<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 0-21924
METROCALL, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 54 - 1215634
- --------------------------------------- -------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6677 RICHMOND HIGHWAY, ALEXANDRIA, VIRGINIA 22306
- ------------------------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (703) 660-6677
</TABLE>
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES / X / NO / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:
<TABLE>
<S> <C>
CLASS OUTSTANDING AT AUGUST 1, 1996
------------------------------------- --------------------------------
COMMON STOCK, $.01 PAR VALUE 14,638,197
</TABLE>
<PAGE> 2
METROCALL, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page
Number
---------------
<S> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets, December 31, 1995 and June 30, 1996 3
Consolidated Statements of Operations for the three months ended
June 30, 1995 and 1996 4
Consolidated Statements of Operations for the six months ended
June 30, 1995 and 1996 5
Consolidated Statements of Cash Flows for the six months ended
June 30, 1995 and 1996 6
Notes to Consolidated Financial Statements 7
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations 11
PART I OTHER INFORMATION
Item 1 Legal Proceedings 16
Item 2 Changes in Securities 16
Item 3 Defaults upon Senior Securities 16
Item 4 Submission of Matters to a Vote of Security Holders 16
Item 5 Other Information 16
Item 6 Exhibits and Reports on Form 8-K 17
SIGNATURES 20
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
METROCALL, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Information)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996
--------------- -------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 123,574 $ 49,377
Accounts receivable, less allowance for doubtful accounts of
$968 as of December 31, 1995 and $917 as of June 30, 1996 9,785 10,788
Prepaid expenses and other current assets 1,908 2,021
---------------- ---------------
Total current assets 135,267 62,186
---------------- ---------------
PROPERTY AND EQUIPMENT:
Land, buildings and leasehold improvements 9,900 10,445
Furniture, office equipment and vehicles 12,794 15,605
Paging and plant equipment 103,427 129,786
Less - Accumulated depreciation and amortization (50,175) (62,461)
---------------- ---------------
75,946 93,375
---------------- ---------------
INTANGIBLE ASSETS, net of accumulated amortization of
approximately $8,875 as of December 31, 1995 and $12,437
as of June 30, 1996 129,085 192,248
EQUITY INVESTMENT IN A+ NETWORK, INC. (Note 8) - 26,759
OTHER ASSETS 316 312
---------------- ---------------
$ 340,614 $ 374,880
================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 252 $ 271
Accounts payable 9,390 17,457
Obligation under tender offer (Note 8) - 45,165
Deferred revenues and subscriber deposits 1,950 2,759
Other current liabilities 7,666 7,001
---------------- ---------------
Total current liabilities 19,258 72,653
---------------- ---------------
CAPITAL LEASE OBLIGATION, net of current portion 2,849 2,745
LONG-TERM DEBT, less current maturities 150,954 150,918
DEFERRED INCOME TAX LIABILITY 11,814 11,471
MINORITY INTEREST IN PARTNERSHIP 501 500
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.01 per share; authorized
1,000,000 shares; none issued and outstanding - -
Common stock, par value $.01 per share; authorized 20,000,000
shares; 14,626,255 shares issued and outstanding as of
December 31, 1995 and June 30, 1996, respectively 146 146
Additional paid-in capital 201,956 201,956
Accumulated deficit (46,864) (65,509)
---------------- ---------------
155,238 136,593
---------------- ---------------
$ 340,614 $ 374,880
================ ===============
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
METROCALL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Share and Per Share Information)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
--------------------------------
1995 1996
------------- ------------
<S> <C> <C>
REVENUES:
Service, rent and maintenance revenues $ 23,396 $ 25,079
Product sales 4,244 6,969
---------------- ----------------
Total revenues 27,640 32,048
Net book value of products sold (3,598) (5,910)
---------------- ----------------
24,042 26,138
---------------- ----------------
OPERATING EXPENSES:
Service, rent and maintenance expenses 6,345 8,305
Selling and marketing 3,864 5,399
General and administrative 6,277 6,920
Depreciation and amortization 6,944 13,607
---------------- ----------------
23,430 34,231
---------------- ----------------
Income (loss) from operations 612 (8,093)
INTEREST EXPENSE (2,829) (4,191)
INTEREST AND OTHER INCOME 8 1,157
---------------- ----------------
LOSS BEFORE INCOME TAXES (2,209) (11,127)
INCOME TAX BENEFIT 171 172
---------------- ----------------
Net loss $ (2,038) $ (10,955)
================ ================
NET LOSS PER COMMON SHARE $ (0.19) $ (0.75)
================ ================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 10,608,324 14,626,255
================ ================
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
METROCALL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Share and Per Share Information)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------------------
1995 1996
------------- --------------
<S> <C> <C>
REVENUES:
Service, rent and maintenance revenues $ 45,504 $ 48,829
Product sales 7,932 13,158
----------------- -----------------
Total revenues 53,436 61,987
Net book value of products sold (6,750) (10,560)
----------------- -----------------
46,686 51,427
----------------- -----------------
OPERATING EXPENSES:
Service, rent and maintenance expenses 12,642 16,498
Selling and marketing 7,827 9,992
General and administrative 12,126 12,702
Depreciation and amortization 12,713 25,098
----------------- -----------------
45,308 64,290
----------------- -----------------
Income (loss) from operations 1,378 (12,863)
INTEREST EXPENSE (5,408) (8,401)
INTEREST AND OTHER (EXPENSE) INCOME (9) 2,511
----------------- -----------------
LOSS BEFORE INCOME TAXES (4,039) (18,753)
INCOME TAX BENEFIT 312 107
----------------- -----------------
Net loss $ (3,727) $ (18,646)
================= =================
NET LOSS PER COMMON SHARE $ (0.35) $ (1.27)
================= =================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 10,605,253 14,626,255
================= =================
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
METROCALL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------
1995 1996
------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(3,727) $ (18,646)
Adjustments to reconcile net loss to net cash provided
by operating activities-
Depreciation and amortization 12,713 25,098
Amortization of debt financing costs 377 176
Decrease in deferred income taxes (343) (343)
Write-off of deferred acquisition costs - 388
Equity in loss of A+ Network, Inc. - 153
Deferred debt financing costs (35) -
Cash provided by (used in) changes in assets and liabilities:
Accounts receivable (3,950) (1,002)
Prepaid expenses and other current assets (186) (113)
Accounts payable (1,883) 8,068
Deferred revenues 847 957
Subscriber deposits (213) (148)
Other current liabilities (23) (665)
------------- -------------
Net cash provided by operating activities 3,577 13,923
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment, net (15,128) (39,065)
Additions to intangibles (754) (35,265)
Equity investment in A+ Network, Inc. - (13,671)
Other 74 3
------------- -------------
Net cash used in investing activities (15,808) (87,998)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 13,000 -
Principal payments on long-term debt (110) (122)
Proceeds from exercise of common stock options 17 -
Increase in minority interest in partnership 2 -
------------- -------------
Net cash provided by financing activities 12,909 (122)
------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 678 (74,197)
CASH AND CASH EQUIVALENTS, beginning of period 2,773 123,574
------------- -------------
CASH AND CASH EQUIVALENTS, end of period $ 3,451 $ 49,377
============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash payments for interest $ 5,522 $ 7,956
Cash payments for income taxes $ 31 $ 236
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
INFORMATION:
On June 24, 1996, shareholders of A+ Network, Inc. tendered 2,140,526
shares of common stock to the Company, at $21.10 per share, which were
purchased on July 1, 1996.
In May 1995, the total number of shares of Metrocall common stock issued
in its November 1994 acquisition of MetroPaging, Inc. to former
MetroPaging stockholders was adjusted which reduced the total purchase
price by approximately $153.
See notes to condensed consolidated financial statements.
6
<PAGE> 7
METROCALL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
1. ORGANIZATION
Metrocall, Inc. (the "Company"), is a leading provider of local,
regional and nationwide paging and other wireless messaging services. The
Company's selling efforts are concentrated in 16 markets in four operating
regions: (i) the Northeast (Massachusetts through Delaware), (ii) the
Mid-Atlantic (Maryland and the Washington, D. C. metropolitan area), (iii) the
Southeast (Virginia through Florida) and (iv) the West (primarily California,
Nevada and Arizona). Through its Nationwide Network, the Company provides
coverage to over 860 cities representing the top 100 Standard Metropolitan
Statistical Areas.
2. BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC") and include, in
the opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of interim period results.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. The
Company believes, however, that its disclosures are adequate to make the
information presented not misleading. These condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's 1995 Annual Report on
Form 10-K. The results of operations for the three and six-month periods ended
June 30, 1996, are not necessarily indicative of the results to be expected for
the full year.
3. SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
The Company recognizes revenue under service, rental and maintenance
agreements with customers as the related services are performed. Sales of
equipment are recognized upon delivery.
Cash and Cash Equivalents
Cash and cash equivalents include short-term, highly liquid
investments purchased with original maturities of three months or less.
Property and Equipment
Property and equipment are carried at cost. Depreciation is computed
using the straight-line method over the following estimated useful lives.
<TABLE>
<CAPTION>
YEARS
------
<S> <C>
Buildings and leasehold improvements 10-31
Furniture and office equipment 5-10
Vehicles 3-5
Subscriber paging equipment 3-4
Transmission and plant equipment 5-12
</TABLE>
In July, 1995, the Company began recording and depreciating all new
pagers as a component of subscriber paging equipment. Depreciation expense
recorded on new pagers in the three and six-month periods ended June 30, 1996
was approximately $1.7 million and $2.6 million, respectively. Betterments to
acquired pagers are charged to depreciation expense.
7
<PAGE> 8
METROCALL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1996
(UNAUDITED)
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Long-Lived Assets
Long-lived assets and identifiable intangibles to be held and used are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount should be addressed. Impairment is measured by
comparing the value to the estimated undiscounted future cash flows expected to
result from use of the assets and their eventual disposition. The Company has
determined that as of June 30, 1996, there has been no impairment in the
carrying value of long-lived assets.
Income Taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."
4. NET LOSS PER COMMON SHARE
Net loss per common share for the three and six month periods ended
June 30, 1995 and 1996, is based upon the weighted average number of common
equivalent shares outstanding during the period. The effect of outstanding
options on net loss per share for the periods is not included because such
options would be anti-dilutive.
5. EQUITY AND NOTES OFFERINGS
On September 27, 1995, the Company completed a public offering of 4.0
million shares of Metrocall common stock (the "Equity Offering") at $28.25 per
share. After underwriting discounts, commissions and other professional fees,
net proceeds from the Equity Offering were approximately $107.0 million.
On October 2, 1995, the Company completed a public offering of $150.0
million senior subordinated notes (the "Notes Offering"), bearing interest at
10.375% payable semi-annually on April 1 and October 1, due 2007. After
underwriting discounts, commissions and other professional fees, net proceeds
from the Notes Offering were approximately $145.1 million. Proceeds from the
Notes Offering were used to repay approximately $113.3 million outstanding
under the Company's currently existing credit facility. In connection with
this repayment, the Company recognized an extraordinary charge of approximately
$4.5 million in October 1995 to write off deferred debt financing and related
costs. Concurrently, the existing credit facility was amended to permit the
indebtedness incurred under the Notes Offering.
6. CREDIT AGREEMENT
The Company currently has a secured credit agreement with a group of
lenders (the "Banks") for a $175 million credit facility (the "Existing Credit
Facility") consisting of a reducing revolving credit facility of $100 million
and a revolving credit and term loan facility of $75 million. The Existing
Credit Facility is secured by substantially all assets of the Company. The
Existing Credit Facility contains covenants regarding, among other things, the
maintenance of ratios of total debt to EBITDA (as defined), of EBITDA to debt
service and of EBITDA to interest expense. On June 25, 1996, the Company
obtained a Waiver and Consent Letter (the "Waiver") easing certain of these
covenants, which the Company otherwise would not have complied with. The
Waiver expires September 21, 1996. At August 1, 1996, the balance outstanding
and payable under the facility was $39 million.
8
<PAGE> 9
METROCALL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1996
(UNAUDITED)
7. STOCK OPTION PLANS
During the six-month period ended June 30, 1996, pursuant to the
Company's stock option plans, the Board of Directors authorized the issuance of
options to purchase 520,500 shares of Metrocall common stock exercisable at
prices ranging from $19.125 to $21.25 per share to certain key employees and
directors of the Company. All options were issued with exercise prices equal
to the fair market value at the date of grant. Certain of these options were
issued under a stock option plan, the Metrocall 1996 Stock Option Plan, which
was ratified by the Company's stockholders on May 1, 1996. All options granted
under the Plan become fully vested and exercisable on the second anniversary of
the date of grant and expire ten years from the date of grant. Total options
outstanding under the Company's stock option plans at June 30, 1996, were
1,213,000 with exercise prices ranging from $13.00 to $22.25 per share. Of the
total options outstanding at June 30, 1996, a total of 472,500 were currently
exercisable. In addition, there are options outstanding and exercisable to
purchase 27,958 shares of the Company's common stock at $1.035 per share which
were assumed in connection with the acquisition of FirstPAGE USA, Inc. in
August 1994.
Pursuant to the Directors Stock Option Plan (the "Directors Plan"),
the Board of Directors authorized the issuance of an option to purchase 1,000
shares of Metrocall common stock exercisable at $20.00 per share during the six
months ended June 30, 1996. All options were issued at exercise prices equal
to the fair market value at the grant date. All options granted under the
Directors Plan become fully vested and exercisable on the six-month anniversary
of the date of grant. Total options outstanding under the Directors Plan at
June 30, 1996, were 9,000 with exercise prices ranging from $13.00 to $22.125
per share. At June 30, 1996, options outstanding to acquire 8,000 shares of
the Company's common stock were exercisable.
8. EQUITY INVESTMENT IN A+ NETWORK, INC.
On May 16, 1996, the Company entered into a definitive merger
agreement (the "A+ Agreement") with A+ Network, Inc. of Pensacola, Florida ("A+
Network"). Under the terms of the A+ Agreement, A+ Network would become a
wholly-owned subsidiary of the Company in exchange for cash, the assumption of
debt and issuance of Metrocall common stock. Total consideration in the A+
Network merger is expected to be $91.8 million cash paid pursuant to the tender
offer discussed below, assumption of $125 million of A+ Network indebtedness
and the exchange of approximately 9.0 million shares of Metrocall common stock.
The A+ Agreement provided for the commencement of a tender offer (the "Offer")
by the Company for 2,140,526 shares of A+ Network common stock. The Offer
commenced on May 22, 1996 and expired on June 24, 1996. Shareholders of A+
Network tendered approximately 5,362,482 shares of A+ Network common stock
pursuant to the Offer and the Company purchased 2,140,526 of such shares at
$21.10 per share, pursuant to the Offer. In addition, the Company purchased
2,210,217 shares at $21.10 per share of A+ Network common stock from certain
principal shareholders of A+ Network on June 25, 1996 pursuant to the A+
Agreement.
The Company has recorded an equity investment in A+ Network based on
the value of A+ Network's net assets as of June 30, 1996. The shares of A+
Network common stock acquired pursuant to the Offer were not paid for until
July 1, 1996, and, accordingly, the Company has recorded a corresponding
liability for this obligation. In addition, the Company has recorded a charge
of approximately $153,000 representing the Company's share of A+ Network's
losses for the period the Company owned the shares.
9
<PAGE> 10
METROCALL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1996
(UNAUDITED)
9. RECENT AND PENDING ACQUISITIONS
Parkway Paging, Inc.
On July 16, 1996, the Company completed its acquisition of Parkway
Paging, Inc. ("Parkway") of Plano, Texas, for $28 million cash. The
acquisition of Parkway adds approximately 140,000 subscribers to the Company's
subscriber base.
Reflected below is a summary of agreements to acquire businesses
which were pending at June 30, 1996 in addition to that described in Note 8.
Consummation of these pending acquisitions is subject to a number of conditions
including, but not limited to, receipt of all necessary regulatory approvals.
There can be no assurance that such approval can be obtained. In addition, the
purchase prices of each transaction is subject to adjustment based on each
company's ability to meet certain defined performance criteria. The pending
transactions, if consummated, will be accounted for as purchases.
Consummation of these pending acquisitions may subject the Company to
additional risks and uncertainties including challenges of business
integration, substantial indebtedness and needs for future capital.
Satellite Paging and Message Network
On February 28, 1996, the Company signed a definitive acquisition
agreement (the "Satellite Agreement") with Satellite Paging of Fairfield, New
Jersey and Message Network of Boca Raton, Florida (together, "Satellite").
Under the terms of the Satellite Agreement, the Company will acquire all of the
assets of Satellite in exchange for approximately $28 million cash.
Page America Group, Inc.
On April 22, 1996, the Company signed a definitive acquisition
agreement (the "Page America Agreement") with Page America Group, Inc. of
Hackensack, New Jersey ("Page America"). Under the terms of the Page America
Agreement, the Company will acquire substantially all of the assets of Page
America for up to approximately $78.5 million, of which $55 million will be
paid in cash and up to $23.5 million will be paid in the form of the Company's
common stock. The maximum number of shares of common stock to be exchanged
will be approximately 1.3 million.
Other Acquisitions
The Company incurred costs in negotiations to potentially acquire
other wireless telecommunications companies. The Company has ceased further
negotiations with these companies and, accordingly, recorded a charge to write
off deferred acquisition costs of approximately $0.4 million in the
accompanying statement of operations for the three months ended June 30, 1996.
10. CONTINGENCIES
The Company has received communications from a seller in connection
with an acquisition that occurred in 1994 asserting damages resulting from
alleged misrepresentations in connection with the acquisition. The seller, who
received shares of common stock as acquisition consideration, is seeking to
receive additional shares of common stock and a seat on the Company's board of
directors among other requests. If necessary, management will vigorously
defend any legal actions that might arise from such assertions.
The Company is subject to legal and regulatory matters in the normal
course of business. In the opinion of management, the outcome of such
assertions will not have a material effect on the financial position or the
results of the operations of the Company.
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
All statements contained herein that are not historical facts,
including but not limited to, statements regarding anticipated future capital
requirements, the Company's future development plans, the Company's ability to
obtain additional debt, equity or other financing, and the Company's ability to
generate cash from operations and further savings from existing operations, are
based on current expectations. These statements are forward looking within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act and involve a number of risks and uncertainties. Actual results may differ
materially. The following discussion and analysis of the financial condition
and results of operations of the Company should be read in conjunction with the
condensed consolidated financial statements and notes thereto.
OVERVIEW
Metrocall is among the leading paging companies in the United States
based on number of subscribers, with 1,109,647 pagers in service at June 30,
1996. During the period from February through May 1996, Metrocall announced
four separate pending acquisitions which will, if completed, add approximately
1.1 million subscribers to its base of pagers in service. The results of
operations for the three months ended June 30, 1996 do not reflect the results
of operations of any of these companies to be acquired. The definitions below
relate to management's discussion of the Company's results of operations that
follows.
Service, rent and maintenance revenues: include primarily
monthly, quarterly, semi-annually and annually billed
recurring revenue, not generally dependent on usage, charged
to subscribers for paging and related services such as voice
mail and pager repair and replacement.
Net revenues: include service, rent and maintenance revenues
and sales of customer owned and maintained ("COAM") pagers
less net book value of pagers sold.
Service, rent and maintenance expenses: include costs related
to the management, operation and maintenance of the Company's
network systems and customer support centers.
Selling and marketing expenses: include salaries, commissions
and administrative costs for the Company's sales force and
related marketing and advertising expenses.
General and administrative expenses: include executive
management, accounting, office telephone, repairs and
maintenance, management information systems and employee
benefits.
The Company derives the majority of its revenues from fixed, periodic
(usually monthly) fees, generally not dependent on usage, charged to
subscribers for paging services. While a subscriber remains in the Company's
service, future operating results benefit from this recurring revenue stream
with minimal requirements for incremental selling expenses or other fixed
costs.
The Company's growth and expansion into new markets require
significant capital investment for the installation of paging equipment and
technical infrastructure. Additionally, the Company purchases pagers for that
portion of its subscriber base that leases pagers from the Company.
11
<PAGE> 12
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the
percentage of net revenues represented by certain items in the Company's
Condensed Consolidated Statements of Operations.
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30 JUNE 30
---------------------- ----------------------
1995 1996 1995 1996
--------- ---------- --------- -----------
<S> <C> <C> <C> <C>
Revenues:
Service, rent and maintenance 97.3 % 95.9 % 97.5 % 94.9 %
Product sales 17.7 26.7 17.0 25.6
Net book value of products sold (15.0) (22.6) (14.5) (20.5)
---------- ------------ ----------- -----------
Net revenues 100.0 100.0 100.0 100.0
---------- ------------ ----------- -----------
Operating expenses:
Service, rent and maintenance 26.4 31.8 27.1 32.1
Selling and marketing 16.1 20.7 16.8 19.4
General and administrative 26.1 26.5 26.0 24.7
Depreciation and amortization 28.9 52.1 27.2 48.8
---------- ------------ ----------- -----------
Income (loss) from operations 2.5 (31.1) 2.9 (25.0)
Interest expense (11.8) (16.0) (11.6) (16.3)
Interest and other income - 4.4 - 4.9
Income tax benefit 0.8 0.8 0.7 0.2
Net loss (8.5)% (41.9)% (8.0)% (36.2)%
OTHER DATA:
Units in service (end of period) 839,358 1,109,647 839,358 1,109,647
EBITDA (in thousands) (1) $ 7,556 $ 5,514 $ 14,091 $ 12,235
Ratio of EBITDA to net revenues (1) 31.4 % 21.1 % 30.2 % 23.8 %
ARPU (2) $ 9.58 $ 7.89 $ 9.51 $ 7.93
</TABLE>
- --------------------
(1) The ratio of EBITDA (earnings before interest, taxes, depreciation and
amortization) to net revenues is calculated by dividing EBITDA by net
revenues. EBITDA should not be considered in isolation or as an
alternative to net income (loss), income (loss) from operations or any
other measure of performance under generally accepted accounting
principles. EBITDA is used by the Company for the purpose of analyzing its
operating performance, leverage and liquidity. The Company's credit
agreement contains various financial covenants based on "cash flow" as
defined therein, which approximates EBITDA. See "-- Liquidity and Capital
Resources" for discussion of capital requirements and commitments.
(2) ARPU (average monthly recurring revenue per unit) is calculated by
dividing (a) monthly service, rent and maintenance revenues for the period
by (b) the average number of units in service for the period.
Three Months ended June 30, 1996 Compared With 1995
Total revenues increased approximately $4.4 million from $27.6 million
for the three months ended June 30, 1995, (the "1995 quarter") to $32.0 million
for the three months ended June 30, 1996 (the "1996 quarter"). Service, rent
and maintenance revenues increased approximately $1.7 million from $23.4
million in the 1995 quarter to $25.1 million in the 1996 quarter. The increase
is attributable to greater service revenues due to the growth of pagers in
service from 839,358 at June 30, 1995, to 1,109,647 at June 30, 1996. Monthly
ARPU declined from $9.58 per unit in the 1995 quarter to $7.89 per unit in the
1996 quarter due to the increase in the base of customers serviced through
indirect distribution channels. Product sales increased $2.8 million from $4.2
million in the 1995 quarter to $7.0 million in the 1996 quarter and increased
as a percentage of total revenues from 15.4% in the 1995 quarter to 21.7% in
the 1996 quarter, due to a higher volume of sales to resellers and other
indirect sales channels.
Net book value of products sold increased approximately $2.3 million
from $3.6 million in the 1995 quarter to $5.9 million in the 1996 quarter. Net
book value of products sold increased principally due to the increase in
product sales, partially offset by depreciation on pagers.
12
<PAGE> 13
Overall, the Company experienced a decrease in average monthly
operating costs per unit in service (operating costs per unit before
depreciation and amortization) from the 1995 quarter to the 1996 quarter.
Average monthly operating costs per unit decreased from $6.75 per unit for the
1995 quarter to $6.49 per unit for the 1996 quarter, including the impact in
the 1996 quarter of certain non-recurring charges of $0.6 million primarily
associated with certain terminated merger and acquisition transactions. Each
operating expense is discussed separately below.
Service, rent and maintenance expenses increased approximately $2.0
million from $6.3 million in the 1995 quarter to $8.3 million in the 1996
quarter and increased as a percentage of net revenues from 26.4% in the 1995
quarter to 31.8% in the 1996 quarter. The overall increase in service, rent
and maintenance expense is attributable to increased carrier line costs paid to
third party service providers ($1.2 million), increased rent expense related to
the addition of transmitters in the Company's Nationwide Network ($0.2
million), increased personnel costs ($0.5 million) and other operating expenses
($0.1 million). Service, rent and maintenance expense per unit has increased
slightly from $2.60 per unit per month in the 1995 quarter to $2.61 per unit
per month in the 1996 quarter. Continued build-out of the Company's Nationwide
Network by the Company may result in increased service, rent and maintenance
expenses as a percentage of net revenues.
Selling and marketing expenses increased approximately $1.5 million
from $3.9 million in the 1995 quarter to $5.4 million in the 1996 quarter and
increased as a percentage of net revenues from 16.1% in the 1995 quarter to
20.7% in the 1996 quarter. The increase in selling and marketing expenses is
primarily associated with increased sales staff and related costs ($1.3
million) and increased costs associated with product promotions ($0.2 million).
Monthly selling and marketing expense per unit increased from $1.58 per unit in
the 1995 quarter to $1.70 per unit in the 1996 quarter primarily due to
increased sales and distribution personnel in the 1996 quarter. Selling and
marketing expenses may increase as a percentage of net revenues as the Company
continues its subscriber growth and net unit additions.
General and administrative expenses increased approximately $0.6
million from $6.3 million in the 1995 quarter to $6.9 million in the 1996
quarter and increased as a percentage of net revenues from 26.1% in the 1995
quarter to 26.5% in the 1996 quarter. The increase is primarily due to the
write-off of deferred acquisition costs ($0.4 million) and other general
corporate expenses ($0.2 million). Monthly general and administrative expense
per unit has decreased from $2.57 in the 1995 quarter to $2.18 in the 1996
quarter. General and administrative costs should remain constant as a percent
of revenue as the Company increases its total subscriber base.
Depreciation and amortization increased approximately $6.7 million
from $6.9 million in the 1995 quarter to $13.6 million in the 1996 quarter, and
increased as a percentage of net revenues from 28.9% in the 1995 quarter to
52.1% in the 1996 quarter. The increase in total depreciation expense resulted
primarily from increased depreciation on subscriber paging equipment ($5.3
million) and on other plant and other operating equipment ($0.8 million), and
on increased amortization expense ($0.5 million). Beginning in July 1995, the
Company began recording all purchases of new pagers as a component of
subscriber paging equipment. Amounts previously classified as inventories in
the prior year financial statements have been reclassified to conform to the
current period's presentation. This resulted in an increase to depreciation
expense of approximately $1.7 million.
Interest expense increased approximately $1.4 million, from $2.8
million in the 1995 quarter to $4.2 million in the 1996 quarter. Interest
expense increased due to higher average levels of debt as a result of the
Company's Notes Offering in October 1995 of $150.0 million of senior
subordinated notes at an interest rate of 10.375%.
Net loss increased $9.0 million in the 1996 quarter from approximately
$2.0 million in the 1995 quarter to $11.0 million.
EBITDA decreased approximately $2.1 million from $7.6 million in the
1995 quarter to $5.5 million in the 1995 quarter. As a percentage of net
revenues, EBITDA decreased from 31.4% in the 1995 quarter to 21.1% in the 1996
quarter.
13
<PAGE> 14
Six Months ended June 30, 1996 Compared With 1995
Total revenues increased approximately $8.6 million from $53.4 million
for the six months ended June 30, 1995, ("1995") to $62.0 million for the six
months ended June 30, 1996 ("1996"). Service, rent and maintenance revenues
increased approximately $3.3 million in 1996 from $45.5 million in 1995 to
$48.8 million in 1996. The increase is attributable to greater service
revenues due to the growth of pagers in service from 839,358 at June 30, 1995,
to 1,109,647 at June 30, 1996. Monthly ARPU declined from $9.51 per unit in
1995 to $7.93 per unit in 1996 due to the increase in the base of customers
serviced through indirect distribution channels. Product sales increased $5.2
million from $7.9 million in 1995 to $13.1 million in 1996 and increased as a
percentage of total revenues from 14.8% in 1995 to 21.2% in 1996, due to a
higher volume of sales to resellers and other indirect sales channels.
Net book value of products sold increased approximately $3.8 million
from $6.8 million in 1995 to $10.6 million in 1996. Net book value of
products sold increased principally due to the increase in product sales,
partially offset by depreciation on pagers.
Overall, the Company experienced a decrease in average monthly
operating costs per unit in service (operating costs per unit before
depreciation and amortization) from 1995 to 1996. Average monthly operating
cost per unit decreased from $6.81 per unit for 1995 to $6.36 per unit for
1996. Each operating expense is discussed separately below.
Service, rent and maintenance expenses increased approximately $3.9
million from $12.6 million in 1995 to $16.5 million in 1996 and increased as a
percentage of net revenues from 27.1% in 1995 to 32.1% in 1996. The overall
increase in service, rent and maintenance expense is primarily attributable to
increased carrier line costs paid to third party service providers ($2.0
million), increased rent expense related to the addition of transmitters to the
Company's Nationwide Network ($0.7 million) and increased personnel costs ($0.9
million). Service, rent and maintenance expense per unit has increased from
$2.64 per unit per month in 1995 to $2.68 per unit per month in 1996.
Continued build-out of the Company's Nationwide Network by the Company may
result in increased service, rent and maintenance expenses as a
percentage of net revenues.
Selling and marketing expenses increased approximately $2.2 million
from $7.8 million in 1995 to $10.0 million in 1996 and increased as a
percentage of net revenues from 16.8% in 1995 to 19.4% in 1996. The increase
in selling and marketing expenses is primarily associated with increased sales
staff and related costs ($1.6 million) and increased advertising and promotion
costs ($0.5 million). Monthly selling and marketing expense per unit has
decreased from $1.64 per unit in 1995 to $1.62 per unit in 1996. Selling and
marketing expenses may increase as a percentage of net revenues as the Company
continues its subscriber growth and net unit additions.
General and administrative expenses increased approximately $0.6
million from $12.1 million in 1995 compared to $12.7 million in 1996, but
decreased as a percentage of net revenues from 26.0% in 1995 to 24.7% in 1996.
Monthly general and administrative expense per unit has decreased from $2.53
per unit in 1995 to $2.06 per unit in 1996. General and administrative costs
should remain constant as a percent of revenue as the Company increases its
total subscriber base.
Depreciation and amortization increased approximately $12.4 million
from $12.7 million in 1995 to $25.1 million in 1996, and increased as a
percentage of net revenues from 27.2% to 48.8% in 1995 and 1996, respectively.
The increase in total depreciation expense resulted primarily from depreciation
on subscriber paging equipment ($10.8 million) and on other plant and operating
equipment ($1.3 million). Beginning in July 1995, the Company began recording
all purchases of new pagers as a component of subscriber paging equipment.
Amounts previously classified as inventories in the prior year financial
statements have been reclassified to conform to the current period's
presentation. This resulted in an increase to depreciation expense of
approximately $2.6 million.
Interest expense increased approximately $3.0 million, from $5.4
million in 1995 to $8.4 million in 1996. Interest expense increased due to
higher average levels of debt as a result of the Company's Notes Offering in
October, 1995 of $150.0 million of senior subordinated notes at an interest
rate of 10.375%.
Net loss increased $14.9 million in 1996 from approximately $3.7
million in 1995 to $18.6 million in 1996.
14
<PAGE> 15
EBITDA decreased approximately $1.9 million from $14.1 million in 1995
to $12.2 million in 1996. As a percentage of net revenues, EBITDA decreased
from 30.2% in 1995 to 23.8% in 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operations require the availability of substantial funds
to finance the maintenance and growth of its existing paging operations and
customer base, development and construction of future wireless communications
networks, expansion into new markets and the acquisition of other wireless
communications companies. Further cash requirements include debt service,
working capital and general corporate requirements.
The Company financed its internal growth in 1996 through its operating
cash flow and the use of available cash. Net cash provided by operating
activities increased from $3.6 million for the six months ended June 30, 1995,
to $13.9 million for the three months ended June 30, 1996.
Cash flows used in investing activities were primarily to fund
purchases of property and equipment. Capital expenditures were approximately
$15.1 million and $39.1 million for the six-month periods ended June 30, 1995
and 1996, respectively. The Company experienced greater capital expenditure
requirements through June 30, 1996 due to increased pager placements and the
build-out of the Company's Nationwide Network. In addition to capital
expenditures, the Company paid approximately $46.6 million to purchase
approximately 2.2 million shares of common stock from certain principal
shareholders of A+ Network, Inc. The Company paid an additional $45.2 million
on July 1, 1996, upon settlement of its tender offer to purchase an additional
2.1 million shares from A+ Network, Inc. common shareholders.
Cash flows used in financing activities for the six-month period ended
June 30, 1996, included payments on long-term debt of approximately $122,000.
The Company currently has a secured credit agreement with a group of
lenders (the "Banks") for a $175 million credit facility (the "Existing Credit
Facility") consisting of a reducing revolving credit facility of $100 million
and a revolving credit and term loan facility of $75 million. The Existing
Credit Facility is secured by substantially all assets of the Company. The
Existing Credit Facility contains covenants regarding, among other things, the
maintenance of ratios of total debt to EBITDA (as defined), of EBITDA to debt
service and of EBITDA to interest expense. On June 25, 1996, the Company
obtained a Waiver and Consent Letter (the "Waiver") easing certain of these
covenants, which the Company otherwise would not have complied with. The
Waiver expires September 21, 1996. At August 1, 1996, the balance outstanding
and payable under the facility was $39 million. Pursuant to the terms of the
Waiver approximately $15 million was available under the Existing Credit
Facility as of August 1, 1996. The Company is currently working with its
lenders to secure a new credit facility.
The Company's ability to incur additional indebtedness (including
draws on a new credit facility) is subject to certain limitations in the
agreements relating to existing indebtedness. In connection with the pending
acquisitions of A+ Network and Page America, the Company is obligated to assume
approximately $125 million of indebtedness of A+ Network and to pay up to
approximately $55 million in cash in connection with the acquisition of Page
America. The Company will not be able to incur or assume indebtedness in
connection with these acquisitions unless certain ratios of debt to EBITDA for
the most recently reported quarter are not exceeded after the acquisition. The
Company believes that it will not be able to complete these acquisitions until
either reported EBITDA of the Company, A+ Network and Page America increase to
a level that is sufficient to allow the Company to assume the A+ Network
indebtedness and pay the acquisition consideration or the Company reduces the
overall level of indebtedness that would exist after the acquisitions by
raising additional equity capital or by other means. Metrocall is exploring
options for raising additional equity capital should that become necessary.
There can be no assurance that additional capital, either indebtedness or
equity, will be available on terms satisfactory to the Company.
15
<PAGE> 16
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company, from time to time, is involved in lawsuits in the
normal course of business. The Company believes that its currently
pending lawsuits will not have a materially adverse effect on the
Company's financial position or results of operations.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders held on May 1, 1996,
the following proposals were adopted by the vote specified below:
<TABLE>
<CAPTION>
Withheld/ Broker
Proposal For Against Abstain Nonvotes
---------------------------- ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Election of three directors:
1. Ronald V. Aprahamian 11,201,791 543,224 - 2,881,240
2. Harry L. Brock, Jr. 10,790,531 954,484 - 2,881,240
3. Richard M. Johnston 11,200,291 544,724 - 2,881,240
Ratification of Arthur Andersen LLP
as independent public accountants 11,220,326 511,130 13,559 2,881,240
Adoption of the Metrocall, Inc.
Employee Stock Purchase Plan 8,891,756 738,332 25,259 4,970,908
Approval of the Metrocall, Inc.
1996 Stock Option Plan 8,689,883 824,481 25,735 5,086,156
Approval of an amendment to increase
the number of authorized common
shares to 26,000,000 10,843,885 624,753 276,377 2,881,240
</TABLE>
ITEM 5. OTHER INFORMATION
None.
16
<PAGE> 17
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K.
2.1 Agreement and Plan of Reorganization among Metrocall, FPGE
Acquisition Corp., FirstPAGE, Wilmington Securities, Inc.,
First Century Partnership III and Omega Partners, L.P.,
dated March 15, 1994 (the "FirstPAGE Reorganization
Agreement"). (a)
2.2 Certificate of Merger between FirstPAGE and FPGE
Acquisition Corp. executed upon approval of the merger by
the stockholders of Metrocall and FirstPAGE. (a)
2.3 Supplemental Agreement executed in connection with the
FirstPAGE Reorganization Agreement.(a)
2.4 Indemnification and Escrow Agreement executed in connection
with FirstPAGE Reorganization Agreement. (b)
2.5 Voting Agreement among Metrocall, FirstPAGE and certain
principal stockholders of Metrocall and FirstPAGE executed
in connection with the FirstPAGE Reorganization Agreement.
(b)
2.6 First Amendment to FirstPAGE Reorganization Agreement. (a)
2.7 Agreement of Merger by and among Metrocall, Inc., PPI
Acquisition Corp., Parkway Paging, Inc. certain
shareholders of Parkway Paging, Inc., and George W. Bush,
dated February 26, 1996. (c)
2.8 Asset Purchase Agreement by and among O.R. Estman, Inc.
d/b/a Satellite Paging, Dana Paging, Inc. d/b/a Message
Network, Bertram M. Wachtel, Edward R. Davalos, Kevan D.
Bloomgren and Metrocall, Inc., dated February 28, 1996. (c)
2.9 Agreement and Plan of Merger dated as of May 16, 1996,
between Metrocall, Inc. and A+ Network, Inc. (d)
2.10 Shareholders' Option and Sale Agreement dated as of May 16,
1996 between Metrocall, Inc. and certain shareholders of A+
Network, Inc. listed therein. (d)
2.11 Metrocall Stockholders Voting Agreement dated as of May 16,
1996 between May 16, 1996 between A+ Network, Inc. and
certain stockholders of Metrocall, Inc. listed therein. (d)
2.12 Agreement dated May 16, 1996 among Metrocall, Inc. and Ray
D. Russenberger and Elliott H. Singer regarding voting for
director. (d)
3.1 Amended and Restated Certificate of Incorporation of
Metrocall. *
3.2 Certificate of Amendment of Certificate of Incorporation of
Metrocall, Inc. *
3.3 Fourth Amended and Restated Bylaws of Metrocall. *
4.1 Indenture, including form of 10 3/8% Senior Subordinated
Notes due 2007. (f)
10.1 Loan Agreement by and among Metrocall, certain lenders and
Toronto Dominion Bank as agent, dated August 31, 1994 (the
"Loan Agreement"). (b)
10.2 First Amendment to Loan Agreement dated November 30, 1994.
(e)
10.3 Second Amendment to Loan Agreement dated April 28, 1995. (f)
10.4 Third Amendment to Loan Agreement dated October 2, 1995. (g)
10.5 Fourth Amendment to Loan Agreement dated as of April 15,
1996 among Metrocall, Inc., Toronto Dominion (Texas), Inc.,
as administrative agent for the Banks, and the Banks
signatory thereto. *
10.6 Waiver and Consent dated as of June 25, 1996 among
Metrocall, Inc., Toronto Dominion (Texas), Inc., as
administrative agent for the Banks, and the Banks signatory
thereto. *
10.7 Amended and Restated 1993 Stock Option Plan of Metrocall.
(h)
10.8 Directors' Stock Option Plan of Metrocall. (h)
10.9 Metrocall 1996 Stock Option Plan (i)
17
<PAGE> 18
10.10 Employee Stock Purchase Plan of Metrocall. (i)
10.11 Deed of Lease between Douglas and Joyce Jemal, as landlord,
and Metrocall, as tenant, dated April 14, 1994. (b)
10.12 Lease Agreement dated December 20, 1983, between a
predecessor of Metrocall and Beacon Communications
Associates, Ltd. (j)
10.13 Employment Agreement between Metrocall and William L.
Collins. *
10.14 Employment Agreement between Metrocall and Vincent D.
Kelly. *
10.15 Employment Agreement between Metrocall and Steven D.
Jacoby. *
10.16 Change of Control Agreement between Metrocall and William
L. Collins. *
10.17 Change of Control Agreement between Metrocall and Vincent
D. Kelly. *
10.18 Change of Control Agreement between Metrocall and Steven D.
Jacoby. *
10.19 Agreement and Plan of Merger entered into effective the
26th day of April between A+ Network, Inc. ("ACOM"), a
Louisiana corporation to be formed as a wholly-owned
subsidiary of ACOM, Radio and Communications Consultants,
Inc., Advanced Cellular Telephone, Inc., Leroy Faith, Sr.
and Eddie Ray Faith, DeWayne Faith and Leroy Faith, Jr. (d)
10.20 Asset Purchase Agreement by and between Page America Group,
Inc., Page America of New York, Inc., Page America of
Illinois, Inc., Page America Communications of Indiana,
Inc., Page America of Pennsylvania, Inc., and Metrocall,
Inc. dated as of April 22, 1996. (k)
10.21 Tax Indemnification Agreement by and among Metrocall, Harry
L. Brock, Jr., Christopher A. Kidd, Vincent D. Kelly and
Suzanne S. Brock. (h)
10.22 Metrocall Savings and Retirement Plan, as amended and
restated dated April 1, 1995. (l)
10.23 Agreement and Plan of Merger among Metrocall; ACPI
Acquisition Corporation; AllCity Paging, Norman H. Minkow;
Nancy Minkow; Brian David Minkow, Karen Lynn Mercer and
Steven Andrew Minkow, as Trustees of the Brian David Minkow
Irrevocable Trust dated November 1, 1993; David Minkow,
Karen Lynn Mercer and Steven Andrew Minkow, as Trustees of
the Karen Lynn Minkow Irrevocable Trust dated November 1,
1993; Brian David Minkow, Karen Lynn Mercer and Steven
Andrew Minkow, as Trustees of the Steven Andrew Minkow
Irrevocable Trust dated November 1, 1993; Barry F. Hobbs;
and Tom J. Hull, dated April 20, 1994 ("Agreement and Plan
of Merger").(m)
10.24 First Amendment to Agreement and Plan of Merger dated
November 28, 1994. (g)
13.1 Metrocall 1995 Annual Report to Shareholders. (l)
21.1 Subsidiaries of Metrocall. (l)
----------------
* Exhibit filed herewith.
(a) Incorporated by reference to Metrocall's Registration
Statement on Form S-4, as amended (File No. 33-79818),
filed with the Commission on July 19, 1994.
(b) Incorporated by reference to Metrocall's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1994,
filed with the Commission on November 14, 1994.
(c) Incorporated by reference to Metrocall's Quarterly Report
on Form 10-Q/A as amended, for the quarter ended March 31,
1996, filed with the Commission on May 14, 1996
(d) Incorporated by reference to Metrocall's Tender Offer
Statement on Schedule 14D-1, filed with the Commission on
May 22, 1996.
(e) Incorporated by reference to Metrocall's Annual Report on
Form 10-K/A for the year ended December 31, 1994, filed
with the Commission on July 26, 1995.
(f) Incorporated by reference to Metrocall's Registration
Statement on Form S-1, as amended (File No. 33-96042),
filed with the Commission on September 27, 1995.
(g) Incorporated by reference to Metrocall's Quarterly Report
on Form 10-Q for the quarter ended
18
<PAGE> 19
September 30, 1995, filed with the Commission on
November 14, 1995.
(h) Incorporated by reference to Metrocall's Annual Report on
Form 10-K/A as amended, for the year ended December 31,
1993, filed with the Commission on July 21, 1994.
(i) Incorporated by reference to Metrocall's Proxy Statement
filed for the Annual Meeting of Stockholders held on May 1,
1996.
(j) Incorporated by reference to Metrocall's Registration
Statement on Form S-1, as amended (File No. 33-63886),
filed with the Commission on July 12, 1993.
(k) Incorporated by reference to Metrocall's Statement on
Schedule 13D filed with the Commission on May 2, 1996.
(l) Incorporated by reference to Metrocall's Annual Report on
Form 10-K for the year ended December 31, 1995 filed with
the Commission on April 1, 1996.
(m) Incorporated by reference to Metrocall's Current Report on
Form 8-K, dated April 20, 1994, filed with the Commission
on April 26, 1994.
(b) REPORTS ON FORM 8-K
Current Report on From 8-K dated May 16, 1996 announcing definitive
merger agreement between the Company and A+ Network, Inc.
19
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 14, 1996 METROCALL, INC.
/s/ Vincent D. Kelly
---------------------------
Vincent D. Kelly
Chief Financial Officer, Treasurer
and Vice President
20
<PAGE> 21
EXHIBIT INDEX
Exhibit
Number Exhibit Description
2.1 Agreement and Plan of Reorganization among Metrocall, FPGE
Acquisition Corp., FirstPAGE, Wilmington Securities, Inc.,
First Century Partnership III and Omega Partners, L.P.,
dated March 15, 1994 (the "FirstPAGE Reorganization
Agreement"). (a)
2.2 Certificate of Merger between FirstPAGE and FPGE
Acquisition Corp. executed upon approval of the merger by
the stockholders of Metrocall and FirstPAGE. (a)
2.3 Supplemental Agreement executed in connection with the
FirstPAGE Reorganization Agreement.(a)
2.4 Indemnification and Escrow Agreement executed in connection
with FirstPAGE Reorganization Agreement. (b)
2.5 Voting Agreement among Metrocall, FirstPAGE and certain
principal stockholders of Metrocall and FirstPAGE executed
in connection with the FirstPAGE Reorganization Agreement.
(b)
2.6 First Amendment to FirstPAGE Reorganization Agreement. (a)
2.7 Agreement of Merger by and among Metrocall, Inc., PPI
Acquisition Corp., Parkway Paging, Inc. certain
shareholders of Parkway Paging, Inc., and George W. Bush,
dated February 26, 1996. (c)
2.8 Asset Purchase Agreement by and among O.R. Estman, Inc.
d/b/a Satellite Paging, Dana Paging, Inc. d/b/a Message
Network, Bertram M. Wachtel, Edward R. Davalos, Kevan D.
Bloomgren and Metrocall, Inc., dated February 28, 1996. (c)
2.9 Agreement and Plan of Merger dated as of May 16, 1996,
between Metrocall, Inc. and A+ Network, Inc. (d)
2.10 Shareholders' Option and Sale Agreement dated as of May 16,
1996 between Metrocall, Inc. and certain shareholders of A+
Network, Inc. listed therein. (d)
2.11 Metrocall Stockholders Voting Agreement dated as of May 16,
1996 between May 16, 1996 between A+ Network, Inc. and
certain stockholders of Metrocall, Inc. listed therein. (d)
2.12 Agreement dated May 16, 1996 among Metrocall, Inc. and Ray
D. Russenberger and Elliott H. Singer regarding voting for
director. (d)
3.1 Amended and Restated Certificate of Incorporation of
Metrocall. *
3.2 Certificate of Amendment of Certificate of Incorporation of
Metrocall, Inc. *
3.3 Fourth Amended and Restated Bylaws of Metrocall. *
4.1 Indenture, including form of 10 3/8% Senior Subordinated
Notes due 2007. (f)
10.1 Loan Agreement by and among Metrocall, certain lenders and
Toronto Dominion Bank as agent, dated August 31, 1994 (the
"Loan Agreement"). (b)
10.2 First Amendment to Loan Agreement dated November 30, 1994.
(e)
10.3 Second Amendment to Loan Agreement dated April 28, 1995. (f)
10.4 Third Amendment to Loan Agreement dated October 2, 1995. (g)
10.5 Fourth Amendment to Loan Agreement dated as of April 15,
1996 among Metrocall, Inc., Toronto Dominion (Texas), Inc.,
as administrative agent for the Banks, and the Banks
signatory thereto. *
10.6 Waiver and Consent dated as of June 25, 1996 among
Metrocall, Inc., Toronto Dominion (Texas), Inc., as
administrative agent for the Banks, and the Banks signatory
thereto. *
10.7 Amended and Restated 1993 Stock Option Plan of Metrocall.
(h)
10.8 Directors' Stock Option Plan of Metrocall. (h)
10.9 Metrocall 1996 Stock Option Plan (i)
10.10 Employee Stock Purchase Plan of Metrocall. (i)
10.11 Deed of Lease between Douglas and Joyce Jemal, as landlord,
and Metrocall, as tenant,
21
<PAGE> 22
dated April 14, 1994. (b)
10.12 Lease Agreement dated December 20, 1983, between a
predecessor of Metrocall and Beacon Communications
Associates, Ltd. (j)
10.13 Employment Agreement between Metrocall and William L.
Collins. *
10.14 Employment Agreement between Metrocall and Vincent D.
Kelly. *
10.15 Employment Agreement between Metrocall and Steven D.
Jacoby. *
10.16 Change of Control Agreement between Metrocall and William
L. Collins. *
10.17 Change of Control Agreement between Metrocall and Vincent
D. Kelly. *
10.18 Change of Control Agreement between Metrocall and Steven D.
Jacoby. *
10.19 Agreement and Plan of Merger entered into effective the
26th day of April between A+ Network, Inc. ("ACOM"), a
Louisiana corporation to be formed as a wholly-owned
subsidiary of ACOM, Radio and Communications Consultants,
Inc., Advanced Cellular Telephone, Inc., Leroy Faith, Sr.
and Eddie Ray Faith, DeWayne Faith and Leroy Faith, Jr. (d)
10.20 Asset Purchase Agreement by and between Page America Group,
Inc., Page America of New York, Inc., Page America of
Illinois, Inc., Page America Communications of Indiana,
Inc., Page America of Pennsylvania, Inc., and Metrocall,
Inc. dated as of April 22, 1996. (k)
10.21 Tax Indemnification Agreement by and among Metrocall, Harry
L. Brock, Jr., Christopher A. Kidd, Vincent D. Kelly and
Suzanne S. Brock. (h)
10.22 Metrocall Savings and Retirement Plan, as amended and
restated dated April 1, 1995. (l)
10.23 Agreement and Plan of Merger among Metrocall; ACPI
Acquisition Corporation; AllCity Paging, Norman H. Minkow;
Nancy Minkow; Brian David Minkow, Karen Lynn Mercer and
Steven Andrew Minkow, as Trustees of the Brian David Minkow
Irrevocable Trust dated November 1, 1993; David Minkow,
Karen Lynn Mercer and Steven Andrew Minkow, as Trustees of
the Karen Lynn Minkow Irrevocable Trust dated November 1,
1993; Brian David Minkow, Karen Lynn Mercer and Steven
Andrew Minkow, as Trustees of the Steven Andrew Minkow
Irrevocable Trust dated November 1, 1993; Barry F. Hobbs;
and Tom J. Hull, dated April 20, 1994 ("Agreement and Plan
of Merger").(m)
10.24 First Amendment to Agreement and Plan of Merger dated
November 28, 1994. (g)
13.1 Metrocall 1995 Annual Report to Shareholders. (l)
21.1 Subsidiaries of Metrocall. (l)
----------------
* Exhibit filed herewith.
(a) Incorporated by reference to Metrocall's Registration
Statement on Form S-4, as amended (File No. 33-79818),
filed with the Commission on July 19, 1994.
(b) Incorporated by reference to Metrocall's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1994,
filed with the Commission on November 14, 1994.
(c) Incorporated by reference to Metrocall's Quarterly Report
on Form 10-Q/A as amended, for the quarter ended March 31,
1996, filed with the Commission on May 14, 1996
(d) Incorporated by reference to Metrocall's Tender Offer
Statement on Schedule 14D-1, filed with the Commission on
May 22, 1996.
(e) Incorporated by reference to Metrocall's Annual Report on
Form 10-K/A for the year ended December 31, 1994, filed
with the Commission on July 26, 1995.
(f) Incorporated by reference to Metrocall's Registration
Statement on Form S-1, as amended (File No. 33-96042),
filed with the Commission on September 27, 1995.
(g) Incorporated by reference to Metrocall's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1995,
filed with the Commission on November 14, 1995.
(h) Incorporated by reference to Metrocall's Annual Report on
Form 10-K/A as amended, for the year
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<PAGE> 23
ended December 31, 1993, filed with the Commission on
July 21, 1994.
(i) Incorporated by reference to Metrocall's Proxy Statement
filed for the Annual Meeting of Stockholders held on May 1,
1996.
(j) Incorporated by reference to Metrocall's Registration
Statement on Form S-1, as amended (File No. 33-63886),
filed with the Commission on July 12, 1993.
(k) Incorporated by reference to Metrocall's Statement on
Schedule 13D filed with the Commission on May 2, 1996.
(l) Incorporated by reference to Metrocall's Annual Report on
Form 10-K for the year ended December 31, 1995 filed with
the Commission on April 1, 1996.
(m) Incorporated by reference to Metrocall's Current Report on
Form 8-K, dated April 20, 1994, filed with the Commission
on April 26, 1994.
23
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
METROCALL, INC.
Metrocall, Inc., a corporation organized and existing under the laws
of the State of Delaware (the "Corporation"), hereby certifies as follows:
FIRST: The name of the Corporation is Metrocall, Inc. The Corporation
was originally incorporated under the name Metrocall of Delaware, Inc., and the
original Certificate of Incorporation of the Corporation was filed with the
Secretary of State of the State of Delaware on October 26, 1982.
SECOND: This Amended and Restated Certificate of Incorporation was
duly adopted in accordance with Sections 242 and 245 of the General
Corporation Law of the State of Delaware (the "Delaware General Corporation
Law"), and was duly adopted by the holders of all of the outstanding Common
Stock of the Corporation, acting by written consent pursuant to Section 228(d)
of the Delaware General Corporation Law, and restates and integrates and
further amends the provisions of the Certificate of Incorporation of the
Corporation, as heretofore amended.
THIRD: The text of the Certificate of Incorporation of the
Corporation as heretofore amended hereby is restated and amended to read in its
entirety as follows:
1. NAME.
The name of this corporation is Metrocall, Inc.
2. REGISTERED OFFICE AND AGENT.
The registered office of the Corporation shall be located at 32
Loockerman Square, Suite L-100, Dover, Delaware 19901 in the County of Kent.
The registered agent of the Corporation at such address be United States
Corporation Company.
3. PURPOSE AND POWERS.
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law. The Corporation shall have all power necessary or helpful to
engage in such acts and activities.
<PAGE> 2
4. CAPITAL STOCK.
4.1. AUTHORIZED SHARES.
The total number of shares of all classes of stock that the
Corporation shall have the authority to issue is 21,000,000 shares, of which
1,000,000 shares shall be Preferred Stock, having a par value of $0.01 per
share ("Preferred Stock"), and 20,000,000 shall be classified as shares of
Common Stock, par value $0.01 per share ("Common Stock"). The Board of
Directors is expressly authorized to provide for the classification and
reclassification of any unissued shares of Preferred Stock or Common Stock and
the issuance thereof in one of more classes or series without the approval of
the stockholders of the Corporation.
4.2. COMMON STOCK.
(a) RELATIVE RIGHTS.
The Common Stock shall be subject to all of the rights, privileges,
preferences and priorities of the Preferred Stock as set forth in the
certificate of designations filed to establish the respective series of
Preferred Stock. Each share of Common Stock shall have the same relative rights
as and be identical in all respects to all the other shares of Common Stock.
(b) VOTING RIGHTS.
Each holder of shares of Common Stock shall be entitled to attend all
special and annual meetings of the stockholders of the Corporation and, share
for share and without regard to class, together with the holders of all other
classes of stock entitled to attend such meetings and to vote (except any class
or series of stock having special voting rights), to cast one vote for each
outstanding share of Common Stock so held upon any matter or thing (including,
without limitation, the election of one or more directors) properly considered
and acted upon by the stockholders, except as otherwise provided in this
Amended and Restated Certificate of Incorporation or by applicable law.
(c) DIVIDENDS.
Whenever there shall have been paid, or declared and set aside for
payment, to the holders of shares of any class of stock having preference over
the Common Stock as to the payment of dividends, the full amount of dividends
and of sinking fund or retirement payments, if any, to which such holders are
respectively entitled in preference to the Common Stock, then the holders of
record of the Common Stock and any class or series of stock entitled to
participate therewith as to dividends, shall be entitled to receive dividends,
when, as, and if declared by the
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<PAGE> 3
Board of Directors, out of any assets legally available for the payment of
dividends thereon.
(d) DISSOLUTIONS, LIQUIDATION, WINDING UP.
In the event of any discussion, liquidation or winding up of the
Corporation, whether voluntary or involuntary, the holders of record of the
Common Stock then outstanding, and all holders of any class or series of stock
entitled to participate therewith in whole or in part, as to distribution of
assets, shall become entitled to participate in the distribution of any assets
of the Corporation remaining after the Corporation shall have paid, or set
aside for payment, to the holders of any class of stock having preference over
the Common Stock in the event of dissolution, liquidation or winding up, the
full preferential amounts (if any) to which they are entitled, and shall have
paid or provided for payment of all debts and liabilities of the Corporation.
4.3. PREFERRED STOCK.
(a) ISSUANCE, DESIGNATIONS, POWER, ETC.
The Board of Directors expressly is authorized, subject to limitations
prescribed by the Delaware General Corporation Law and the provisions of this
Amended and Restated Certificate of Incorporation, to provide, by resolution
and by filing a certificate of designations pursuant to the Delaware General
Corporation Law, for the issuance from time to time of the shares of Preferred
Stock in one or more series, to establish from time to time the number of
shares to be included in each such series, and to fix the designation, powers,
preferences and other rights of the shares of each such series and to fix the
qualifications, limitations and restrictions thereon, including, but without
limiting the generality of the foregoing, the following:
(i) the number of shares constituting that series and the
distinctive designation of that series;
(ii) the dividend rate on the shares of that series,
whether dividends shall be cumulative, and, if so, from which date or dates,
and the relative rights of priority, if any, of payment of dividends on shares
of that series;
(iii) whether that series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms of such
voting rights;
(iv) whether that series shall have conversion privileges,
and, if so, the terms and conditions of such conversion, including provision
for adjustment of the conversion rate in such events as the Board of Directors
shall determine;
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<PAGE> 4
(v) whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption, including
the dates upon or after which they shall be redeemable, and the amount per
share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(vi) whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;
(vii) the rights of the shares of that series in the event
of voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of shares
of that series; and
(viii) any other relative powers, preferences, and rights of
that series, and qualifications, limitations or restrictions on that series.
(b) DISSOLUTION, LIQUIDATION, WINDING UP.
In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of Preferred Stock
of each series shall be entitled to receive only such amount or amounts as
shall have been fixed by the certificate of designations or by the resolution
or resolutions of the Board of Directors providing for the issuance of such
series.
4.4. ADJUSTMENTS OF AUTHORIZED STOCK.
Except as provided to the contrary in the provisions establishing a
class or series of stock, the amount of the authorized stock of the Corporation
of any class or classes may be increased or decreased (but not below the number
then outstanding) by the affirmative vote of a majority of the directors then
in office, whether or not a quorum.
4.5. RESTRICTIONS ON FOREIGN OWNERSHIP OF SHARES.
(a) No shares of stock of any class or series outstanding at any time
shall be owned of record or beneficially by a person (as defined in Section
4.5(c) hereof) whose ownership thereof would constitute a violation of Section
310(a) or 310(b) of the Communications Act of 1934, as amended, or any similar
or successor federal statutes.
(b) The Corporation may, in its sole discretion, redeem any
outstanding shares of stock of any class or series which are owned in violation
of Section 4.5(a) hereof. Shares redeemed by the Corporation under this Section
4.5(b) may be redeemed for cash, property or rights, at the lesser of (i) the
fair market value at the
4
<PAGE> 5
time of the redemption or (ii) the holder's purchase price, provided the holder
purchased such shares within a year prior to the redemption. The Board of
Directors shall have sole discretion to determine whether shares are owned in
violation of Section 4.5(a) hereof, the fair market value of any shares to be
redeemed, and the value of any non-cash consideration to be provided for such
shares in any such redemption.
(c) For purposes of this Section 4.5, "person" shall mean an
individual, a partnership, a corporation, a trust, a joint venture, an
unincorporated organization, a government or any department or agency thereof
or any other legal entity.
5. BOARD OF DIRECTORS.
5.1. CLASSIFICATION.
Except as otherwise provided in this Amended and Restated Certificate
of Incorporation or a certificate of designations relating to the rights of the
holders of any class or series of Preferred Stock, voting separately by class
or series, to elect additional directors under specified circumstances, the
number of directors of the Corporation shall be as fixed from time to time by
or pursuant to the Bylaws of the Corporation. The directors, other than those
who may be elected by the holders of any class or series of Preferred Stock
voting separately by class or series, shall be classified, with respect to the
time for which they severally hold office, into three classes, Class I, Class II
and Class III, which shall be as nearly equal in number as possible, and shall
be adjusted from time to time in the manner specified in the Bylaws of the
Corporation to maintain such proportionality. Each initial director in Class I
shall hold office for a term expiring at the 1996 annual meeting of
stockholder, each initial director in Class II shall hold office initially for
a term expiring at the 1995 annual meeting of stockholders, and each initial
director in Class III shall hold office for a term expiring at the 1994 annual
meeting of stockholders. Notwithstanding the foregoing provisions of this
Section 5.1, each director shall serve until such director's successor is duly
elected and qualified or until such director's earlier death, resignation or
removal. At each annual meeting of stockholders, the successors to the class of
directors whose term expires at the meeting shall be elected to hold office for
a term expiring at the annual meeting of stockholders held in the third year
following the year of their election and until their successors have been duly
elected and qualified or until any such director's earlier death, resignation
or removal.
5.2. REMOVAL.
(a) Except as otherwise provided pursuant to the
provisions of this Amended and Restated Certificate of Incorporation or a
certificate of designations relating to the rights of the holders of any class
or series of Preferred Stock, voting separately by class or series, to elect
directors under specified
5
<PAGE> 6
circumstances, any director or directors may be removed from office at any
time, but only for cause (as defined in Section 5.2(b) hereof) and only by the
affirmative vote, at a special meeting of the stockholders called for such a
purpose, of not less than 66-2/3% of the total number of votes of the then
outstanding shares of stock of the Corporation entitled to vote generally in
the election of directors, voting together as a single class, but only if
notice of such proposal was contained in the notice of such meeting. At least
30 days prior to such special meeting of stockholders, written notice shall be
sent to the director or directors whose removal will be considered at such
meeting. Any vacancy in the Board of Directors resulting from any such removal
or otherwise shall be filled only by vote of a majority of the directors then
in office, although less than a quorum, and any directors so chosen shall hold
office until the next election of the class for which such directors shall have
been chosen and until their successors shall be elected and qualified or until
any such director's earlier death, resignation or removal.
(b) For purposes of this Section 5.2, "cause" shall mean (i)
conduct as a director of the Corporation or any subsidiary involving dishonesty
of a material nature or (ii) criminal conduct (other than minor infractions and
traffic violations) that relates to the performance of the director's duties as
a director of the Corporation or any subsidiary.
5.3. CHANGE OF AUTHORIZED NUMBER.
In the event of any increase or decrease in the authorized number of
directors, the newly created or eliminated directorships resulting from such
increase or decrease shall be apportioned by the Board of Directors among the
three classes of directors so as to maintain such classes as nearly equal as
possible. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
5.4. DIRECTORS ELECTED BY HOLDERS OF PREFERRED STOCK.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock issued by the Corporation shall have the
right, voting separately by class or series, to elect directors at an annual or
special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
terms of this Amendment and Restated Certificate of Incorporation or a
certificate of designations applicable thereto, and such directors so elected
shall not be divided into classes pursuant to this Section 5 unless expressly
provided by the certificate of designations.
5.5. LIMITATION OF LIABILITY.
No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for any breach of fiduciary duty as a
director,
6
<PAGE> 7
provided that this provision shall not eliminate or limit the liability of a
director (a) for any breach of the director's duty of loyalty to the
Corporation or its stockholders; (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (c) for the
types of liability set forth in Section 174 of the Delaware General Corporation
Law; or (d) for any transaction from which the director received any improper
personal benefit. Any repeal or modification of this Section 5.5 by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification with respect to acts or
omissions occurring prior to such repeal or modification.
6. INDEMNIFICATION.
To the extent permitted by law, the Corporation shall fully indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (whether civil,
criminal, administrative or investigative) by reason of the fact that such
person is or was a director or officer of the Corporation, or is or was serving
at the request of the Corporation as a director or officer of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorneys' fees), judgements, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding.
To the extent permitted by law, the Corporation may fully indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (whether civil,
criminal, administrative or investigative) by reasons of the fact that such
person is or was a director or officer of the Corporation, or is or was serving
at the request of the Corporation as an employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorneys' fees), judgements, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding.
The Corporation may advance expenses (including attorneys' fees)
incurred by a director or officer in advance of the final disposition of such
action, suit or proceeding upon the receipt of an undertaking by or on behalf
of the director or officer to repay such amount if it shall ultimately be
determined that such director or officer is not entitled to indemnification.
The Corporation may advance expenses (including attorneys' fees) incurred by an
employee or agent in advance of the final disposition of such action, suit or
proceeding upon such terms and conditions, if any, as the Board of Directors
deems appropriate.
7
<PAGE> 8
7. ACTIONS BY STOCKHOLDERS.
Any action required or permitted to be taken by the stockholders of
the Corporation must be effected at a duly called annual or special meeting of
stockholders, and may not be effected by any consent in writing by such
stockholders, unless such consent unanimous.
8. SPECIAL MEETINGS.
Special meetings of the stockholders may be called at any time but
only by (a) the chairman of the board of the Corporation, (b) a majority of the
directors in office, although less than a quorum, or (c) the holders of not
less than 35% of the total number of votes of the then outstanding shares of
stock of the Corporation entitled to vote generally in the election of the
directors, voting together as a single class.
9. CRITERIA FOR EVALUATING CERTAIN OFFERS.
The Board of Directors, when evaluating any offer of another party to
(a) make a tender or exchange offer for any equity security of the Corporation,
(b) merge or consolidate the Corporation with another institution, or (c)
purchase or otherwise acquire all or substantially all of the properties and
assets of the Corporation, shall, in connection with the exercise of its
judgement, in determining what is in the best interests of the Corporation and
its stockholders, be authorized to give due consideration to any such factors
as the Board of Directors determines to be relevant, including, without
limitation:
(i) the interests of the stockholders of the Corporation;
(ii) whether the proposed transaction might violate federal or
state laws;
(iii) the consolidation being offered in the proposed transaction,
in relation to the then current market price for the outstanding capital stock
of the Corporation, the market price for the capital stock of the Corporation
over a period of years, the estimated price that might be achieved in a
negotiated sale of the Corporation as a whole or in part or through orderly
liquidation, the premiums over market price for the securities of other
corporations in similar transactions, current political, economic and other
factors bearing on securities prices and the Corporation's financial condition
and estimated future value as an independent entity; and
(iv) the social, legal and economic effects upon employees,
suppliers, subscribers and others having similar relationships with the
Corporation, and the communities in which the Corporation conducts its
business.
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<PAGE> 9
In connection with any such evaluation, the Board of Directors is authorized to
conduct such investigations and engage in such legal proceedings as the Board
of Directors may determine.
10. ANTI-GREENMAIL.
Any direct or indirect purchase or other acquisition by the
Corporation of any capital stock of the Corporation from any Significant
Stockholder (as hereinafter defined) who has been the beneficial owner (as
hereinafter defined) of such capital stock for less than two years prior to the
date of such purchase or other acquisition shall, except as hereinafter
expressly provided, require the affirmative vote of the holders of at least a
majority of the total number of outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class, excluding in calculating such affirmative vote and
the total number of outstanding shares all capital stock beneficially owned by
such Significant Stockholder. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required or the a lesser
percentage may be specified, by law, but no such affirmative vote shall be
required with respect to (a) any purchase or other acquisition of capital stock
of the Corporation made as part of a tender or exchange offer by the
Corporation to purchase capital stock of the Corporation on the same terms from
all holders of the same class of capital stock and complying with the
applicable requirements of the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder, (b) any purchase of capital stock of the
Corporation which the Board of Directors shall determine to be necessary
pursuant to Section 4.5 of this Amended and Restated Certificate of
Incorporation, (c) any purchase or other acquisition of capital stock of the
Corporation on the same terms from all holders of such class of capital stock in
accordance with the terms and conditions of any stock option or employee
benefit plan of the Corporation, or (d) any purchase of capital stock of the
Corporation, where the Board of Directors has determined that the purchase
price per share of the capital stock does note exceed the fair market value of
the capital stock. Such fair market value shall be equal to the average closing
price or the mean of the bid and asked prices of a share of capital stock for
the 20 trading days immediately preceding the execution of a definitive
agreement to purchase the capital stock from a Significant Stockholder.
For purposes of this Section 10, "Significant Stockholder" shall mean
any person (other than the Corporation or any corporation of which a majority
of any class of capital stock of the Corporation is owned, directly or
indirectly, by the Corporation) that is the beneficial owner, directly or
indirectly, of five percent or more of the voting power of the outstanding
capital stock of the Corporation.
For purposes of this Section 10, "Beneficial Owner," when used with
respect to any capital stock of the Corporation, means any person that:
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<PAGE> 10
(i) individually or with any of its Affiliates (as
hereinafter defined), beneficially owns capital stock directly or
indirectly;
(ii) individually or with any of its Affiliates, has (a)
the right to acquire capital stock (whether such right is exercisable
immediately or only after passage of time) pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise; (b) the
right to vote or direct the voting of capital stock pursuant to any
agreement, arrangement or understanding; or (c) the right to dispose
of or to direct the disposition of capital stock pursuant to any
agreement, arrangement or understanding; or
(iii) individually or with any of its Affiliates, has any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of capital stock with any other person
that beneficially owns, or whose Affiliates beneficially own, directly
or indirectly, such shares of capital stock.
For purposes of this Section 10, "Affiliates" shall mean a person that
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, a specified person.
11. COMPROMISE OR ARRANGEMENT CLAUSE.
Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under
Section 291 of the Delaware General Corporation Law or on the application of
trustees in dissolution or of any receiver or receivers appointed for the
Corporation under Section 279 of the Delaware General Corporation Law order a
meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of the Corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders of the Corporation, as the case may be, and also on the
Corporation.
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<PAGE> 11
12. AMENDMENT OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.
Notwithstanding any other provisions of this Amended and Restated
Certificate of Incorporation or the Bylaws of the Corporation (and
notwithstanding the fact that a lesser percentage may be specified by law, this
Amended and Restated Certificate of Incorporation or the Bylaws of the
Corporation), the affirmative vote of 66-2/3% of the total number of votes of
the then outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors, voting together as a single class,
shall be required to amend or repeal, or to adopt any provision inconsistent
with the purpose or intent of Sections 5, 7, 8, 9, and 10 hereof, and this
Section 12. Notice of any such proposed amendment, repeal or adoption shall be
contained in the notice of the meeting at which it is to be considered. Subject
to the provisions set forth herein, the Corporation reserves the right to
amend, alter, repeal or rescind any provision contained in this Amended and
Restated Certificate of Incorporation in the manner now or hereafter prescribed
by law.
13. AMENDMENT OF BYLAWS.
In furtherance and not in limitation of the powers conferred by the
Delaware General Corporation Law, the Board of Directors is expressly
authorized and empowered to adopt, amend and repeal the Bylaws of the
Corporation, subject to the right of the stockholders entitled to vote with
respect thereto to amend or repeal Bylaws adopted by the Board of Directors as
provided for in this Amended and Restated Certificate of Incorporation or in
the Bylaws of the Corporation.
IN WITNESS WHEREOF, Metrocall, Inc. has caused this Amended and
Restated Certificate of Incorporation to be executed on its behalf on July 12,
1993.
METROCALL, INC.
By: /s/ HARRY L. BROCK, JR.
---------------------------
Harry L. Brock, Jr.
President
Attest:
/s/ SUZANNE S. BROCK
- --------------------
Suzanne S. Brock
Secretary
11
<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
METROCALL, INC.
I, the undersigned, being the Assistant Secretary of METROCALL, INC., a
corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware,
DO HEREBY CERTIFY:
FIRST: That Article Four of the Certificate of Incorporation be and it
hereby is amended to read as follows:
4.1 Authorized Shares.
The total number of shares of all classes of stock that the
Corporation shall have the authority to issue is 27,000,000
shares, of which 1,000,000 shares shall be Preferred Stock,
having a par value of $0.01 per share (the "Preferred Stock")
and 26,000,000 shall be classified as shares of Common Stock,
par value $0.01 per share ("Common Stock"). The Board of
Directors is expressly authorized to provide for the
classification and reclassification of any unissued shares of
Preferred Stock or Common Stock and the issuance thereof in
one or more classes or series without the approval of the
stockholders of the Corporation.
SECOND: That the amendment was duly adopted in accordance with the
provisions of section 242 of the General Corporation Law of the State of
Delaware.
<PAGE> 2
IN WITNESS WHEREOF, I have signed this certificate this 25th day of
June, 1996.
/s/ Shirley B. White
----------------------------
Shirley B. White
<PAGE> 1
EXHIBIT 3.3
FOURTH AMENDED AND RESTATED BYLAWS
OF
METROCALL, INC.
1. OFFICES
1.1. REGISTERED OFFICE.
The initial registered office of the Corporation shall be in Dover,
Delaware, and the initial registered agent in charge thereof shall be United
States Corporation Company.
1.2. OTHER OFFICES.
The Corporation may also have offices at such other places, both within
and without the State of Delaware, as the Board of Directors may from time to
time determine or as may be necessary or useful in connection with the business
of the Corporation.
2. MEETINGS OF STOCKHOLDERS
2.1. PLACE OF MEETINGS.
All meetings of the stockholders shall be held at such place as may be
fixed from time to time by the Board of Directors.
2.2. ANNUAL MEETINGS.
The Corporation shall hold annual meetings of stockholders on the first
Wednesday in May at 11 a.m. or at such other date and time as shall be
designated from time to time by the Board of Directors, at which stockholders
shall elect directors and transact such other business as may properly be
brought before the meeting.
2.3. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or the Corporation's Amended and
Restated Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), may be called by (a) the Chairman, (b) a majority of the
directors in office, whether or not a quorum, or (c) the holder of not less
than 85% of the
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total number of votes of the then outstanding shares of stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
2.4. NOTICE OF MEETINGS.
Notice of any meeting of stockholders, stating the place, date and hour
of the meeting and the purpose or purposes for which the meeting is called
shall be given to each stockholder entitled to vote at such meeting not less
than 10 days nor more than 60 days before the date of the meeting (except to
the extent that such notice is waived or is not required as provided in the
General Corporation Law of the State of Delaware (the "Delaware General
Corporation Law")). Such notice shall be given in accordance with, and shall
be deemed effective as set forth in, Section 222 (or any successor section) of
the Delaware General Corporation Law.
2.5. WAIVERS OF NOTICE.
Whenever the giving of any notice is required by statute, the
Certificate of Incorporation or these Bylaws, a waiver thereof, in writing and
delivered to the corporation, signed by the person or persons entitled to said
notice, whether before or after the event as to which such notice is required,
shall be deemed equivalent to notice. Attendance of a stockholder at a meeting
shall constitute a waiver of notice (a) of such meeting, except when the
stockholder at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting, and (b) of consideration of a particular
matter at the meeting that is not within the purpose or purposes described in
the meeting notice, unless the stockholder objects to considering the matter at
the beginning of the meeting.
2.6. BUSINESS AT ANNUAL MEETING.
At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be (a) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the Board of Directors, (b) otherwise properly brought before the meeting by
or at the direction of the Board of Directors or (e) otherwise properly brought
before the meeting by a stockholder.
For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing
to the Secretary. To be timely, a stockholder's notice must be received at the
principal executive offices of the Corporation no later than the date
designated for receipt of stockholders' proposals in a prior public disclosure
made by the Corporation. If there has been no such prior public disclosure,
then to be timely, a stockholder's notice must be delivered to or mailed and
received at the principal executive offices of the Corporation not less than 60
days nor more than 90 days prior to the annual meeting; provided, however, that
in the event that less than 70 days' notice of the date of this annual meeting
is given to stockholders or prior public disclosure of the date of the meeting
is
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made, notice by the stockholder to be timely must be so received not later than
the close of business on the 10th day following the date on which such notice
of the date of the annual meeting was mailed or such public disclosure was
made. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting and
the reason for conducting such business at the annual meeting, (b) the name and
address, as they appear on the Corporation's books, of the stockholder
proposing such business, (c) the class and number of shares of the Corporation
which are beneficially owned by the stockholder, (d) any material interest of
the stockholder in such business and (e) the same information required by
clauses (b), (c) and (d) above with respect to any other stockholder that, to
the knowledge of the stockholder proposing such business, supports such
proposal. Notwithstanding anything in these Bylaws to the contrary, no
business shall be conducted at an annual meeting except in accordance with the
procedures set forth in this Section 2.6. The Chairman of an annual meeting
shall, if the facts warrant, determine and declare to the annual meeting that a
matter of business was not properly brought before its meeting in accordance
with the provisions of this Section 2.6, and if the Chairman should so
determine, the Chairman shall so declare to the meeting and any such business
not properly brought before the meeting shall not be transacted.
2.7. LIST OF STOCKHOLDERS.
After the record date for a meeting of stockholders has been fixed, at
least 10 days before such meeting, the officer who has charge of the stock
ledger of the Corporation shall make a list of all stockholders entitled to
vote at the meeting, arranged in alphabetical order and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder for
any purpose germane to the meeting, during ordinary business hours, for a
period of at least 10 days prior to the meeting, either at a place in the city
where the meeting is to be held, which place is to be specified in the notice
of the meeting, or at the place where the meeting is to be held. Such list,
also shall, for the duration of the meeting, be produced and kept open to the
examination of any stockholder who is present at the time and place of the
meeting. The stock ledger of the Corporation shall be the only evidence as to
the stockholders entitled to examine the list required by Section 2.7 hereof or
to vote in person or by proxy at any meeting of stockholders.
2.8. QUORUM AT MEETINGS.
Stockholders may take action on a matter at a meeting only if a quorum
exists with respect to that matter. Except as otherwise provided by statute or
by the Certificate of Incorporation, the holders of a majority of the stock
issued and outstanding and entitled to vote at the meeting, and, who are
present in person or represented by proxy, shall constitute a quorum at all
meetings of the stockholders for the transaction of business. Once a share is
represented for any purpose at a meeting (other than solely to object (a) to
holding the meeting or transacting business at the meeting or (b) to
consideration of a particular matter at the meeting that is not within the
purpose or purposes described in the meeting notice), it is deemed present for
quorum purposes for the remainder of the meeting and for any adjournment of
that meeting unless a new
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record date is or must be set for the adjourned meeting. The holders of a
majority of the voting shares represented at a meeting, whether or not a quorum
is present, may adjourn such meeting from time to time. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder entitled to vote at
the meeting.
2.9. VOTING AND PROXIES.
Unless otherwise provided in the Delaware General Corporation Law or in
the Certificate of Incorporation, and subject to the other provisions of these
Bylaws, each stockholder shall be entitled to one vote on each matter, in
person or by proxy, for each share of the Corporation's capital stock that has
voting power and that is held by such stockholder. No proxy shall be voted or
acted upon after three years from its date, unless the proxy provides for a
longer period. A duly executed appointment of proxy shall be irrevocable if
the appointment form states that it is irrevocable and if, and only as long as,
it is coupled with an interest sufficient in law to support an irrevocable
power.
2.10. REQUIRED VOTE.
If a quorum exists, action on a matter (other than the election of
directors) is approved if the votes cast favoring the action exceed the votes
cast opposing the action, unless the Certificate of Incorporation or the
Delaware General Corporation Law requires a greater number of affirmative votes
(in which case such different requirement shall apply). Directors shall be
elected by a plurality of the votes cast by the shares entitled to vote in the
election (provided a quorum exists), and the election of directors need not be
by written ballot. The Board of Directors, in its discretion, may require that
any votes cast at such meeting shall be cast by written ballot.
2.11. ACTION WITHOUT A MEETING.
Any action required or permitted to be taken by the stockholders of the
Corporation must be effected at a duly called annual or special meeting of
stockholders, and may not be effected by any consent in writing by such
stockholders, unless such written consent is unanimous, and the writing or
writings are delivered to the Corporation for inclusion in the Minute Book of
the Corporation.
2.12. INSPECTORS OF ELECTION.
The director or the person presiding at the meeting shall appoint one
or more inspectors of election and any substitute inspectors to act at the
meeting or any adjournment thereof. Each inspector, before entering upon the
discharge of his or her duties, shall take and sign an oath faithfully to
execute the duties of inspector at such meeting with strict impartiality and
according
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to the beat of his or her ability. The inspectors shall determine the number
of shares of stock outstanding and the voting power of each, the shares of
stock represented at the meeting, the existence of a quorum, the validity and
effect of proxies and ballots, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine the
result, determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors,
certify their determination of the number of shares represented at the meeting,
and their count of all votes and ballots, and do such acts as are proper to
conduct the election or vote with fairness to all stockholders. The inspectors
may appoint and retain other persons or entities to assist the inspectors in
the performance of the duties of the inspectors. On request of the person
presiding at the meeting, the inspectors shall make a report in writing of any
challenge, question or matter determined by them and execute a certificate of
any fact found by them.
3. DIRECTORS
3.1. POWERS.
The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors, which may exercise all such
powers of the Corporation and do all such lawful acts and things, subject to
any limitation set forth in the Certificate of Incorporation, these Bylaws or
agreements among stockholders which are otherwise lawful.
3.2. NUMBER AND ELECTION.
The number of directors which shall constitute the whole board shall
not be fewer than three nor more than 11. Within the limits above specified,
the number of directors shall be determined by resolution of the Board of
Directors. Directors shall be elected only by stockholders at annual meetings
of stockholders, other than the initial board of directors and except as
provided in Section 3.3 hereof in the case of vacancies and newly created
directorships. Each director elected shall hold office for the term for which
such director is elected and until such director's successor is elected and
qualified or until such director's earlier resignation or removal.
3.3. VACANCIES.
Vacancies and newly created directorships resulting from any increase
in the authorized number of directors shall be filled, for the unexpired term,
by the concurring vote of a majority of the directors then in office, whether
or not a quorum, and any director so chosen shall hold office for the remainder
of the full term of the class of directors in which the new directorship was
created or the vacancy occurred and until such director's successor shall have
been elected and qualified or until such director's earlier death, resignation
or removal.
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3.4. CLASSES; TERMS OF OFFICE.
Unless otherwise provided in the Certificate of Incorporation, the
Board of Directors shall divide the directors into three classes; and, when the
number of directors is changed, shall determine the class or classes to which
the increased or decreased number of directors shall be apportioned; provided,
however, that no decrease in the number of directors shall affect the term of
any director then in office. At each annual meeting of stockholders, directors
elected to succeed those whose terms are expiring shall be elected for a term
of office expiring at the annual meeting of stockholders held in the third year
following their election and until their respective successors are elected and
qualified, or until such director's earlier death, resignation or removal.
3.5. NOMINATION OF DIRECTORS.
Nominations of persons for election to the Board of Directors may be
made by the Board of Directors, or by any stockholder of the Corporation
entitled to vote for the election of directors at the annual meeting who
complies with the notice procedures set forth in this Section 3.5. Nominations
by stockholders shall be made pursuant to timely notice in writing to the
Secretary. To be timely, a stockholder's notice shall be received at the
principal executive offices of the Corporation no later than the date
designated for receipt of stockholders' proposals in a prior public disclosure
made by the Corporation. If there has been no such prior public disclosure,
then to be timely, a stockholders nomination must be delivered to or mailed and
received at the principal executive offices of the Corporation not less than 60
days nor more than 90 days prior to the annual meeting; provided, however, that
in the event that less than 70 days' notice of the date of the meeting is given
to stockholders or prior public disclosure of the date of the meeting is made,
notice by the stockholder to be timely must be so received not later than the
close of business on the 10th day following the day on which such notice of the
date of the annual meeting was mailed or such public disclosure was made. Such
stockholder's notice shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or reelection as a director, (i) the name,
age, business address and residence address of such person, (ii) the principal
occupation or employment of such person, (iii) the class and number of shares
of the Corporation which are beneficially owned by such person, and (iv) any
other information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (including without limitation such person's written consent to
being named in the proxy statement as a nominee and to serving as a director if
elected); and (b) as to the stockholder giving notice (i) the name and address,
as they appear on the Corporation's books, of the stockholder proposing such
nomination, and (ii) the class and number of shares of the Corporation which
are beneficially owned by the stockholder. No person shall be eligible for
election as a director of the Corporation unless nominated in accordance with
the procedures set forth in this Section 3.5. The Chairman of the meeting
shall, if the facts warrant, determine and declare to the annual meeting that a
nomination was not made in accordance with the provisions of this Section 3.5,
and if the Chairman should so determine, the Chairman shall so declare to the
meeting and the defective nomination shall be disregarded.
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3.6. MEETINGS.
(a) REGULAR MEETINGS.
Regular meetings of the Board of Directors may be held without notice
at such time and at such place as shall from time to time be determined by the
Board of Directors.
(b) SPECIAL MEETINGS.
Special meetings of the Board of Directors may be called by the
Chairman, the Vice Chairman or Chief Executive Officer on one day's notice to
each director, either personally or by telephone, express delivery service (so
that the scheduled delivery date of the notice is at least one day in advance
of the meeting), telegram or facsimile transmission, and on five days' notice
by mail (effective upon deposit of such notice in the mail). The notice need
not describe the purpose of a special meeting.
(c) TELEPHONE MEETINGS.
Members of the Board of Directors may participate in a meeting of the
Board of Directors by means of conference telephone or similar communications
equipment by means of which all participating directors can simultaneously hear
each other during the meeting. A director participating in a meeting by this
means is deemed to be present in person at the meeting.
(d) ACTION WITHOUT MEETING.
Any action required or permitted to be taken at any meeting of the
Board of Directors may be taken without a meeting if all members of the Board
of Directors consent thereto in writing, and the writing or writings are
delivered to the Corporation for inclusion in the Minute Book of the
Corporation.
(e) WAIVER OF NOTICE OF MEETING; PRESUMPTION OF ASSENT.
A director may waive any notice required by statute, the Certificate of
Incorporation or these Bylaws before or after the date and time stated in the
notice. Except as set forth below, the waiver must be in writing, signed by
the director entitled to the notice, and delivered to the Corporation for
inclusion in the Minute Book of the Corporation. Notwithstanding the
foregoing, a director's attendance at or participation in a meeting waives any
required notice to the director of the meeting unless the director at the
beginning of the meeting objects to holding the meeting or transacting business
at the meeting and does not thereafter vote for or assent to action taken at
the meeting. A director who is present at a meeting is presumed to have
assented to any action taken unless such director enters a dissent or
abstention in the minutes of the meeting or files a written dissent to such
action no later than five days after such director
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receives a copy of the minutes of the meeting, provided that the right to
dissent shall not apply to a director who votes in favor of such action.
(f) QUORUM AND VOTE AT MEETINGS.
At all meetings of the Board of Directors, a quorum of the Board of
Directors consists of a majority of the total number of directors prescribed
pursuant to Section 3.2 hereof (or, if no number is prescribed, the number in
office immediately before the meeting begins). The vote of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors, except as may be otherwise specifically provided by
statute or by the Certificate of Incorporation or by these Bylaws. In the
absence of a quorum for any meeting of the Board of Directors, a majority of
the directors present thereat may adjourn such meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present.
3.7. COMPENSATION OF DIRECTORS.
The Board of Directors shall have the authority to fix the compensation
of directors. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
4. COMMITTEES
4.1. CREATION OF COMMITTEES.
The Board of Directors may by resolution create one or more committees
including, but not limited to, an Executive Committee, and appoint members of
the Board of Directors to serve on them. The Board of Directors shall create
(a) an Audit Committee for the purpose of examining and considering matters
relating to the financial affairs of the Corporation, and (b) a Compensation
Committee for the purpose of establishing and implementing an executive
compensation policy. Each committee may have one or more members, who serve at
the pleasure of the Board of Directors, provided that the Audit Committee and
the Compensation Committee shall consist of at least a majority of non-employee
directors. The creation of a committee and appointment of members to it shall
be approved by a majority of all the directors in office when the action is
taken, whether or not a quorum. The same rules that govern meetings, action
without meetings, notice and waiver of notice, and quorum and voting
requirements of the Board of Directors apply to committees and their members as
well.
4.2. COMMITTEE AUTHORITY.
To the extent specified by the Board of Directors or in the Certificate
of Incorporation, each committee may exercise the authority of the Board of
Directors, except that a committee
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may not: (i) approve or recommend to stockholders action that is required by
law to be approved by stockholders; (ii) fill vacancies on the Board of
Directors or on any of its committees; (iii) amend the Certificate of
Incorporation; (iv) adopt, amend or repeal these Bylaws; (v) approve a plan of
merger not requiring stockholder approval; (vi) authorize or approve a
distribution, except according to a general formula or method prescribed by the
Board of Directors; or (vii) authorize or approve the issuance or sale or
contract for sale of shares, or determine the designation and relative rights,
preferences and limitations of a class or series of shares, except that the
Board of Directors may authorize a committee, or a senior executive officer of
the Corporation, to do so within the limits specifically prescribed by the
Board of Directors.
5. OFFICERS
5.1. POSITIONS.
The officers of the Corporation shall be a Chairman, Vice Chairman, a
Chief Executive Officer, a Chief Financial Officer, a Chief Operating Officer,
a President, a Secretary and a Treasurer, and such other officers as the Board
of Directors (or an officer authorized by the Board of Directors) from time to
time may appoint, including one or more Executive Vice Presidents, Vice
Presidents, Assistant Secretaries and Assistant Treasurers. Each such officer
shall exercise such powers and perform such duties as shall be set forth below
and such other powers and duties as from time to time may be specified by the
Board of Directors or by any officer(s) authorized by the Board of Directors to
prescribe the duties of such other officers. Any number of offices may be held
by the same person.
5.2. POWERS.
(a) Each officer shall have, in addition to the duties and powers
set forth herein, such duties and powers as are commonly incident to such
officer's office and such additional duties and powers as the Board of
Directors may from time to time authorize.
(b) Powers of attorney, proxies, waivers of notice of meetings,
consents and other instruments relating to securities or partnership interests
owned by the Corporation may be executed in the name of and on behalf of the
Corporation by the Chairman, the Chief Executive Officer or the President and
any such officer may, in the name of and on behalf of the Corporation, take all
such action as any such officer may deem advisable to vote in person or by
proxy at any meeting of security holders of any corporation in which the
Corporation may own securities, or at any meeting of any partnership in which
the Corporation owns an interest at any such meeting, and shall possess and may
exercise any and all rights and powers incident to the ownership of such
securities or partnership interest and which, as the owner thereof, the
Corporation might have possessed and exercised if present.
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5.3. CHAIRMAN.
The Chairman shall (when present) preside at all meetings of the Board
of Directors and stockholders, and shall ensure that all orders and resolutions
of the Board of Directors and stockholders are carried into effect. The
Chairman may execute bonds, mortgages and other contracts, under the seal of
the Corporation, if required, except where required or permitted by law to be
otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the Board of Directors to some other
officer or agent of the Corporation.
5.4. VICE CHAIRMAN.
The Vice Chairman shall, in the absence of the Chairman, preside at all
meetings of the Board of Directors and stockholders and, without limiting the
foregoing, shall when serving in such capacity exercise the powers vested in
the Chairman in Sections 2.6 and 3.5. The Vice Chairman may execute bonds,
mortgages and other contracts, under the seal of the Corporation, if required,
except where required or permitted by law to be otherwise signed and executed
and except where the signing and execution thereof shall be expressly delegated
by the Board of Directors to some other officer or agent of the Corporation.
5.5 CHIEF EXECUTIVE OFFICER.
The Chief Executive Officer of the Corporation shall have overall
responsibility and authority for the Corporation's strategic planning and for
evaluating potential mergers and acquisitions and new business opportunities,
subject to the authority of the Board of Directors and the Management
Operations Committee. The Chief Executive Officer may execute bonds, mortgages
and other contracts, under the seal of the Corporation, if required, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the Board of Directors to some other officer or agent of the Corporation,
provided that the Chief Executive, in the absence of the President, may sign or
execute any document or instrument where the signing and execution thereof
shall be expressly delegated to the "President" of the Corporation.
5.6. CHIEF OPERATING OFFICER.
The Chief Operating Officer of the Corporation shall have overall
responsibility and authority for the technical systems, sales and marketing and
customer service operations of the Corporation, subject to the authority of the
Board of Directors and the Management Operations Committee.
5.7. CHIEF FINANCIAL OFFICER.
The Chief Financial Officer of the Corporation shall have overall
responsibility and authority for the financial affairs of the Corporation
including, without limitation, oversight of
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the Corporation's accounting, inventory, management information systems,
internal audit and billing functions, subject to the authority of the Board of
Directors and the Management Operations Committee.
5.8 PRESIDENT.
The President, subject to the authority of the Board of Directors, shall
have general charge and supervision of the business of the Corporation, and
shall have such duties and powers as shall be designated from time to time by
the Board of Directors. The President may execute bonds, mortgages and other
contracts, under the seal of the Corporation, if required, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the Corporation.
5.9. VICE PRESIDENT.
Any Vice President shall have such duties and powers as shall be set
forth in these Bylaws or as shall be designated from time to time by the Board
of Directors or by the Chairman, the Chief Executive Officer or the President.
Any Vice President may execute bonds, mortgages and other documents under the
seal of the Corporation, except where required or permitted by law to be
otherwise executed and except where the execution thereof shall be expressly
delegated by the Board of Directors to some other officer or agent of the
Corporation.
5.10. SECRETARY.
The Secretary shall have responsibility for preparation of minutes of
meetings of the Board of Directors and of the stockholders and for
authenticating records of the Corporation. The Secretary shall give, or cause
to be given, notice of all meetings of the stockholders and special meetings of
the Board of Directors. The Secretary or an Assistant Secretary also may
attest all instruments signed by any other officer of the Corporation.
5.11. ASSISTANT SECRETARY.
The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board of Directors (or if there
shall have been no such determination, then in the order of their election),
shall, in the absence of the Secretary or in the event of the Secretary's
inability or refusal to act, perform the duties and exercise the powers of the
Secretary.
5.12. TREASURER.
The Treasurer shall have responsibility for the custody of the corporate
funds and securities and shall see to it that full and accurate accounts of
receipts and disbursements are kept in books belonging to the Corporation. The
Treasurer shall render to the Chairman, the Vice Chairman, the Chief Executive
Officer, the President, the Vice President, and the Board of
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Directors, upon request, an account of all financial transactions and of the
financial condition of the Corporation.
5.13. ASSISTANT TREASURER.
The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board of Directors (or if
there shall have been no such determination, than in the order of their
election), shall, in the absence of the Treasurer or in the event of the
Treasurer's inability or refusal to act, perform the duties and exercise the
powers of the Treasurer.
5.14. MANAGEMENT OPERATIONS COMMITTEE.
The Management Operations Committee shall be comprised of the Vice
Chairman, who shall serve as the Chairman of such Committee, the Chief
Executive Officer, the Chief Operating Officer and the Chief Financial Officer.
The responsibilities of the Management Operations Committee shall include
development of a business plan of the Corporation which addresses acquisition,
strategies, the integration of the businesses of the Corporation and that of
any acquired entities, including FirstPAGE USA, Inc. and MetroPaging, Inc.
(formerly AllCity Paging, Inc.), development of a strategy for exploitation of
nationwide licenses held by the Corporation, development of sales, marketing
and distribution strategies of the Corporation, coordination of the integrated
management and daily operations of the Corporation and in general recommend to
the Board of Directors of such other initiatives as the Management Operations
Committee considers appropriate to further the growth and successful operations
of the Corporation, subject to the authority of the Board of Directors.
5.15. TERM OF OFFICE.
The officers of the Corporation shall hold office until their successors
are chosen and qualified or until their death, earlier resignation or removal.
Any officer may resign at any time upon written notice to the Corporation. Any
officer elected or appointed by the Board of Directors may be removed at any
time, with or without cause, by the affirmative vote of a majority of the Board
of Directors
5.16. COMPENSATION.
The compensation of officers of the Corporation shall be fixed by the
Compensation Committee of the Board of Directors.
5.17. FIDELITY BONDS.
The Corporation may secure the fidelity of any or all of its officers
or agents by bond or otherwise.
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6. CAPITAL STOCK.
6.1. CERTIFICATES OF STOCK; UNCERTIFICATED SHARES.
The shares of the Corporation shall be represented by certificates,
provided that the Board of Directors may provide by resolution that some or all
of any or all classes or series of the Corporation's stock shall be
uncertificated shares. Any such resolution shall not apply to shares
represented by a certificate until such certificate is surrendered to the
Corporation. Notwithstanding the adoption of such a resolution by the Board of
Directors, every holder of stock represented by certificates, and upon request
every holder of uncertificated shares, shall be entitled to have a certificate
(representing the number of shares registered in certificate form) signed in
the name of the Corporation by the Chairman, the Vice Chairman, the Chief
Executive Officer, the President, or any Vice President, and by the Treasurer,
Secretary or any Assistant Treasurer or Assistant Secretary. Any or all the
signatures on the certificate may be facsimile. In case any officer, transfer
agent or registrar whose signature or facsimile signature appears on a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if such person were such officer, transfer agent or registrar at
the date of issue.
6.2. LOST CERTIFICATES.
The Board of Directors, Chairman, Vice Chairman, Chief Executive
Officer, President or Secretary may direct a new certificate of stock to be
issued in place of any certificate theretofore issued by the Corporation and
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming that the certificate of stock has been
lost, stolen or destroyed. When authorizing such issuance of a new
certificate, the Board of Directors or any such officer may, as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or such owner's legal representative, to
advertise the same in such manner as the Board of Directors or such officer
shall require and/or to give the Corporation a bond, in such sum as the Board
of Directors or such officer may direct, as indemnity against any claim that
may be made against the Corporation on account of the certificate alleged to
have been lost, stolen or destroyed or an account of the issuance of such new
certificate or uncertified shares.
6.3. RECORD DATE.
(a) ACTIONS BY STOCKHOLDERS.
In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders (or to take any other
action), the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted by the Board of Directors and shall not be less than 10 nor more than
60 days before the meeting or action requiring a determination of stockholders.
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In order that the Corporation may determine the stockholders entitled to
consent to corporate action without a meeting, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors and
shall not be more than 10 days after the date upon which the resolution fixing
the record date is adopted by the Board of Directors.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting, unless the Board of Directors fixes a new record date.
If no record date is fixed by the Board of Directors, the record date
shall be at the close of business on the day next preceding the day on which
the notice is given, or if notice is not required or is waived, at the close of
business on the day next preceding the day on which the meeting is held or such
other action is taken, except that (if no record date is established by the
Board of Directors) the record date for determining stockholders entitled to
consent to corporate action without a meeting is the first date on which a
stockholder delivers a signed written consent to the Corporation for inclusion
in the Minute Book of the Corporation.
(b) PAYMENTS.
In order that the Corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than 60 days prior to such
action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
(c) STOCKHOLDERS OF RECORD.
The Corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends, to
receive notifications, to vote as such owner, and to exercise all the rights
and powers of an owner. The Corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise may be provided by the Delaware General Corporation Law.
7. INSURANCE
The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation
(or is or was serving at the request of the Corporation as a director, officer,
partner, trustee, employee or agent of another
14
<PAGE> 15
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise) against liability asserted against or incurred by such person in
such capacity or arising from such person's status as such (whether or not the
corporation would have the power to indemnify such person against the same
liability).
8. INDEMNIFICATION
8.1. INDEMNIFICATION IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN
THOSE BY OR IN RIGHT OF THE CORPORATION.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding (whether criminal, administrative or investigative) by
reason of fact that such person is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director or officer of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if such person acted in good faith and in a manner which such person
reasonably believed to be in or not opposed to the best interests of the
Corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe that such conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create
a presumption that the person did not act in good faith and in a manner which
such person reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or proceeding, had
unreasonable cause to believe that such conduct was unlawful.
(b) This Corporation may indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (whether civil, criminal, administrative
or investigative) by reason of the fact that such person is or was an employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as an employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, if such person acted in good faith and in a manner which
such person reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe that such conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a manner
which such person reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that such conduct was unlawful.
15
<PAGE> 16
8.2. INDEMNIFICATION IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE
RIGHT OF THE CORPORATION.
(a) The Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that such person is or
was a director or officer of the Corporation, or is or was serving at the
request of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
against expenses (including attorneys' fees) actually and reasonably incurred
by such person in connection with the defense or settlement of such action or
suit if such person acted in good faith and in a manner which such person
reasonably believed to be in or not opposed to the best interests of the
Corporation. No such indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable
to the Corporation unless and only to the extent that the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such court shall deem proper.
(b) The Corporation may indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that such person is or
was an employee or agent of the Corporation, or is or was serving at the
request of the Corporation as an employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
against expenses (including attorneys' fees) actually and reasonably incurred
by such person in connection with the defense or settlement of such action or
suit if such person acted in good faith and in a manner which such person
reasonably believed to be in or not opposed to the best interests of the
Corporation. No such indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable
to the Corporation unless and only to the extent that the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such court shall deem proper.
8.3. AUTHORIZATION OF INDEMNIFICATION.
Any indemnification under this Section 8 shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because such person or persons have met the applicable standard
of conduct set forth in Sections 8.1 and 8.2 hereof. Such determination shall
be made (a) by the Board of Directors by a majority vote of a quorum consisting
of directors who were not parties to such action, suit or proceeding, or (b) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel, in a written
opinion, or (c) by a majority of the stockholders entitled to vote generally in
the election of directors.
16
<PAGE> 17
8.4. ADVANCEMENT OF EXPENSES.
The Corporation may advance expenses (including attorneys' fees)
incurred by a director or officer in advance of the final disposition of such
action, suit or proceeding upon the receipt of an undertaking by or on behalf
of the director or officer to repay such amount if it shall ultimately be
determined that such director or officer is not entitled to indemnification.
The Corporation may advance expenses (including attorneys' fees)
incurred by any employee or agent in advance of the final disposition of such
action, suit or proceeding upon such terms and condition, if any, as the Board
of Directors deems appropriate.
9. GENERAL PROVISIONS
9.1. INSPECTION OF BOOKS AND RECORDS.
Any stockholder, in person or by attorney or other agent, shall, upon
written demand under oath stating the purpose thereof, have the right during
the usual hours for business to inspect for any proper purpose the
Corporation's stock ledger, a list of its stockholders, and its other books and
records, and to make copies or extracts therefrom. A proper purpose shall mean
a purpose reasonably related to such person's interest as a stockholder. In
every instance where an attorney or other agent shall be the person who seeks
the right to inspection, the demand under oath shall be accompanied by a power
of attorney or such other writing which authorizes the attorney or other agent
to so act an behalf of the stockholder. The demand under oath shall be
directed to the Corporation at its registered office or at its principal place
of business.
9.2. DIVIDENDS.
The Board of Directors may declare dividends upon the capital stock of
the Corporation, subject to the provisions of the Certificate of Incorporation
and the laws of the State of Delaware.
9.3. RESERVES.
The Board of Directors may set apart, out of the funds of the
Corporation available for dividends, a reserve or reserves for any proper
purpose and may abolish any such reserve.
9.4. EXECUTION OF INSTRUMENTS.
All checks, drafts or other orders for the payment of money, and
promissory notes of the Corporation shall be signed by such officer or officers
or such other person or persons as the Board of Directors may from time to time
designate.
17
<PAGE> 18
9.5. FISCAL YEAR.
The fiscal year of the Corporation shall begin on January 1 and end on
December 31.
9.6. SEAL.
The corporate seal shall be in such form as the Board of Directors
shall approve. The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
10. AMENDMENTS TO BYLAWS
The Board of Directors may from time to time adopt, amend and repeal
these Bylaws. Such action by the Board of Directors shall require the
affirmative vote of at least a majority of the directors then in office. If
stockholders are entitled to vote with respect thereto to amend or repeal
Bylaws adopted by the Board of Directors as may be provided in the Certificate
of Incorporation or by law, then the affirmative vote of 66-2/3% of the total
number of votes of the then outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required for the amendment or repeal of
Bylaws by the stockholders of the Corporation.
18
<PAGE> 1
EXHIBIT 10.5
FOURTH AMENDMENT TO LOAN AGREEMENT
THIS FOURTH AMENDMENT TO LOAN AGREEMENT (the "Amendment"), made as of
this 15th day of April, 1996 among Metrocall, Inc., a Delaware corporation (the
"Borrower"), The Toronto-Dominion Bank, PNC Bank, National Association, The
Bank of New York, First Union National Bank of North Carolina, Fleet National
Bank, The First National Bank of Boston, Union Bank of California, N.A.,
NatWest Bank N.A., The Riggs National Bank of Washington, D.C., Royal Bank of
Canada and IBJ Schroder Bank & Trust Company (collectively, the "Banks") and
Toronto Dominion (Texas), Inc., as administrative agent for the Banks (the
"Administrative Agent"),
W I T N E S S E T H:
WHEREAS, the Borrower, the Administrative Agent and the Banks are
parties to that certain Loan Agreement dated as of August 31, 1994, as amended
by that certain First Amendment to Loan Agreement dated as of November 30,
1994, as amended by that certain Second Amendment to Loan Agreement dated as of
April 28, 1995, and as further amended by that certain Third Amendment to Loan
Agreement dated as of October 2, 1995 (the "Loan Agreement"); and
WHEREAS, the Borrower has requested the Administrative Agent and the
Banks to agree to amend and waive certain provisions of the Loan Agreement as
provided herein;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is acknowledged, the parties agree that all
capitalized terms used herein which are not otherwise defined herein shall have
the meanings ascribed thereto in the Loan Agreement, and further agree as
follows:
1. Amendments to Article 1.
(a) Article 1 of the Loan Agreement, Definitions, is hereby
amended by deleting the existing definition of "Change in Control Event" in its
entirety and by substituting the following in lieu thereof:
"`Change in Control Event' shall mean the occurrence of any of
the following events or the existence of any of the following
conditions: (i) a person or entity or group (as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended)
of persons or entities shall have become the beneficial owner of a
majority (by voting power or otherwise) of the securities of the
Borrower ordinarily having the right to vote in the election of
directors, (ii) during any consecutive three-year period
<PAGE> 2
commencing on or after September 27, 1995, individuals who at the
beginning of such period constituted the Board of Directors of the
Borrower (together with any directors who are members of such Board of
Directors of the Borrower on September 27, 1995 and any new directors
whose election by such Board of Directors of the Borrower or whose
nomination for election by the stockholders of the Borrower was
approved by a vote of 66 2/3% of the directors then still in office
who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of Directors of
the Borrower then in office, (iii) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of
all, or substantially all, the assets of the Borrower to any person or
entity or group (as defined above in this definition) of persons or
entities (other than any wholly owned Subsidiary of the Borrower),
(iv) the merger or consolidation of the Borrower with or into another
corporation or the merger of another corporation into the Borrower
with the effect that immediately after such transaction any person or
entity or group (as defined above in this definition) of persons or
entities shall have become the beneficial owner of securities of the
surviving corporation of such merger or consolidation representing a
majority of the combined voting power of the outstanding securities of
the surviving corporation ordinarily having the right to vote in the
election of directors, (v) the adoption of a plan leading to the
liquidation or dissolution of the Borrower or (vi) or any "change of
control" or "change of control event," however designated or
denominated, shall have been deemed to have occurred under any
agreement of the Borrower or any of its Subsidiaries having an
aggregate economic value to such Person exceeding $5,000,000;
provided, however, that none of the following, in itself, constitutes
or will constitute a Change in Control Event within the meaning of
this Agreement: (A) the existence of the Voting Agreement dated as of
August 31, 1994, among the Borrower and the other parties thereto, as
in effect on September 27, 1995 (the "Voting Agreement"); (B) any
termination of the Voting Agreement; (C) any amendment or modification
of the Voting Agreement that does not (x) add any Person as a party to
the Voting Agreement, (y) increase the number of directors who may be
designated by any Person or group thereunder, or (z) purport to bind
the Borrower, its Board of Directors or any member of the Borrower's
Board of Directors to cause or use efforts to cause any Person to be
elected or appointed to serve as an officer of the Borrower or to
constitute or appoint any Person to any committee of the Board of
Directors of the
-2-
<PAGE> 3
Borrower (in either case at any time after the Effective Time (as
defined in the Voting Agreement)), or otherwise to direct or influence
the policies of the Borrower by any means other than the election of
directors or the designation of Persons to stand for election as
directors; (D) the beneficial ownership by the Stockholders (as such
term is defined in the Voting Agreement), collectively, of a majority
of the outstanding shares of Common Stock; (E) the sale or disposition
of any securities of the Borrower by, or other decrease in the
percentage ownership in any class of such securities of, any
Stockholder or Stockholders; or (F) the purchase or acquisition of any
securities of the Borrower by, or other increase in the percentage
ownership in any class of such securities of, any Stockholder or
Stockholders; provided further, however, that, notwithstanding the
foregoing, (1) the beneficial ownership by any individual Stockholder,
by the Metrocall Group or the FirstPAGE Group (as such terms are
defined in the Voting Agreement), respectively, or by any other group
(as defined above) of which any Stockholder is a part, of a majority
(by voting power or otherwise) of securities of the Borrower
ordinarily having the right to vote in the election of directors, or
(2) any transaction or event that constitutes a "Rule 13e-3
transaction" within the meaning of Rule 13e-3(a)(3) of the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as
amended (or what would constitute such a Rule 13e-3 transaction if the
Person effecting such transaction was an affiliate of the Borrower
within the meaning of such rule), shall nevertheless constitute a
Change in Control Event for all purposes of this Agreement."
(b) Article 1 of the Loan Agreement, Definitions, is hereby
further amended by adding the following definitions of "Board of Directors,"
"Common Stock" and "Voting Agreement" thereto in the appropriate alphabetical
order:
"'Board of Directors' when used with reference to the
Borrower, shall mean the Board of Directors of the Borrower, or the
Executive Committee of the Board of Directors of the Borrower."
"'Common Stock' shall mean, in respect of any Person, Capital
Stock of such Person that does not rank prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person, to
shares of Capital Stock of any other class of such Person."
-3-
<PAGE> 4
"'Voting Agreement' shall have the meaning ascribed to such
term in the definition of "'Change in Control Event'."
2. Amendments to Schedules to Loan Agreement.
(a) Schedule 4 to the Loan Agreement, Litigation, is hereby
amended by deleting the existing Schedule 4 in its entirety and by substituting
the attached Schedule 4, Litigation, in lieu thereof.
(b) Schedule 5 to the Loan Agreement, Agreements with Affiliates,
is hereby amended by deleting the existing Schedule 5 in its entirety and by
substituting the attached Schedule 5, Agreements with Affiliates, in lieu
thereof.
3. Waiver of Default. The Administrative Agent and the Banks hereby
waive any Default or Event of Default which may have arisen under Section
8.1(p) of the Loan Agreement due the fact that Christopher A. Kidd is no longer
the chief executive officer of the Borrower.
4. Strict Compliance. Except for the amendments and waiver set forth
above, the text of the Loan Agreement shall remain unchanged and in full force
and effect. The amendments and waiver agreed to herein shall not constitute a
modification of the Loan Agreement or a course of dealing with the
Administrative Agent and the Banks, or any of them, at variance with the Loan
Agreement such as to require further notice by the Administrative Agent, the
Banks, the Majority Banks, or any of them, to require strict compliance with
the terms of the Loan Agreement, as amended by this Amendment, in the future.
5. Representations and Warranties. The Borrower hereby represents and
warrants to and in favor of the Administrative Agent and the Banks as follows:
(a) Each representation and warranty set forth in Article 4 of the
Loan Agreement, as amended hereby, is hereby restated and affirmed as true and
correct in all material respects as of the date hereof, except to the extent
previously fulfilled in accordance with the terms of the Loan Agreement, as
amended hereby, and to the extent relating specifically to the Agreement Date
or otherwise inapplicable;
(b) The Borrower has the corporate power and authority (i) to
enter into this Amendment, and (ii) to do all acts and things as are required
or contemplated hereunder to be done, observed and performed by it;
-4-
<PAGE> 5
(c) This Amendment has been duly authorized, validly executed and
delivered by one or more Authorized Signatories of the Borrower, and
constitutes the legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with its terms; and
(d) The execution and delivery of this Amendment and performance
by the Borrower under the Loan Agreement, as amended hereby, does not and will
not require the consent or approval of any regulatory authority or governmental
authority or agency having jurisdiction over the Borrower which has not already
been obtained, nor be in contravention of or in conflict with the Certificate
of Incorporation or By-Laws of the Borrower, or any provision of any statute,
judgment, order, indenture, instrument, agreement, or undertaking, to which the
Borrower is party or by which the Borrower's assets or properties are bound.
6. Conditions Precedent to Effectiveness of Amendment. The effectiveness
of this Amendment is subject to:
(i) the truth and accuracy of the representations and
warranties contained in Section 4 hereof;
(ii) receipt by the Administrative Agent and the Banks of
a signed legal opinion of Wilmer, Cutler & Pickering, counsel to the
Borrower and its Subsidiaries, in form and substance satisfactory to
the Administrative Agent and its special counsel;
(iii) receipt by the Administrative Agent and the Banks of
a certificate of incumbency with respect to each Authorized Signatory
of the Borrower, in form and substance satisfactory to the
Administrative Agent and its special counsel; and
(iv) receipt of any other documents that the
Administrative Agent, the Banks, or any of them, may reasonably
request, certified by an officer of the Borrower if so requested.
7. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same agreement.
8. Law of Contract. This Amendment shall be deemed to be made pursuant
to the laws of the State of New York and shall be construed, interpreted,
performed and enforced in accordance therewith.
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<PAGE> 6
9. Loan Document. This Amendment shall constitute a Loan Document.
10. Effective Date. Upon satisfaction of the conditions precedent
referred to in Section 5 above, this Amendment shall be effective as of April
15, 1996.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused their respective
duly authorized officers or representatives to execute, deliver and seal this
Amendment as of the day and year first above written, to be effective as set
forth in Section 9 hereof.
<TABLE>
<S> <C>
BORROWER: METROCALL, INC., a Delaware corporation
By: [SIG]
-------------------------------------------------------
Its: Chief Financial Officer and Treasurer
---------------------------------------------
[CORPORATE SEAL] Attest: /s/ SHIRLEY B. WHITE
---------------------------------------------------
Its: Assistant Secretary
---------------------------------------------
ADMINISTRATIVE TORONTO DOMINION (TEXAS), INC., as
AGENT: Administrative Agent
By: /s/ SOPHIA D. SGAIL
-------------------------------------------------------
Name:
-------------------------------------------------
Title:
------------------------------------------------
BANKS: THE TORONTO-DOMINION BANK
By: /s/ SOPHIA D. SGAIL
--------------------------------------------------------
Name:
-------------------------------------------------
Title:
------------------------------------------------
PNC BANK, NATIONAL ASSOCIATION
By: /s/ KELLEY L. CLAYPOOL
-------------------------------------------------------
Name: Kelley L. Claypool
-------------------------------------------------
Title: Banking Officer
------------------------------------------------
THE BANK OF NEW YORK
By: /s/ EDWARD F. RYAN, JR.
-------------------------------------------------------
Name: Edward F. Ryan, Jr.
-------------------------------------------------
Title: Senior Vice President
------------------------------------------------
</TABLE>
<PAGE> 8
<TABLE>
<S> <C>
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By: [SIG]
-------------------------------------------------------
Name:
-------------------------------------------------
Title:
------------------------------------------------
FLEET NATIONAL BANK
By: /s/ ALEXANDER G. IVANOV
-------------------------------------------------------
Name: Alexander G. Ivanov
-------------------------------------------------
Title: Banking Officer
------------------------------------------------
By: /s/ JEFFREY R. GREENE
-------------------------------------------------------
Name: Jeffrey R. Greene
-------------------------------------------------
Title: Banking Officer
------------------------------------------------
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ MARY E. MEDUSKI
-------------------------------------------------------
Name: Mary E. Meduski
-------------------------------------------------
Title: Director
------------------------------------------------
UNION BANK OF CALIFORNIA, N.A.
By: /s/ JOHN C. LEE
-------------------------------------------------------
Name: John C. Lee
-------------------------------------------------
Title: Banking Officer
------------------------------------------------
NATWEST BANK N.A.
By: /s/ TANYA CROSSLEY
-------------------------------------------------------
Name: Tanya Crossley
-------------------------------------------------
Title: Vice President
------------------------------------------------
</TABLE>
<PAGE> 9
<TABLE>
<S> <C>
THE RIGGS NATIONAL BANK OF WASHINGTON, D.C.
By: /s/ ANA G. TESTBLUM
-------------------------------------------------------
Name: Ana G. Testblum
-------------------------------------------------
Title: Vice President
------------------------------------------------
ROYAL BANK OF CANADA
By: /s/ JOHN P. PAGE
-------------------------------------------------------
Name: John P. Page
-------------------------------------------------
Title: Senior Manager
------------------------------------------------
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ M. MCLAUGHLIN
-------------------------------------------------------
Name: M. Mclaughlin
------------------------------------------------
Title: Vice President
------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.6
WAIVER AND CONSENT LETTER
As of June 25, 1996
Metrocall, Inc.
6677 Richmond Highway
Alexandria, Virginia 22306
Attn: Vincent D. Kelly
Re: Loan Agreement dated as of August 31, 1994 (as the same is
amended or restated from time to time, the "Loan Agreement")
among Metrocall, Inc. (the "Borrower"), The Toronto-Dominion
Bank, PNC Bank, National Association, The Bank of New York,
First Union National Bank of North Carolina, Fleet National
Bank, The First National Bank of Boston, Union Bank of
California, N.A., Fleet Bank, N.A. (formerly known as NatWest
Bank N.A.), The Riggs National Bank of Washington, D.C., Royal
Bank of Canada and IBJ Schroder Bank & Trust Company
(collectively, the "Banks"), and Toronto Dominion (Texas),
Inc. as administrative agent for the Banks (the
"Administrative Agent")
Ladies and Gentlemen:
This letter, when accepted by you, will reflect our agreement with
respect to certain matters arising in respect of the Loan Agreement by virtue
of certain acquisitions and investments proposed to be made by the Borrower.
1. Waivers of Financial Covenants.
By signing this Waiver and Consent Letter in the spaces provided
below, and notwithstanding anything contained in the Loan Agreement which may
be construed to the contrary, but subject to the terms and conditions hereof,
the Administrative Agent and the Banks hereby waive compliance by the Borrower
with the following financial covenants until September 21, 1996:
(a) The Administrative Agent and the Banks hereby waive compliance
with Section 7.8 of the Loan Agreement, Leverage Ratio, provided that (i) as of
the end of the calendar quarter ending June 30, 1996, and (ii) at the time of
any Advance under the Loan Agreement (after giving effect thereto), the ratio
of (x) the aggregate amount of Indebtedness for Money Borrowed (other than
Subordinated Debt) of the Borrower and its Subsidiaries on a consolidated basis
determined in accordance with GAAP to (y) Annualized Operating Cash Flow for
the fiscal quarter being tested or for the most recently completed fiscal
quarter for which financial
<PAGE> 2
Metrocall, Inc.
As of June 25, 1996
Page 2
statements are required to have been delivered pursuant to Section 6.1 of the
Loan Agreement, as the case may be, does not exceed 2.5:1.
(b) The Administrative Agent and the Banks hereby waive compliance
with Section 7.9 of the Loan Agreement, Annualized Operating Cash Flow to Pro
Forma Debt Service, provided that (i) as of the end of the calendar quarter
ending June 30, 1996, and (ii) at the time of any Advance under the Loan
Agreement (after giving effect thereto), the ratio which would otherwise be
calculated under such Section exceeds 1.25:1.
(c) The Administrative Agent and the Banks hereby waive compliance
with Section 7.11 of the Loan Agreement, Operating Cash Flow to Interest
Expense, provided that (i) as of the end of the calendar quarter ending June
30, 1996, and (ii) at the time of any Advance under the Loan Agreement (after
giving effect thereto), the ratio of which would otherwise be calculated under
such Section exceeds 1.5:1.
2. Consents and Waivers Relating to Proposed Acquisitions.
In addition, and notwithstanding anything contained in the Loan
Agreement which may be construed to the contrary, including, without
limitation, the first two sentences of Section 4.1(n), Compliance with
Regulations G, T, U and X, Section 5.10, Use of Proceeds, and Section 7.6,
Investments and Acquisitions of the Loan Agreement, but subject to the terms
and conditions hereof, the Administrative Agent and the Banks hereby consent to
the following transactions:
(a) the acquisition by the Borrower of O.R. Estman, Inc. d/b/a
Satellite Paging (New York) for a Net Purchase Price not to exceed $30,000,000
and Parkway Paging, Inc. (Texas) for a Net Purchase Price not to exceed
$30,000,000, provided that, in each such case, (i) no Default then exists or
would be caused thereby, and (ii) the Borrower has provided to the
Administrative Agent and the Banks a compliance certificate specifically
demonstrating the Borrower's pro forma compliance with Sections 7.8, 7.9, 7.10
and 7.11 of the Loan Agreement after giving effect to the waivers contained
herein and after giving effect to the proposed Acquisition, as well as all
documentation with respect to such Acquisition prescribed by the terms of
Section 5.13 of the Loan Agreement; and
(b) the acquisition by the Borrower of up to 40% of the shares of the
capital stock of A+ Network, Inc. ("A+ Shares") and options to acquire an
additional 11% of such A+ Shares for a Net Purchase Price not to exceed
$92,000,000 with a combination of cash on hand and proceeds
<PAGE> 3
Metrocall, Inc.
As of June 25, 1996
Page 3
of the Loans, after which acquisition the amount available for investments
under Section 7.6(c) of the Loan Agreement shall be deemed to be $100,000,000
minus such Net Purchase Price.
Notwithstanding anything contained in the Loan Agreement or any other
Loan Document which may be construed to the contrary, but subject to the terms
and conditions hereof, the Administrative Agent and the Banks hereby
relinquish, release, disclaim and waive any requirement for the granting of,
any Lien on A+ Shares now owned or hereafter acquired by the Borrower or any of
its Subsidiaries as security for the Obligations to the extent that the A+
Shares constitute "margin stock" as such term is defined under Regulations G
and U of the Board of Governors of the Federal Reserve System, as in effect
from time to time ("Regulations G and U"). The Borrower hereby confirms,
acknowledges and agrees, however, that the provisions of Section 7.2,
Limitation on Liens, shall remain in effect and unchanged with respect to all
assets of the Borrower and its Subsidiaries, including, without limitation, A+
Shares.
The consents and waivers granted herein are subject to receipt by the
Administrative Agent of (i) a duly executed Federal Reserve Form U-1 or G-3 for
each Bank; (ii) an opinion of counsel to the Borrower and its Subsidiaries
addressed to the Administrative Agent and the Banks, which the Borrower hereby
directs such counsel to provide to the Administrative Agent and the Banks; and
(iii) all other documentation which may be reasonably requested by the
Administrative Agent or any of the Banks with respect hereto or the
transactions contemplated hereby; all of which shall be in form and substance
satisfactory to the Administrative Agent.
No waiver by the Administrative Agent and the Banks under the Loan
Agreement or any other Loan Document is granted or intended except as expressly
set forth above, and the Administrative Agent and the Banks expressly reserve
the right to require strict compliance with the terms of the Loan Agreement and
the other Loan Documents in all other respects. The waivers granted herein
shall not constitute a modification of the Loan Agreement or a course of
dealing by the Administrative Agent and the Banks at variance with the Loan
Agreement such as to require further notice by the Administrative Agent or the
Banks of their intent to require strict compliance with the terms of the Loan
Agreement and the other Loan Documents in the future.
In requesting this Waiver and Consent Letter, the Borrower represents
and warrants that each representation and warranty set forth in Article 4 of
the Loan Agreement is true and correct as of the date hereof, except with
respect to the statement contained in Section 4.1(n) of the Loan Agreement,
Compliance with Regulations G, T, U and X, to the effect that no proceeds of
the Loans will be used, directly or indirectly, for the purpose of purchasing
or carrying "margin stock" under the terms of Regulations G and U, which
representation and warranty is hereby
<PAGE> 4
Metrocall, Inc.
As of June 25, 1996
Page 4
waived by the Administrative Agent and the Banks solely with respect to the
acquisition of the A+ Shares contemplated herein. However, the Borrower
represents and warrants, and at the time of each Advance of the Loans hereafter
(after giving effect to the application of the proceeds of such Advance) will
be deemed to have represented and warranted, that not more than twenty-five
percent (25%) of the value (determined in accordance with Regulations G and U)
of the assets which are subject to Section 7.2 of the Loan Agreement,
Limitations on Liens, constitute "margin stock," as such term is defined in
Regulations G and U.
This Waiver and Consent Letter may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same
instrument.
Capitalized terms used in this Waiver and Consent Letter and not
otherwise defined are used as defined in the Loan Agreement.
This Waiver and Consent Letter shall be construed in accordance with
and governed by the internal laws of the State of New York applicable to
agreements made and to be performed in the State of New York.
Please acknowledge your acceptance of the terms and provisions set
forth herein by signing where indicated below.
Very truly yours,
ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS), INC., as
Administrative Agent
By: /s/ Sophia D. Sgarbi
-----------------------------------
Name: Sophia D. Sgarbi
------------------------
Title: Vice President
-----------------------
<PAGE> 5
Metrocall, Inc.
As of June 25, 1996
Page 5
BANKS: THE TORONTO-DOMINION BANK
By: /s/ Sophia D. Sgarbi
----------------------------------------
Name: Sophia D. Sgarbi
-----------------------------
Title:Mgr. Syndications & Credit
Admin
----------------------------
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Kelley L. Claypool
---------------------------------------
Name: Kelley L. Claypool
-----------------------------
Title: Banking Officer
----------------------------
THE BANK OF NEW YORK
By: /s/ Edward F. Ryan, Jr.
----------------------------------------
Name: Edward F. Ryan, Jr.
-----------------------------
Title: Senior Vice President
----------------------------
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By: /s/ Stephen A. McKenna
----------------------------------------
Name: Stephen A. McKenna
---------------------------
Title: Vice President
----------------------------
<PAGE> 6
Metrocall, Inc.
As of June 25, 1996
Page 6
FLEET NATIONAL BANK
By: /s/ Paula H. Lang
----------------------------------------
Name: Paula H. Lang
-----------------------------
Title: Vice President
----------------------------
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Mary E. Meduski
----------------------------------------
Name: Mary E. Meduski
-----------------------------
Title: Director
----------------------------
UNION BANK OF CALIFORNIA, N.A.
By: /s/ John C. Lee
----------------------------------------
Name: John C. Lee
-----------------------------
Title: Banking Officer
----------------------------
<PAGE> 7
Metrocall, Inc.
As of June 25, 1996
Page 7
FLEET BANK, N.A. (formerly known as NatWest
Bank, N.A.)
By: /s/ Leonard Maddox
----------------------------------------
Name: Leonard Maddox
-----------------------------
Title: Senior Vice President
----------------------------
THE RIGGS NATIONAL BANK OF
WASHINGTON, D.C.
By: /s/ Ana G. Tesblum
----------------------------------------
Name: Ana G. Tesblum
-----------------------------
Title: Vice President
----------------------------
ROYAL BANK OF CANADA
By: /s/ Thomas M. Byrne
----------------------------------------
Name: Thomas M. Byrne
-----------------------------
Title: Manager
----------------------------
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ Merily McLaughlin
----------------------------------------
Name: Merily McLaughlin
-----------------------------
Title: Vice President
----------------------------
<PAGE> 8
Metrocall, Inc.
As of June 25, 1996
Page 8
Agreed to and accepted:
BORROWER:
METROCALL, INC.
By: /s/ Vincent D. Kelly
------------------------------------------------
Name: Vincent D. Kelly
-------------------------------------
Its: Chief Financial Officer,
---------------------------------------
Treasurer and Vice President
<PAGE> 1
EXHIBIT 10.13
EMPLOYMENT AGREEMENT
This Employment Agreement dated as of May 15, 1996 (the "Agreement")
is made by and between Metrocall, Inc., a Delaware corporation (the "Company")
and WILLIAM L. COLLINS, III (the "Executive"). The employment agreement
between the Company and the Executive dated as of January 16, 1996 is hereby
canceled and replaced with this Agreement.
WHEREAS, in consideration of the Executive's service to the Company as
President and Chief Executive Officer of the Company and the Executive's
agreement not to compete with the Company, the Company and the Executive desire
to enter into this Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the covenants
and agreements set forth in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
1. Employment. The Company agrees to continue to employ the Executive
and the Executive agrees to remain employed by the Company as the
President and Chief Executive Officer of the Company based upon the
terms and conditions set forth in this Agreement, for the period of
time specified in Section 3. In such position, the Executive shall
report directly and exclusively to the Board of Directors of the
Company (the "Board").
2. Duties and Authority. During the term of this Agreement, as President
and Chief Executive Officer of the Company, under the direction and
subject to the control of the Board (which direction shall be such as
is customarily exercised over a chief executive officer of a public
company), the Executive shall be responsible for the business,
affairs, properties, and operations of the Company and shall have
general executive charge, management, and control of the Company, with
all such powers and authority with respect to such business, affairs,
properties, and operations as may be reasonably incident to such
duties and responsibilities. During the term of this Agreement, the
Executive shall have such powers, authority, functions, and
responsibilities for the Company and corporations affiliated with the
Company as he possessed as of May 1, 1996 and such additional duties,
powers, authority, functions, and responsibilities as the Board (and
not a committee thereof) shall assign to him that do not (except with
the Executive's consent)
<PAGE> 2
interfere with, or detract from, those vested in or being performed by
the Executive for the Company as of the beginning of the term of this
Agreement. The Executive shall devote the Executive's reasonable best
efforts and full business time to the performance of the Executive's
duties and the advancement of the business and affairs of the Company.
3. Term. The term of this Agreement and the period of employment of the
Executive by the Company hereunder shall commence on the date of this
Agreement and shall end on December 31, 1999; provided, however, that
the term shall be automatically extended for additional one (1) year
periods on each anniversary date of this Agreement, unless and until
either party notifies the other party not less than ninety (90) days
before such anniversary date that such party is terminating this
Agreement, which termination shall be effective as of the end of such
initial term or extended term, as the case may be (the "Expiration
Date"), or until sooner terminated as hereinafter set forth.
4. Salary and Expenses.
(a) In consideration for the Executive's services, the Company
shall pay to the Executive an annual base salary (the "Base
Salary") equal to Three Hundred Thousand Dollars ($300,000).
The Base Salary shall be payable biweekly or in such other
installments as shall be consistent with the Company's payroll
procedures. The Company shall deduct and withhold all
necessary social security and withholding taxes and any other
similar sums required by law or authorized by the Executive
with respect to the payment of the Base Salary. The Board
shall review the Executive's salary annually before December
31 and may increase, but not decrease, his Base Salary in any
renewal, extension, or replacement of this Agreement. The
Company shall review the appropriateness of creating
additional forms of nonqualified executive compensation to
cover the Executive.
(b) To the maximum extent permitted by applicable state and
federal law, the Executive shall be eligible, at no cost to
the Executive, to participate in all of the Company's benefit
plans, including fringe benefits available to the Company's
senior executives and use of an automobile suitable for the
chief executive officer of a public company.
-2-
<PAGE> 3
(c) The Company shall pay any premiums due and payable on the
Executive's whole life policy in effect on the date of this
Agreement (or such other policy as the Executive and the
Company agree shall be substituted for that policy) between
the date of this Agreement and the Expiration Date
(d) The Executive shall be entitled to (i) time off for all public
holidays observed by the Company and (ii) vacation days in
accordance with the applicable policies for the Company's
senior executives.
(d) The Company shall reimburse the Executive for all reasonable
expenses the Executive incurs in accordance with the
guidelines adopted from time to time by the Company.
5. Confidential Information.
(a) The Executive covenants and agrees that the Executive will not
at any time, without the prior written consent of the Board or
a person authorized by the Board, publish or disclose to any
third party, use for the Executive's own benefit or advantage,
or make available for others to use, any confidential
information with respect to any of the Company's products,
services, subscribers, suppliers, marketing techniques,
methods, or future plans disclosed to the Executive as a
result of the Executive's employment with the Company, to the
extent such information has heretofore remained confidential
(except for unauthorized disclosures) and except as otherwise
ordered by a court of competent jurisdiction.
(b) The Executive acknowledges that the restrictions contained in
Section 5(a) are reasonable and necessary, in view of the
nature of the Company's business, in order to protect the
legitimate interests of the Company, and that any violation
thereof would result in irreparable injury to the Company.
Therefore, the Executive agrees that in the event of a breach
or threatened breach by the Executive of the provisions of
Section 5(a), the Company shall be entitled to obtain from
any court of competent jurisdiction, preliminary or permanent
injunctive relief restraining the Executive from disclosing
or using any such confidential information. Nothing herein
shall be construed as prohibiting the Company from pursuing
any other remedies available to it for such breach or
-3-
<PAGE> 4
threatened breach, including, without limitation, recovery of
damages from the Executive.
6. Covenant Not to Compete. The Executive agrees that, through the
position of President and Chief Executive Officer, the Executive has
established valuable and recognized expertise in the paging business
and has had and will have access to the trade secrets and confidential
information of the Company. The Executive hereby enters into a
covenant restricting the Executive from soliciting employees of the
Company and from competing against the Company (the "Covenant Not to
Compete") upon the terms and conditions described below:
(a) During the Executive's employment, the Executive agrees that
the Executive will not, without the prior written consent of
the Company:
(i) induce or attempt to induce any of the Company's
employees to terminate their employment with the
Company in order to become an director, officer,
employee, consultant, or independent contractor to or
for any enterprise with which the Executive has an
interest, whether as a proprietor, partner,
shareholder, employee, agent, director, or officer;
(ii) at any time and in any state or other jurisdiction in
the United States in which the Company is engaged in
business or, during the Executive's employment, has
developed plans to engage in business: (1) engage in,
including as a director, agent, or representative, or
have any direct or indirect financial interest
(whether as a partner, shareholder, or owner) in any
enterprise that engages in, the business of owning
and operating one-way paging and wireless messaging
networks, voice mail services or data transmitting
services (the "Business"); or (2) participate as an
employee or officer in any enterprise in which the
Executive's responsibility relates to the Business.
The ownership by the Executive of less than five
percent (5%) of the outstanding equity securities of
any corporation, partnership, limited liability
company, trust, or other entity shall not be deemed a
violation of this Section 6(a)(ii). The ownership by
the Executive of his current percentage of equity
securities or his position as an officer or
-4-
<PAGE> 5
director of USA Telecommunications, Inc. or Collins
Broadcasting Systems shall not be deemed a violation
of this Section 6(a)(ii).
(iii) solicit or cause or encourage any person to solicit
any Business in competition with the Company from any
person who is a client of the Company during the
Executive's employment hereunder.
(b) The Executive agrees that the restrictions set forth in this
Section 6 are reasonable, proper, and necessitated by
legitimate business interests of the Company and do not
constitute an unlawful or unreasonable restraint upon the
Executive' ability to earn a livelihood. The parties agree
that in the event any of the restrictions in this Agreement,
interpreted in accordance with the Agreement as a whole, are
found to be unreasonable a court of competent jurisdiction,
such court shall determine the limits allowable by law and
shall enforce the same.
(c) The Executive further acknowledges that it may be impossible
to assess the monetary damages incurred by the Executive's
violation of this Agreement, and that violation of this
Agreement will cause irreparable injury to the Company.
Accordingly, the Executive agrees that the Company will be
entitled, in addition to all other rights and remedies that
may be available, to an injunction enjoining and restraining
the Executive and any other involved party from committing a
violation of this Agreement. In addition, the Company will be
entitled to such damages as it can demonstrate it has
sustained by reason of the violation of this Agreement by the
Executive and/or others. However, recourse to any remedy
hereunder shall not constitute an exclusive remedy for the
Company, but rather the Company may resort to other remedies
or a combination of remedies as it may choose. The Executive
and the Company also agree in the event that either party is
successful in whole or in part in any legal action against the
other party under this Agreement, that the successful party
will be entitled to payment of all costs, including reasonable
attorney's fees, from the other party.
-5-
<PAGE> 6
7. Termination. Notwithstanding any other provision of this Agreement,
this Agreement shall terminate upon the death of the Executive, or it
may be terminated with thirty (30) days' written notice as follows:
(a) The Company may terminate this Agreement under the following
circumstances:
(i) if the Executive is unable to perform any services by
reason of illness, physical, or mental disability, or
other similar incapacity ("Disability") that
continues for more than six (6) consecutive months;
(ii) or for "Cause." For purposes of this Agreement,
"Cause" means (A) dishonesty of a material nature
that relates to the performance of services under
this Agreement, (B) criminal conduct (other than
minor infractions and traffic violations) that
relates to the performance of services under this
Agreement, or (C) the Executive's willfully breaching
or failing to perform his duties as described in
Section 2 hereof, which act or omission results in a
material adverse effect on the Company. No act or
failure to act on the Executive's part shall be
deemed "willful" unless done, or omitted to be done,
by the Executive not in good faith and without
reasonable belief that such action or omission was in
the best interests of the Company. Notwithstanding
the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there
shall have been delivered to the Executive a
certificate of a resolution duly adopted by the
affirmative vote of not less than seventy-five
percent (75%) of the entire membership of the Board
at a meeting of the Board called and held for such
purpose (after reasonable notice to the Executive and
an opportunity for the Executive, together with the
Executive's counsel, to be heard before the Board),
finding that in the good faith opinion of the Board,
the Executive has engaged in the conduct set forth in
this paragraph and specifying the particulars thereof
in detail.
(b) The Executive may terminate this Agreement at any time upon
sixty (60) days' prior written notice.
-6-
<PAGE> 7
(c) Any purported termination of the Executive's employment by the
Company or by the Executive shall be communicated by written
Notice of Termination to the other party hereto in accordance
with Section 9. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice that shall indicate the
specific provision of this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's
employment under the provision so indicated.
8. Compensation Upon Termination.
(a) Death. If the Executive's employment is terminated by the
Executive's death, the Company shall pay to the Executive's
estate, or as may be directed by the legal representatives to
such estate, (i) the Executive's full Base Salary through the
Executive's date of death and all other unpaid amounts, if
any, to which the Executive is entitled as of the Executive's
date of death, under any Company fringe benefit or incentive
compensation plan or program, at the time such payments would
otherwise ordinarily be due; and (ii) the Executive's full
Base Salary that would have been payable to the Executive from
the Executive's date of death through the Expiration Date, in
a lump sum within forty-five (45) days after his death.
(b) Disability. During any period that the Executive fails to
perform the Executive's duties hereunder as a result of
incapacity due to Disability (the "Disability Period"), the
Executive shall continue to receive (i) the Executive's full
Base Salary through the Executive's date of disability and all
other unpaid amounts, if any, to which the Executive is
entitled as of the Executive's date of disability, under any
Company fringe benefit or incentive compensation plan or
program, at the time such payments are due; and (ii) the
Executive's full Base Salary that would have been payable to
the Executive from the Executive's date of disability through
the Expiration Date, at the time such payments would otherwise
ordinarily be due; provided, however, that any payments made
to the Executive during the Disability Period shall be reduced
by any amounts paid or payable to the Executive under any
Company disability benefit plans.
-7-
<PAGE> 8
(c) For Cause. If the Company terminates the Executive's
employment for Cause, the Company shall pay the Executive's
full Base Salary through the date specified in the Notice of
Termination and the Company shall have no further obligations
to the Executive under this Agreement.
(d) Voluntary. If the Executive terminates his employment for
other than Good Reason, the Company shall pay the Executive
the Executive's full Base Salary through the date specified in
the Notice of Termination and from the date of termination
through the earlier of (I) one (1) year from the date of
termination or (ii) the Expiration Date, at the time such
payments would otherwise ordinarily be due.
"Good Reason" means the occurrence, without the Executive's
express written consent, of any of the following circumstances:
(i) the Company's failure to perform or observe
any of the material terms or provisions of
this Agreement or of the Metrocall, Inc.
Change of Control Agreement for Chief
Executive Officer dated of even date herewith
(the "Change of Control Agreement"), and the
continued failure of the Company to cure such
default within fifteen (15) days after the
Executive gives a written demand for
performance to the Company, which demand
shall describe specifically the nature of
such alleged failure to perform or observe
such material terms or provisions;
(ii) the assignment to the Executive of any duties
inconsistent with, or any substantial
diminution in, such Executive's status or
responsibilities as in effect on the date
hereof, including imposition of travel
obligations that differ materially from
required business travel as of the date
hereof;
(iii) any diminution in the status or
responsibilities of the Executive's position
from that which existed as of the date
hereof, whether by reason of the Company's
ceasing to be a public company under the
-8-
<PAGE> 9
Securities Exchange Act of 1934, becoming a
subsidiary of a successor public company, or
otherwise;
(iv) (I) a reduction in the Executive's Base
Salary as in effect on the date hereof, as
that amount may be increased from time to
time; or (II) the failure to pay a bonus
award to which the Executive is otherwise
entitled under any short-term incentive plan
in which the Executive then participates, at
the time such awards are usually paid;
(v) the termination of employment of Steven D.
Jacoby or Vincent D. Kelly (other than a
termination (I) by the Company for "Cause" or
(II) because of death or "Disability" as
those terms are defined in their respective
employment agreements), including a
termination that results from a failure by
the Company and Jacoby or Kelly to reach
agreement to continue Jacoby's or Kelly's
employment on terms at least as favorable to
him, in the aggregate, as those in effect
when his then existing employment agreement
expired;
(vi) a change in the principal place of the
Executive's employment, as in effect on the
date hereof, or as in effect after any
subsequent change to which the Executive
consented in writing, to a location more than
thirty-five (35) miles distant from the
location of such principal place;
(vii) (I) the Company's failure to continue in
effect any incentive compensation plan or
stock option plan in which the Executive
participates, unless the Company has provided
an equivalent alternative compensation
arrangement (embodied in an ongoing
substitute or alternative plan) to the
Executive, or (II) the Company's failure to
continue the Executive's participation in any
such incentive or stock option plan on
substantially the same basis, both in terms
of the amount of benefits provided and the
level of the Executive's participation
relative to other participants, as of the
date hereof or as of any succeeding December
31;
-9-
<PAGE> 10
(viii) the Company's violation of any applicable
criminal law not due to the Executive's gross
negligence or willful misconduct;
(ix) the failure of the Company or any successor
to obtain a satisfactory written agreement
from any successor to assume and agree to
perform this Agreement, as contemplated in
Section 12 below; or
(x) any purported termination of the Executive's
employment that is not effected pursuant to a
Notice of Termination satisfying the
requirements of Sections 7(a)(ii) and 7(c) as
applicable. For purposes of this Agreement,
no such purported termination shall be
effective except as constituting Good Reason.
The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any
circumstances constituting Good Reason hereunder.
(e) Other. Except as otherwise provided in Section 8(f) for
terminations after a Change in Control, if the Company
terminates the Executive's employment other than for Cause or
Disability (under Section 8(b) hereof), or if the Executive
terminates employment with the Company for Good Reason, the
Company shall pay the Executive
(i) the Executive's full Base Salary through the date
specified in the Notice of Termination within two (2)
days after such date and all other unpaid amounts, if
any, to which the Executive is entitled as of the
date specified in the Notice of Termination, under
any Company fringe benefit or incentive compensation
plan or program, at the time such payments are due;
(ii) the full Base Salary and any other amounts that would
have been payable to the Executive hereunder from the
date specified in the Notice of Termination through
the Expiration Date within forty-five (45) days after
such date;
-10-
<PAGE> 11
(iii) the premiums on the Executive's whole life policy (as
set forth in Section 4(c) hereof) until the earlier
of the end of the time during the insurance policy
during which premiums are due or the Expiration Date.
(iiv) in lieu of exercising or retaining any rights the
Executive may have to exercise some or all of the
outstanding stock options that he then holds
(including any rights to exercise stock options that
arise during the Term if he were to remain employed
and including any that would otherwise terminate as
result of his termination of employment), the
Executive may elect within sixty (60) days after
termination of employment to surrender such rights to
the Company and receive in exchange therefor a cash
payment equal to the aggregate difference, if
positive, between (a) the "fair market value"
(determined as of the date of termination using the
higher of the "fair market value" (i) as defined in
the terms of the applicable option plan or option
agreement as of the date of termination and (ii) as
defined in the plan or agreement on the date of
grant) of the shares of common stock subject to the
options and (b) the option prices of the shares
subject to such surrendered options; and the Company
shall make such payment within forty-five (45) days
after the Executive notifies the Company of his
election to surrender all or a portion of his
options.
(f) Termination of Employment after a Change in Control. If,
after a Change of Control (as defined in the Change of Control
Agreement), the Company terminates the Executive's employment
other than for Cause or Disability, or if the Executive
terminates employment with the Company for Good Reason after a
Change of Control, Executive's compensation and benefits shall
be exclusively determined by the terms of the Change of
Control Agreement as then in effect.
(g) Mitigation. The Executive shall not be required to mitigate
amounts payable pursuant to this section by seeking other
employment or otherwise.
9. Notices. All notices, demands, requests, or other communications
required or permitted to be given or made hereunder shall be in
writing and shall be delivered, telecopied, or mailed by first class
registered or certified mail, postage prepaid, addressed as follows:
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<PAGE> 12
(a) if to the Company:
Metrocall, Inc.
6677 Richmond Highway
Alexandria, Virginia 22306
Telecopier: (703) 768-5407
Attention: Francis A. Martin, III
with a copy (which shall not constitute notice) to
Wilmer, Cutler & Pickering
2445 M Street, NW
Washington, DC 20037-1420
Telecopier: (202) 663-6363
Attention: George P. Stamas and John B. Watkins
(a) if to the Executive:
William L. Collins, III
314 River Bend Road
Great Falls, Virginia 22066
or to such other address as may be designated by either party in a
notice to the other. Each notice, demand, request, or other
communication that shall be given or made in the manner described
above shall be deemed sufficiently given or made for all purposes
three (3) days after it is deposited in the U.S. mail, postage
prepaid, or at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, the answer back or the affidavit
of messenger being deemed conclusive evidence of such delivery) or at
such time as delivery is refused by the addressee upon presentation.
10. Severability. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or
enforceability of the other provisions of this Agreement, which shall
remain in full force and effect.
11. Survival. It is the express intention and agreement of the parties
that the provisions of Section 5 shall survive three (3) years after
the termination of this Agreement.
-12-
<PAGE> 13
12. Assignment; Successors. The rights and obligations of the parties to
this Agreement shall not be assignable, except that the rights and
obligations of the Company hereunder shall be assignable in connection
with any subsequent merger, consolidation, sale of substantially all
of the assets of the Company, or similar reorganization of a
successor. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company is required to perform
it. Failure of the Company to obtain such assumption and agreement
before the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle the Executive to compensation from
the Company as provided in Section 6 of the Change of Control
Agreement.
13. Binding Effect. Subject to any provisions restricting assignment,
this Agreement shall be binding upon the parties and shall inure to
the benefit of the parties and their respective heirs, devisees,
executors, administrators, legal representatives, successors, and
assigns.
14. Amendment; Waiver. This Agreement shall not be amended, altered or
modified except by an instrument in writing duly executed by the both
parties. Neither the waiver by either of the parties of a breach of
or a default under any of the provisions of this Agreement, nor the
failure of either of the parties, on one or more occasions, to enforce
any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall thereafter be construed as a waiver of any
subsequent breach or default of a similar nature, or as a waiver of
any such provisions, rights, or privileges.
15. Headings. Section headings contained in this Agreement are inserted
for convenience of reference only, shall not be deemed to be a part of
this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction, or scope of any of the provisions of
this Agreement.
16. Governing Law. This Agreement, the rights and obligations of the
parties, and any claims or disputes arising from this Agreement, shall
be governed by and construed in accordance with the laws of the
Commonwealth of Virginia (but not including the choice of law rules
thereof).
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<PAGE> 14
17. Entire Agreement. This Agreement and the Change of Control Agreement
constitute the entire agreement between the parties with respect to
the subject matter hereof and thereof, and supersede all prior oral or
written agreements, commitments, or understandings with respect to the
matters provided for in this Agreement and the Change of Control
Agreement.
18. Arbitration. The Executive may designate in writing to the Company (in
which case this Section 18 shall have effect but not otherwise) that
any dispute that may arise directly or indirectly in connection with
this Agreement, the Executive's employment, or the termination of the
Executive's employment, whether arising in contract, statute, tort,
fraud, misrepresentation, or other legal theory, shall be determined
solely by arbitration in Washington, D.C. under the rules of the
American Arbitration Association (the "AAA"). The only legal claims
between the Executive, on the one hand, and the Company or any
Subsidiary, on the other, that would not be included in this agreement
to arbitration are claims by the Executive for workers' compensation
or unemployment compensation benefits, claims for benefits under a
Company or Subsidiary benefit plan if the plan does not provide for
arbitration of such disputes, and claims by the Executive that seek
judicial relief in the form of specific performance of the right to be
paid until the termination date during the pendency of any dispute or
controversy arising under Section 7(a)(ii). If this Section 18 is in
effect, any claim with respect to this Agreement, the Executive's
employment, or the termination of the Executive's employment must be
established by a preponderance of the evidence submitted to the
impartial arbitrator. A single arbitrator engaged in the practice of
law shall conduct any arbitration under the then current procedures of
the AAA and under the AAA's then current Model Employment Arbitration
Rules. The arbitrator shall have the authority to order a pre-hearing
exchange of information by the parties including, without limitation,
production of requested documents, and examination by deposition of
parties and their authorized agents. If this Section 18 is in effect,
the decision of the arbitrator (i) shall be final and binding, (ii)
shall be rendered within ninety (90) days after the impanelment of the
arbitrator, and (iii) shall be kept confidential by the parties to
such arbitration. The arbitration award may be enforced in any court
of competent jurisdiction. The Federal Arbitration Act, 9 U.S.C.
Section Section 1-15, not state law, shall govern the arbitrability of
all claims.
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<PAGE> 15
19. Cancellation of Previous Agreements. In consideration of this
Agreement, the Executive hereby waives any and all rights under and
releases, and indemnifies and holds the Company and its successors and
assigns, harmless from any damage, loss, liability, judgment, fine,
penalty, assessment, settlement, cost, or expense including, without
limitation, reasonable expenses of investigation, reasonable
attorneys' fees and other reasonable legal costs and expenses incident
to any of the foregoing or to the enforcement of this Section, whether
or not suit is brought or, if brought, whether or not such suit is
successful, in whole or in part arising out of or relating to any and
all employment, consulting, non-competition, bonus, or other
compensatory plan, program, arrangement, or contract relating to the
employment of the Executive, written or oral, between the Executive
and the Company or any person affiliated with the Company, and the
Executive consents to the termination of each such agreement and
arrangement effective as of the date of this Agreement; provided,
however, that nothing herein shall constitute a termination or waiver
of the Change of Control Agreement.
20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which
shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement,
or have caused this Agreement to be duly executed, on their behalf as of the
day and year first hereinabove written.
<TABLE>
<S> <C> <C>
METROCALL, INC.
Date: May 15, 1996 By: /s/ Richard D. Johnston
------------ -----------------------
Richard D. Johnston
Chairman of the Board
Date: May 15, 1996 /s/ William L. Collins, III
------------ ---------------------------
William L. Collins, III
| | Executive's Copy
--
| | Company's Copy
--
</TABLE>
-15-
<PAGE> 1
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
This Employment Agreement dated as of May 15, 1996 (the "Agreement")
is made by and between Metrocall, Inc., a Delaware corporation (the "Company")
and VINCENT D. KELLY (the "Executive"). The employment agreement between the
Company and the Executive dated as of June 1, 1993 and amended as of January 1,
1996 is hereby canceled and replaced with this Agreement.
WHEREAS, in consideration of the Executive's service to the Company as
Chief Financial Officer of the Company and the Executive's agreement not to
compete with the Company, the Company and the Executive desire to enter into
this Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the covenants
and agreements set forth in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
1. Employment. The Company agrees to continue to employ the Executive
and the Executive agrees to remain employed by the Company as the
Chief Financial Officer of the Company based upon the terms and
conditions set forth in this Agreement, for the period of time
specified in Section 3. In such position, the Executive shall report
directly to the Chief Executive Officer.
2. Duties and Authority. During the term of this Agreement, as Chief
Financial Officer of the Company, under the direction and subject to
the control of the Chief Executive Officer, the Executive shall be
responsible for the financial operations of the Company and shall have
general executive charge, management, and control of financial
management of the Company, with all such powers and authority with
respect to such business, affairs, properties, and operations as may
be reasonably incident to such duties and responsibilities. During
the term of this Agreement, the Executive shall have such powers,
authority, functions, and responsibilities for the Company and
corporations affiliated with the Company as he possessed as of May 1,
1996 and such additional duties, powers, authority, functions, and
responsibilities as the Chief Executive Officer shall assign to him
that do not (except with the Executive's consent) interfere with, or
detract from, those vested in or being performed by the Executive for
the Company as of the beginning of the term of this Agreement. The
Executive shall devote the Executive's
<PAGE> 2
reasonable best efforts and full business time to the performance of
the Executive's duties and the advancement of the business and affairs
of the Company.
3. Term. The term of this Agreement and the period of employment of the
Executive by the Company hereunder shall commence on the date of this
Agreement and shall end on December 31, 1999; provided, however, that
the term shall be automatically extended for additional one (1) year
periods on each anniversary date of this Agreement, unless and until
either party notifies the other party not less than ninety (90) days
before such anniversary date that such party is terminating this
Agreement, which termination shall be effective as of the end of such
initial term or extended term, as the case may be (the "Expiration
Date"), or until sooner terminated as hereinafter set forth.
4. Salary and Expenses.
(a) In consideration for the Executive's services, the Company
shall pay to the Executive an annual base salary (the "Base
Salary") equal to Two Hundred Twenty-Five Thousand Dollars
($225,000). The Base Salary shall be payable biweekly or in
such other installments as shall be consistent with the
Company's payroll procedures. The Company shall deduct and
withhold all necessary social security and withholding taxes
and any other similar sums required by law or authorized by
the Executive with respect to the payment of the Base Salary.
The Board shall review the Executive's salary annually before
December 31 and may increase, but not decrease, his Base
Salary in any renewal, extension, or replacement of this
Agreement. The Company shall review the appropriateness of
creating additional forms of nonqualified executive
compensation to cover the Executive.
(b) To the maximum extent permitted by applicable state and
federal law, the Executive shall be eligible, at no cost to
the Executive, to participate in all of the Company's benefit
plans, including fringe benefits available to the Company's
senior executives and use of an automobile suitable for a
senior executive of a public company.
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<PAGE> 3
(c) The Executive shall be entitled to (i) time off for all public
holidays observed by the Company and (ii) vacation days in
accordance with the applicable policies for the Company's
senior executives.
(d) The Company shall reimburse the Executive for all reasonable
expenses the Executive incurs in accordance with the
guidelines adopted from time to time by the Company.
5. Confidential Information.
(a) The Executive covenants and agrees that the Executive will not
at any time, without the prior written consent of the Board or
a person authorized by the Board, publish or disclose to any
third party, use for the Executive's own benefit or advantage,
or make available for others to use, any confidential
information with respect to any of the Company's products,
services, subscribers, suppliers, marketing techniques,
methods, or future plans disclosed to the Executive as a
result of the Executive's employment with the Company, to the
extent such information has heretofore remained confidential
(except for unauthorized disclosures) and except as otherwise
ordered by a court of competent jurisdiction.
(b) The Executive acknowledges that the restrictions contained in
Section 5(a) are reasonable and necessary, in view of the
nature of the Company's business, in order to protect the
legitimate interests of the Company, and that any violation
thereof would result in irreparable injury to the Company.
Therefore, the Executive agrees that in the event of a breach
or threatened breach by the Executive of the provisions of
Section 5(a), the Company shall be entitled to obtain from any
court of competent jurisdiction, preliminary or permanent
injunctive relief restraining the Executive from disclosing or
using any such confidential information. Nothing herein shall
be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened
breach, including, without limitation, recovery of damages
from the Executive.
6. Covenant Not to Compete. The Executive agrees that, through
the position of Chief Financial Officer, the Executive has
established valuable and recognized expertise in the
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<PAGE> 4
paging business and has had and will have access to the trade secrets
and confidential information of the Company. The Executive hereby
enters into a covenant restricting the Executive from soliciting
employees of the Company and from competing against the Company (the
"Covenant Not to Compete") upon the terms and conditions described
below:
(a) During the Executive's employment and for twelve (12) months
thereafter, the Executive agrees that the Executive will not,
without the prior written consent of the Company:
(i) induce or attempt to induce any of the Company's
employees to terminate their employment with the
Company in order to become an director, officer,
employee, consultant, or independent contractor to or
for any enterprise with which the Executive has an
interest, whether as a proprietor, partner,
shareholder, employee, agent, director, or officer;
(ii) at any time and in any state or other jurisdiction in
the United States in which the Company is engaged in
business or, during the Executive's employment, has
developed plans to engage in business: (1) engage in,
including as a director, agent, or representative, or
have any direct or indirect financial interest
(whether as a partner, shareholder, or owner) in any
enterprise that engages in, the business of owning
and operating one-way paging and wireless messaging
networks, voice mail services or data transmitting
services (the "Business"); or (2) participate as an
employee or officer in any enterprise in which the
Executive's responsibility relates to the Business.
The ownership by the Executive of less than five
percent (5%) of the outstanding equity securities of
any corporation, partnership, limited liability
company, trust, or other entity shall not be deemed a
violation of this Section 6(a)(ii).
(iii) solicit or cause or encourage any person to solicit
any Business in competition with the Company from any
person who is a client of the Company during the
Executive's employment hereunder.
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<PAGE> 5
(b) The Executive agrees that the restrictions set forth in this
Section 6 are reasonable, proper, and necessitated by
legitimate business interests of the Company and do not
constitute an unlawful or unreasonable restraint upon the
Executive' ability to earn a livelihood. The parties agree
that in the event any of the restrictions in this Agreement,
interpreted in accordance with the Agreement as a whole, are
found to be unreasonable a court of competent jurisdiction,
such court shall determine the limits allowable by law and
shall enforce the same.
(c) The Executive further acknowledges that it may be impossible
to assess the monetary damages incurred by the Executive's
violation of this Agreement, and that violation of this
Agreement will cause irreparable injury to the Company.
Accordingly, the Executive agrees that the Company will be
entitled, in addition to all other rights and remedies that
may be available, to an injunction enjoining and restraining
the Executive and any other involved party from committing a
violation of this Agreement. In addition, the Company will be
entitled to such damages as it can demonstrate it has
sustained by reason of the violation of this Agreement by the
Executive and/or others. However, recourse to any remedy
hereunder shall not constitute an exclusive remedy for the
Company, but rather the Company may resort to other remedies
or a combination of remedies as it may choose. The Executive
and the Company also agree in the event that either party is
successful in whole or in part in any legal action against the
other party under this Agreement, that the successful party
will be entitled to payment of all costs, including reasonable
attorney's fees, from the other party.
7. Termination. Notwithstanding any other provision of this Agreement,
this Agreement shall terminate upon the death of the Executive, or it
may be terminated with thirty (30) days' written notice as follows:
(a) The Company may terminate this Agreement under the following
circumstances:
(i) if the Executive is unable to perform any services by
reason of illness, physical, or mental disability, or
other similar incapacity ("Disability") that
continues for more than six (6) consecutive months;
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<PAGE> 6
(ii) or for "Cause." For purposes of this Agreement,
"Cause" means (A) dishonesty of a material nature
that relates to the performance of services under
this Agreement, (B) criminal conduct (other than
minor infractions and traffic violations) that
relates to the performance of services under this
Agreement, or (C) the Executive's willfully breaching
or failing to perform his duties as described in
Section 2 hereof, which act or omission results in a
material adverse effect on the Company. No act or
failure to act on the Executive's part shall be
deemed "willful" unless done, or omitted to be done,
by the Executive not in good faith and without
reasonable belief that such action or omission was in
the best interests of the Company. Notwithstanding
the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there
shall have been delivered to the Executive a
certificate of a resolution duly adopted by the
affirmative vote of not less than seventy-five
percent (75%) of the entire membership of the Board
at a meeting of the Board called and held for such
purpose (after reasonable notice to the Executive and
an opportunity for the Executive, together with the
Executive's counsel, to be heard before the Board),
finding that in the good faith opinion of the Board,
the Executive has engaged in the conduct set forth in
this paragraph and specifying the particulars thereof
in detail.
(b) The Executive may terminate this Agreement at any time upon
sixty (60) days' prior written notice.
(c) Any purported termination of the Executive's employment by the
Company or by the Executive shall be communicated by written
Notice of Termination to the other party hereto in accordance
with Section 9. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice that shall indicate the
specific provision of this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's
employment under the provision so indicated.
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<PAGE> 7
8. Compensation Upon Termination.
(a) Death. If the Executive's employment is terminated by the
Executive's death, the Company shall pay to the Executive's
estate, or as may be directed by the legal representatives to
such estate, (i) the Executive's full Base Salary through the
Executive's date of death and all other unpaid amounts, if
any, to which the Executive is entitled as of the Executive's
date of death, under any Company fringe benefit or incentive
compensation plan or program, at the time such payments would
otherwise ordinarily be due; and (ii) the Executive's full
Base Salary that would have been payable to the Executive from
the Executive's date of death through the Expiration Date, in
a lump sum within forty-five (45) days after his death.
(b) Disability. During any period that the Executive fails to
perform the Executive's duties hereunder as a result of
incapacity due to Disability (the "Disability Period"), the
Executive shall continue to receive (i) the Executive's full
Base Salary through the Executive's date of disability and all
other unpaid amounts, if any, to which the Executive is
entitled as of the Executive's date of disability, under any
Company fringe benefit or incentive compensation plan or
program, at the time such payments are due; and (ii) the
Executive's full Base Salary that would have been payable to
the Executive from the Executive's date of disability through
the Expiration Date, at the time such payments would otherwise
ordinarily be due; provided, however, that any payments made
to the Executive during the Disability Period shall be reduced
by any amounts paid or payable to the Executive under any
Company disability benefit plans.
(c) For Cause. If the Company terminates the Executive's
employment for Cause, the Company shall pay the Executive's
full Base Salary through the date specified in the Notice of
Termination and the Company shall have no further obligations
to the Executive under this Agreement.
(d) Voluntary. If the Executive terminates his employment for
other than Good Reason, the Company shall pay the Executive
the Executive's full Base Salary through the date specified in
the Notice of Termination and from the date of termination
through the earlier of (I) one (1) year from the date of
termination or
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<PAGE> 8
(ii) the Expiration Date, at the time such payments would
otherwise ordinarily be due.
"Good Reason" means the occurrence, without the Executive's
express written consent, of any of the following circumstances:
(i) the Company's failure to perform or observe
any of the material terms or provisions of
this Agreement or of the Metrocall, Inc.
Change of Control Agreement for Chief
Financial Officer dated of even date herewith
(the "Change of Control Agreement"), and the
continued failure of the Company to cure such
default within fifteen (15) days after the
Executive gives a written demand for
performance to the Company, which demand
shall describe specifically the nature of
such alleged failure to perform or observe
such material terms or provisions;
(ii) the assignment to the Executive of any duties
inconsistent with, or any substantial
diminution in, such Executive's status or
responsibilities as in effect on the date
hereof, including imposition of travel
obligations that differ materially from
required business travel as of the date
hereof;
(iii) any diminution in the status or
responsibilities of the Executive's position
from that which existed as of the date
hereof, whether by reason of the Company's
ceasing to be a public company under the
Securities Exchange Act of 1934, becoming a
subsidiary of a successor public company, or
otherwise;
(iv) (I) a reduction in the Executive's Base
Salary as in effect on the date hereof, as
that amount may be increased from time to
time; or (II) the failure to pay a bonus
award to which the Executive is otherwise
entitled under any short-term incentive plan
in which the Executive then participates, at
the time such awards are usually paid;
-8-
<PAGE> 9
(v) the termination of employment of William L.
Collins, III or Steven D. Jacoby (other than
a termination (I) by the Company for "Cause"
or (II) because of death or "Disability" as
those terms are defined in their respective
employment agreements), including a
termination that results from a failure by
the Company and Collins or Jacoby to reach
agreement to continue Collins' or Jacoby's
employment on terms at least as favorable to
him, in the aggregate, as those in effect
when his then existing employment agreement
expired;
(vi) a change in the principal place of the
Executive's employment, as in effect on the
date hereof, or as in effect after any
subsequent change to which the Executive
consented in writing, to a location more than
thirty-five (35) miles distant from the
location of such principal place;
(vii) (I) the Company's failure to continue in
effect any incentive compensation plan or
stock option plan in which the Executive
participates, unless the Company has provided
an equivalent alternative compensation
arrangement (embodied in an ongoing
substitute or alternative plan) to the
Executive, or (II) the Company's failure to
continue the Executive's participation in any
such incentive or stock option plan on
substantially the same basis, both in terms
of the amount of benefits provided and the
level of the Executive's participation
relative to other participants, as of the
date hereof or as of any succeeding December
31;
(viii) the Company's violation of any applicable
criminal law not due to the Executive's gross
negligence or willful misconduct;
(ix) the failure of the Company or any successor
to obtain a satisfactory written agreement
from any successor to assume and agree to
perform this Agreement, as contemplated in
Section 12 below; or
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<PAGE> 10
(x) any purported termination of the Executive's
employment that is not effected pursuant to a
Notice of Termination satisfying the
requirements of Sections 7(a)(ii) and 7(c) as
applicable. For purposes of this Agreement,
no such purported termination shall be
effective except as constituting Good Reason.
The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any
circumstances constituting Good Reason hereunder.
(e) Other. Except as otherwise provided in Section 8(f) for
terminations after a Change in Control, if the Company
terminates the Executive's employment other than for Cause or
Disability (under Section 8(b) hereof), or if the Executive
terminates employment with the Company for Good Reason, the
Company shall pay the Executive
(i) the Executive's full Base Salary through the date
specified in the Notice of Termination within two (2)
days after such date and all other unpaid amounts, if
any, to which the Executive is entitled as of the
date specified in the Notice of Termination, under
any Company fringe benefit or incentive compensation
plan or program, at the time such payments are due;
(ii) the full Base Salary and any other amounts that would
have been payable to the Executive hereunder from the
date specified in the Notice of Termination through
the Expiration Date within forty-five (45) days after
such date; and
(iii) in lieu of exercising or retaining any rights the
Executive may have to exercise some or all of the
outstanding stock options that he then holds
(including any rights to exercise stock options that
arise during the Term if he were to remain employed
and including any that would otherwise terminate as
result of his termination of employment), the
Executive may elect within sixty (60) days after
termination of employment to surrender such rights to
the Company and receive in exchange therefor a cash
payment equal to the aggregate difference, if
positive, between (a) the
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<PAGE> 11
"fair market value" (determined as of the date of
termination using the higher of the "fair market
value" (i) as defined in the terms of the applicable
option plan or option agreement as of the date of
termination and (ii) as defined in the plan or
agreement on the date of grant) of the shares of
common stock subject to the options and (b) the
option prices of the shares subject to such
surrendered options; and the Company shall make such
payment within forty-five (45) days after the
Executive notifies the Company of his election to
surrender all or a portion of his options.
(f) Termination of Employment after a Change in Control. If,
after a Change of Control (as defined in the Change of Control
Agreement), the Company terminates the Executive's employment
other than for Cause or Disability, or if the Executive
terminates employment with the Company for Good Reason after a
Change of Control, Executive's compensation and benefits shall
be exclusively determined by the terms of the Change of
Control Agreement as then in effect.
(g) Mitigation. The Executive shall not be required to mitigate
amounts payable pursuant to this section by seeking other
employment or otherwise.
9. Notices. All notices, demands, requests, or other communications
required or permitted to be given or made hereunder shall be in
writing and shall be delivered, telecopied, or mailed by first class
registered or certified mail, postage prepaid, addressed as follows:
(a) if to the Company:
Metrocall, Inc.
6677 Richmond Highway
Alexandria, Virginia 22306
Telecopier: (703) 768-5407
Attention: Francis A. Martin, III
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<PAGE> 12
with a copy (which shall not constitute notice) to
Wilmer, Cutler & Pickering
2445 M Street, NW
Washington, DC 20037-1420
Telecopier: (202) 663-6363
Attention: George P. Stamas and John B. Watkins
(a) if to the Executive:
Vincent D. Kelly
11807 Chapel Road
Clifton, VA 22024
or to such other address as may be designated by either party in a
notice to the other. Each notice, demand, request, or other
communication that shall be given or made in the manner described
above shall be deemed sufficiently given or made for all purposes
three (3) days after it is deposited in the U.S. mail, postage
prepaid, or at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, the answer back or the affidavit
of messenger being deemed conclusive evidence of such delivery) or at
such time as delivery is refused by the addressee upon presentation.
10. Severability. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or
enforceability of the other provisions of this Agreement, which shall
remain in full force and effect.
11. Survival. It is the express intention and agreement of the parties
that the provisions of Section 5 shall survive three (3) years after
the termination of this Agreement.
12. Assignment; Successors. The rights and obligations of the parties to
this Agreement shall not be assignable, except that the rights and
obligations of the Company hereunder shall be assignable in connection
with any subsequent merger, consolidation, sale of substantially all
of the assets of the Company, or similar reorganization of a
successor. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company is required to perform
it. Failure
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<PAGE> 13
of the Company to obtain such assumption and agreement before the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the
Company as provided in Section 6 of the Change of Control Agreement.
13. Binding Effect. Subject to any provisions restricting assignment,
this Agreement shall be binding upon the parties and shall inure to
the benefit of the parties and their respective heirs, devisees,
executors, administrators, legal representatives, successors, and
assigns.
14. Amendment; Waiver. This Agreement shall not be amended, altered or
modified except by an instrument in writing duly executed by the both
parties. Neither the waiver by either of the parties of a breach of
or a default under any of the provisions of this Agreement, nor the
failure of either of the parties, on one or more occasions, to enforce
any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall thereafter be construed as a waiver of any
subsequent breach or default of a similar nature, or as a waiver of
any such provisions, rights, or privileges.
15. Headings. Section headings contained in this Agreement are inserted
for convenience of reference only, shall not be deemed to be a part of
this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction, or scope of any of the provisions of
this Agreement.
16. Governing Law. This Agreement, the rights and obligations of the
parties, and any claims or disputes arising from this Agreement, shall
be governed by and construed in accordance with the laws of the
Commonwealth of Virginia (but not including the choice of law rules
thereof).
17. Entire Agreement. This Agreement and the Change of Control Agreement
constitute the entire agreement between the parties with respect to
the subject matter hereof and thereof, and supersede all prior oral or
written agreements, commitments, or understandings with respect to the
matters provided for in this Agreement and the Change of Control
Agreement.
18. Arbitration. The Executive may designate in writing to the Company (in
which case this Section 18 shall have effect but not otherwise) that
any dispute that may arise directly or
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<PAGE> 14
indirectly in connection with this Agreement, the Executive's
employment, or the termination of the Executive's employment, whether
arising in contract, statute, tort, fraud, misrepresentation, or other
legal theory, shall be determined solely by arbitration in Washington,
D.C. under the rules of the American Arbitration Association (the
"AAA"). The only legal claims between the Executive, on the one hand,
and the Company or any Subsidiary, on the other, that would not be
included in this agreement to arbitration are claims by the Executive
for workers' compensation or unemployment compensation benefits,
claims for benefits under a Company or Subsidiary benefit plan if the
plan does not provide for arbitration of such disputes, and claims by
the Executive that seek judicial relief in the form of specific
performance of the right to be paid until the termination date during
the pendency of any dispute or controversy arising under Section
7(a)(ii). If this Section 18 is in effect, any claim with respect to
this Agreement, the Executive's employment, or the termination of the
Executive's employment must be established by a preponderance of the
evidence submitted to the impartial arbitrator. A single arbitrator
engaged in the practice of law shall conduct any arbitration under the
then current procedures of the AAA and under the AAA's then current
Model Employment Arbitration Rules. The arbitrator shall have the
authority to order a pre-hearing exchange of information by the
parties including, without limitation, production of requested
documents, and examination by deposition of parties and their
authorized agents. If this Section 18 is in effect, the decision of
the arbitrator (i) shall be final and binding, (ii) shall be rendered
within ninety (90) days after the impanelment of the arbitrator, and
(iii) shall be kept confidential by the parties to such arbitration.
The arbitration award may be enforced in any court of competent
jurisdiction. The Federal Arbitration Act, 9 U.S.C. Section Section
1-15, not state law, shall govern the arbitrability of all claims.
19. Cancellation of Previous Agreements. In consideration of this
Agreement, the Executive hereby waives any and all rights under and
releases, and indemnifies and holds the Company and its successors and
assigns, harmless from any damage, loss, liability, judgment, fine,
penalty, assessment, settlement, cost, or expense including, without
limitation, reasonable expenses of investigation, reasonable
attorneys' fees and other reasonable legal costs and expenses incident
to any of the foregoing or to the enforcement of this Section, whether
or not suit is brought or, if brought, whether or not such suit is
successful, in whole or in part arising out of or relating to any and
all employment, consulting, non-competition, bonus, or other
compensatory plan, program,
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<PAGE> 15
arrangement, or contract relating to the employment of the Executive,
written or oral, between the Executive and the Company or any person
affiliated with the Company, and the Executive consents to the
termination of each such agreement and arrangement effective as of the
date of this Agreement; provided, however, that nothing herein shall
constitute a termination or waiver of the Change of Control Agreement.
20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which
shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement,
or have caused this Agreement to be duly executed, on their behalf as of the
day and year first hereinabove written.
<TABLE>
<S> <C> <C>
METROCALL, INC.
Date: May 15, 1996 By: /s/ Richard D. Johnston
------------ -----------------------
Richard D. Johnston
Chairman of the Board
Date: May 15, 1996 /s/ Vincent D. Kelly
------------ --------------------
Vincent D. Kelly
| | Executive's Copy
--
| | Company's Copy
--
</TABLE>
-15-
<PAGE> 1
EXHIBIT 10.15
EMPLOYMENT AGREEMENT
This Employment Agreement dated as of May 15, 1996 (the "Agreement")
is made by and between Metrocall, Inc., a Delaware corporation (the "Company")
and STEVEN D. JACOBY (the "Executive"). The employment agreement between the
Company and the Executive dated as of August 31, 1994 and amended as of January
1, 1996 is hereby canceled and replaced with this Agreement.
WHEREAS, in consideration of the Executive's service to the Company as
Chief Operating Officer of the Company and the Executive's agreement not to
compete with the Company, the Company and the Executive desire to enter into
this Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the covenants
and agreements set forth in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
1. Employment. The Company agrees to continue to employ the Executive
and the Executive agrees to remain employed by the Company as the
Chief Operating Officer of the Company based upon the terms and
conditions set forth in this Agreement, for the period of time
specified in Section 3. In such position, the Executive shall report
directly to the Chief Executive Officer.
2. Duties and Authority. During the term of this Agreement, as Chief
Operating Officer of the Company, under the direction and subject to
the control of the Chief Executive Officer, the Executive shall be
responsible for the operations of the Company and shall have general
executive charge, management, and control of sales, marketing, and
other operational matters for the Company, with all such powers and
authority with respect to such business, affairs, properties, and
operations as may be reasonably incident to such duties and
responsibilities. During the term of this Agreement, the Executive
shall have such powers, authority, functions, and responsibilities for
the Company and corporations affiliated with the Company as he
possessed as of May 1, 1996 and such additional duties, powers,
authority, functions, and responsibilities as the Chief Executive
Officer shall assign to him that do not (except with the Executive's
consent) interfere with, or detract from, those vested in or being
performed by the Executive for the Company as of the beginning of the
term of this Agreement. The Executive shall devote the Executive's
<PAGE> 2
reasonable best efforts and full business time to the performance of
the Executive's duties and the advancement of the business and affairs
of the Company.
3. Term. The term of this Agreement and the period of employment of the
Executive by the Company hereunder shall commence on the date of this
Agreement and shall end on December 31, 1999; provided, however, that
the term shall be automatically extended for additional one (1) year
periods on each anniversary date of this Agreement, unless and until
either party notifies the other party not less than ninety (90) days
before such anniversary date that such party is terminating this
Agreement, which termination shall be effective as of the end of such
initial term or extended term, as the case may be (the "Expiration
Date"), or until sooner terminated as hereinafter set forth.
4. Salary and Expenses.
(a) In consideration for the Executive's services, the Company
shall pay to the Executive an annual base salary (the "Base
Salary") equal to Two Hundred Twenty-Five Thousand Dollars
($225,000). The Base Salary shall be payable biweekly or in
such other installments as shall be consistent with the
Company's payroll procedures. The Company shall deduct and
withhold all necessary social security and withholding taxes
and any other similar sums required by law or authorized by
the Executive with respect to the payment of the Base Salary.
The Board shall review the Executive's salary annually before
December 31 and may increase, but not decrease, his Base
Salary in any renewal, extension, or replacement of this
Agreement. The Company shall review the appropriateness of
creating additional forms of nonqualified executive
compensation to cover the Executive.
(b) To the maximum extent permitted by applicable state and
federal law, the Executive shall be eligible, at no cost to
the Executive, to participate in all of the Company's benefit
plans, including fringe benefits available to the Company's
senior executives and use of an automobile suitable for a
senior executive of a public company.
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<PAGE> 3
(c) The Executive shall be entitled to (i) time off for all public
holidays observed by the Company and (ii) vacation days in
accordance with the applicable policies for the Company's
senior executives.
(d) The Company shall reimburse the Executive for all reasonable
expenses the Executive incurs in accordance with the
guidelines adopted from time to time by the Company.
5. Confidential Information.
(a) The Executive covenants and agrees that the Executive will not
at any time, without the prior written consent of the Board or
a person authorized by the Board, publish or disclose to any
third party, use for the Executive's own benefit or advantage,
or make available for others to use, any confidential
information with respect to any of the Company's products,
services, subscribers, suppliers, marketing techniques,
methods, or future plans disclosed to the Executive as a
result of the Executive's employment with the Company, to the
extent such information has heretofore remained confidential
(except for unauthorized disclosures) and except as otherwise
ordered by a court of competent jurisdiction.
(b) The Executive acknowledges that the restrictions contained in
Section 5(a) are reasonable and necessary, in view of the
nature of the Company's business, in order to protect the
legitimate interests of the Company, and that any violation
thereof would result in irreparable injury to the Company.
Therefore, the Executive agrees that in the event of a breach
or threatened breach by the Executive of the provisions of
Section 5(a), the Company shall be entitled to obtain from any
court of competent jurisdiction, preliminary or permanent
injunctive relief restraining the Executive from disclosing or
using any such confidential information. Nothing herein shall
be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened
breach, including, without limitation, recovery of damages
from the Executive.
6. Covenant Not to Compete. The Executive agrees that, through the
position of Chief Operating Officer, the Executive has established
valuable and recognized expertise in the
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<PAGE> 4
paging business and has had and will have access to the trade secrets
and confidential information of the Company. The Executive hereby
enters into a covenant restricting the Executive from soliciting
employees of the Company and from competing against the Company (the
"Covenant Not to Compete") upon the terms and conditions described
below:
(a) During the Executive's employment and for twelve (12) months
thereafter, the Executive agrees that the Executive will not,
without the prior written consent of the Company:
(i) induce or attempt to induce any of the Company's
employees to terminate their employment with the
Company in order to become an director, officer,
employee, consultant, or independent contractor to or
for any enterprise with which the Executive has an
interest, whether as a proprietor, partner,
shareholder, employee, agent, director, or officer;
(ii) at any time and in any state or other jurisdiction in
the United States in which the Company is engaged in
business or, during the Executive's employment, has
developed plans to engage in business: (1) engage in,
including as a director, agent, or representative, or
have any direct or indirect financial interest
(whether as a partner, shareholder, or owner) in any
enterprise that engages in, the business of owning
and operating one-way paging and wireless messaging
networks, voice mail services or data transmitting
services (the "Business"); or (2) participate as an
employee or officer in any enterprise in which the
Executive's responsibility relates to the Business.
The ownership by the Executive of less than five
percent (5%) of the outstanding equity securities of
any corporation, partnership, limited liability
company, trust, or other entity shall not be deemed a
violation of this Section 6(a)(ii).
(iii) solicit or cause or encourage any person to solicit
any Business in competition with the Company from any
person who is a client of the Company during the
Executive's employment hereunder.
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<PAGE> 5
(b) The Executive agrees that the restrictions set forth in this
Section 6 are reasonable, proper, and necessitated by
legitimate business interests of the Company and do not
constitute an unlawful or unreasonable restraint upon the
Executive' ability to earn a livelihood. The parties agree
that in the event any of the restrictions in this Agreement,
interpreted in accordance with the Agreement as a whole, are
found to be unreasonable a court of competent jurisdiction,
such court shall determine the limits allowable by law and
shall enforce the same.
(c) The Executive further acknowledges that it may be impossible
to assess the monetary damages incurred by the Executive's
violation of this Agreement, and that violation of this
Agreement will cause irreparable injury to the Company.
Accordingly, the Executive agrees that the Company will be
entitled, in addition to all other rights and remedies that
may be available, to an injunction enjoining and restraining
the Executive and any other involved party from committing a
violation of this Agreement. In addition, the Company will be
entitled to such damages as it can demonstrate it has
sustained by reason of the violation of this Agreement by the
Executive and/or others. However, recourse to any remedy
hereunder shall not constitute an exclusive remedy for the
Company, but rather the Company may resort to other remedies
or a combination of remedies as it may choose. The Executive
and the Company also agree in the event that either party is
successful in whole or in part in any legal action against the
other party under this Agreement, that the successful party
will be entitled to payment of all costs, including reasonable
attorney's fees, from the other party.
7. Termination. Notwithstanding any other provision of this Agreement,
this Agreement shall terminate upon the death of the Executive, or it
may be terminated with thirty (30) days' written notice as follows:
(a) The Company may terminate this Agreement under the following
circumstances:
(i) if the Executive is unable to perform any services by
reason of illness, physical, or mental disability, or
other similar incapacity ("Disability") that
continues for more than six (6) consecutive months;
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<PAGE> 6
(ii) or for "Cause." For purposes of this Agreement,
"Cause" means (A) dishonesty of a material nature
that relates to the performance of services under
this Agreement, (B) criminal conduct (other than
minor infractions and traffic violations) that
relates to the performance of services under this
Agreement, or (C) the Executive's willfully breaching
or failing to perform his duties as described in
Section 2 hereof, which act or omission results in a
material adverse effect on the Company. No act or
failure to act on the Executive's part shall be
deemed "willful" unless done, or omitted to be done,
by the Executive not in good faith and without
reasonable belief that such action or omission was in
the best interests of the Company. Notwithstanding
the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there
shall have been delivered to the Executive a
certificate of a resolution duly adopted by the
affirmative vote of not less than seventy-five
percent (75%) of the entire membership of the Board
at a meeting of the Board called and held for such
purpose (after reasonable notice to the Executive and
an opportunity for the Executive, together with the
Executive's counsel, to be heard before the Board),
finding that in the good faith opinion of the Board,
the Executive has engaged in the conduct set forth in
this paragraph and specifying the particulars thereof
in detail.
(b) The Executive may terminate this Agreement at any time upon
sixty (60) days' prior written notice.
(c) Any purported termination of the Executive's employment by the
Company or by the Executive shall be communicated by written
Notice of Termination to the other party hereto in accordance
with Section 9. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice that shall indicate the
specific provision of this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's
employment under the provision so indicated.
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<PAGE> 7
8. Compensation Upon Termination.
(a) Death. If the Executive's employment is terminated by the
Executive's death, the Company shall pay to the Executive's
estate, or as may be directed by the legal representatives to
such estate, (i) the Executive's full Base Salary through the
Executive's date of death and all other unpaid amounts, if
any, to which the Executive is entitled as of the Executive's
date of death, under any Company fringe benefit or incentive
compensation plan or program, at the time such payments would
otherwise ordinarily be due; and (ii) the Executive's full
Base Salary that would have been payable to the Executive from
the Executive's date of death through the Expiration Date, in
a lump sum within forty-five (45) days after his death.
(b) Disability. During any period that the Executive fails to
perform the Executive's duties hereunder as a result of
incapacity due to Disability (the "Disability Period"), the
Executive shall continue to receive (i) the Executive's full
Base Salary through the Executive's date of disability and all
other unpaid amounts, if any, to which the Executive is
entitled as of the Executive's date of disability, under any
Company fringe benefit or incentive compensation plan or
program, at the time such payments are due; and (ii) the
Executive's full Base Salary that would have been payable to
the Executive from the Executive's date of disability through
the Expiration Date, at the time such payments would otherwise
ordinarily be due; provided, however, that any payments made
to the Executive during the Disability Period shall be reduced
by any amounts paid or payable to the Executive under any
Company disability benefit plans.
(c) For Cause. If the Company terminates the Executive's
employment for Cause, the Company shall pay the Executive's
full Base Salary through the date specified in the Notice of
Termination and the Company shall have no further obligations
to the Executive under this Agreement.
(d) Voluntary. If the Executive terminates his employment for
other than Good Reason, the Company shall pay the Executive
the Executive's full Base Salary through the date specified in
the Notice of Termination and from the date of termination
through the earlier of (I) one (1) year from the date of
termination or
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<PAGE> 8
(ii) the Expiration Date, at the time such payments would
otherwise ordinarily be due.
"Good Reason" means the occurrence, without the Executive's
express written consent, of any of the following
circumstances:
(i) the Company's failure to perform or observe
any of the material terms or provisions of
this Agreement or of the Metrocall, Inc.
Change of Control Agreement for Chief
Operating Officer dated of even date herewith
(the "Change of Control Agreement"), and the
continued failure of the Company to cure such
default within fifteen (15) days after the
Executive gives a written demand for
performance to the Company, which demand
shall describe specifically the nature of
such alleged failure to perform or observe
such material terms or provisions;
(ii) the assignment to the Executive of any duties
inconsistent with, or any substantial
diminution in, such Executive's status or
responsibilities as in effect on the date
hereof, including imposition of travel
obligations that differ materially from
required business travel as of the date
hereof;
(iii) any diminution in the status or
responsibilities of the Executive's position
from that which existed as of the date
hereof, whether by reason of the Company's
ceasing to be a public company under the
Securities Exchange Act of 1934, becoming a
subsidiary of a successor public company, or
otherwise;
(iv) (I) a reduction in the Executive's Base
Salary as in effect on the date hereof, as
that amount may be increased from time to
time; or (II) the failure to pay a bonus
award to which the Executive is otherwise
entitled under any short-term incentive plan
in which the Executive then participates, at
the time such awards are usually paid;
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<PAGE> 9
(v) the termination of employment of William L.
Collins, III or Vincent D. Kelly (other than
a termination (I) by the Company for "Cause"
or (II) because of death or "Disability" as
those terms are defined in their respective
employment agreements), including a
termination that results from a failure by
the Company and Collins or Kelly to reach
agreement to continue Collins' or Kelly's
employment on terms at least as favorable to
him, in the aggregate, as those in effect
when his then existing employment agreement
expired;
(vi) a change in the principal place of the
Executive's employment, as in effect on the
date hereof, or as in effect after any
subsequent change to which the Executive
consented in writing, to a location more than
thirty-five (35) miles distant from the
location of such principal place;
(vii) (I) the Company's failure to continue in
effect any incentive compensation plan or
stock option plan in which the Executive
participates, unless the Company has provided
an equivalent alternative compensation
arrangement (embodied in an ongoing
substitute or alternative plan) to the
Executive, or (II) the Company's failure to
continue the Executive's participation in any
such incentive or stock option plan on
substantially the same basis, both in terms
of the amount of benefits provided and the
level of the Executive's participation
relative to other participants, as of the
date hereof or as of any succeeding December
31;
(viii) the Company's violation of any applicable
criminal law not due to the Executive's gross
negligence or willful misconduct;
(ix) the failure of the Company or any successor
to obtain a satisfactory written agreement
from any successor to assume and agree to
perform this Agreement, as contemplated in
Section 12 below; or
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<PAGE> 10
(x) any purported termination of the Executive's
employment that is not effected pursuant to a
Notice of Termination satisfying the
requirements of Sections 7(a)(ii) and 7(c) as
applicable. For purposes of this Agreement,
no such purported termination shall be
effective except as constituting Good Reason.
The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any
circumstances constituting Good Reason hereunder.
(e) Other. Except as otherwise provided in Section 8(f) for
terminations after a Change in Control, if the Company
terminates the Executive's employment other than for Cause or
Disability (under Section 8(b) hereof), or if the Executive
terminates employment with the Company for Good Reason, the
Company shall pay the Executive
(i) the Executive's full Base Salary through the date
specified in the Notice of Termination within two (2)
days after such date and all other unpaid amounts, if
any, to which the Executive is entitled as of the
date specified in the Notice of Termination, under
any Company fringe benefit or incentive compensation
plan or program, at the time such payments are due;
(ii) the full Base Salary and any other amounts that would
have been payable to the Executive hereunder from the
date specified in the Notice of Termination through
the Expiration Date within forty-five (45) days after
such date; and
(iii) in lieu of exercising or retaining any rights the
Executive may have to exercise some or all of the
outstanding stock options that he then holds
(including any rights to exercise stock options that
arise during the Term if he were to remain employed
and including any that would otherwise terminate as
result of his termination of employment), the
Executive may elect within sixty (60) days after
termination of employment to surrender such rights to
the Company and receive in exchange therefor a cash
payment equal to the aggregate difference, if
positive, between (a) the
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<PAGE> 11
"fair market value" (determined as of the date of
termination using the higher of the "fair market
value" (i) as defined in the terms of the applicable
option plan or option agreement as of the date of
termination and (ii) as defined in the plan or
agreement on the date of grant) of the shares of
common stock subject to the options and (b) the
option prices of the shares subject to such
surrendered options; and the Company shall make such
payment within forty-five (45) days after the
Executive notifies the Company of his election to
surrender all or a portion of his options.
(f) Termination of Employment after a Change in Control. If,
after a Change of Control (as defined in the Change of Control
Agreement), the Company terminates the Executive's employment
other than for Cause or Disability, or if the Executive
terminates employment with the Company for Good Reason after a
Change of Control, Executive's compensation and benefits shall
be exclusively determined by the terms of the Change of
Control Agreement as then in effect.
(g) Mitigation. The Executive shall not be required to mitigate
amounts payable pursuant to this section by seeking other
employment or otherwise.
9. Notices. All notices, demands, requests, or other communications
required or permitted to be given or made hereunder shall be in
writing and shall be delivered, telecopied, or mailed by first class
registered or certified mail, postage prepaid, addressed as follows:
(a) if to the Company:
Metrocall, Inc.
6677 Richmond Highway
Alexandria, Virginia 22306
Telecopier: (703) 768-5407
Attention: Francis A. Martin, III
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<PAGE> 12
with a copy (which shall not constitute notice) to
Wilmer, Cutler & Pickering
2445 M Street, NW
Washington, DC 20037-1420
Telecopier: (202) 663-6363
Attention: George P. Stamas and John B. Watkins
(a) if to the Executive:
Steven D. Jacoby
4303 Kimbrelee Court
Alexandria, VA 22309
or to such other address as may be designated by either party in a
notice to the other. Each notice, demand, request, or other
communication that shall be given or made in the manner described
above shall be deemed sufficiently given or made for all purposes
three (3) days after it is deposited in the U.S. mail, postage
prepaid, or at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, the answer back or the affidavit
of messenger being deemed conclusive evidence of such delivery) or at
such time as delivery is refused by the addressee upon presentation.
10. Severability. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or
enforceability of the other provisions of this Agreement, which shall
remain in full force and effect.
11. Survival. It is the express intention and agreement of the parties
that the provisions of Section 5 shall survive three (3) years after
the termination of this Agreement.
12. Assignment; Successors. The rights and obligations of the parties to
this Agreement shall not be assignable, except that the rights and
obligations of the Company hereunder shall be assignable in connection
with any subsequent merger, consolidation, sale of substantially all
of the assets of the Company, or similar reorganization of a
successor. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company is required to perform
it. Failure
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<PAGE> 13
of the Company to obtain such assumption and agreement before the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the
Company as provided in Section 6 of the Change of Control Agreement.
13. Binding Effect. Subject to any provisions restricting assignment,
this Agreement shall be binding upon the parties and shall inure to
the benefit of the parties and their respective heirs, devisees,
executors, administrators, legal representatives, successors, and
assigns.
14. Amendment; Waiver. This Agreement shall not be amended, altered or
modified except by an instrument in writing duly executed by the both
parties. Neither the waiver by either of the parties of a breach of
or a default under any of the provisions of this Agreement, nor the
failure of either of the parties, on one or more occasions, to enforce
any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall thereafter be construed as a waiver of any
subsequent breach or default of a similar nature, or as a waiver of
any such provisions, rights, or privileges.
15. Headings. Section headings contained in this Agreement are inserted
for convenience of reference only, shall not be deemed to be a part of
this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction, or scope of any of the provisions of
this Agreement.
16. Governing Law. This Agreement, the rights and obligations of the
parties, and any claims or disputes arising from this Agreement, shall
be governed by and construed in accordance with the laws of the
Commonwealth of Virginia (but not including the choice of law rules
thereof).
17. Entire Agreement. This Agreement and the Change of Control Agreement
constitute the entire agreement between the parties with respect to
the subject matter hereof and thereof, and supersede all prior oral or
written agreements, commitments, or understandings with respect to the
matters provided for in this Agreement and the Change of Control
Agreement.
18. Arbitration. The Executive may designate in writing to the Company (in
which case this Section 18 shall have effect but not otherwise) that
any dispute that may arise directly or
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<PAGE> 14
indirectly in connection with this Agreement, the Executive's
employment, or the termination of the Executive's employment, whether
arising in contract, statute, tort, fraud, misrepresentation, or other
legal theory, shall be determined solely by arbitration in Washington,
D.C. under the rules of the American Arbitration Association (the
"AAA"). The only legal claims between the Executive, on the one hand,
and the Company or any Subsidiary, on the other, that would not be
included in this agreement to arbitration are claims by the Executive
for workers' compensation or unemployment compensation benefits,
claims for benefits under a Company or Subsidiary benefit plan if the
plan does not provide for arbitration of such disputes, and claims by
the Executive that seek judicial relief in the form of specific
performance of the right to be paid until the termination date during
the pendency of any dispute or controversy arising under Section
7(a)(ii). If this Section 18 is in effect, any claim with respect to
this Agreement, the Executive's employment, or the termination of the
Executive's employment must be established by a preponderance of the
evidence submitted to the impartial arbitrator. A single arbitrator
engaged in the practice of law shall conduct any arbitration under the
then current procedures of the AAA and under the AAA's then current
Model Employment Arbitration Rules. The arbitrator shall have the
authority to order a pre-hearing exchange of information by the
parties including, without limitation, production of requested
documents, and examination by deposition of parties and their
authorized agents. If this Section 18 is in effect, the decision of
the arbitrator (i) shall be final and binding, (ii) shall be rendered
within ninety (90) days after the impanelment of the arbitrator, and
(iii) shall be kept confidential by the parties to such arbitration.
The arbitration award may be enforced in any court of competent
jurisdiction. The Federal Arbitration Act, 9 U.S.C. Section Section
1-15, not state law, shall govern the arbitrability of all claims.
19. Cancellation of Previous Agreements. In consideration of this
Agreement, the Executive hereby waives any and all rights under and
releases, and indemnifies and holds the Company and its successors and
assigns, harmless from any damage, loss, liability, judgment, fine,
penalty, assessment, settlement, cost, or expense including, without
limitation, reasonable expenses of investigation, reasonable
attorneys' fees and other reasonable legal costs and expenses incident
to any of the foregoing or to the enforcement of this Section, whether
or not suit is brought or, if brought, whether or not such suit is
successful, in whole or in part arising out of or relating to any and
all employment, consulting, non-competition, bonus, or other
compensatory plan, program,
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<PAGE> 15
arrangement, or contract relating to the employment of the Executive,
written or oral, between the Executive and the Company or any person
affiliated with the Company, and the Executive consents to the
termination of each such agreement and arrangement effective as of the
date of this Agreement; provided, however, that nothing herein shall
constitute a termination or waiver of the Change of Control Agreement.
20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which
shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement,
or have caused this Agreement to be duly executed, on their behalf as of the
day and year first hereinabove written.
<TABLE>
<S> <C> <C>
METROCALL, INC.
Date: May 15, 1996 By:/s/ Richard D. Johnston
------------ -----------------------
Richard D. Johnston
Chairman of the Board
Date: May 15, 1996 /s/ Steven D. Jacoby
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Steven D. Jacoby
| | Executive's Copy
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| | Company's Copy
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</TABLE>
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EXHIBIT 10.16
METROCALL, INC.
CHANGE OF CONTROL AGREEMENT
FOR CHIEF EXECUTIVE OFFICER
May 15, 1996
William L. Collins, III
314 River Bend Road
Great Falls, Virginia 22066
Dear Mr. Collins:
Metrocall, Inc. (the "Company"), on behalf of itself, its
subsidiaries, and its shareholders, wishes to encourage your continued service
and dedication in the performance of your duties, notwithstanding the
possibility, threat, or occurrence of a Change of Control (as defined in
Section 1(b) below) of the Company. The Board of Directors of the Company (the
"Board") believes that the prospect of a pending or threatened Change of
Control inevitably creates distractions and personal risks and uncertainties
for a company's executives and that it is in the best interests of the Company
to minimize such distractions to certain executives and the Company. The Board
further believes that it is in the best interests of the Company to encourage
its executives' full attention and dedication to their duties, both currently
and in the event of any threatened or pending Change of Control.
Accordingly, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued retention of you and certain
members of the Company's management and the attention and dedication of
management to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a Change
of Control of the Company.
To induce you (the "Executive") to remain in the Company's employ and
in consideration of your continued service to the Company, the Company agrees
that you shall receive the benefits set forth in this letter agreement (the
"Agreement") if your employment with the Company is terminated for any reason
after a Change of Control of the Company and has, of even date herewith,
entered into a revised employment agreement relating to your services as
President and Chief Executive Officer (the "Employment Agreement"). For
purposes of this Agreement, references to employment with the Company shall
include employment with a Subsidiary of the Company.
Section 1. DEFINITIONS
The following terms shall have the meanings set forth below for purposes of
this Agreement.
(a) CAUSE. Under this Agreement, "Cause" shall mean (1)
dishonesty of a material nature relating to performing
services under the Employment Agreement, (2) criminal conduct
(other than minor infractions and traffic violations) that
relates
<PAGE> 2
to the performance of services under the Employment Agreement,
or (3) the Executive's willfully breaching or failing to
perform his employment duties as set forth in his Employment
Agreement, which act or omission results in a material adverse
effect on the Company. For purposes of this Section 1(a), no
act, or failure to act, on the Executive's part shall be
deemed "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that
such action or omission was in the best interests of the
Company. Notwithstanding the foregoing, the Executive shall
not be deemed to have been terminated for Cause unless and
until there shall have been delivered to the Executive a
certificate of a resolution duly adopted by the affirmative
vote of not less than seventy-five percent (75%) of the entire
membership of the Board at a meeting of the Board called and
held for such purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with
the Executive's counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, the
Executive has engaged in the conduct set forth in this
subsection and specifying the particulars thereof in detail.
(b) CHANGE OF CONTROL. For purposes of this Agreement, a "Change
of Control" shall be deemed to have occurred if there is a
change of control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") or any successor
provision of similar import, whether or not the Company is
then subject to such reporting requirement; provided that,
without limitation, such a Change of Control shall be deemed
to have occurred if:
(i) any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as determined for purposes of
Regulation 13D-G under the Exchange Act as currently
in effect), directly or indirectly, of securities
representing twenty-five percent (25%) or more of the
total voting power of all of the Company's then
outstanding voting securities, unless through a
transaction consummated with the Board's prior
approval; provided, however, that for purposes of
this paragraph, persons acting in concert under the
terms of that certain Voting Agreement dated as of
August 31, 1994 shall not, solely as a result of
actions provided under such agreement, be treated as
a "person";
(ii) during any period of two consecutive calendar years,
individuals who at the beginning of such period
constitute the Board and any new director(s) whose
election by the Board or nomination for election by
the Company's shareholders was approved by a vote of
at least two-thirds of the directors then still in
office who either were directors at the beginning of
the period or whose election or nomination for
election was previously so approved cease for any
reason to constitute a majority of the Board;
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(iii) the Company becomes a party to a merger, plan of
reorganization, consolidation, or share exchange in
which either (x) the Company will not be the
surviving corporation or (y) the Company will be the
surviving corporation and any outstanding shares of
the Company's common stock will be converted into
shares of any other company (other than a
reincorporation or the establishment of a holding
company involving no change of ownership of the
Company) or other securities or cash or other
property (excluding payments made solely for
fractional shares);
(iv) the shareholders of the Company approve a merger,
plan of reorganization, consolidation, or share
exchange with any other corporation, and immediately
following such merger, plan of reorganization,
consolidation, or share exchange the holders of the
voting securities of the Company outstanding
immediately prior thereto hold securities
representing fifty percent (50%) or less of the
combined voting power of the voting securities of the
Company or such surviving entity outstanding
immediately after such merger, plan of
reorganization, consolidation, or share exchange;
provided, however, that notwithstanding the
foregoing, no Change of Control for purposes of this
Section 1(b)(iv) shall be deemed to have occurred if
seventy-five percent (75%) or more of the members of
the Board of the Company or such surviving entity
immediately after such merger, plan of
reorganization, consolidation, or share exchange is
comprised of persons who served as directors of the
Company immediately before such merger, plan of
reorganization, consolidation, or share exchange or
who are otherwise designees of the Company; or
(v) any other event occurs that a majority of the Board,
in its sole discretion, shall determine constitutes a
Change of Control.
(c) CONTROLLED GROUP. For purposes of this Agreement, "Controlled
Group" shall mean the Company and all of the Company's
Subsidiaries.
(d) DISABILITY. "Disability" shall have the meaning set forth in
the Employment Agreement.
(e) EMPLOYER. For purposes of this Agreement, "Employer" shall
mean the Company or the Subsidiary, as the case may be, with
which the Executive has an employment relationship.
(f) GOOD REASON. For purposes of this Agreement, "Good Reason"
shall mean the occurrence, without the Executive's express
written consent, of any of the following circumstances:
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(i) the Company's failure to perform or observe any of
the material terms or provisions of this Agreement or
the Employment Agreement, and the continued failure
of the Company to cure such default within fifteen
(15) days after the Executive gives a written demand
for performance to the Company, which demand shall
describe specifically the nature of such alleged
failure to perform or observe such material terms or
provisions;
(ii) the assignment to the Executive of any duties
inconsistent with, or any substantial diminution in,
such Executive's status or responsibilities as in
effect immediately before a Change of Control of the
Company, including imposition of travel obligations
that differ materially from required business travel
immediately before the Change of Control;
(iii) any diminution in the status or responsibilities of
the Executive's position from that which existed
immediately before the Change of Control, whether by
reason of the Company's ceasing to be a public
company under the Exchange Act, becoming a subsidiary
of a successor public company, or otherwise;
(iv) (I) a reduction in the Executive's Base Salary (as
defined in the Employment Agreement), as that amount
may be increased from time to time and as in effect
immediately before the Change of Control; or (II) the
failure to pay a bonus award to which the Executive
is otherwise entitled under any short-term incentive
plan in which the Executive then participates, or any
successor incentive compensation plans at the time
such awards are usually paid;
(v) the termination of employment of Steven D. Jacoby or
Vincent D. Kelly (other than a termination (I) by the
Company for "Cause" or (II) because of death or
"Disability" as those terms are defined and applied
in their respective employment agreements), including
a termination that results from a failure by the
Company and Jacoby or Kelly to reach agreement to
continue Jacoby's or Kelly's employment on terms at
least as favorable to him, in the aggregate, as those
in effect before the Change in Control of the
Company;
(vi) a change in the principal place of the Executive's
employment, as in effect immediately before the
Change of Control of the Company, to a location more
than thirty-five (35) miles distant from the location
of such principal place at such time;
(vi) (A) the Company's failure to continue in effect any
incentive compensation plan or stock option plan in
which the Executive participates immediately before
the Change in Control, unless an
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equivalent alternative compensation arrangement
(embodied in an ongoing substitute or alternative
plan) has been provided to the Executive, or (B) the
Company's failure to continue the Executive's
participation in any such incentive or stock option
plan on substantially the same basis, both in terms
of the amount of benefits provided and the level of
the Executive's participation relative to other
participants, as existed immediately before the time
of the Change of Control;
(viii) the Company's violation of any applicable criminal
law not due to the Executive's gross negligence or
willful misconduct;
(ix) the failure of the Company or any successor to obtain
a satisfactory written agreement from any successor
to assume and agree to perform this Agreement, as
contemplated in Section 6(a) below; or
(x) any purported termination of the Executive's
employment that is not effected pursuant to a Notice
of Termination satisfying the requirements of Section
3(b) or, if applicable, Section 1(a). For purposes
of this Agreement, no such purported termination
shall be effective except as constituting Good
Reason.
The Executive's continued employment shall not constitute consent to,
or a waiver of rights with respect to, any circumstances constituting
Good Reason hereunder.
(g) SUBSIDIARY. For purposes of this Agreement, "Subsidiary"
shall mean any corporation of whose voting stock the Company
directly or indirectly owns more than fifty percent (50%).
(h) TERMINATION DATE. For purposes of this Agreement,
"Termination Date" shall mean: (i) if the Executive's
employment is terminated for Disability pursuant to the
Employment Agreement, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not
have returned to the full-time performance of his duties
during such thirty-day period); and (ii) if the Executive's
employment is terminated for Cause or Good Reason or for any
reason other than death or Disability, the date specified in
the Notice of Termination (which in the case of a termination
for Cause shall not be less than thirty (30) days and in the
case of a termination for Good Reason shall not be less than
thirty (30) days nor more than sixty (60) days, respectively,
from the date such Notice of Termination is given).
Section 2. TERM OF AGREEMENT
(a) GENERAL. Upon execution by the Executive, this Agreement
shall commence as of May ___, 1996. This Agreement shall
continue in effect on December 31,
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1999; provided, however, that the term shall be automatically
extended for additional one (1) year periods on each
anniversary date of this Agreement, unless and until either
party notifies the other party not less than ninety (90) days
before such anniversary date that such party is terminating
this Agreement, which termination shall be effective as of the
end of such initial term or extended term, as the case may be
(the "Expiration Date"); and provided further, however, that
if a Change of Control of the Company occurs before the
Expiration Date, this Agreement shall continue in effect for a
period of thirty-six months beyond the month in which the
Change of Control occurred.
(b) DISPOSITION OF EMPLOYER. If the Executive is employed by a
Subsidiary, the terms of this Agreement shall expire if such
Subsidiary is sold or otherwise disposed of before a Change of
Control unless the Executive continues in employment with the
Controlled Group after such sale or other disposition. If the
Executive's Employer is sold or disposed of following a Change
of Control, this Agreement shall continue through its original
term or any extended term then in effect.
(c) DEEMED CHANGE OF CONTROL. If the Executive's employment with
the Employer is terminated before the date on which a Change
of Control occurs, and such termination was at the request of
a third party who has taken steps to effect a Change of
Control or the termination was otherwise caused by the Change
of Control, then for all purposes of this Agreement, a Change
of Control shall be deemed to have occurred before such
termination.
(d) EXPIRATION OF AGREEMENT. No termination or expiration of this
Agreement shall affect any rights, obligations, or liabilities
of either party that shall have accrued on or before the date
of such termination or expiration.
Section 3. TERMINATION FOLLOWING CHANGE OF CONTROL
(a) ENTITLEMENT TO BENEFITS. If a Change of Control of the
Company occurs, the Executive shall be entitled to the
benefits provided in Section 4 hereof upon his termination of
employment with the Company within three years after the date
of the Change of Control, unless such termination is (i) a
result of the Executive's death, (ii) for Cause, (iii) a
result of the Executive's Disability(pursuant to the terms of
the Employment Agreement that provide for termination as a
result of Disability), or (iv) by the Executive other than for
Good Reason. A termination of the Executive's employment that
entitles the Executive to the payment of benefits under
Section 4 hereof shall be referred to hereinafter as a
"Termination."
(b) NOTICE OF TERMINATION. Any purported termination of the
Executive's employment by the Company or by the Executive
shall be communicated by
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written Notice of Termination to the other party hereto in
accordance with Section 8. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice that shall
indicate the specific provision of this Agreement relied upon
and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
If, following a Change of Control, the Executive's employment
shall be terminated for Cause or by the Executive for other
than Good Reason, the Company shall pay the Executive any
amounts to be paid to the Executive pursuant to the Employment
Agreement and any other compensation plans, programs, or
employment agreements then in effect, and the Company shall
have no further obligations to the Executive under this
Agreement.
If within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice notifies the other
party that a dispute exists concerning the grounds for
termination, then, notwithstanding the meaning of "Termination
Date" set forth in Section 1(h), the Termination Date shall be
the date on which the dispute is finally resolved, whether by
mutual written agreement of the parties or by a decision
rendered pursuant to Section 11; provided that the Termination
Date shall be extended by a notice of dispute only if such
notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute,
the Company will continue to pay the Executive his full
compensation in effect when the notice giving rise to the
dispute was given, and continue the Executive as a participant
in all benefits, plans, or perquisites in which the Executive
was participating or which he was enjoying when the Notice of
Termination giving rise to the dispute was given (to the
extent such continued participation is not prohibited by law
or the generally applicable terms of those arrangements),
until the dispute is finally resolved. Amounts paid under
this Section 3(b) are in addition to all other amounts due
under this Agreement and shall not be offset against or reduce
any other amounts due under this Agreement.
Section 4. COMPENSATION UPON A TERMINATION
Following a Change of Control of the Company, upon a Termination of the
Executive's employment by the Company without "Cause" or by the Executive for
"Good Reason," the Executive shall be entitled to the following benefits,
provided that the Termination occurs during the three-year period immediately
following the date of the Change of Control:
(a) STANDARD BENEFITS. The Company shall pay the Executive his
full Base Salary through the Termination Date, at the rate in
effect at the time the Notice of Termination is given, no
later than the second day following the Termination Date, plus
all other amounts to which the Executive is entitled under any
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compensation plan of the Company applicable to the Executive
at the time such payments are due. Without limitation,
amounts payable pursuant to this Section 4(a) shall include,
pursuant to the express terms of the short-term incentive plan
in which the Executive participates or otherwise, the
Executive's annual bonus under such short-term incentive plan,
pro-rated to the Termination Date.
(b) ADDITIONAL BENEFITS. The Company shall pay to the Executive
as additional pay ("Additional Pay"), the product of (i) three
(3) and (ii) the sum of (x) the Executive's annual Base Salary
rate in effect immediately before the Termination Date and (y)
the Executive's annual bonus amount under the short-term
incentive plan in which the Executive participates, such bonus
amount to be calculated on the basis of the extent to which
the performance factors targeted by the Compensation Committee
of the Board have been achieved (for this purpose, the
Company's performance through the Termination Date shall be
annualized based upon the actual number of days elapsed from
the beginning of the fiscal year in which the Termination
occurs through the Termination Date over a year of 360 days),
which shall be deemed to be 100% unless the performance
actually achieved is greater than 100%, in which case the
actual performance levels shall be utilized. The Company
shall pay to the Executive the Additional Pay in a lump sum,
in cash, not later than the thirtieth (30th) day following the
Termination Date.
(c) RETIREMENT PLAN BENEFITS. If not already vested, the
Executive shall be deemed fully vested in all Company
retirement plans and/or other written agreements relating to
pay upon retirement in which the Executive was a participant,
party, or beneficiary immediately preceding a Change of
Control, and any additional plans and/or agreements in which
such Executive became a participant, party, or beneficiary
thereafter. In addition to the foregoing, for purposes of
determining the amounts to be paid to the Executive under such
plans and/or agreements, the years of service with the Company
and the age of the Executive under all such plans and
agreements shall be deemed increased by the lesser of
thirty-six (36) months or such shorter period of time as would
render the Executive sixty-five (65) years of age. For
purposes of this Section 4(c), "plans" include, without
limitation, any long-term incentive plan, or non-qualified and
mid-career retirement plans but does not include any plans
intended to be qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). If the terms
of the plans referenced in this Section 4(c) do not for any
reason coincide with the provisions of this Section 4(c), the
Executive shall be entitled to receive from the Company under
the terms of this Agreement an amount equivalent to all
amounts he would have received had all such plans continued in
existence as in effect on the date of this Agreement after
being amended to coincide with the terms of this Section 4(c).
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(d) OPTION PAYMENTS. In lieu of exercising or retaining any
rights the Executive may have to exercise some or all of the
outstanding stock options that he then holds (including any
rights to exercise stock options that arise during the Term if
he were to remain employed and including any that would
otherwise terminate as result of his termination of
employment), the Executive may elect within sixty (60) days
after termination of employment to surrender such rights to
the Company and receive in exchange therefor a cash payment
equal to the aggregate difference, if positive, between (a)
the "fair market value" (determined as of the date of
termination using the higher of the "fair market value" (i) as
defined in the terms of the applicable option plan or option
agreement as of the date of termination and (ii) as defined
in the plan or agreement on the date of grant) of the shares
of common stock subject to the options and (b) the option
prices of the shares subject to such surrendered options; and
the Company shall make such payment within forty-five (45)
days after the Executive notifies the Company of his election
to surrender all or a portion of his options.
(e) HEALTH AND LIFE BENEFITS. Following the Termination Date, the
Company shall provide, at its own expense, the continued
health coverage required by Section 4980B of the Code and
shall continue to pay the premiums on his whole life policy
(as set forth in Section 4(c) of the Employment Agreement) for
the lesser of the remainder of the time during the insurance
policy during which premiums are due or three years.
(f) GROSS-UP PAYMENTS.
(i) If any payment or the value of any benefit received
or to be received by the Executive in connection with
the Executive's Termination or contingent upon a
Change of Control of the Company (whether received or
to be received pursuant to the terms of this
Agreement (the "Agreement Payments") or of any other
plan, arrangement, or agreement of the Company, its
successors, any person whose actions result in a
Change of Control of the Company, or any person
affiliated with any of them (or which, as a result of
the completion of the transactions causing a Change
of Control, will become affiliated with any of them
("Other Payments" and, together with the Agreement
Payments, the "Payments")) would be subject to the
excise tax imposed by Section 4999 of the Code or any
comparable federal, state, or local excise tax (such
excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the
"Excise Tax"), as determined as provided below, the
Company shall pay to the Executive an additional
amount (the "Gross-Up Payment") such that the net
amount the Executive retains, after deduction of the
Excise Tax on Agreement Payments and Other Payments
and any federal, state, and local income tax and
Excise Tax upon the payment provided for by this
Section 4(f)(i), and any interest, penalties, or
additions to tax payable
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by the Executive with respect thereto shall be equal
to the total present value of the Agreement Payments
and Other Payments at the time such Payments are to
be made. The intent of the parties is that the
Company shall be solely responsible for and shall
pay, any Excise Tax on any Payments and Gross-Up
Payment and any income and employment taxes
(including, without limitation, penalties and
interest) imposed on any Gross-Up Payments as well as
any loss of deduction caused by the Gross-Up Payment.
(ii) All determinations required to be made under this
Section 4(f), including, without limitation, whether
and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determinations,
shall be made by tax counsel (either a law firm or a
nationally recognized public accounting firm)
selected by the Company and reasonably acceptable to
the Executive ("Tax Counsel"). The Company shall
cause the Tax Counsel to provide detailed supporting
calculations to the Company and the Executive within
fifteen (15) business days after notice is given by
the Executive to the Company that any or all of the
Payments have occurred, or such earlier time as is
requested by the Company. Within two (2) business
days after such notice is given to the Company, the
Company shall instruct the Tax Counsel to timely
provide the data required by this Section 4(f) to the
Executive. The Company shall pay all fees and
expenses of the Tax Counsel. The Company shall pay
any Excise Tax determined pursuant to this Section
4(f) to the Internal Revenue Service ("IRS") and/or
other appropriate taxing authority on the Executive's
behalf within five (5) days after receipt of the Tax
Counsel's determination. If the Tax Counsel
determines that there is substantial authority
(within the meaning of Section 6662 of the Code) that
no Excise Tax is payable by the Executive, the Tax
Counsel shall furnish the Executive with a written
opinion that failure to disclose or report the Excise
Tax on the Executive's federal income tax return will
not constitute a substantial understatement of tax or
be reasonably likely to result in the imposition of a
negligence or similar penalty. Any determination by
the Tax Counsel shall be binding upon the Company and
the Executive in the absence of material mathematical
or legal error.
As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial
determination by the Tax Counsel hereunder, it is
possible that the Company will not have made Gross-Up
Payments that should have been made or that it will
have made Gross-Up Payments that should not have been
made, in each case, consistent with the calculations
required to be made hereunder. If the Company
exhausts its remedies pursuant to Section 4(f)(iii)
below and the Executive is
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thereafter required to pay any Excise Tax, the Tax
Counsel shall determine the amount of underpayment of
Excise Taxes that has occurred and the Company shall
promptly pay any such underpayment to the IRS or
other appropriate taxing authority on the Executive's
behalf or, if the Executive has previously paid such
underpayment, to the Executive. If the Tax Counsel
determines that an overpayment of Gross-Up Payments
has occurred, any such overpayment shall be treated
for all purposes as a loan to the Executive with
interest at the applicable federal rate provided for
in Section 7872(f)(2) of the Code, due and payable
within ninety (90) days after written demand to the
Executive by the Company; provided, however, that the
Executive shall have no duty or obligation whatsoever
to repay such loan if the Executive's receipt of the
overpayment, or any portion thereof, is includible in
the Executive's income and the Executive's repayment
of the same is not deductible by the Executive for
federal and state income tax purposes.
(iii) The Executive shall notify the Company in writing of
any claim by the IRS or state or local taxing
authority, that, if successful, would result in any
Excise Tax or an underpayment of Gross-Up Payments.
Such notice shall be given as soon as practicable but
no later than fifteen (15) business days after the
Executive is informed in writing of the claim and
shall inform the Company of the nature of the claim,
the administrative or judicial appeal period, and the
date on which any payment of the claim must be paid.
The Executive shall not pay any portion of the claim
before the expiration of the thirty (30) day period
following the date on which the Executive gives such
notice to the Company (or such shorter period ending
on the date that any amount under the claim is due).
If the Company notifies the Executive in writing
before the expiration of such thirty (30) day period
that it desires to contest the claim, the Executive
shall:
(A) give the Company any information reasonably
requested by the Company relating to the
claim;
(B) take such action in connection with
contesting the claim as the Company shall
reasonably request in writing from time to
time, including, without limitation,
accepting legal representation concerning the
claim by an attorney selected by the Company
who is reasonably acceptable to the
Executive; and
(C) cooperate with the Company in good faith in
order to effectively contest the claim;
provided, however, that the Company shall
bear and pay directly all costs and expenses
(including, without limitation, additional
interest and penalties and attorneys' fees)
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incurred in such contests and shall indemnify
and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income
tax (including, without limitation, interest
and penalties thereon) imposed as a result of
such representation. Without limitation upon
the foregoing provisions of this Section
4(f)(iii), except as provided below, the
Company shall control all proceedings
concerning such contest and, in its sole
opinion, may pursue or forego any and all
administrative appeal, proceedings, hearings,
and conferences with the taxing authority
pertaining to the claim. At the Company's
written request and upon payment to the
Executive of an amount at least equal to the
claim plus any additional amount necessary to
obtain the jurisdiction of the appropriate
tribunal and/or court, the Executive shall
pay the same and sue for a refund. The
Executive agrees to prosecute any contest of
a claim to a determination before any
administrative tribunal, in a court of
initial jurisdiction and in one or more
appellate courts, as the Company shall
determine; provided, however, that if the
Company requests the Executive to pay the
claim and sue for a refund, the Company shall
advance the amount of such payment to the
Executive, on an interest-free basis, and
shall indemnify and hold the Executive
harmless on an after-tax basis, from any
Excise Tax or income tax (including, without
limitation, interest and penalties thereon)
imposed on such advance or for any imputed
income on such advance. Any extension of the
statute of limitations relating to assessment
of any Excise Tax for the taxable year of the
Executive that is the subject of the claim is
to be limited solely to the claim.
Furthermore, the Company's control of the
contest shall be limited to issues for which
a Gross-Up Payment would be payable
hereunder. The Executive shall be entitled
to settle or contest, as the case may be, any
other issue raised by the IRS or any other
taxing authority.
(iv) If, after the Executive receives an amount the
Company advanced pursuant to Section 4(f)(iii) above,
the Executive receives any refund of a claim and/or
any additional amount that was necessary to obtain
jurisdiction, the Executive shall promptly pay to the
Company the amount of such refund (together with any
interest paid or credited thereon after taxes
applicable thereto). If, after the Executive
receives an amount the Company advanced pursuant to
Section 4(f)(iii) above, a determination is made that
the Executive shall not be entitled to any refund of
the claim, and the Company does not notify the
Executive in writing of its intent to contest such
denial of refund of a claim before the expiration of
thirty (30) days after such determination, then the
portion of such advance attributable to a claim shall
be forgiven and shall not be required to be
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<PAGE> 13
repaid. The amount of such advance attributable to a
claim shall offset, to the extent thereof, the amount
of the underpayment required to be paid by the
Company to the Executive.
(v) If, after the Company advances an additional amount
necessary to obtain jurisdiction, there is a final
determination made by the taxing authority that the
Executive is not entitled to any refund of such
amount, or any portion thereof, then the Executive
shall repay such nonrefundable amount to the Company
within thirty (30) days after the Executive receives
notice of such final determination. A final
determination shall occur when the period to contest
or otherwise appeal any decision by an administrative
tribunal or court of initial jurisdiction has been
waived or the time for contesting or appealing the
same has expired.
(g) LEGAL FEES AND EXPENSES. The Company shall pay to the
Executive all legal fees and expenses as and when incurred by
the Executive in connection with this Agreement, including all
such fees and expenses, if any, incurred in contesting or
disputing any Termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement, regardless of
the outcome, unless, in the case of a legal action brought by
or in the name of the Executive, a decision is rendered
pursuant to Section 10 that such action was not brought by the
Executive in good faith, in which event the Executive shall be
liable to the Company for its legal fees and expenses.
(h) NO MITIGATION. The Executive shall not be required to
mitigate the amount of any payment provided for in this
Section 4 by seeking other employment or otherwise, nor shall
the amount of any payment or benefit provided for in this
Section 4 be reduced by any compensation the Executive earns
as the result of employment by another employer or by
retirement or other benefits received after the Termination
Date or otherwise, except as specifically provided in this
Section 4. The Company's obligation to make payments provided
for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense, or other claim, right, or action that the
Company or Employer may have against the Executive or other
parties.
Section 5. DEATH AND DISABILITY BENEFITS
In the event of the death or Disability of the Executive after a
Change of Control of the Company, the Executive, or in the case of death, the
Executive's beneficiaries, shall receive the benefits to which they are
entitled under the the Employment Agreement, the retirement plans, disability
policies, and other applicable plans or agreements of the Company.
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<PAGE> 14
Section 6. SUCCESSORS; BINDING AGREEMENT
(a) OBLIGATIONS OF SUCCESSORS. The Company will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and
agree to perform this Agreement in the same manner and to the
same extent that the Company is required to perform it.
Failure of the Company to obtain such assumption and agreement
before the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle the Executive to
compensation from the Company in the same amount and on the
same terms as the Executive would be entitled hereunder if the
Executive had terminated his employment following a Change of
Control of the Company, except that for purposes of
implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Termination
Date. As used in this Agreement, the "Company" shall mean the
Company as hereinabove defined and any successor to its
business and/or assets as aforesaid that assumes and agrees to
perform this Agreement by operation of law, or otherwise.
(b) ENFORCEABLE BY BENEFICIARIES. This Agreement shall inure to
the benefit of and be enforceable by the Executive's personal
or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, and legatees (the
"Beneficiaries"). If the Executive dies while any amount
would still be payable hereunder if he had not then died, all
such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the
Executive's Beneficiaries.
(c) EMPLOYMENT. Except in the event of a Change of Control and,
thereafter, only as specifically set forth in this Agreement,
nothing in this Agreement shall be construed to (i) limit in
any way the right of the Company or a Subsidiary to terminate
the Executive's employment at any time for any reason or for
no reason; or (ii) be evidence of any agreement or
understanding, expressed or implied, that the Company or a
Subsidiary will employ the Executive in any particular
position, on any particular terms, or at any particular rate
of remuneration.
Section 7. CONFIDENTIAL INFORMATION.
The Executive shall hold in fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge, or data relating to
the Company, the Subsidiaries, and their respective businesses, that shall have
been obtained during the Executive's employment by the Employer and that shall
not be public knowledge (other than by acts by the Executive or his
representatives in violation of this Agreement). After termination of the
Executive's employment with the Company or any Employer within the Controlled
Group, the Executive shall not, without prior written consent of the Company or
the Employer, communicate or divulge any such information, knowledge, or data
to anyone other than the Company, the
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<PAGE> 15
Employer, or those designated by them. In no event shall an asserted violation
of this Section 7 or comparable provisions in any applicable employment
agreement constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.
Section 8. NOTICE
All notices, demands, requests. or other communications required or
permitted to be given or made hereunder shall be in writing and shall be
delivered, telecopied, or mailed by first class registered or certified mail,
postage prepaid, addressed as follows:
(a) if to the Company:
Metrocall, Inc.
6677 Richmond Highway
Alexandria, Virginia 22306
Telecopier: (703) 768-5407
Attention: Francis A. Martin, III
with a copy (which shall not constitute notice) to
Wilmer, Cutler & Pickering
2445 M Street, NW
Washington, DC 20037-1420
Telecopier: (202) 663-6363
Attention: George P. Stamas and John B. Watkins
(a) if to the Executive:
William L. Collins, III
314 River Bend Road
Great Falls, Virginia 22066
or to such other address as may be designated by either party in a
notice to the other. Each notice, demand, request, or other
communication that shall be given or made in the manner described
above shall be deemed sufficiently given or made for all purposes
three (3) days after it is deposited in the U.S. mail, postage
prepaid, or at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, the answer back, or the
affidavit of messenger being deemed conclusive evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.
Section 9. MISCELLANEOUS
No provision of this Agreement may be modified, waived, or discharged
unless such waiver, modification, or discharge is agreed to in writing and
signed by the Executive and the
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<PAGE> 16
Chairman of the Compensation Committee of the Board of Directors. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any conditions or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any earlier or later time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party that are
not expressly set forth in this Agreement. validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the Commonwealth of Virginia. All references to sections of the Code or the
Exchange Act shall be deemed also to refer to any successor provisions of such
sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law. The
obligations of the Company under Sections 4 and 5 shall survive the expiration
of the term of this Agreement.
Section 10. VALIDITY
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
Section 11. ARBITRATION
The Executive may designate in writing to the Company (in which case
this Section 11 shall have effect but not otherwise) that any dispute that may
arise directly or indirectly in connection with this Agreement, the Executive's
employment, or the termination of the Executive's employment, whether arising
in contract, statute, tort, fraud, misrepresentation, or other legal theory,
shall be determined solely by arbitration in Washington, D.C. under the rules
of the American Arbitration Association (the "AAA"). The only legal claims
between the Executive, on the one hand, and the Company or any Subsidiary, on
the other, that would not be included in this agreement to arbitration are
claims by the Executive for workers' compensation or unemployment compensation
benefits, claims for benefits under a Company or Subsidiary benefit plan if the
plan does not provide for arbitration of such disputes, and claims by the
Executive that seek judicial relief in the form of specific performance of the
right to be paid until the Termination Date during the pendency of any dispute
or controversy arising under Section 3(b). If this Section 11 is in effect,
any claim with respect to this Agreement, the Executive's employment, or the
termination of the Executive's employment must be established by a
preponderance of the evidence submitted to the impartial arbitrator. A single
arbitrator engaged in the practice of law shall conduct any arbitration under
the then current procedures of the AAA and under the AAA's then current Model
Employment Arbitration Rules. The arbitrator shall have the authority to order
a pre-hearing exchange of information by the parties including, without
limitation, production of requested documents, and examination by deposition of
parties and their authorized agents. If this Section 11 is in effect, the
decision of the arbitrator (i) shall be final and binding, (ii) shall be
rendered within ninety (90) days after the impanelment of the arbitrator, and
(iii) shall be kept confidential by the parties to such arbitration. The
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<PAGE> 17
arbitration award may be enforced in any court of competent jurisdiction. The
Federal Arbitration Act, 9 U.S.C. Section Section 1-15, not state law, shall
govern the arbitrability of all claims.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign both originals of this letter and return to the Assistant Secretary
of the Company one of the fully executed originals of this letter, which will
then constitute our agreement on this subject.
Sincerely,
METROCALL, INC.
By: /s/ Richard D. Johnston
-----------------------
Richard D. Johnston
Chairman of the Board of Directors
Acknowledged and Agreed:
/s/ William L. Collins, III
----------------------------
William L. Collins, III
May 15, 1996
------------
Date
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<PAGE> 1
EXHIBIT 10.17
METROCALL, INC.
CHANGE OF CONTROL AGREEMENT
FOR CHIEF FINANCIAL OFFICER
May 15, 1996
Vincent D. Kelly
11807 Chapel Road
Clifton, VA 22024
Dear Mr. Kelly:
Metrocall, Inc. (the "Company"), on behalf of itself, its
subsidiaries, and its shareholders, wishes to encourage your continued service
and dedication in the performance of your duties, notwithstanding the
possibility, threat, or occurrence of a Change of Control (as defined in
Section 1(b) below) of the Company. The Board of Directors of the Company (the
"Board") believes that the prospect of a pending or threatened Change of
Control inevitably creates distractions and personal risks and uncertainties
for a company's executives and that it is in the best interests of the Company
to minimize such distractions to certain executives and the Company. The Board
further believes that it is in the best interests of the Company to encourage
its executives' full attention and dedication to their duties, both currently
and in the event of any threatened or pending Change of Control.
Accordingly, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued retention of you and certain
members of the Company's management and the attention and dedication of
management to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a Change
of Control of the Company.
To induce you (the "Executive") to remain in the Company's employ and
in consideration of your continued service to the Company, the Company agrees
that you shall receive the benefits set forth in this letter agreement (the
"Agreement") if your employment with the Company is terminated for any reason
after a Change of Control of the Company and has, of even date herewith,
entered into a revised employment agreement relating to your services as Chief
Financial Officer (the "Employment Agreement"). For purposes of this
Agreement, references to employment with the Company shall include employment
with a Subsidiary of the Company.
Section 1. DEFINITIONS
The following terms shall have the meanings set forth below for purposes of
this Agreement.
(a) CAUSE. Under this Agreement, "Cause" shall mean (1)
dishonesty of a material nature relating to performing
services under the Employment Agreement, (2) criminal conduct
(other than minor infractions and traffic violations) that
relates
<PAGE> 2
to the performance of services under the Employment Agreement,
or (3) the Executive's willfully breaching or failing to
perform his employment duties as set forth in his Employment
Agreement, which act or omission results in a material adverse
effect on the Company. For purposes of this Section 1(a), no
act, or failure to act, on the Executive's part shall be
deemed "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that
such action or omission was in the best interests of the
Company. Notwithstanding the foregoing, the Executive shall
not be deemed to have been terminated for Cause unless and
until there shall have been delivered to the Executive a
certificate of a resolution duly adopted by the affirmative
vote of not less than seventy-five percent (75%) of the entire
membership of the Board at a meeting of the Board called and
held for such purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with
the Executive's counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, the
Executive has engaged in the conduct set forth in this
subsection and specifying the particulars thereof in detail.
(b) CHANGE OF CONTROL. For purposes of this Agreement, a "Change
of Control" shall be deemed to have occurred if there is a
change of control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") or any successor
provision of similar import, whether or not the Company is
then subject to such reporting requirement; provided that,
without limitation, such a Change of Control shall be deemed
to have occurred if:
(i) any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as determined for purposes of
Regulation 13D-G under the Exchange Act as currently
in effect), directly or indirectly, of securities
representing twenty-five percent (25%) or more of the
total voting power of all of the Company's then
outstanding voting securities, unless through a
transaction consummated with the Board's prior
approval; provided, however, that for purposes of
this paragraph, persons acting in concert under the
terms of that certain Voting Agreement dated as of
August 31, 1994 shall not, solely as a result of
actions provided under such agreement, be treated as
a "person";
(ii) during any period of two consecutive calendar years,
individuals who at the beginning of such period
constitute the Board and any new director(s) whose
election by the Board or nomination for election by
the Company's shareholders was approved by a vote of
at least two-thirds of the directors then still in
office who either were directors at the beginning of
the period or whose election or nomination for
election was previously so approved cease for any
reason to constitute a majority of the Board;
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<PAGE> 3
(iii) the Company becomes a party to a merger, plan of
reorganization, consolidation, or share exchange in
which either (x) the Company will not be the
surviving corporation or (y) the Company will be the
surviving corporation and any outstanding shares of
the Company's common stock will be converted into
shares of any other company (other than a
reincorporation or the establishment of a holding
company involving no change of ownership of the
Company) or other securities or cash or other
property (excluding payments made solely for
fractional shares);
(iv) the shareholders of the Company approve a merger,
plan of reorganization, consolidation, or share
exchange with any other corporation, and immediately
following such merger, plan of reorganization,
consolidation, or share exchange the holders of the
voting securities of the Company outstanding
immediately prior thereto hold securities
representing fifty percent (50%) or less of the
combined voting power of the voting securities of the
Company or such surviving entity outstanding
immediately after such merger, plan of
reorganization, consolidation, or share exchange;
provided, however, that notwithstanding the
foregoing, no Change of Control for purposes of this
Section 1(b)(iv) shall be deemed to have occurred if
seventy-five percent (75%) or more of the members of
the Board of the Company or such surviving entity
immediately after such merger, plan of
reorganization, consolidation, or share exchange is
comprised of persons who served as directors of the
Company immediately before such merger, plan of
reorganization, consolidation, or share exchange or
who are otherwise designees of the Company; or
(v) any other event occurs that a majority of the Board,
in its sole discretion, shall determine constitutes a
Change of Control.
(c) CONTROLLED GROUP. For purposes of this Agreement, "Controlled
Group" shall mean the Company and all of the Company's
Subsidiaries.
(d) DISABILITY. "Disability" shall have the meaning set forth in
the Employment Agreement.
(e) EMPLOYER. For purposes of this Agreement, "Employer" shall
mean the Company or the Subsidiary, as the case may be, with
which the Executive has an employment relationship.
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<PAGE> 4
(f) GOOD REASON. For purposes of this Agreement, "Good Reason"
shall mean the occurrence, without the Executive's express
written consent, of any of the following circumstances:
(i) the Company's failure to perform or observe any of
the material terms or provisions of this Agreement or
the Employment Agreement, and the continued failure
of the Company to cure such default within fifteen
(15) days after the Executive gives a written demand
for performance to the Company, which demand shall
describe specifically the nature of such alleged
failure to perform or observe such material terms or
provisions;
(ii) the assignment to the Executive of any duties
inconsistent with, or any substantial diminution in,
such Executive's status or responsibilities as in
effect immediately before a Change of Control of the
Company, including imposition of travel obligations
that differ materially from required business travel
immediately before the Change of Control;
(iii) any diminution in the status or responsibilities of
the Executive's position from that which existed
immediately before the Change of Control, whether by
reason of the Company's ceasing to be a public
company under the Exchange Act, becoming a subsidiary
of a successor public company, or otherwise;
(iv) (I) a reduction in the Executive's Base Salary (as
defined in the Employment Agreement), as that amount
may be increased from time to time and as in effect
immediately before the Change of Control; or (II) the
failure to pay a bonus award to which the Executive
is otherwise entitled under any short-term incentive
plan in which the Executive then participates, or any
successor incentive compensation plans at the time
such awards are usually paid;
(v) the termination of employment of William L. Collins,
III or Steven D. Jacoby (other than a termination (I)
by the Company for "Cause" or (II) because of death
or "Disability" as those terms are defined and
applied in their respective employment agreements),
including a termination that results from a failure
by the Company and Collins or Jacoby to reach
agreement to continue Collins' or Jacoby's employment
on terms at least as favorable to him, in the
aggregate, as those in effect before the Change in
Control of the Company;
(vi) a change in the principal place of the Executive's
employment, as in effect immediately before the
Change of Control of the Company, to a location more
than thirty-five (35) miles distant from the location
of such principal place at such time;
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<PAGE> 5
(vi) (A) the Company's failure to continue in effect any
incentive compensation plan or stock option plan in
which the Executive participates immediately before
the Change in Control, unless an equivalent
alternative compensation arrangement (embodied in an
ongoing substitute or alternative plan) has been
provided to the Executive, or (B) the Company's
failure to continue the Executive's participation in
any such incentive or stock option plan on
substantially the same basis, both in terms of the
amount of benefits provided and the level of the
Executive's participation relative to other
participants, as existed immediately before the time
of the Change of Control;
(viii) the Company's violation of any applicable criminal
law not due to the Executive's gross negligence or
willful misconduct;
(ix) the failure of the Company or any successor to obtain
a satisfactory written agreement from any successor
to assume and agree to perform this Agreement, as
contemplated in Section 6(a) below; or
(x) any purported termination of the Executive's
employment that is not effected pursuant to a Notice
of Termination satisfying the requirements of Section
3(b) or, if applicable, Section 1(a). For purposes
of this Agreement, no such purported termination
shall be effective except as constituting Good
Reason.
The Executive's continued employment shall not constitute consent to,
or a waiver of rights with respect to, any circumstances constituting
Good Reason hereunder.
(g) SUBSIDIARY. For purposes of this Agreement, "Subsidiary"
shall mean any corporation of whose voting stock the Company
directly or indirectly owns more than fifty percent (50%).
(h) TERMINATION DATE. For purposes of this Agreement,
"Termination Date" shall mean: (i) if the Executive's
employment is terminated for Disability pursuant to the
Employment Agreement, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not
have returned to the full-time performance of his duties
during such thirty-day period); and (ii) if the Executive's
employment is terminated for Cause or Good Reason or for any
reason other than death or Disability, the date specified in
the Notice of Termination (which in the case of a termination
for Cause shall not be less than thirty (30) days and in the
case of a termination for Good Reason shall not be less than
thirty (30) days nor more than sixty (60) days, respectively,
from the date such Notice of Termination is given).
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<PAGE> 6
Section 2. TERM OF AGREEMENT
(a) GENERAL. Upon execution by the Executive, this Agreement
shall commence as of May ___, 1996. This Agreement shall
continue in effect on December 31, 1999; provided, however,
that the term shall be automatically extended for additional
one (1) year periods on each anniversary date of this
Agreement, unless and until either party notifies the other
party not less than ninety (90) days before such anniversary
date that such party is terminating this Agreement, which
termination shall be effective as of the end of such initial
term or extended term, as the case may be (the "Expiration
Date"); and provided further, however, that if a Change of
Control of the Company occurs before the Expiration Date, this
Agreement shall continue in effect for a period of thirty-six
months beyond the month in which the Change of Control
occurred.
(b) DISPOSITION OF EMPLOYER. If the Executive is employed by a
Subsidiary, the terms of this Agreement shall expire if such
Subsidiary is sold or otherwise disposed of before a Change of
Control unless the Executive continues in employment with the
Controlled Group after such sale or other disposition. If the
Executive's Employer is sold or disposed of following a Change
of Control, this Agreement shall continue through its original
term or any extended term then in effect.
(c) DEEMED CHANGE OF CONTROL. If the Executive's employment with
the Employer is terminated before the date on which a Change
of Control occurs, and such termination was at the request of
a third party who has taken steps to effect a Change of
Control or the termination was otherwise caused by the Change
of Control, then for all purposes of this Agreement, a Change
of Control shall be deemed to have occurred before such
termination.
(d) EXPIRATION OF AGREEMENT. No termination or expiration of this
Agreement shall affect any rights, obligations, or liabilities
of either party that shall have accrued on or before the date
of such termination or expiration.
Section 3. TERMINATION FOLLOWING CHANGE OF CONTROL
(a) ENTITLEMENT TO BENEFITS. If a Change of Control of the
Company occurs, the Executive shall be entitled to the
benefits provided in Section 4 hereof upon his termination of
employment with the Company within three years after the date
of the Change of Control, unless such termination is (i) a
result of the Executive's death, (ii) for Cause, (iii) a
result of the Executive's Disability (pursuant to the terms of
the Employment Agreement that provide for termination as a
result of Disability), or (iv) by the Executive other than for
Good Reason. A termination of the Executive's employment that
entitles the Executive to the
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<PAGE> 7
payment of benefits under Section 4 hereof shall be referred
to hereinafter as a "Termination."
(b) NOTICE OF TERMINATION. Any purported termination of the
Executive's employment by the Company or by the Executive
shall be communicated by written Notice of Termination to the
other party hereto in accordance with Section 8. For purposes
of this Agreement, a "Notice of Termination" shall mean a
notice that shall indicate the specific provision of this
Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision
so indicated.
If, following a Change of Control, the Executive's employment
shall be terminated for Cause or by the Executive for other
than Good Reason, the Company shall pay the Executive any
amounts to be paid to the Executive pursuant to the Employment
Agreement and any other compensation plans, programs, or
employment agreements then in effect, and the Company shall
have no further obligations to the Executive under this
Agreement.
If within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice notifies the other
party that a dispute exists concerning the grounds for
termination, then, notwithstanding the meaning of "Termination
Date" set forth in Section 1(h), the Termination Date shall be
the date on which the dispute is finally resolved, whether by
mutual written agreement of the parties or by a decision
rendered pursuant to Section 11; provided that the Termination
Date shall be extended by a notice of dispute only if such
notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute,
the Company will continue to pay the Executive his full
compensation in effect when the notice giving rise to the
dispute was given, and continue the Executive as a participant
in all benefits, plans, or perquisites in which the Executive
was participating or which he was enjoying when the Notice of
Termination giving rise to the dispute was given (to the
extent such continued participation is not prohibited by law
or the generally applicable terms of those arrangements),
until the dispute is finally resolved. Amounts paid under
this Section 3(b) are in addition to all other amounts due
under this Agreement and shall not be offset against or reduce
any other amounts due under this Agreement.
Section 4. COMPENSATION UPON A TERMINATION
Following a Change of Control of the Company, upon a Termination of the
Executive's employment by the Company without "Cause" or by the Executive for
"Good Reason," the Executive shall be entitled to the following benefits,
provided that the Termination occurs during the three-year period immediately
following the date of the Change of Control:
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<PAGE> 8
(a) STANDARD BENEFITS. The Company shall pay the Executive his
full Base Salary through the Termination Date, at the rate in
effect at the time the Notice of Termination is given, no
later than the second day following the Termination Date, plus
all other amounts to which the Executive is entitled under any
compensation plan of the Company applicable to the Executive
at the time such payments are due. Without limitation,
amounts payable pursuant to this Section 4(a) shall include,
pursuant to the express terms of the short-term incentive plan
in which the Executive participates or otherwise, the
Executive's annual bonus under such short-term incentive plan,
pro-rated to the Termination Date.
(b) ADDITIONAL BENEFITS. The Company shall pay to the Executive
as additional pay ("Additional Pay"), the product of (i) three
(3) and (ii) the sum of (x) the Executive's annual Base Salary
rate in effect immediately before the Termination Date and (y)
the Executive's annual bonus amount under the short-term
incentive plan in which the Executive participates, such bonus
amount to be calculated on the basis of the extent to which
the performance factors targeted by the Compensation Committee
of the Board have been achieved (for this purpose, the
Company's performance through the Termination Date shall be
annualized based upon the actual number of days elapsed from
the beginning of the fiscal year in which the Termination
occurs through the Termination Date over a year of 360 days),
which shall be deemed to be 100% unless the performance
actually achieved is greater than 100%, in which case the
actual performance levels shall be utilized. The Company
shall pay to the Executive the Additional Pay in a lump sum,
in cash, not later than the thirtieth (30th) day following the
Termination Date.
(c) RETIREMENT PLAN BENEFITS. If not already vested, the
Executive shall be deemed fully vested in all Company
retirement plans and/or other written agreements relating to
pay upon retirement in which the Executive was a participant,
party, or beneficiary immediately preceding a Change of
Control, and any additional plans and/or agreements in which
such Executive became a participant, party, or beneficiary
thereafter. In addition to the foregoing, for purposes of
determining the amounts to be paid to the Executive under such
plans and/or agreements, the years of service with the Company
and the age of the Executive under all such plans and
agreements shall be deemed increased by the lesser of
thirty-six (36) months or such shorter period of time as would
render the Executive sixty-five (65) years of age. For
purposes of this Section 4(c), "plans" include, without
limitation, any long-term incentive plan, or non-qualified and
mid-career retirement plans but does not include any plans
intended to be qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). If the terms
of the plans referenced in this Section 4(c) do not for any
reason coincide with the provisions of this Section 4(c), the
Executive shall be entitled to receive from the Company under
the terms of this Agreement an
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<PAGE> 9
amount equivalent to all amounts he would have received had
all such plans continued in existence as in effect on the date
of this Agreement after being amended to coincide with the
terms of this Section 4(c).
(d) OPTION PAYMENTS. In lieu of exercising or retaining any
rights the Executive may have to exercise some or all of the
outstanding stock options that he then holds (including any
rights to exercise stock options that arise during the Term if
he were to remain employed and including any that would
otherwise terminate as result of his termination of
employment), the Executive may elect within sixty (60) days
after termination of employment to surrender such rights to
the Company and receive in exchange therefor a cash payment
equal to the aggregate difference, if positive, between (a)
the "fair market value" (determined as of the date of
termination using the higher of the "fair market value" (i) as
defined in the terms of the applicable option plan or option
agreement as of the date of termination and (ii) as defined
in the plan or agreement on the date of grant) of the shares
of common stock subject to the options and (b) the option
prices of the shares subject to such surrendered options; and
the Company shall make such payment within forty-five (45)
days after the Executive notifies the Company of his election
to surrender all or a portion of his options.
(e) HEALTH BENEFITS. Following the Termination Date, the Company
shall provide, at its own expense, the continued health
coverage required by Section 4980B of the Code.
(f) GROSS-UP PAYMENTS.
(i) If any payment or the value of any benefit received
or to be received by the Executive in connection with
the Executive's Termination or contingent upon a
Change of Control of the Company (whether received or
to be received pursuant to the terms of this
Agreement (the "Agreement Payments") or of any other
plan, arrangement, or agreement of the Company, its
successors, any person whose actions result in a
Change of Control of the Company, or any person
affiliated with any of them (or which, as a result of
the completion of the transactions causing a Change
of Control, will become affiliated with any of them
("Other Payments" and, together with the Agreement
Payments, the "Payments")) would be subject to the
excise tax imposed by Section 4999 of the Code or any
comparable federal, state, or local excise tax (such
excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the
"Excise Tax"), as determined as provided below, the
Company shall pay to the Executive an additional
amount (the "Gross-Up Payment") such that the net
amount the Executive retains, after deduction of the
Excise Tax on Agreement Payments and Other Payments
and any federal, state, and local income tax and
Excise Tax upon the payment provided for by
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<PAGE> 10
this Section 4(f)(i), and any interest, penalties, or
additions to tax payable by the Executive with
respect thereto shall be equal to the total present
value of the Agreement Payments and Other Payments at
the time such Payments are to be made. The intent of
the parties is that the Company shall be solely
responsible for and shall pay, any Excise Tax on any
Payments and Gross-Up Payment and any income and
employment taxes (including, without limitation,
penalties and interest) imposed on any Gross-Up
Payments as well as any loss of deduction caused by
the Gross-Up Payment.
(ii) All determinations required to be made under this
Section 4(f), including, without limitation, whether
and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determinations,
shall be made by tax counsel (either a law firm or a
nationally recognized public accounting firm)
selected by the Company and reasonably acceptable to
the Executive ("Tax Counsel"). The Company shall
cause the Tax Counsel to provide detailed supporting
calculations to the Company and the Executive within
fifteen (15) business days after notice is given by
the Executive to the Company that any or all of the
Payments have occurred, or such earlier time as is
requested by the Company. Within two (2) business
days after such notice is given to the Company, the
Company shall instruct the Tax Counsel to timely
provide the data required by this Section 4(f) to the
Executive. The Company shall pay all fees and
expenses of the Tax Counsel. The Company shall pay
any Excise Tax determined pursuant to this Section
4(f) to the Internal Revenue Service ("IRS") and/or
other appropriate taxing authority on the Executive's
behalf within five (5) days after receipt of the Tax
Counsel's determination. If the Tax Counsel
determines that there is substantial authority
(within the meaning of Section 6662 of the Code) that
no Excise Tax is payable by the Executive, the Tax
Counsel shall furnish the Executive with a written
opinion that failure to disclose or report the Excise
Tax on the Executive's federal income tax return will
not constitute a substantial understatement of tax or
be reasonably likely to result in the imposition of a
negligence or similar penalty. Any determination by
the Tax Counsel shall be binding upon the Company and
the Executive in the absence of material mathematical
or legal error.
As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial
determination by the Tax Counsel hereunder, it is
possible that the Company will not have made Gross-Up
Payments that should have been made or that it will
have made Gross-Up Payments that should not have been
made, in each case, consistent with the calculations
required to be made hereunder. If the Company
exhausts
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<PAGE> 11
its remedies pursuant to Section 4(f)(iii) below and
the Executive is thereafter required to pay any
Excise Tax, the Tax Counsel shall determine the
amount of underpayment of Excise Taxes that has
occurred and the Company shall promptly pay any such
underpayment to the IRS or other appropriate taxing
authority on the Executive's behalf or, if the
Executive has previously paid such underpayment, to
the Executive. If the Tax Counsel determines that an
overpayment of Gross-Up Payments has occurred, any
such overpayment shall be treated for all purposes as
a loan to the Executive with interest at the
applicable federal rate provided for in Section
7872(f)(2) of the Code, due and payable within ninety
(90) days after written demand to the Executive by
the Company; provided, however, that the Executive
shall have no duty or obligation whatsoever to repay
such loan if the Executive's receipt of the
overpayment, or any portion thereof, is includible in
the Executive's income and the Executive's repayment
of the same is not deductible by the Executive for
federal and state income tax purposes.
(iii) The Executive shall notify the Company in writing of
any claim by the IRS or state or local taxing
authority, that, if successful, would result in any
Excise Tax or an underpayment of Gross-Up Payments.
Such notice shall be given as soon as practicable but
no later than fifteen (15) business days after the
Executive is informed in writing of the claim and
shall inform the Company of the nature of the claim,
the administrative or judicial appeal period, and the
date on which any payment of the claim must be paid.
The Executive shall not pay any portion of the claim
before the expiration of the thirty (30) day period
following the date on which the Executive gives such
notice to the Company (or such shorter period ending
on the date that any amount under the claim is due).
If the Company notifies the Executive in writing
before the expiration of such thirty (30) day period
that it desires to contest the claim, the Executive
shall:
(A) give the Company any information reasonably
requested by the Company relating to the
claim;
(B) take such action in connection with
contesting the claim as the Company shall
reasonably request in writing from time to
time, including, without limitation,
accepting legal representation concerning the
claim by an attorney selected by the Company
who is reasonably acceptable to the
Executive; and
(C) cooperate with the Company in good faith in
order to effectively contest the claim;
provided, however, that the Company shall
bear and pay directly all costs and expenses
(including, without
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<PAGE> 12
limitation, additional interest and penalties
and attorneys' fees) incurred in such
contests and shall indemnify and hold the
Executive harmless, on an after-tax basis,
for any Excise Tax or income tax (including,
without limitation, interest and penalties
thereon) imposed as a result of such
representation. Without limitation upon the
foregoing provisions of this Section
4(f)(iii), except as provided below, the
Company shall control all proceedings
concerning such contest and, in its sole
opinion, may pursue or forego any and all
administrative appeal, proceedings, hearings,
and conferences with the taxing authority
pertaining to the claim. At the Company's
written request and upon payment to the
Executive of an amount at least equal to the
claim plus any additional amount necessary to
obtain the jurisdiction of the appropriate
tribunal and/or court, the Executive shall
pay the same and sue for a refund. The
Executive agrees to prosecute any contest of
a claim to a determination before any
administrative tribunal, in a court of
initial jurisdiction and in one or more
appellate courts, as the Company shall
determine; provided, however, that if the
Company requests the Executive to pay the
claim and sue for a refund, the Company shall
advance the amount of such payment to the
Executive, on an interest-free basis, and
shall indemnify and hold the Executive
harmless on an after-tax basis, from any
Excise Tax or income tax (including, without
limitation, interest and penalties thereon)
imposed on such advance or for any imputed
income on such advance. Any extension of the
statute of limitations relating to assessment
of any Excise Tax for the taxable year of the
Executive that is the subject of the claim is
to be limited solely to the claim.
Furthermore, the Company's control of the
contest shall be limited to issues for which
a Gross-Up Payment would be payable
hereunder. The Executive shall be entitled
to settle or contest, as the case may be, any
other issue raised by the IRS or any other
taxing authority.
(iv) If, after the Executive receives an amount the
Company advanced pursuant to Section 4(f)(iii) above,
the Executive receives any refund of a claim and/or
any additional amount that was necessary to obtain
jurisdiction, the Executive shall promptly pay to the
Company the amount of such refund (together with any
interest paid or credited thereon after taxes
applicable thereto). If, after the Executive
receives an amount the Company advanced pursuant to
Section 4(f)(iii) above, a determination is made that
the Executive shall not be entitled to any refund of
the claim, and the Company does not notify the
Executive in writing of its intent to contest such
denial of refund of a claim before the expiration of
thirty (30) days after such determination, then the
portion of such advance
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<PAGE> 13
attributable to a claim shall be forgiven and shall
not be required to be repaid. The amount of such
advance attributable to a claim shall offset, to the
extent thereof, the amount of the underpayment
required to be paid by the Company to the Executive.
(v) If, after the Company advances an additional amount
necessary to obtain jurisdiction, there is a final
determination made by the taxing authority that the
Executive is not entitled to any refund of such
amount, or any portion thereof, then the Executive
shall repay such nonrefundable amount to the Company
within thirty (30) days after the Executive receives
notice of such final determination. A final
determination shall occur when the period to contest
or otherwise appeal any decision by an administrative
tribunal or court of initial jurisdiction has been
waived or the time for contesting or appealing the
same has expired.
(g) LEGAL FEES AND EXPENSES. The Company shall pay to the
Executive all legal fees and expenses as and when incurred by
the Executive in connection with this Agreement, including all
such fees and expenses, if any, incurred in contesting or
disputing any Termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement, regardless of
the outcome, unless, in the case of a legal action brought by
or in the name of the Executive, a decision is rendered
pursuant to Section 10 that such action was not brought by the
Executive in good faith, in which event the Executive shall be
liable to the Company for its legal fees and expenses.
(h) NO MITIGATION. The Executive shall not be required to
mitigate the amount of any payment provided for in this
Section 4 by seeking other employment or otherwise, nor shall
the amount of any payment or benefit provided for in this
Section 4 be reduced by any compensation the Executive earns
as the result of employment by another employer or by
retirement or other benefits received after the Termination
Date or otherwise, except as specifically provided in this
Section 4. The Company's obligation to make payments provided
for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense, or other claim, right, or action that the
Company or Employer may have against the Executive or other
parties.
Section 5. DEATH AND DISABILITY BENEFITS
In the event of the death or Disability of the Executive after a
Change of Control of the Company, the Executive, or in the case of death, the
Executive's beneficiaries, shall receive the benefits to which they are
entitled under the the Employment Agreement, the retirement plans, disability
policies, and other applicable plans or agreements of the Company.
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<PAGE> 14
Section 6. SUCCESSORS; BINDING AGREEMENT
(a) OBLIGATIONS OF SUCCESSORS. The Company will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and
agree to perform this Agreement in the same manner and to the
same extent that the Company is required to perform it.
Failure of the Company to obtain such assumption and agreement
before the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle the Executive to
compensation from the Company in the same amount and on the
same terms as the Executive would be entitled hereunder if the
Executive had terminated his employment following a Change of
Control of the Company, except that for purposes of
implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Termination
Date. As used in this Agreement, the "Company" shall mean the
Company as hereinabove defined and any successor to its
business and/or assets as aforesaid that assumes and agrees to
perform this Agreement by operation of law, or otherwise.
(b) ENFORCEABLE BY BENEFICIARIES. This Agreement shall inure to
the benefit of and be enforceable by the Executive's personal
or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, and legatees (the
"Beneficiaries"). If the Executive dies while any amount
would still be payable hereunder if he had not then died, all
such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the
Executive's Beneficiaries.
(c) EMPLOYMENT. Except in the event of a Change of Control and,
thereafter, only as specifically set forth in this Agreement,
nothing in this Agreement shall be construed to (i) limit in
any way the right of the Company or a Subsidiary to terminate
the Executive's employment at any time for any reason or for
no reason; or (ii) be evidence of any agreement or
understanding, expressed or implied, that the Company or a
Subsidiary will employ the Executive in any particular
position, on any particular terms, or at any particular rate
of remuneration.
Section 7. CONFIDENTIAL INFORMATION.
The Executive shall hold in fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge, or data relating to
the Company, the Subsidiaries, and their respective businesses, that shall have
been obtained during the Executive's employment by the Employer and that shall
not be public knowledge (other than by acts by the Executive or his
representatives in violation of this Agreement). After termination of the
Executive's employment with the Company or any Employer within the Controlled
Group, the Executive shall not, without prior written consent of the Company or
the Employer, communicate or divulge any such information, knowledge, or data
to anyone other than the Company, the
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<PAGE> 15
Employer, or those designated by them. In no event shall an asserted violation
of this Section 7 or comparable provisions in any applicable employment
agreement constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.
Section 8. NOTICE
All notices, demands, requests. or other communications required or
permitted to be given or made hereunder shall be in writing and shall be
delivered, telecopied, or mailed by first class registered or certified mail,
postage prepaid, addressed as follows:
(a) if to the Company:
Metrocall, Inc.
6677 Richmond Highway
Alexandria, Virginia 22306
Telecopier: (703) 768-5407
Attention: Francis A. Martin, III
with a copy (which shall not constitute notice) to
Wilmer, Cutler & Pickering
2445 M Street, NW
Washington, DC 20037-1420
Telecopier: (202) 663-6363
Attention: George P. Stamas and John B. Watkins
(a) if to the Executive:
Vincent D. Kelly
11807 Chapel Road
Clifton, VA 22024
or to such other address as may be designated by either party in a
notice to the other. Each notice, demand, request, or other
communication that shall be given or made in the manner described
above shall be deemed sufficiently given or made for all purposes
three (3) days after it is deposited in the U.S. mail, postage
prepaid, or at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, the answer back, or the
affidavit of messenger being deemed conclusive evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.
Section 9. MISCELLANEOUS
No provision of this Agreement may be modified, waived, or discharged
unless such waiver, modification, or discharge is agreed to in writing and
signed by the Executive and the
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<PAGE> 16
Chairman of the Compensation Committee of the Board of Directors. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any conditions or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any earlier or later time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party that are
not expressly set forth in this Agreement. validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the Commonwealth of Virginia. All references to sections of the Code or the
Exchange Act shall be deemed also to refer to any successor provisions of such
sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law. The
obligations of the Company under Sections 4 and 5 shall survive the expiration
of the term of this Agreement.
Section 10. VALIDITY
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
Section 11. ARBITRATION
The Executive may designate in writing to the Company (in which case
this Section 11 shall have effect but not otherwise) that any dispute that may
arise directly or indirectly in connection with this Agreement, the Executive's
employment, or the termination of the Executive's employment, whether arising
in contract, statute, tort, fraud, misrepresentation, or other legal theory,
shall be determined solely by arbitration in Washington, D.C. under the rules
of the American Arbitration Association (the "AAA"). The only legal claims
between the Executive, on the one hand, and the Company or any Subsidiary, on
the other, that would not be included in this agreement to arbitration are
claims by the Executive for workers' compensation or unemployment compensation
benefits, claims for benefits under a Company or Subsidiary benefit plan if the
plan does not provide for arbitration of such disputes, and claims by the
Executive that seek judicial relief in the form of specific performance of the
right to be paid until the Termination Date during the pendency of any dispute
or controversy arising under Section 3(b). If this Section 11 is in effect,
any claim with respect to this Agreement, the Executive's employment, or the
termination of the Executive's employment must be established by a
preponderance of the evidence submitted to the impartial arbitrator. A single
arbitrator engaged in the practice of law shall conduct any arbitration under
the then current procedures of the AAA and under the AAA's then current Model
Employment Arbitration Rules. The arbitrator shall have the authority to order
a pre-hearing exchange of information by the parties including, without
limitation, production of requested documents, and examination by deposition of
parties and their authorized agents. If this Section 11 is in effect, the
decision of the arbitrator (i) shall be final and binding, (ii) shall be
rendered within ninety (90) days after the impanelment of the arbitrator, and
(iii) shall be kept confidential by the parties to such arbitration. The
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<PAGE> 17
arbitration award may be enforced in any court of competent jurisdiction. The
Federal Arbitration Act, 9 U.S.C. Section Section 1-15, not state law, shall
govern the arbitrability of all claims.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign both originals of this letter and return to the Assistant Secretary
of the Company one of the fully executed originals of this letter, which will
then constitute our agreement on this subject.
Sincerely,
METROCALL, INC.
By: /s/ Richard D. Johnston
-----------------------
Richard D. Johnston
Chairman of the Board of Directors
Acknowledged and Agreed:
/s/ Vincent D. Kelly
- --------------------
Vincent D. Kelly
May 15, 1996
- ------------
Date
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<PAGE> 1
EXHIBIT 10.18
METROCALL, INC.
CHANGE OF CONTROL AGREEMENT
FOR CHIEF OPERATING OFFICER
May 15, 1996
Steven D. Jacoby
4203 Kimbrelee Court
Alexandria, VA 22309
Dear Mr. Jacoby:
Metrocall, Inc. (the "Company"), on behalf of itself, its
subsidiaries, and its shareholders, wishes to encourage your continued service
and dedication in the performance of your duties, notwithstanding the
possibility, threat, or occurrence of a Change of Control (as defined in
Section 1(b) below) of the Company. The Board of Directors of the Company (the
"Board") believes that the prospect of a pending or threatened Change of
Control inevitably creates distractions and personal risks and uncertainties
for a company's executives and that it is in the best interests of the Company
to minimize such distractions to certain executives and the Company. The Board
further believes that it is in the best interests of the Company to encourage
its executives' full attention and dedication to their duties, both currently
and in the event of any threatened or pending Change of Control.
Accordingly, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued retention of you and certain
members of the Company's management and the attention and dedication of
management to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a Change
of Control of the Company.
To induce you (the "Executive") to remain in the Company's employ and
in consideration of your continued service to the Company, the Company agrees
that you shall receive the benefits set forth in this letter agreement (the
"Agreement") if your employment with the Company is terminated for any reason
after a Change of Control of the Company and has, of even date herewith,
entered into a revised employment agreement relating to your services as Chief
Operating Officer (the "Employment Agreement"). For purposes of this
Agreement, references to employment with the Company shall include employment
with a Subsidiary of the Company.
Section 1. DEFINITIONS
The following terms shall have the meanings set forth below for purposes of
this Agreement.
(a) CAUSE. Under this Agreement, "Cause" shall mean (1) dishonesty
of a material nature relating to performing services under the
Employment Agreement, (2) criminal conduct (other than minor
infractions and traffic violations) that relates
<PAGE> 2
to the performance of services under the Employment Agreement,
or (3) the Executive's willfully breaching or failing to
perform his employment duties as set forth in his Employment
Agreement, which act or omission results in a material adverse
effect on the Company. For purposes of this Section 1(a), no
act, or failure to act, on the Executive's part shall be
deemed "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that
such action or omission was in the best interests of the
Company. Notwithstanding the foregoing, the Executive shall
not be deemed to have been terminated for Cause unless and
until there shall have been delivered to the Executive a
certificate of a resolution duly adopted by the affirmative
vote of not less than seventy-five percent (75%) of the entire
membership of the Board at a meeting of the Board called and
held for such purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with
the Executive's counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, the
Executive has engaged in the conduct set forth in this
subsection and specifying the particulars thereof in detail.
(b) CHANGE OF CONTROL. For purposes of this Agreement, a "Change
of Control" shall be deemed to have occurred if there is a
change of control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") or any successor
provision of similar import, whether or not the Company is
then subject to such reporting requirement; provided that,
without limitation, such a Change of Control shall be deemed
to have occurred if:
(i) any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as determined for purposes of
Regulation 13D-G under the Exchange Act as currently
in effect), directly or indirectly, of securities
representing twenty-five percent (25%) or more of the
total voting power of all of the Company's then
outstanding voting securities, unless through a
transaction consummated with the Board's prior
approval; provided, however, that for purposes of
this paragraph, persons acting in concert under the
terms of that certain Voting Agreement dated as of
August 31, 1994 shall not, solely as a result of
actions provided under such agreement, be treated as
a "person";
(ii) during any period of two consecutive calendar years,
individuals who at the beginning of such period
constitute the Board and any new director(s) whose
election by the Board or nomination for election by
the Company's shareholders was approved by a vote of
at least two-thirds of the directors then still in
office who either were directors at the beginning of
the period or whose election or nomination for
election was previously so approved cease for any
reason to constitute a majority of the Board;
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<PAGE> 3
(iii) the Company becomes a party to a merger, plan of
reorganization, consolidation, or share exchange in
which either (x) the Company will not be the
surviving corporation or (y) the Company will be the
surviving corporation and any outstanding shares of
the Company's common stock will be converted into
shares of any other company (other than a
reincorporation or the establishment of a holding
company involving no change of ownership of the
Company) or other securities or cash or other
property (excluding payments made solely for
fractional shares);
(iv) the shareholders of the Company approve a merger,
plan of reorganization, consolidation, or share
exchange with any other corporation, and immediately
following such merger, plan of reorganization,
consolidation, or share exchange the holders of the
voting securities of the Company outstanding
immediately prior thereto hold securities
representing fifty percent (50%) or less of the
combined voting power of the voting securities of the
Company or such surviving entity outstanding
immediately after such merger, plan of
reorganization, consolidation, or share exchange;
provided, however, that notwithstanding the
foregoing, no Change of Control for purposes of this
Section 1(b)(iv) shall be deemed to have occurred if
seventy-five percent (75%) or more of the members of
the Board of the Company or such surviving entity
immediately after such merger, plan of
reorganization, consolidation, or share exchange is
comprised of persons who served as directors of the
Company immediately before such merger, plan of
reorganization, consolidation, or share exchange or
who are otherwise designees of the Company; or
(v) any other event occurs that a majority of the Board,
in its sole discretion, shall determine constitutes a
Change of Control.
(c) CONTROLLED GROUP. For purposes of this Agreement, "Controlled
Group" shall mean the Company and all of the Company's
Subsidiaries.
(d) DISABILITY. "Disability" shall have the meaning set forth in
the Employment Agreement.
(e) EMPLOYER. For purposes of this Agreement, "Employer" shall
mean the Company or the Subsidiary, as the case may be, with
which the Executive has an employment relationship.
(f) GOOD REASON. For purposes of this Agreement, "Good Reason"
shall mean the occurrence, without the Executive's express
written consent, of any of the following circumstances:
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<PAGE> 4
(i) the Company's failure to perform or observe any of
the material terms or provisions of this Agreement or
the Employment Agreement, and the continued failure
of the Company to cure such default within fifteen
(15) days after the Executive gives a written demand
for performance to the Company, which demand shall
describe specifically the nature of such alleged
failure to perform or observe such material terms or
provisions;
(ii) the assignment to the Executive of any duties
inconsistent with, or any substantial diminution in,
such Executive's status or responsibilities as in
effect immediately before a Change of Control of the
Company, including imposition of travel obligations
that differ materially from required business travel
immediately before the Change of Control;
(iii) any diminution in the status or responsibilities of
the Executive's position from that which existed
immediately before the Change of Control, whether by
reason of the Company's ceasing to be a public
company under the Exchange Act, becoming a subsidiary
of a successor public company, or otherwise;
(iv) (I) a reduction in the Executive's Base Salary (as
defined in the Employment Agreement), as that amount
may be increased from time to time and as in effect
immediately before the Change of Control; or (II) the
failure to pay a bonus award to which the Executive
is otherwise entitled under any short-term incentive
plan in which the Executive then participates, or any
successor incentive compensation plans at the time
such awards are usually paid;
(v) the termination of employment of William L. Collins,
III or Vincent D. Kelly (other than a termination (I)
by the Company for "Cause" or (II) because of death
or "Disability" as those terms are defined and
applied in their respective employment agreements),
including a termination that results from a failure
by the Company and Collins or Kelly to reach
agreement to continue Collins' or Kelly's employment
on terms at least as favorable to him, in the
aggregate, as those in effect before the Change in
Control of the Company;
(vi) a change in the principal place of the Executive's
employment, as in effect immediately before the
Change of Control of the Company, to a location more
than thirty-five (35) miles distant from the location
of such principal place at such time;
(vi) (A) the Company's failure to continue in effect any
incentive compensation plan or stock option plan in
which the Executive participates immediately before
the Change in Control, unless an
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equivalent alternative compensation arrangement
(embodied in an ongoing substitute or alternative
plan) has been provided to the Executive, or (B) the
Company's failure to continue the Executive's
participation in any such incentive or stock option
plan on substantially the same basis, both in terms
of the amount of benefits provided and the level of
the Executive's participation relative to other
participants, as existed immediately before the time
of the Change of Control;
(viii) the Company's violation of any applicable criminal
law not due to the Executive's gross negligence or
willful misconduct;
(ix) the failure of the Company or any successor to obtain
a satisfactory written agreement from any successor
to assume and agree to perform this Agreement, as
contemplated in Section 6(a) below; or
(x) any purported termination of the Executive's
employment that is not effected pursuant to a Notice
of Termination satisfying the requirements of Section
3(b) or, if applicable, Section 1(a). For purposes
of this Agreement, no such purported termination
shall be effective except as constituting Good
Reason.
The Executive's continued employment shall not constitute consent to,
or a waiver of rights with respect to, any circumstances constituting
Good Reason hereunder.
(g) SUBSIDIARY. For purposes of this Agreement, "Subsidiary"
shall mean any corporation of whose voting stock the Company
directly or indirectly owns more than fifty percent (50%).
(h) TERMINATION DATE. For purposes of this Agreement,
"Termination Date" shall mean: (i) if the Executive's
employment is terminated for Disability pursuant to the
Employment Agreement, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not
have returned to the full-time performance of his duties
during such thirty-day period); and (ii) if the Executive's
employment is terminated for Cause or Good Reason or for any
reason other than death or Disability, the date specified in
the Notice of Termination (which in the case of a termination
for Cause shall not be less than thirty (30) days and in the
case of a termination for Good Reason shall not be less than
thirty (30) days nor more than sixty (60) days, respectively,
from the date such Notice of Termination is given).
Section 2. TERM OF AGREEMENT
(a) GENERAL. Upon execution by the Executive, this Agreement
shall commence as of May ___, 1996. This Agreement shall
continue in effect on December 31,
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<PAGE> 6
1999; provided, however, that the term shall be automatically
extended for additional one (1) year periods on each
anniversary date of this Agreement, unless and until either
party notifies the other party not less than ninety (90) days
before such anniversary date that such party is terminating
this Agreement, which termination shall be effective as of the
end of such initial term or extended term, as the case may be
(the "Expiration Date"); and provided further, however, that
if a Change of Control of the Company occurs before the
Expiration Date, this Agreement shall continue in effect for a
period of thirty-six months beyond the month in which the
Change of Control occurred.
(b) DISPOSITION OF EMPLOYER. If the Executive is employed by a
Subsidiary, the terms of this Agreement shall expire if such
Subsidiary is sold or otherwise disposed of before a Change of
Control unless the Executive continues in employment with the
Controlled Group after such sale or other disposition. If the
Executive's Employer is sold or disposed of following a Change
of Control, this Agreement shall continue through its original
term or any extended term then in effect.
(c) DEEMED CHANGE OF CONTROL. If the Executive's employment with
the Employer is terminated before the date on which a Change
of Control occurs, and such termination was at the request of
a third party who has taken steps to effect a Change of
Control or the termination was otherwise caused by the Change
of Control, then for all purposes of this Agreement, a Change
of Control shall be deemed to have occurred before such
termination.
(d) EXPIRATION OF AGREEMENT. No termination or expiration of this
Agreement shall affect any rights, obligations, or liabilities
of either party that shall have accrued on or before the date
of such termination or expiration.
Section 3. TERMINATION FOLLOWING CHANGE OF CONTROL
(a) ENTITLEMENT TO BENEFITS. If a Change of Control of the
Company occurs, the Executive shall be entitled to the
benefits provided in Section 4 hereof upon his termination of
employment with the Company within three years after the date
of the Change of Control, unless such termination is (i) a
result of the Executive's death, (ii) for Cause, (iii) a
result of the Executive's Disability (pursuant to the terms of
the Employment Agreement that provide for termination as a
result of Disability), or (iv) by the Executive other than for
Good Reason. A termination of the Executive's employment that
entitles the Executive to the payment of benefits under
Section 4 hereof shall be referred to hereinafter as a
"Termination."
(b) NOTICE OF TERMINATION. Any purported termination of the
Executive's employment by the Company or by the Executive
shall be communicated by
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<PAGE> 7
written Notice of Termination to the other party hereto in
accordance with Section 8. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice that shall
indicate the specific provision of this Agreement relied upon
and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
If, following a Change of Control, the Executive's employment
shall be terminated for Cause or by the Executive for other
than Good Reason, the Company shall pay the Executive any
amounts to be paid to the Executive pursuant to the Employment
Agreement and any other compensation plans, programs, or
employment agreements then in effect, and the Company shall
have no further obligations to the Executive under this
Agreement.
If within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice notifies the other
party that a dispute exists concerning the grounds for
termination, then, notwithstanding the meaning of "Termination
Date" set forth in Section 1(h), the Termination Date shall be
the date on which the dispute is finally resolved, whether by
mutual written agreement of the parties or by a decision
rendered pursuant to Section 11; provided that the Termination
Date shall be extended by a notice of dispute only if such
notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute,
the Company will continue to pay the Executive his full
compensation in effect when the notice giving rise to the
dispute was given, and continue the Executive as a participant
in all benefits, plans, or perquisites in which the Executive
was participating or which he was enjoying when the Notice of
Termination giving rise to the dispute was given (to the
extent such continued participation is not prohibited by law
or the generally applicable terms of those arrangements),
until the dispute is finally resolved. Amounts paid under
this Section 3(b) are in addition to all other amounts due
under this Agreement and shall not be offset against or reduce
any other amounts due under this Agreement.
Section 4. COMPENSATION UPON A TERMINATION
Following a Change of Control of the Company, upon a Termination of the
Executive's employment by the Company without "Cause" or by the Executive for
"Good Reason," the Executive shall be entitled to the following benefits,
provided that the Termination occurs during the three-year period immediately
following the date of the Change of Control:
(a) STANDARD BENEFITS. The Company shall pay the Executive his
full Base Salary through the Termination Date, at the rate in
effect at the time the Notice of Termination is given, no
later than the second day following the Termination Date, plus
all other amounts to which the Executive is entitled under any
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<PAGE> 8
compensation plan of the Company applicable to the Executive
at the time such payments are due. Without limitation,
amounts payable pursuant to this Section 4(a) shall include,
pursuant to the express terms of the short-term incentive plan
in which the Executive participates or otherwise, the
Executive's annual bonus under such short-term incentive plan,
pro-rated to the Termination Date.
(b) ADDITIONAL BENEFITS. The Company shall pay to the Executive
as additional pay ("Additional Pay"), the product of (i) three
(3) and (ii) the sum of (x) the Executive's annual Base Salary
rate in effect immediately before the Termination Date and (y)
the Executive's annual bonus amount under the short-term
incentive plan in which the Executive participates, such bonus
amount to be calculated on the basis of the extent to which
the performance factors targeted by the Compensation Committee
of the Board have been achieved (for this purpose, the
Company's performance through the Termination Date shall be
annualized based upon the actual number of days elapsed from
the beginning of the fiscal year in which the Termination
occurs through the Termination Date over a year of 360 days),
which shall be deemed to be 100% unless the performance
actually achieved is greater than 100%, in which case the
actual performance levels shall be utilized. The Company
shall pay to the Executive the Additional Pay in a lump sum,
in cash, not later than the thirtieth (30th) day following the
Termination Date.
(c) RETIREMENT PLAN BENEFITS. If not already vested, the
Executive shall be deemed fully vested in all Company
retirement plans and/or other written agreements relating to
pay upon retirement in which the Executive was a participant,
party, or beneficiary immediately preceding a Change of
Control, and any additional plans and/or agreements in which
such Executive became a participant, party, or beneficiary
thereafter. In addition to the foregoing, for purposes of
determining the amounts to be paid to the Executive under such
plans and/or agreements, the years of service with the Company
and the age of the Executive under all such plans and
agreements shall be deemed increased by the lesser of
thirty-six (36) months or such shorter period of time as would
render the Executive sixty-five (65) years of age. For
purposes of this Section 4(c), "plans" include, without
limitation, any long-term incentive plan, or non-qualified and
mid-career retirement plans but does not include any plans
intended to be qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). If the terms
of the plans referenced in this Section 4(c) do not for any
reason coincide with the provisions of this Section 4(c), the
Executive shall be entitled to receive from the Company under
the terms of this Agreement an amount equivalent to all
amounts he would have received had all such plans continued in
existence as in effect on the date of this Agreement after
being amended to coincide with the terms of this Section 4(c).
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<PAGE> 9
(d) OPTION PAYMENTS. In lieu of exercising or retaining any
rights the Executive may have to exercise some or all of the
outstanding stock options that he then holds (including any
rights to exercise stock options that arise during the Term if
he were to remain employed and including any that would
otherwise terminate as result of his termination of
employment), the Executive may elect within sixty (60) days
after termination of employment to surrender such rights to
the Company and receive in exchange therefor a cash payment
equal to the aggregate difference, if positive, between (a)
the "fair market value" (determined as of the date of
termination using the higher of the "fair market value" (i) as
defined in the terms of the applicable option plan or option
agreement as of the date of termination and (ii) as defined
in the plan or agreement on the date of grant) of the shares
of common stock subject to the options and (b) the option
prices of the shares subject to such surrendered options; and
the Company shall make such payment within forty-five (45)
days after the Executive notifies the Company of his election
to surrender all or a portion of his options.
(e) HEALTH BENEFITS. Following the Termination Date, the Company
shall provide, at its own expense, the continued health
coverage required by Section 4980B of the Code.
(f) GROSS-UP PAYMENTS.
(i) If any payment or the value of any benefit received
or to be received by the Executive in connection with
the Executive's Termination or contingent upon a
Change of Control of the Company (whether received or
to be received pursuant to the terms of this
Agreement (the "Agreement Payments") or of any other
plan, arrangement, or agreement of the Company, its
successors, any person whose actions result in a
Change of Control of the Company, or any person
affiliated with any of them (or which, as a result of
the completion of the transactions causing a Change
of Control, will become affiliated with any of them
("Other Payments" and, together with the Agreement
Payments, the "Payments")) would be subject to the
excise tax imposed by Section 4999 of the Code or any
comparable federal, state, or local excise tax (such
excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the
"Excise Tax"), as determined as provided below, the
Company shall pay to the Executive an additional
amount (the "Gross-Up Payment") such that the net
amount the Executive retains, after deduction of the
Excise Tax on Agreement Payments and Other Payments
and any federal, state, and local income tax and
Excise Tax upon the payment provided for by this
Section 4(f)(i), and any interest, penalties, or
additions to tax payable by the Executive with
respect thereto shall be equal to the total present
value of the Agreement Payments and Other Payments at
the time such Payments are to be made. The intent of
the parties is that the Company
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<PAGE> 10
shall be solely responsible for and shall pay, any
Excise Tax on any Payments and Gross-Up Payment and
any income and employment taxes (including, without
limitation, penalties and interest) imposed on any
Gross-Up Payments as well as any loss of deduction
caused by the Gross-Up Payment.
(ii) All determinations required to be made under this
Section 4(f), including, without limitation, whether
and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determinations,
shall be made by tax counsel (either a law firm or a
nationally recognized public accounting firm)
selected by the Company and reasonably acceptable to
the Executive ("Tax Counsel"). The Company shall
cause the Tax Counsel to provide detailed supporting
calculations to the Company and the Executive within
fifteen (15) business days after notice is given by
the Executive to the Company that any or all of the
Payments have occurred, or such earlier time as is
requested by the Company. Within two (2) business
days after such notice is given to the Company, the
Company shall instruct the Tax Counsel to timely
provide the data required by this Section 4(f) to the
Executive. The Company shall pay all fees and
expenses of the Tax Counsel. The Company shall pay
any Excise Tax determined pursuant to this Section
4(f) to the Internal Revenue Service ("IRS") and/or
other appropriate taxing authority on the Executive's
behalf within five (5) days after receipt of the Tax
Counsel's determination. If the Tax Counsel
determines that there is substantial authority
(within the meaning of Section 6662 of the Code) that
no Excise Tax is payable by the Executive, the Tax
Counsel shall furnish the Executive with a written
opinion that failure to disclose or report the Excise
Tax on the Executive's federal income tax return will
not constitute a substantial understatement of tax or
be reasonably likely to result in the imposition of a
negligence or similar penalty. Any determination by
the Tax Counsel shall be binding upon the Company and
the Executive in the absence of material mathematical
or legal error.
As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial
determination by the Tax Counsel hereunder, it is
possible that the Company will not have made Gross-Up
Payments that should have been made or that it will
have made Gross-Up Payments that should not have been
made, in each case, consistent with the calculations
required to be made hereunder. If the Company
exhausts its remedies pursuant to Section 4(f)(iii)
below and the Executive is thereafter required to pay
any Excise Tax, the Tax Counsel shall determine the
amount of underpayment of Excise Taxes that has
occurred and the Company shall promptly pay any such
underpayment to the IRS or
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<PAGE> 11
other appropriate taxing authority on the Executive's
behalf or, if the Executive has previously paid such
underpayment, to the Executive. If the Tax Counsel
determines that an overpayment of Gross-Up Payments
has occurred, any such overpayment shall be treated
for all purposes as a loan to the Executive with
interest at the applicable federal rate provided for
in Section 7872(f)(2) of the Code, due and payable
within ninety (90) days after written demand to the
Executive by the Company; provided, however, that the
Executive shall have no duty or obligation whatsoever
to repay such loan if the Executive's receipt of the
overpayment, or any portion thereof, is includible in
the Executive's income and the Executive's repayment
of the same is not deductible by the Executive for
federal and state income tax purposes.
(iii) The Executive shall notify the Company in writing of
any claim by the IRS or state or local taxing
authority, that, if successful, would result in any
Excise Tax or an underpayment of Gross-Up Payments.
Such notice shall be given as soon as practicable but
no later than fifteen (15) business days after the
Executive is informed in writing of the claim and
shall inform the Company of the nature of the claim,
the administrative or judicial appeal period, and the
date on which any payment of the claim must be paid.
The Executive shall not pay any portion of the claim
before the expiration of the thirty (30) day period
following the date on which the Executive gives such
notice to the Company (or such shorter period ending
on the date that any amount under the claim is due).
If the Company notifies the Executive in writing
before the expiration of such thirty (30) day period
that it desires to contest the claim, the Executive
shall:
(A) give the Company any information reasonably
requested by the Company relating to the
claim;
(B) take such action in connection with
contesting the claim as the Company shall
reasonably request in writing from time to
time, including, without limitation,
accepting legal representation concerning the
claim by an attorney selected by the Company
who is reasonably acceptable to the
Executive; and
(C) cooperate with the Company in good faith in
order to effectively contest the claim;
provided, however, that the Company shall
bear and pay directly all costs and expenses
(including, without limitation, additional
interest and penalties and attorneys' fees)
incurred in such contests and shall indemnify
and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income
tax (including, without limitation, interest
and penalties
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<PAGE> 12
thereon) imposed as a result of such
representation. Without limitation upon the
foregoing provisions of this Section
4(f)(iii), except as provided below, the
Company shall control all proceedings
concerning such contest and, in its sole
opinion, may pursue or forego any and all
administrative appeal, proceedings, hearings,
and conferences with the taxing authority
pertaining to the claim. At the Company's
written request and upon payment to the
Executive of an amount at least equal to the
claim plus any additional amount necessary to
obtain the jurisdiction of the appropriate
tribunal and/or court, the Executive shall
pay the same and sue for a refund. The
Executive agrees to prosecute any contest of
a claim to a determination before any
administrative tribunal, in a court of
initial jurisdiction and in one or more
appellate courts, as the Company shall
determine; provided, however, that if the
Company requests the Executive to pay the
claim and sue for a refund, the Company shall
advance the amount of such payment to the
Executive, on an interest-free basis, and
shall indemnify and hold the Executive
harmless on an after-tax basis, from any
Excise Tax or income tax (including, without
limitation, interest and penalties thereon)
imposed on such advance or for any imputed
income on such advance. Any extension of the
statute of limitations relating to assessment
of any Excise Tax for the taxable year of the
Executive that is the subject of the claim is
to be limited solely to the claim.
Furthermore, the Company's control of the
contest shall be limited to issues for which
a Gross-Up Payment would be payable
hereunder. The Executive shall be entitled
to settle or contest, as the case may be, any
other issue raised by the IRS or any other
taxing authority.
(iv) If, after the Executive receives an amount the
Company advanced pursuant to Section 4(f)(iii) above,
the Executive receives any refund of a claim and/or
any additional amount that was necessary to obtain
jurisdiction, the Executive shall promptly pay to the
Company the amount of such refund (together with any
interest paid or credited thereon after taxes
applicable thereto). If, after the Executive
receives an amount the Company advanced pursuant to
Section 4(f)(iii) above, a determination is made that
the Executive shall not be entitled to any refund of
the claim, and the Company does not notify the
Executive in writing of its intent to contest such
denial of refund of a claim before the expiration of
thirty (30) days after such determination, then the
portion of such advance attributable to a claim shall
be forgiven and shall not be required to be repaid.
The amount of such advance attributable to a claim
shall offset, to the extent thereof, the amount of
the underpayment required to be paid by the Company
to the Executive.
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<PAGE> 13
(v) If, after the Company advances an additional amount
necessary to obtain jurisdiction, there is a final
determination made by the taxing authority that the
Executive is not entitled to any refund of such
amount, or any portion thereof, then the Executive
shall repay such nonrefundable amount to the Company
within thirty (30) days after the Executive receives
notice of such final determination. A final
determination shall occur when the period to contest
or otherwise appeal any decision by an administrative
tribunal or court of initial jurisdiction has been
waived or the time for contesting or appealing the
same has expired.
(g) LEGAL FEES AND EXPENSES. The Company shall pay to the
Executive all legal fees and expenses as and when incurred by
the Executive in connection with this Agreement, including all
such fees and expenses, if any, incurred in contesting or
disputing any Termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement, regardless of
the outcome, unless, in the case of a legal action brought by
or in the name of the Executive, a decision is rendered
pursuant to Section 10 that such action was not brought by the
Executive in good faith, in which event the Executive shall be
liable to the Company for its legal fees and expenses.
(h) NO MITIGATION. The Executive shall not be required to
mitigate the amount of any payment provided for in this
Section 4 by seeking other employment or otherwise, nor shall
the amount of any payment or benefit provided for in this
Section 4 be reduced by any compensation the Executive earns
as the result of employment by another employer or by
retirement or other benefits received after the Termination
Date or otherwise, except as specifically provided in this
Section 4. The Company's obligation to make payments provided
for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense, or other claim, right, or action that the
Company or Employer may have against the Executive or other
parties.
Section 5. DEATH AND DISABILITY BENEFITS
In the event of the death or Disability of the Executive after a
Change of Control of the Company, the Executive, or in the case of death, the
Executive's beneficiaries, shall receive the benefits to which they are
entitled under the the Employment Agreement, the retirement plans, disability
policies, and other applicable plans or agreements of the Company.
Section 6. SUCCESSORS; BINDING AGREEMENT
(a) OBLIGATIONS OF SUCCESSORS. The Company will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly
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<PAGE> 14
assume and agree to perform this Agreement in the same manner
and to the same extent that the Company is required to perform
it. Failure of the Company to obtain such assumption and
agreement before the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount
and on the same terms as the Executive would be entitled
hereunder if the Executive had terminated his employment
following a Change of Control of the Company, except that for
purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the
Termination Date. As used in this Agreement, the "Company"
shall mean the Company as hereinabove defined and any
successor to its business and/or assets as aforesaid that
assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(b) ENFORCEABLE BY BENEFICIARIES. This Agreement shall inure to
the benefit of and be enforceable by the Executive's personal
or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, and legatees (the
"Beneficiaries"). If the Executive dies while any amount
would still be payable hereunder if he had not then died, all
such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the
Executive's Beneficiaries.
(c) EMPLOYMENT. Except in the event of a Change of Control and,
thereafter, only as specifically set forth in this Agreement,
nothing in this Agreement shall be construed to (i) limit in
any way the right of the Company or a Subsidiary to terminate
the Executive's employment at any time for any reason or for
no reason; or (ii) be evidence of any agreement or
understanding, expressed or implied, that the Company or a
Subsidiary will employ the Executive in any particular
position, on any particular terms, or at any particular rate
of remuneration.
Section 7. CONFIDENTIAL INFORMATION.
The Executive shall hold in fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge, or data relating to
the Company, the Subsidiaries, and their respective businesses, that shall have
been obtained during the Executive's employment by the Employer and that shall
not be public knowledge (other than by acts by the Executive or his
representatives in violation of this Agreement). After termination of the
Executive's employment with the Company or any Employer within the Controlled
Group, the Executive shall not, without prior written consent of the Company or
the Employer, communicate or divulge any such information, knowledge, or data
to anyone other than the Company, the Employer, or those designated by them.
In no event shall an asserted violation of this Section 7 or comparable
provisions in any applicable employment agreement constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
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<PAGE> 15
Section 8. NOTICE
All notices, demands, requests. or other communications required or
permitted to be given or made hereunder shall be in writing and shall be
delivered, telecopied, or mailed by first class registered or certified mail,
postage prepaid, addressed as follows:
(a) if to the Company:
Metrocall, Inc.
6677 Richmond Highway
Alexandria, Virginia 22306
Telecopier: (703) 768-5407
Attention: Francis A. Martin, III
with a copy (which shall not constitute notice) to
Wilmer, Cutler & Pickering
2445 M Street, NW
Washington, DC 20037-1420
Telecopier: (202) 663-6363
Attention: George P. Stamas and John B. Watkins
(a) if to the Executive:
Steven D. Jacoby
4203 Kimbrelee Court
Alexandria, VA 22309
or to such other address as may be designated by either party in a
notice to the other. Each notice, demand, request, or other
communication that shall be given or made in the manner described
above shall be deemed sufficiently given or made for all purposes
three (3) days after it is deposited in the U.S. mail, postage
prepaid, or at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, the answer back, or the
affidavit of messenger being deemed conclusive evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.
Section 9. MISCELLANEOUS
No provision of this Agreement may be modified, waived, or discharged
unless such waiver, modification, or discharge is agreed to in writing and
signed by the Executive and the Chairman of the Compensation Committee of the
Board of Directors. No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any conditions or provision
of this Agreement to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any earlier
or later time. No
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<PAGE> 16
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party that are
not expressly set forth in this Agreement. validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the Commonwealth of Virginia. All references to sections of the Code or the
Exchange Act shall be deemed also to refer to any successor provisions of such
sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law. The
obligations of the Company under Sections 4 and 5 shall survive the expiration
of the term of this Agreement.
Section 10. VALIDITY
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
Section 11. ARBITRATION
The Executive may designate in writing to the Company (in which case
this Section 11 shall have effect but not otherwise) that any dispute that may
arise directly or indirectly in connection with this Agreement, the Executive's
employment, or the termination of the Executive's employment, whether arising
in contract, statute, tort, fraud, misrepresentation, or other legal theory,
shall be determined solely by arbitration in Washington, D.C. under the rules
of the American Arbitration Association (the "AAA"). The only legal claims
between the Executive, on the one hand, and the Company or any Subsidiary, on
the other, that would not be included in this agreement to arbitration are
claims by the Executive for workers' compensation or unemployment compensation
benefits, claims for benefits under a Company or Subsidiary benefit plan if the
plan does not provide for arbitration of such disputes, and claims by the
Executive that seek judicial relief in the form of specific performance of the
right to be paid until the Termination Date during the pendency of any dispute
or controversy arising under Section 3(b). If this Section 11 is in effect,
any claim with respect to this Agreement, the Executive's employment, or the
termination of the Executive's employment must be established by a
preponderance of the evidence submitted to the impartial arbitrator. A single
arbitrator engaged in the practice of law shall conduct any arbitration under
the then current procedures of the AAA and under the AAA's then current Model
Employment Arbitration Rules. The arbitrator shall have the authority to order
a pre-hearing exchange of information by the parties including, without
limitation, production of requested documents, and examination by deposition of
parties and their authorized agents. If this Section 11 is in effect, the
decision of the arbitrator (i) shall be final and binding, (ii) shall be
rendered within ninety (90) days after the impanelment of the arbitrator, and
(iii) shall be kept confidential by the parties to such arbitration. The
arbitration award may be enforced in any court of competent jurisdiction. The
Federal Arbitration Act, 9 U.S.C. Section Section 1-15, not state law, shall
govern the arbitrability of all claims.
- 16 -
<PAGE> 17
If this letter sets forth our agreement on the subject matter hereof,
kindly sign both originals of this letter and return to the Assistant Secretary
of the Company one of the fully executed originals of this letter, which will
then constitute our agreement on this subject.
<TABLE>
<S> <C>
Sincerely,
METROCALL, INC.
By: /s/ Richard D. Johnston
-----------------------
Richard D. Johnston
Chairman of the Board of Directors
Acknowledged and Agreed:
/s/ Steven D. Jacoby
--------------------
Steven D. Jacoby
May 15, 1996
------------
Date
</TABLE>
- 17 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
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<SECURITIES> 0
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0
0
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<TOTAL-LIABILITY-AND-EQUITY> 374,880
<SALES> 6,969
<TOTAL-REVENUES> 32,048
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<INCOME-PRETAX> (11,127)
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<EPS-PRIMARY> (0.75)
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