<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 3, 1998.
REGISTRATION NO. 333-44329
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
AMENDMENT NO. 1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
METROCALL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4812 54-1215634
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
6677 RICHMOND HIGHWAY
ALEXANDRIA, VIRGINIA 22306
(703) 660-6677
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
WILLIAM L. COLLINS, III
CHIEF EXECUTIVE OFFICER
METROCALL, INC.
6677 RICHMOND HIGHWAY
ALEXANDRIA, VIRGINIA 22306
(703) 660-6677
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
With a copy to:
GEORGE P. STAMAS, ESQ.
THOMAS W. WHITE, ESQ.
WILMER, CUTLER & PICKERING
2445 M STREET, N.W.
WASHINGTON, D.C. 20037
(202) 663-6000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PER SECURITY PRICE(1) REGISTRATION FEE(2)
9 3/4% Senior Subordinated Notes
of Metrocall, Inc. ............. $200,000,000 100% $200,000,000 $51,800
Total............................. $200,000,000 100% $200,000,000 $51,800
</TABLE>
(1) Calculated pursuant to Rule 457(f) solely for the purpose of calculating the
registration fee. Such amount represents the aggregate offering price for
9 3/4% Senior Subordinated Notes of Metrocall that Metrocall is offering to
accept in exchange for the 9 3/4% Senior Subordinated Notes of Metrocall
registered pursuant to this Registration Statement.
(2) Previously paid.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
PROSPECTUS
OFFER FOR ALL OUTSTANDING
9 3/4% SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR
9 3/4% SENIOR SUBORDINATED NOTES DUE 2007
THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OF
LOGO
The Exchange Offer and Withdrawal Rights will
expire at 5:00 p.m., New York City time,
on March 5, 1998, unless extended.
------------------------
Metrocall, Inc. (the "Company" or "Metrocall") hereby offers to exchange up
to $200,000,000 aggregate principal amount of the Company's 9 3/4% Senior
Subordinated Notes due 2007 (the "New Notes") for a like aggregate principal
amount of the Company's outstanding 9 3/4% Senior Subordinated Notes due 2007
(the "Old Notes" and, with the New Notes, the "Notes"), of which $200,000,000 in
principal amount is outstanding. The New Notes have terms that are substantially
identical to the terms of the Old Notes, except that the New Notes have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement (as defined herein), of which this
Prospectus constitutes a part, do not contain terms with respect to transfer
restrictions, and do not provide for additional interest for certain periods.
The offer is made upon the terms and subject to the conditions set forth in this
Prospectus (such Prospectus, as it may be amended or supplemented from time to
time, the "Prospectus") and in the accompanying Letter of Transmittal (which
together constitute the "Exchange Offer").
Interest on the New Notes will be payable semiannually in cash on January
15 and July 15 of each year. The New Notes will be redeemable at the option of
the Company, in whole or in part, at any time on or after November 1, 2002, at
the redemption prices set forth herein, plus accrued interest.
(Continued on next page)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY HOLDERS WHO TENDER OLD NOTES IN THE EXCHANGE OFFER.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Date of this Prospectus is February 3, 1998.
<PAGE> 3
(Continued From Cover Page)
The terms of the New Notes will be identical in all material respects to
the respective terms of the Old Notes, except that (i) the New Notes will have
been registered under the Securities Act of 1933 (the "Securities Act") and
therefore will not be subject to certain restrictions on transfer applicable to
the Old Notes and (ii) the New Notes will not be subject to an increase in
interest payments thereon as a consequence of a failure to take certain actions
in connection with their registration under the Securities Act. The New Notes
will be general unsecured obligations of the Company and will be subordinate and
junior in right of payment to all existing and future Senior Debt (as defined
herein) of the Company.
The New Notes are being offered for exchange in order to satisfy certain
obligations of the Company under the Registration Rights Agreement dated October
21, 1997 ("Registration Rights Agreement") among the Company, Morgan Stanley &
Co. Incorporated, TD Securities (USA) Inc., First Union Capital Markets Corp.
and Nationsbanc Montgomery Securities, Inc. (the "Placement Agents"). In the
event the Exchange Offer is consummated, any Old Notes which remain outstanding
after consummation of the Exchange Offer and the New Notes issued in the
Exchange Offer will vote together as a single class for purposes of determining
whether holders of the requisite percentage of outstanding principal amount
thereof have taken certain actions or exercised certain rights under the
indenture governing the Notes.
The Company is making the Exchange Offer with respect to the New Notes in
reliance on the position of the staff of the Division of Corporation Finance
(the "Staff ") of the Securities and Exchange Commission (the "Commission") as
set forth in certain interpretive letters addressed to parties in other
transactions. However, the Company has not sought its own interpretive letter
and there can be no assurance that the Staff would make a similar determination
with respect to the Exchange Offer as it has in such interpretive letters to
third parties. Based on these interpretations by the Staff, and subject to the
two immediately following sentences, the Company believes that New Notes issued
pursuant to this Exchange Offer in exchange for Old Notes may be offered for
resale, resold and otherwise transferred by a holder of such New Notes (other
than a holder who is a broker-dealer) without further compliance with the
registration and prospectus delivery requirements of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
holder's business and that such holder is not participating, and has no
arrangement or understanding with any person to participate, in a distribution
(within the meaning of the Securities Act) of such New Notes. However, any
holder of Old Notes who is an "affiliate" of the Company or who intends to
participate in the Exchange Offer for the purpose of distributing New Notes or
any broker-dealer who purchased Old Notes from the Company to resell pursuant to
Rule 144A under the Securities Act ("Rule 144A") or any other available
exemption under the Securities Act, (a) will not be able to rely on the
interpretations of the Staff set forth in the above-mentioned interpretive
letters, (b) will not be permitted or entitled to tender such Old Notes in the
Exchange Offer and (c) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or other transfer
of such Old Notes unless such sale is made pursuant to an exemption from such
requirements. In addition, as described below, if any broker-dealer holds Old
Notes acquired for its own account as a result of market-making or other trading
activities and exchanges such Old Notes for New Notes, then such broker-dealer
must deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of such New Notes or any other New Notes received in
respect thereof.
Each holder of Old Notes who wishes to exchange Old Notes for New Notes in
the Exchange Offer will be required to represent that at the time of the
consummation of the Exchange Offer (i) it is not an "affiliate" of the Company
within the meaning of Rule 405 under the 1933 Act, (ii) any New Notes to be
received by it are being acquired in the ordinary course of its business, and
(iii) it has no arrangement or understanding with any person to participate in a
distribution (within the meaning of the Securities Act) of such New Notes. If
such holder is a broker-dealer that will receive New Notes for its own account
in exchange for Old Notes that were acquired by such broker-dealer as a result
of market-making activities or other trading activities, it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
ii
<PAGE> 4
Based on the positions taken by the Staff in the interpretive letters
referred to above, the Company believes that broker-dealers who acquired Old
Notes for their own accounts, as a result of market-making activities or other
trading activities ("Participating Broker-Dealers") may fulfill their prospectus
delivery requirements with respect to the New Notes received upon exchange of
the Old Notes (other than Old Notes which represent an unsold allotment from the
original sale of the Old Notes ) with a prospectus meeting the requirements of
the Securities Act, which may be the prospectus prepared for an exchange offer
so long as it contains a description of the plan of distribution with respect to
the resale of such New Notes. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
during the period referred to below in connection with resales of New Notes
received in exchange for Old Notes where such Old Notes were acquired by such
Participating Broker-Dealer for its own account as a result of market-making or
other trading activities. Subject to certain provisions set forth in the
Registration Rights Agreement, the Company has agreed that this Prospectus, as
it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of such New Notes for a
period ending 180 days after the last date of acceptance for the Exchange Offer.
See "Plan of Distribution."
In that regard, each Participating Broker-Dealer who surrenders Old Notes
for its account pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal, that, upon receipt of notice from the
Company of the occurrence of any event or the discovery of any fact which makes
any statement contained or incorporated by reference in this Prospectus untrue
in any material respect or which causes this Prospectus to omit to state a
material fact necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances under which they
were made, not misleading or of the occurrence of certain other events specified
in the Registration Rights Agreement, such Participating Broker-Dealer will
suspend the sale of New Notes pursuant to this Prospectus until the Company has
amended or supplemented this Prospectus to correct such misstatement or omission
and has furnished copies of the amended or supplemented Prospectus to such
Participating Broker-Dealer or the Company has given notice that the sale of the
New Notes may be resumed, as the case may be.
Any Old Notes not tendered and accepted in the Exchange Offer will remain
outstanding and will be entitled to all the same rights and will be subject to
the same limitations applicable thereto under the Indenture (except for those
rights that terminate upon consummation of the Exchange Offer). Following
consummation of the Exchange Offer, the holders of Old Notes will continue to be
subject to all of the existing restrictions upon transfer thereof and the
Company will not have any further obligation to such holders pursuant to the
Registration Rights Agreement to provide for registration under the Securities
Act of the Old Notes held by them. To the extent that Old Notes are tendered and
accepted in the Exchange Offer, a holder's ability to sell untendered Old Notes
could be adversely affected. See "Risk Factors -- Consequences of a Failure to
Exchange Old Notes."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD NOTES ARE URGED TO READ THIS PROSPECTUS AND THE
RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR
OLD NOTES PURSUANT TO THE EXCHANGE OFFER.
Old Notes may be tendered for exchange on or prior to 5:00 p.m., New York
City time, on March 5, 1998 (such time on such date being hereinafter called the
"Expiration Date"), unless the Exchange Offer is extended by the Company (in
which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended). Tenders of Old Notes may be withdrawn at
any time on or prior to the Expiration Date. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Notes being tendered for
exchange. However, the Exchange Offer is subject to certain terms and provisions
of the Registration Rights Agreement. The Company has agreed to pay certain
expenses of the Exchange Offer. See "The Exchange Offer -- Fees and Expenses."
This Prospectus, together with the Letter of Transmittal and Notice of
Guaranteed Delivery, is being sent to all registered holders of Old Notes as of
February 4, 1998.
iii
<PAGE> 5
The Company will not receive any cash proceeds from the issuance of the New
Notes offered hereby. No dealer-manager is being used in connection with this
Exchange Offer. See "Use of Proceeds" and "Plan of Distribution."
------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES
OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY PERSON IN ANY
JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF.
------------------------
iv
<PAGE> 6
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Exchange Act
and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information filed by the Company with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the following regional offices of the
Commission: 5 Park Place, Room 1228, New York, New York 10007 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60621. Copies of such material may
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. at prescribed rates. Such reports and other
information can also be reviewed through the Commission's Electronic Data
Gathering, Analysis, and Retrieval System ("EDGAR") which is publicly available
though the Commission's World Wide Web site (http://www.sec.gov). In addition,
the Company's Common Stock is listed on the Nasdaq Stock Market's National
Market System, and materials filed by the Company can be inspected at the
offices of the National Association of Securities Dealers, Inc., 1735 K Street,
N.W., Washington, D.C. 20006.
This Prospectus constitutes a part of a registration statement on Form S-4
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act. As permitted by the rules and regulations of the Commission,
this Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission, and reference is hereby made to the
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the New Notes. Any statements
contained herein concerning the provisions of any document are not necessarily
complete, and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Metrocall pursuant to
the Exchange Act are incorporated by reference in this Prospectus:
1. Metrocall's Annual Report on Form 10-K for the year ended December
31, 1996, as amended, filed with the Commission on May 8, 1997;
2. Metrocall's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997, filed with the Commission on May 15, 1997;
3. Metrocall's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997, as amended, filed with the Commission on August 22, 1997;
and
4. Metrocall's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997, filed with the Commission on November 14, 1997.
5. Metrocall's Current Reports on Form 8-K, as amended, filed with the
Commission on January 9, 1997, January 27, 1997, February 24, 1997, July
16, 1997, August 12, 1997, September 8, 1997, October 8, 1997, October 23,
1997, November 25, 1997 and January 14, 1998, respectively.
All documents filed by the Company pursuant to Sections 13(a) and (c), 14,
or 15(d) of the Exchange Act after the date hereof and prior to the termination
of the offering of the securities offered hereby shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus,
including the documents or portions thereof incorporated or deemed to be
incorporated herein by reference, as the same may be amended, supplemented or
otherwise modified from time to time. Statements contained in this Prospectus as
to the
v
<PAGE> 7
contents of any contract or other document referred to herein do not purport to
be complete, and where reference is made to the particular provisions of such
contract or other document, such provisions are qualified in all respects by
reference to all of the provisions of such contract or other document.
This prospectus incorporates documents by reference which are not presented
herein or delivered herewith. These documents (excluding exhibits to the
information that is incorporated by reference unless such exhibits are
specifically incorporated by reference into the information that the prospectus
incorporates) are available without charge on request from
Metrocall, Inc.
6677 Richmond Highway
Alexandria, Virginia, 22306
Attention: Shirley B. White
Assistant Secretary
(telephone number: (703) 660-6677)
In order to ensure timely delivery of the documents, any request should be
made no later than five (5) business days prior to the Expiration Date.
The New Notes will be represented by a global certificate registered in the
name of The Depository Trust Company ("DTC"). See "Description of the New
Notes -- Book-Entry; Delivery and Form and The Depository Trust Company."
vi
<PAGE> 8
SUMMARY
The following summary is qualified in its entirety by and should be read in
conjunction with the more detailed information and financial statements and
notes thereto included elsewhere or incorporated by reference in this
Prospectus. Investors should carefully consider the information set forth in
"Risk Factors" in evaluating the Exchange Offer. Unless the context otherwise
requires, all references in this Prospectus to "Metrocall" or the "Company" are
to Metrocall, Inc. and its subsidiaries.
THE COMPANY
Metrocall is the second largest paging company in the United States,
providing local, regional and nationwide paging and other wireless messaging
services. Metrocall currently operates regional and nationwide paging networks
throughout the United States and has historically concentrated its selling
efforts in five operating regions: (i) the Northeast (Massachusetts through
Delaware); (ii) the Mid-Atlantic (Maryland and the Washington, D.C. metropolitan
area); (iii) the Southeast (including Virginia, the Carolinas, Georgia, Florida,
Alabama, Louisiana, Mississippi and Tennessee); (iv) the Southwest (primarily
Texas); and (v) the West (California, Nevada and Arizona). Through the Metrocall
Nationwide Wireless Network, Metrocall provides paging services in all 50 states
and approximately 1,000 U.S. cities, which include the top 100 Standard
Metropolitan Statistical Areas.
On December 30, 1997, Metrocall completed the merger of ProNet Inc.
("ProNet") with and into Metrocall (the "ProNet Merger"). After giving effect to
the merger, the surviving corporation has over 4 million subscribers. In
connection with the ProNet Merger, Metrocall refinanced ProNet's secured bank
debt through borrowings under Metrocall's credit facility and assumed $100.0
million in ProNet senior subordinated notes. On October 21, 1997, Metrocall
completed the sale of the Old Notes (the "Note Sale"), the net proceeds of which
were used to repay outstanding bank debt. On July 1, 1997, Metrocall acquired
substantially all the assets of Page America Group, Inc. and its subsidiaries
("Page America"), which added approximately 200,000 subscribers ("Page America
Acquisition"). The acquisitions of Page America and ProNet expanded Metrocall's
operating regions to include the Mid-West while also increasing its subscriber
bases in its existing operating regions.
Metrocall was organized as a Delaware corporation in October 1982.
Metrocall Common Stock is traded on the Nasdaq Stock Market (the "NSM") under
the symbol "MCLL." Metrocall's principal executive offices are located at 6677
Richmond Highway, Alexandria, Virginia 22306 and its telephone number is (703)
660-6677.
1
<PAGE> 9
THE EXCHANGE OFFER
GENERAL....................... The Old Notes were issued by the Company on
October 21, 1997 to Morgan Stanley & Co.
Incorporated, TD Securities (USA) Inc., First
Union Capital Markets Corp., and NationsBanc
Montgomery Securities, Inc. (the "Placement
Agents"). The Placement Agents subsequently
resold the Old Notes in the United States to
qualified institutional buyers in reliance
upon Rule 144A under the Securities Act, and,
outside the United States, to persons other
than U.S. Persons. Up to $200,000,000
aggregate principal amount of New Notes are
being offered in exchange for a like aggregate
principal amount of Old Notes. The Company
will issue, promptly after the Expiration
Date, $1,000 principal amount of New Notes in
exchange for each $1,000 principal amount of
outstanding Old Notes tendered and accepted in
connection with the Exchange Offer. The
Company is making the Exchange Offer in order
to satisfy obligations under the Registration
Rights Agreement. For a description of the
procedures for tendering Old Notes, see "The
Exchange Offer -- Procedures for Tendering Old
Notes."
EXPIRATION DATE............... 5:00 p.m., New York City time, on March 5,
1998 (such time on such date being hereinafter
called the "Expiration Date") unless the
Exchange Offer is extended by the Company (in
which case the term "Expiration Date" shall
mean the latest date and time to which the
Exchange Offer is extended). See "The Exchange
Offer -- Expiration Date; Extensions;
Amendments."
CONDITIONS TO THE EXCHANGE
OFFER......................... The Exchange Offer is not subject to any
conditions other than that the Exchange Offer
does not violate applicable law or any
applicable interpretation of the staff of the
SEC, and is not conditioned upon any minimum
principal amount of the Old Notes being
tendered. See "The Exchange
Offer -- Conditions to the Exchange Offer."
The Company reserves the right in its sole and
absolute discretion, subject to applicable
law, at any time and from time to time, (i) to
delay the acceptance of the Old Notes for
exchange, (ii) to terminate the Exchange Offer
(iii) to extend the Expiration Date of the
Exchange Offer and retain all Old Notes
tendered pursuant to the Exchange Offer,
subject, however, to the right of holders of
Old Notes to withdraw their tendered Old
Notes, or (iv) to waive any condition or
otherwise amend the terms of the Exchange
Offer in any respect. See "The Exchange
Offer -- Expiration Date; Extensions;
Amendments."
WITHDRAWAL RIGHTS............. Tenders of Old Notes may be withdrawn at any
time on or prior to the Expiration Date by
delivering a written notice of such withdrawal
to First Union National Bank (the "Exchange
Agent") in conformity with certain procedures
set forth below under "The Exchange
Offer -- Withdrawal Rights."
PROCEDURES FOR TENDERING OLD
NOTES......................... Tendering holders of Old Notes must complete
and sign a Letter of Transmittal in accordance
with the instructions contained therein and
forward the same by mail, facsimile or hand
delivery,
2
<PAGE> 10
together with any other required documents, to
the Exchange Agent, together with the Old
Notes to be tendered or in compliance with the
specified procedures for guaranteed delivery
of Old Notes. Certain brokers, dealers,
commercial banks, trust companies and other
nominees may also effect tenders by book-entry
transfer. Holders of Old Notes registered in
the name of a broker, dealer, commercial bank,
trust company or other nominee are urged to
contact such person promptly if they wish to
tender Old Notes pursuant to the Exchange
Offer. See "The Exchange Offer -- Procedures
for Tendering Old Notes." Letters of
Transmittal and certificates representing Old
Notes should not be sent to the Company. Such
documents should only be sent to the Exchange
Agent. Questions regarding how to tender and
requests for information should be directed to
the Exchange Agent. See "The Exchange
Offer -- Exchange Agent."
RESALES OF NEW NOTES.......... The Company is making the Exchange Offer in
reliance on the position of the Staff as set
forth in certain interpretive letters
addressed to parties in other transactions.
However, the Company has not sought its own
interpretive letter and there can be no
assurance that the Staff would make a similar
determination with respect to the Exchange
Offer as it has in such interpretive letters
to third parties. Based on these
interpretations by the Staff, and subject to
the two immediately following sentences, the
Company believes that New Notes issued
pursuant to this Exchange Offer in exchange
for Old Notes may be offered for resale,
resold and otherwise transferred by a holder
thereof (other than a holder who is a
broker-dealer) without further compliance with
the registration and prospectus delivery
requirements of the Securities Act, provided
that such New Notes are acquired in the
ordinary course of such holder's business and
that such holder is not participating, and has
no arrangement or understanding with any
person to participate, in a distribution
(within the meaning of the Securities Act) of
such New Notes. However, any holder of Old
Notes who is an "affiliate" of the Company or
who intends to participate in the Exchange
Offer for the purpose of distributing the New
Notes, or any broker-dealer who purchased the
Old Notes from the Company to resell pursuant
to Rule 144A or any other available exemption
under the Securities Act, (a) will not be able
to rely on the interpretations of the Staff
set forth in the above-mentioned interpretive
letters, (b) will not be permitted or entitled
to tender such Old Notes in the Exchange Offer
and (c) must comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any sale or
other transfer of such Old Notes unless such
sale is made pursuant to an exemption from
such requirements. In addition, as described
below, if any broker-dealer holds Old Notes
acquired for its own account as a result of
market-making or other trading activities and
exchanges such Old Notes for New Notes, then
such broker-dealer must deliver a prospectus
meeting the requirements of the Securities Act
in connection with any resales of such New
Notes.
3
<PAGE> 11
Each holder of Old Notes who wishes to
exchange Old Notes for New Notes in the
Exchange Offer will be required to represent
that at the time of the consummation of the
Exchange Offer (i) it is not an "affiliate" of
the Company within the meaning of Rule 405
under the 1933 Act, (ii) any New Notes to be
received by it are being acquired in the
ordinary course of its business, and (iii) it
has no arrangement or understanding with any
person to participate in a distribution
(within the meaning of the Securities Act) of
such New Notes.
Each broker-dealer that receives New Notes for
its own account pursuant to the Exchange Offer
must acknowledge that it acquired the Old
Notes for its own account as a result of
market-making activities or other trading
activities and must agree that it will deliver
a prospectus meeting the requirements of the
Securities Act in connection with any resale
of such New Notes. The Letter of Transmittal
states that by so acknowledging and by
delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act. Based on the position taken by
the Staff in the interpretive letters referred
to above, the Company believes that
broker-dealers who acquired Old Notes for
their own accounts as a result of market-
making activities or other trading activities
("Participating Broker-Dealers") may fulfill
their prospectus delivery requirements with
respect to the New Notes received upon
exchange of such Old Notes (other than Old
Notes which represent an unsold allotment from
the original sale of the Old Notes) with a
prospectus meeting the requirements of the
Securities Act, which may be the prospectus
prepared for an exchange offer so long as it
contains a description of the plan of
distribution with respect to the resale of
such New Notes. Accordingly, this Prospectus,
as it may be amended or supplemented from time
to time, may be used by a Participating
Broker-Dealer in connection with resales of
New Notes received in exchange for Old Notes
where such Old Notes were acquired by such
Participating Broker-Dealer for its own
account as a result of market-making or other
trading activities. Subject to certain
provisions set forth in the Registration
Rights Agreement and to the limitations
described below under "The Exchange
Offer -- Resale of New Notes," the Company has
agreed that this Prospectus, as it may be
amended or supplemented from time to time, may
be used by a Participating Broker-Dealer in
connection with resales of such New Notes for
a period ending 180 days after the
Registration Statement of which this
Prospectus constitutes a part is declared
effective. See "Plan of Distribution."
INTEREST...................... Holders of Old Notes whose Old Notes are
accepted for exchange will receive, in cash,
accrued interest thereon to, but not
including, the date of issuance of the New
Notes. Such interest will be paid with the
first interest payments on the New Notes.
EXCHANGE AGENT................ The Exchange Agent with respect to the
Exchange Offer is First Union National Bank.
The addresses, and telephone and facsimile
4
<PAGE> 12
numbers of the Exchange Agent are set forth in
"The Exchange Offer - Exchange Agent" and in
the Letter of Transmittal.
USE OF PROCEEDS............... The Company will not receive any cash proceeds
from the issuance of the New Notes offered
hereby. The net proceeds from the initial sale
of the Old Notes was approximately $194.2
million of which $193.0 million was used to
repay outstanding amounts under Metrocall's
senior secured credit facility (the "Metrocall
Credit Facility"). See "Use of Proceeds."
CERTAIN UNITED STATES FEDERAL
INCOME
TAX CONSEQUENCES............ Holders of Old Notes should review the
information set forth under "Certain United
States Federal Income Tax Consequences" prior
to tendering Old Notes in the Exchange Offer.
5
<PAGE> 13
THE NEW NOTES
Issuer........................ Metrocall, Inc.
Notes Offered................. The terms of the New Notes will be identical
in all material respects to the Old Notes,
except that the New Notes will not contain
terms with respect to transfer restrictions
and will not provide for increased interest
for certain future periods.
Maturity...................... November 1, 2007.
Interest...................... Payable semi-annually in cash on January 15
and July 15 of each year.
Optional Redemption........... The New Notes are redeemable, in whole or in
part, at any time on or after November 1,
2002, at the option of the Company at the
redemption prices set forth herein, plus
accrued interest. See "Description of New
Notes -- Optional Redemption."
Change of Control............. Upon a Change of Control (as defined herein),
the Company will be required to make an offer
to purchase the New Notes at a purchase price
equal to 101% of their principal amount, plus
accrued interest. See "Description of New
Notes -- Certain Covenants -- Change of
Control."
Ranking....................... The New Notes will be unsecured, general
obligations of the Company, subordinated in
right of payment to all existing and future
Senior Debt of the Company (as defined
herein). The New Notes will rank pari passu in
right of payment with all existing and future
senior subordinated debt of the Company,
including the Company's $252.5 million in
outstanding Senior Subordinated Debt as of
December 30, 1997 and any Old Notes that
remain outstanding ("Senior Subordinated
Debt"). See "Risk Factors -- Substantial
Indebtedness of Metrocall; Ability to Service
Debt; Capital Expenditures,"
"-- Subordination; Priority of Secured
Indebtedness" and "Description of New
Notes -- Ranking."
Certain Covenants............. The indenture pursuant to which the New Notes
are issued (the "Indenture") contains certain
covenants, including, but not limited to,
covenants with respect to: (i) limitation on
indebtedness; (ii) limitation on restricted
payments; (iii) limitation on transactions
with affiliates; (iv) limitation on liens; (v)
limitation on asset dispositions; (vi)
limitation on subsidiary equity interests;
(vii) limitation on dividends and other
payment restrictions affecting subsidiaries;
(viii) limitation on unrestricted
subsidiaries; and (ix) restrictions on
mergers, consolidations and the transfer of
all or substantially all of the assets of the
Company to another person. See "Description of
New Notes -- Certain Covenants."
Listing....................... Application has been made to list the Notes on
the Luxembourg Stock Exchange.
Book-Entry: Delivery and
Form.......................... New Notes exchanged for Old Notes will be
represented by one or more permanent global
New Notes in definitive, fully registered
form, deposited with a custodian for, and
registered in the name of a nominee of, The
Depository Trust Company ("DTC"). Beneficial
interests in such permanent global New Notes
will be shown on, and transfers thereof will
be effected through, records maintained by DTC
and its participants.
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY CERTAIN MATTERS RELATING TO
THE COMPANY, ITS BUSINESS AND AN INVESTMENT IN THE NOTES. SEE "RISK FACTORS."
6
<PAGE> 14
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table presents selected historical financial data of the
Company for the years ended December 31, 1992, 1993, 1994, 1995 and 1996 and the
nine months ended September 30, 1996 and 1997. The historical financial data for
each of the five years in the period ended December 31, 1996 have been derived
from the audited Consolidated Financial Statements of the Company. The
historical financial data for the nine months ended September 30, 1996 and 1997
have been derived from the Company's unaudited Consolidated Financial
Statements. The following information should be read in conjunction with the
Company's Consolidated Financial Statements and notes thereto incorporated by
reference herein. Operating results for interim periods are not necessarily
indicative of the results that might be expected for an entire fiscal year.
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
---------------------------------------------------------- -------------------------
1992 1993 1994(1) 1995 1996(1) 1996(1) 1997(1)
-------- -------- -------- -------- ---------- ---------- -----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Service, rent and maintenance
revenues......................... $ 30,996 $ 33,111 $ 49,716 $ 92,160 $ 124,029 $ 79,453 $ 183,237
Product sales...................... 4,196 4,549 8,139 18,699 25,928 19,155 28,832
-------- -------- -------- -------- ---------- ---------- ----------
Total revenues................. 35,192 37,660 57,855 110,859 149,957 98,608 212,069
Net book value of products sold.... (3,439) (4,130) (6,962) (15,527) (21,633) (15,546) (21,324)
-------- -------- -------- -------- ---------- ---------- ----------
31,753 33,530 50,893 95,332 128,324 83,062 190,745
Operating expenses:
Service, rent and maintenance...... 8,342 9,559 14,014 27,258 38,347 26,297 56,347
Selling, general and
administrative(2)................ 12,341 17,879 20,727 42,353 57,226 36,361 82,955
Depreciation and amortization...... 6,594 6,525 13,829 31,504 58,196 40,385 67,017
-------- -------- -------- -------- ---------- ---------- ----------
Income (loss) from operations...... 4,476 (433) 2,323 (5,783) (25,445) (19,981) (15,574)
Interest and other (expense)
income(3)........................ 1,212 77 161 314 (607) 338 (61)
Interest expense................... (2,631) (1,331) (3,726) (12,533) (20,424) (13,596) (25,763)
-------- -------- -------- -------- ---------- ---------- ----------
Income (loss) before income tax
benefit and extraordinary item... 3,057 (1,687) (1,242) (18,002) (46,476) (33,239) (41,398)
Income tax benefit (provision)..... (69) (59) 152 595 1,021 279 3,510
-------- -------- -------- -------- ---------- ---------- ----------
Income (loss) before extraordinary
item............................. 2,988 (1,746) (1,090) (17,407) (45,455) (32,960) (37,888)
Extraordinary item(3).............. -- (439) (1,309) (2,695) (3,675) -- --
-------- -------- -------- -------- ---------- ---------- ----------
Net income (loss).............. $ 2,988 $ (2,185) $ (2,399) $(20,102) $ (49,130) $ (32,960) $ (37,888)
======== ======== ======== ======== ========== ========== ==========
OPERATING AND OTHER DATA:
Units in service (end of period)... 201,397 247,716 755,546 944,013 2,142,351 1,405,933 2,633,544
EBITDA(4).......................... $ 11,070 $ 10,923 $ 16,152 $ 27,771 $ 32,751 $20,404 $ 51,443
EBITDA margin(5)................... 34.9% 32.6% 31.7% 29.1% 25.5% 24.6% 27.0%
Net cash provided by operating
activities....................... $ 8,858 $ 10,929 $ 11,796 $ 14,000 $ 15,608 $ 17,854 $ 18,685
Net cash provided by (used in)
investing activities............. $ 26,127 $(13,598) $ 19,227 $ 44,528 $ 327,904 $ 183,732 $ 69,249
Net cash (used in) provided by
financing activities............. $(34,167) $ 1,983 $ 9,190 $151,329 $ 199,639 $ 52,547 $ 55,498
ARPU(6)............................ $ 13.10 $ 12.29 $ 10.53 $ 9.15 $ 8.01 $ 7.86 $ 8.30
Average monthly operating expense
per unit(7)...................... $ 8.74 $ 8.39 $ 7.36 $ 6.71 $ 6.28 $ 6.20 $ 6.45
Units in service per employee (end
of period)....................... 730 716 1,007 1,047 1,088 1,320 1,165
Capital expenditures(8)............ $ 3,918 $ 13,561 $ 19,091 $ 44,058 $ 62,110 $ 58,482 $ 54,400
Ratio of earnings to fixed
charges(9)....................... -- -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
------------------------------------------------------- -----------------------
1992 1993 1994 1995 1996 1996 1997
-------- ------- -------- -------- -------- -------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital (deficit).............. $ 531 $(1,603) $ (5,277) $116,009 $ (7,267) $(12,682) $ (1,124)
Cash and cash equivalents.............. 1,700 1,014 2,773 123,574 10,917 10,243 15,851
Total assets........................... 26,180 33,857 200,580 340,614 646,578 412,503 706,280
Total long-term debt, net of current
portion.............................. 30,855 11,814 101,346 153,803 327,092 221,647 384,033
Total stockholders' equity............. (11,374) 13,729 68,136 155,238 166,298 132,363 145,007
</TABLE>
7
<PAGE> 15
- ---------------
(1) 1994, 1996 and the nine months ended September 30, 1996 and 1997 include the
results of operations of acquired companies from their respective
acquisition dates (see Note 3 to consolidated financial statements as of and
for the year ended December 31, 1996 and Note 5 to the condensed
consolidated financial statements as of and for the nine months ended
September 30, 1997).
(2) Includes the impact of one-time, non-recurring charges for the forgiveness
of certain stockholder notes receivable of approximately $4.8 million in
1993, non-recurring severance and other compensation costs incurred as part
of a management reorganization charge of approximately $2.0 million in 1995.
(3) In 1993, 1994 and 1995 the Company refinanced balances outstanding under its
then existing credit facilities. As a result of this refinancing the Company
recorded extraordinary items of $439,000, $1.3 million and $2.7 million,
respectively, representing charges to expense unamortized deferred financing
costs and other costs, net of any income tax benefits, related to those
credit facilities. In 1996, the Company recorded an extraordinary item for
costs of approximately $3.7 million paid to purchase the A+ Network 11 7/8%
senior subordinated notes outstanding. Additionally, the Company incurred
breakage fees of approximately $1.7 million associated with the termination
of two interest rate swap agreements in 1995. Costs associated with this
termination have been included in interest and other (expense) income in the
1995 statement of operations.
(4) Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"),
while not a measure under generally accepted accounting principles ("GAAP"),
is a standard measure of financial performance in the paging industry.
EBITDA should not be considered in isolation or as an alternative to net
income (loss), income (loss) from operations, cash flows from operating
activities, or any other measure of performance under GAAP. EBITDA is,
however, an approximation of the primary financial measure by which the
Company's covenants are calculated under the Indenture and the Metrocall
Credit Facility. EBITDA excludes non-recurring charges for the forgiveness
of certain stockholder notes receivable of approximately $4.8 million in
1993, and approximately $2.0 million incurred as part of a management
reorganization charge in 1995.
(5) EBITDA margin is calculated by dividing (a) EBITDA by (b) total revenues
less the net book value of products sold.
(6) ARPU is calculated by dividing (a) service, rent and maintenance revenues
for the period by (b) the average number of units in service for the period.
ARPU calculation excludes revenues derived from non-paging services such as
telemessaging, long distance and cellular telephone. The average numbers of
units used by the Company to calculate ARPU, average monthly operating
expense per unit and other per unit amounts are based on the average number
of units in service during the relevant period and, with respect to periods
in which an acquisition occurred, adjusted for the estimated number of units
added after the date of acquisition.
(7) Average monthly operating expense per unit is calculated by dividing (a)
total recurring operating expenses before depreciation and amortization for
the period by (b) the average number of units in service for the period. For
this calculation, operating expenses exclude non-recurring charges for the
forgiveness of certain stockholder notes receivable of approximately $4.8
million in 1993, and approximately $2.0 million incurred as a part of a
management reorganization charge in 1995. For a discussion of the estimated
average number of units used in calculating average monthly operating
expense per unit, see Footnote 6 above.
(8) Excludes acquisitions but includes leased pager costs.
(9) Earnings used in computing the ratio of earnings to fixed charges consist of
income before income tax benefit and extraordinary item plus fixed charges.
Fixed charges consist of interest expense and that portion of rental expense
representative of interest. Earnings were insufficient to cover fixed
charges in 1994, 1995, 1996 and the nine months ended September 30, 1996 and
1997 by $1.2 million, $18.0 million, $46.5 million, $33.2 million and $41.4
million, respectively.
8
<PAGE> 16
SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The following summary unaudited pro forma condensed combined statements of
operations data of Metrocall for the year ended December 31, 1996 give effect to
Metrocall's 1996 acquisitions including Parkway, Satellite and A+ Network as if
each transaction had occurred on January 1, 1996 under the heading "Pro Forma
Metrocall." The unaudited pro forma condensed combined statements of operations
data for the year ended December 31, 1996 and for the nine months ended
September 30, 1997 also give effect to the Page America Acquisition under the
heading "Pro Forma Metrocall and Page America," and to the Page America
Acquisition and the Note Sale under the heading "Pro Forma Metrocall, Page
America and Note Sale" and to the Page America Acquisition, the Note Sale and
the ProNet Merger under the heading "Pro Forma Metrocall, Page America, Note
Sale and ProNet," in each case as if those transactions had occurred on January
1, 1996.
The unaudited pro forma condensed combined balance sheet under the heading
"Pro Forma Metrocall and Note Sale" gives effect to the Offering as if it had
occurred on September 30, 1997. The unaudited pro forma condensed combined
balance sheet under the heading "Pro Forma Metrocall, Note Sale and ProNet"
gives effect to the Note Sale and the ProNet Merger as if each had occurred on
September 30, 1997.
This information should be read in conjunction with the unaudited Pro Forma
Condensed Combined Financial Data and the notes thereto incorporated by
reference herein to Metrocall's Current Report on Form 8-K filed January 14,
1998, and to the Metrocall Consolidated Financial Statements and the ProNet
Consolidated Financial Statements incorporated by reference herein. The
unaudited pro forma condensed combined financial data do not purport to
represent what the Company's results of operations or financial position
actually would have been had such transactions and events occurred on the dates
specified, or to project the Company's results of operations or financial
position for any future period or date. The pro forma adjustments are based upon
available information and certain adjustments that management of Metrocall
believes are reasonable. In the opinion of management of Metrocall, all
adjustments have been made that are necessary to present fairly the unaudited
pro forma condensed combined financial data.
9
<PAGE> 17
SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
(CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-------------------------------------------------------------------
PRO FORMA PRO FORMA PRO FORMA
METROCALL METROCALL, METROCALL,
PRO FORMA AND PAGE AMERICA PAGE AMERICA,
METROCALL PAGE AMERICA AND NOTE SALE NOTE SALE AND PRONET
---------- ------------ ------------- --------------------
(IN THOUSANDS, EXCEPT FOR RATIOS AND UNITS IN SERVICE)
<S> <C> <C> <C> <C>
CONDENSED COMBINED STATEMENTS OF OPERATIONS DATA:
Total revenues....................................... $ 247,886 $ 269,870 $ 269,870 $ 372,926
Operating expenses................................... 264,120 288,383 288,383 405,972
Loss from operations................................. (46,821) (50,384) (50,384) (78,161)
Interest and other income (expense), net............. (30,573) (33,561) (50,024) (65,109)
Income tax benefit................................... 5,614 5,614 5,614 10,185
Net loss............................................. $ (71,780) $ (78,331) $ (94,794) $ (133,085)
OTHER DATA:
Units in service (end of period)..................... 2,142,351 2,347,351 2,347,351 3,571,890
EBITDA(1)............................................ $ 53,879 $ 59,003 $ 59,003 $ 83,801
Pro forma ratio of EBITDA to interest expense........ 1.7x 1.8x 1.2x 1.3x
Ratio of earnings to fixed charges(2)................ -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1997
-------------------------------------------------------------------
PRO FORMA PRO FORMA PRO FORMA
METROCALL METROCALL, METROCALL,
AND PAGE AMERICA PAGE AMERICA,
METROCALL PAGE AMERICA AND NOTE SALE NOTE SALE AND PRONET
---------- ------------ ------------- --------------------
(IN THOUSANDS, EXCEPT FOR RATIOS AND UNITS IN SERVICE)
<S> <C> <C> <C> <C>
CONDENSED COMBINED STATEMENTS OF OPERATIONS DATA:
Total revenues....................................... $ 212,069 $ 221,396 $ 221,396 $ 309,756
Operating expenses................................... 206,319 217,370 217,370 330,829
Loss from operations................................. (15,574) (17,723) (17,723) (52,731)
Interest and other income (expense), net............. (25,824) (27,029) (30,418) (43,622)
Income tax benefit................................... 3,510 3,484 3,484 6,981
Net loss............................................. $ (37,888) $ (41,268) $ (44,657) (89,372)
OTHER DATA:
Units in service (end of period)..................... 2,633,544 2,633,544 2,633,544 3,934,606
EBITDA(1)............................................ $ 51,443 $ 52,861 $ 52,861 $ 75,573
Pro forma ratio of EBITDA to interest expense........ 2.0 2.0 1.8x 1.7x
Ratio of earnings to fixed charges(2)................ -- -- -- --
Pro forma ratio of long-term debt, net of current
portion, to EBITDA(3).............................. 5.6 5.4 5.5 5.7
CONDENSED COMBINED BALANCE SHEET DATA (AS OF SEPTEMBER
30, 1997):
Working capital (deficit)............................ $ (1,124) $ (1,124) $ 26 $ (14,056)
Total assets......................................... 706,280 706,280 713,280 1,060,166
Long-term debt, net of current portion(4)............ 384,033 384,033 391,033 573,477
</TABLE>
- ---------------
(1) EBITDA, while not a measure under GAAP, is a standard measure of financial
performance in the paging industry. EBITDA should not be considered in
isolation or as an alternative to net income (loss), income (loss) from
operations, cash flows from operating activities, or any other measure of
performance under GAAP. Pro forma EBITDA excludes certain nonrecurring
charges related to Satellite and A+ Network of approximately $408,000 for
the year ended December 31, 1996. Pro forma EBITDA excludes certain
nonrecurring charges related to ProNet of approximately $8.8 million and
$6.4 million for the year ended December 31, 1996 and nine months ended
September 30, 1997, respectively.
(2) Earnings used in computing the ratio of earnings to fixed charges consist of
income before income tax benefit and extraordinary item plus fixed charges.
Fixed charges consist of interest expense and that portion of rental expense
representative of interest. On a pro forma basis, after giving effect to the
Page America Acquisition, the Note Sale and the ProNet Merger, the Company's
earnings before fixed charges would have been insufficient to cover fixed
charges by $143.3 million and $96.4 million for 1996 and the nine months
ended September 30, 1997, respectively.
(3) The ratios of long-term debt to EBITDA for the nine-month period ended
September 30, 1997 assume annualized EBITDA for the period.
(4) During October 1997 and January 1998, the Company increased borrowings
outstanding under the Metrocall Credit Facility by $18.0 million and $6.0
million, respectively, to fund working capital requirements. Subsequent to
September 30, 1997, ProNet increased borrowings outstanding under its credit
facility by $5.0 million primarily to fund interest payments required for
the ProNet Senior Subordinated Debt.
10
<PAGE> 18
RISK FACTORS
In addition to reviewing the other information contained or incorporated by
reference in this Prospectus, holders of the Old Notes should review carefully
the following risks concerning the New Notes, the Company and the paging
industry before tendering Old Notes for exchange.
SUBSTANTIAL INDEBTEDNESS OF METROCALL; ABILITY TO SERVICE DEBT; CAPITAL
EXPENDITURES
At December 31, 1997, Metrocall had outstanding approximately $600.0
million in indebtedness consisting of bank loans, senior subordinated notes,
mortgage indebtedness and capital leases. The Metrocall Credit Facility
currently provides for total borrowings of $300.0 million (of which $141.2
million was drawn as of December 31, 1997 and is included in the outstanding
indebtedness described above), subject to the limitations described below.
Metrocall expects to incur additional indebtedness (in the form of draws on
the Metrocall Credit Facility or otherwise) to meet working capital needs, in
connection with future acquisitions or for other purposes. However, the ability
to incur additional indebtedness (including draws on the Metrocall Credit
Facility) is subject to certain limitations in the agreements relating to
existing indebtedness.
Metrocall currently would be able to incur approximately $45.8 million of
additional indebtedness under the Metrocall Credit Facility based on its
operating results through September 30, 1997 and estimated cash balances on hand
and after giving effect to the Page America Acquisition, the Note Sale and the
ProNet Merger.
On a pro forma basis, after giving effect to the Page America Acquisition,
the Note Sale and the ProNet Merger, the Company's earnings before fixed charges
would have been insufficient to cover its fixed charges for the year ended
December 31, 1996 and nine months ended September 30, 1997, by approximately
$143.3 million and $96.4 million, respectively. Free cash flow deficit (EBITDA
less capital expenditures and interest expense) for the year ended December 31,
1996 and the nine months ended September 30, 1997 was $49.8 million and $28.7
million, respectively, and, on a pro forma basis, after giving effect to the
Note Sale and the ProNet Merger, the free cash flow deficit for the nine months
ended September 30, 1997 would have been $51.1 million.
This substantial indebtedness, along with the net losses and working
capital deficits sustained by Metrocall in recent periods, will have certain
adverse consequences for Metrocall, including the following: (i) the ability of
Metrocall to obtain additional financing for working capital, capital
expenditures, debt service requirements or other purposes may be impaired; (ii)
a substantial portion of Metrocall's cash flow from operations will be required
to be dedicated to the payment of Metrocall's interest expense; (iii)
indebtedness under the Metrocall Credit Facility bears interest at floating
rates, which will cause Metrocall to be vulnerable to increases in interest
rates; (iv) Metrocall may be more highly leveraged than companies with which it
competes, which may place it at a competitive disadvantage; and (v) Metrocall
may be more vulnerable in the event of a downturn in its business or in general
economic conditions. See "-- History of Losses from Operations."
The Company has required, and will continue to require, substantial capital
in connection with the further development and expansion of its operations.
Historically, the Company has funded its capital requirements by debt financing
and the sale of capital stock. The Company expects its capital expenditures for
1997 and 1998 will be approximately $70 million and $80 million (after giving
effect to the ProNet Merger), respectively. The Company believes that the net
proceeds from the Offering, borrowings under the Metrocall Credit Facility and
cash flow from operations will be sufficient to fund the Company's planned
capital expenditures and working capital and debt service requirements. The
Company may require additional financing for future acquisitions and for further
expansion of its paging operations. See "-- Growth Strategy."
The ability of Metrocall to meet its debt service and other obligations
(including compliance with financial covenants) will be dependent upon the
future performance of Metrocall and its cash flow from operations, which will be
subject to financial, business and other factors, certain of which are beyond
its control, such as prevailing economic conditions. As a result of the ProNet
Merger, the Company's total
11
<PAGE> 19
indebtedness and debt service requirements will be substantially increased and
the Company will be subject to significant financial restrictions and
limitations. The successful implementation of the Company's strategy is
necessary for the Company to meet its debt service requirements, including its
obligations under the Notes. No assurance can be given that, in the event
Metrocall were to require additional financing, such additional financing would
be available on terms permitted by agreements relating to existing indebtedness
or otherwise satisfactory to Metrocall. Moreover, there can be no assurance that
the Company will be able to generate sufficient cash flow from operating
activities to meet its debt service obligations and working capital
requirements. Furthermore, if the Company is unable to satisfy any of the
covenants under the Metrocall Credit Facility, including financial covenants,
the Company will be unable to borrow under such facility to fund planned capital
expenditures, its ongoing operations and other permissible uses. Failure to
obtain such financing could result in delays or abandonment of some or all of
the Company's plans, which could limit the ability of the Company to meet its
debt service obligations (including obligations with respect to the New Notes)
and could have an adverse effect on its business.
Substantially all outstanding debt of the Company will mature prior to the
maturity of the New Notes. The Company's indebtedness may need to be refinanced
at its maturity. The Company's ability to do so will depend on, among other
things, its financial condition at the time, the restrictions in the instruments
governing its indebtedness and other factors, including market conditions,
beyond the control of the Company.
HISTORY OF LOSSES FROM OPERATIONS
Metrocall sustained losses from operations of $5.8 million and $25.4
million for the years ended December 31, 1995 and 1996, respectively, and $15.6
million for the nine months ended September 30, 1997. No assurance can be given
that Metrocall will achieve profitability. In addition, at September 30, 1997,
Metrocall's accumulated stockholders' deficit was approximately $140.0 million.
Metrocall's business requires substantial funds for capital expenditures and
acquisitions that result in significant depreciation and amortization charges.
Accordingly, losses from operations are expected to continue to be incurred in
the future. On a pro forma basis, after giving effect to the Page America
Acquisition and the ProNet Merger, the Company's losses from operations would
have been $78.2 million and $52.7 million for the year ended December 31, 1996
and the nine months ended September 30, 1997, respectively. See "Pro Forma
Condensed Combined Financial Data."
SUBORDINATION; PRIORITY OF SECURED INDEBTEDNESS
The New Notes will be unsecured and subordinated in right of payment to all
existing and future Senior Debt of the Company, including all indebtedness under
the Metrocall Credit Facility. By reason of such subordination, in the event of
the insolvency, liquidation or other reorganization of the Company, the Senior
Debt must be paid in full before the principal of, premium, if any, or interest
on the New Notes may be paid. As of December 31, 1997 the aggregate amount of
Senior Debt is approximately $147.5 million. The Indenture governing the New
Notes permits the Company to incur additional Senior Debt if certain tests are
met. See "Description of Notes -- Certain Covenants." In addition, the
obligations of the Company under the Metrocall Credit Facility are secured by a
first priority security interest in substantially all of the Company's assets.
If the Company becomes insolvent or is liquidated, or if payment under the
Metrocall Credit Facility is accelerated, the lenders under the Metrocall Credit
Facility would be entitled to exercise the remedies available to a secured
lender under applicable law and pursuant to instruments governing such
indebtedness. Accordingly, such lenders will have a prior claim on the Company's
assets. In any such event, because the New Notes will not be secured by any of
the Company's assets, it is possible that there would be no assets remaining
from which claims of the holders of such New Notes could be satisfied, or, if
any such assets remained, such assets might be insufficient to satisfy such
claims fully.
In the event of a default in the payment of principal or interest with
respect to any Senior Debt of the Company, the Company will not make any payment
with respect to the principal of, premium, if any, or interest on the New Notes
unless and until such default has been cured or waived. In the event of any
other default permitting the acceleration of Designated Senior Debt (as defined
in "Description of New Notes -- Ranking") or indebtedness under the Metrocall
Credit Facility where notice of such default has been given to
12
<PAGE> 20
the Company, the Company may not make any payment with respect to the principal
of, or premium, if any, or interest on the New Notes unless and until such
default has been cured or waived; provided, however, that such other default
will not prevent the making of payments on the New Notes for more than 179
consecutive days after notice of such default has been given to the Company.
Upon any payment or distribution of assets of the Company upon a total or
partial liquidation, dissolution, reorganization or similar proceeding, the
holders of Senior Debt will be entitled to receive payment in full before the
holders of the New Notes or other Senior Subordinated Debt are entitled to
receive any payment. See "Description of New Notes -- Ranking."
In addition, the New Notes will rank pari passu with all other Senior
Subordinated Debt of the Company. As of December 31, 1997, the Company had
$452.5 million in Senior Subordinated Debt including the Old Notes. See
"Description of New Notes -- Ranking." Accordingly, in the event that there
remain assets of the Company available to satisfy the claims of creditors after
payment of Senior Debt, but such assets were not sufficient to pay all Senior
Subordinated Debt in full, the holders of the New Notes would receive only a
proportionate share of these assets.
COVENANT RESTRICTIONS
The instruments governing the indebtedness of the Company impose
significant operating and financial restrictions on the Company. Such
restrictions will affect, and in many respects significantly limit or prohibit,
among other things, the ability of the Company to incur additional indebtedness
and certain types of indebtedness, create liens, engage in transactions with
stockholders and affiliates, sell assets, issue capital stock of subsidiaries or
engage in mergers or acquisitions. In addition, the Metrocall Credit Facility
requires that the Company maintain certain financial ratios. These restrictions
could also limit the ability of the Company to effect future financings, make
needed capital expenditures, withstand a future downturn in the Company's
business or the economy in general, or otherwise conduct necessary corporate
activities.
Failure by the Company or its subsidiaries to comply with these
restrictions could lead to a default under the terms of such indebtedness and
the New Notes notwithstanding the ability of the Company to meet its debt
service obligations. In the event of a default, the holders of such indebtedness
could elect to declare all such indebtedness to be due and payable, together
with accrued and unpaid interest. In such event, a significant portion of the
Company's other indebtedness (including the New Notes) may become immediately
due and payable and there can be no assurance that the Company would be able to
make such payments or borrow sufficient funds from alternative sources to make
any such payment. Even if additional financing could be obtained, there can be
no assurance that it would be on terms that are acceptable to the Company. In
addition, the pledge of substantially all of the Company's assets as collateral
under such debt instruments could impair the Company's ability to obtain
favorable financing. The terms of the Company's preferred stock and agreements
executed in connection therewith also contain certain covenants and restrictions
with respect to the Company.
RISKS ASSOCIATED WITH ACQUISITIONS; CHALLENGES OF BUSINESS INTEGRATION
The Company recently has completed several acquisitions and is subject to
risks that the paging systems acquired, including assets acquired in the Page
America Acquisition and in the ProNet Merger, will not perform as expected and
that the returns from such systems will not support indebtedness assumed or
incurred to acquire, or the capital expenditures needed to develop, such assets.
The Company's recent acquisitions, and any additional acquisitions, will require
integration of each company's development, administrative, finance, sales and
marketing organizations, as well as the integration of each company's
communication networks and the coordination of its sales efforts. Further, each
company's customers will need to be reassured that their paging services will
continue uninterrupted. The diversion of management attention and any
difficulties encountered in the transition process could have an adverse impact
on the revenue and operating results of the Company. Additionally, attempts to
achieve economies of scale through cost cutting and lay-offs of existing
personnel may, at least in the short term, have an adverse impact upon the
Company.
Metrocall believes that a key benefit to be realized from the ProNet Merger
will be the integration of paging service coverage, which will allow the Company
to provide paging services in new markets. The
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<PAGE> 21
integration of acquired systems with existing operations entails considerable
expenses in advance of anticipated revenues and may cause substantial
fluctuations in the Company's operating results. This may involve, among other
things, integration of technical, sales, marketing, billing, accounting, quality
control, management, personnel, payroll, regulatory compliance and other systems
and operating hardware and software systems, some of which may be incompatible
with the Company's existing systems. In addition, telecommunications providers
generally experience higher customer and employee turnover rates during and
after an acquisition. The Company is in the process of integrating the
operations of the Page America Acquisition and expects that the integration of
ProNet will not be completed until the end of 1998. There can be no assurance
that the Company will be able to integrate such acquisitions successfully. If
the Company is not successful in integrating such paging service coverage, the
business of the Company will be adversely affected.
GROWTH STRATEGY
Historically, Metrocall has grown substantially through acquisitions. The
Company intends to pursue future acquisition opportunities; however, no
assurance can be given that the Company will identify, finance and purchase
additional suitable acquisitions on acceptable terms, or that future
acquisitions, if completed, will be successful. The Company will likely incur
additional debt to finance any additional acquisitions. The Company intends to
pursue internal growth through expansion of its paging operations. The Company's
internal growth will depend, in part, upon its ability to attract and retain
skilled employees, its increasing reliance on strategic alliances and the
ability of the Company's officers and key employees to maintain effective
quality controls, manage successfully rapid growth and implement appropriate
management information systems and controls. If the Company were unable to
attract and retain skilled employees, rely upon its strategic alliances,
maintain effective quality controls, manage successfully rapid growth and/or
implement appropriate systems and controls, the Company's operations could be
adversely affected.
POSSIBLE IMPACT OF COMPETITION AND TECHNOLOGICAL CHANGE
The Company will face competition from other paging companies in all
markets in which it will operate. The wireless communications industry is highly
competitive, with price being the primary means of differentiation among
providers of numeric messaging services (which account for the substantial
majority of the current revenues of both Metrocall and ProNet), particularly in
the reseller market (which accounts for a majority of ProNet's revenues and an
increasing portion of Metrocall's revenues). Some of the Company's competitors
and potential competitors, which include regional and national paging companies,
have substantially greater financial, personnel, technical, marketing and other
resources than those of the Company, as well as other competitive advantages.
Paging companies also compete on the basis of coverage area, enhanced services,
transmission quality, system reliability and customer service. In addition,
other entities offering wireless two-way communications technology, including
cellular telephone, specialized mobile radio services and Personal Communication
Services ("PCS"), also compete with the paging services that the Company
provides. There can be no assurance that additional competitors will not enter
markets served by the Company or that the Company will be able to compete
successfully. In this regard, certain long distance telephone carriers and
regional Bell operating companies are marketing paging services jointly with
other telecommunications services.
Future technological advances in the wireless communications industry could
create new services or products competitive with the paging and wireless
messaging services provided or to be provided by the Company. Recent and
proposed regulatory changes by the Federal Communications Commission ("FCC") are
aimed at encouraging such new services and products. In particular, in 1994, the
FCC began auctioning licenses for PCS. The FCC's rules also provide for the
private use of PCS spectrum on an unlicensed basis. There are two types of PCS:
narrowband and broadband. Narrowband PCS provides enhanced or advanced paging
and messaging capabilities, such as "acknowledgment paging" or "talk-back"
paging. Broadband PCS offers two-way voice communications and messaging
services. Broadband PCS competes with cellular telephone services and enhanced
specialized mobile radio services, as well as with conventional paging services.
Several PCS systems are currently operational. Additionally, other existing or
prospective radio services have the potential to compete with the Company. For
example, the FCC has authorized non-
14
<PAGE> 22
geostationary mobile satellite service systems in several frequency bands, and
has adopted licensing and operational rules for additional licenses in some of
those bands. Licensees in those satellite services (some of whom have already
launched satellites) are permitted to offer signaling and other mobile services
that could compete with terrestrial paging companies. A recent FCC decision will
allow land mobile licensees in the 220-222 MHz band to offer commercial paging
services. The FCC has also initiated a rule-making proceeding proposing to allow
Multiple Address Systems, a fixed microwave service in various 900 MHz frequency
bands, to offer mobile services. Any of these services may compete directly or
indirectly with the Company.
Moreover, changes in technology could lower the cost of competitive
services and products to a level at which the Company's services and products
would become less competitive or at which the Company would be required to
reduce the prices of its services and products. There can be no assurance that
the Company will be able to develop or introduce new services and products to
remain competitive or that the Company will not be adversely affected in the
event of such technological developments.
Technological change also may affect the value of the pagers owned by the
Company and leased to its subscribers. If the Company's subscribers requested
more technologically advanced pagers, the Company could incur additional
inventory costs and capital expenditures if it were required to replace pagers
leased to its subscribers within a short period of time.
SUBSCRIBER TURNOVER
The results of operations of paging service providers, such as Metrocall,
can be significantly affected by subscriber cancellations and by subscribers who
switch their service to other carriers. To realize net growth in subscribers,
disconnected subscribers must be replaced and new subscribers must be added. The
sales and marketing costs associated with attracting new subscribers are
substantial relative to the costs of providing service to existing customers.
Because the Company's business is characterized by high fixed costs,
disconnections directly and adversely affect the Company's results of
operations. An increase in its subscriber cancellation rate may adversely affect
the Company's results of operations.
POTENTIAL FOR CHANGE IN REGULATORY ENVIRONMENT
The Company's paging operations are subject to regulation by the FCC and,
to a lesser extent, by various state regulatory agencies. There can be no
assurance that those agencies will not adopt regulations or take actions that
would have a material adverse effect on the business of the Company. Changes in
regulation of the Company's paging business or the allocation of radio spectrum
for services that compete with the Company's business could adversely affect the
Company's results of operations. For example, the FCC has adopted rules under
which it will issue paging licenses on a wide-area basis by competitive bidding
(i.e., auctions). Although Metrocall believes that these rule changes may
simplify the Company's regulatory compliance burdens, particularly regarding
adding or relocating transmitter sites, those rule changes may also increase the
Company's costs of obtaining paging licenses.
RELIANCE ON KEY PERSONNEL
Metrocall is dependent on the efforts and abilities of a number of its
current key management, sales, support and technical personnel, including
William L. Collins, III, Steven D. Jacoby and Vincent D. Kelly. The success of
the Company will depend to a large extent on its ability to retain and continue
to attract key employees. The loss of certain of these employees or the
Company's inability to retain or attract key employees in the future could have
an adverse effect on the Company's operations. Metrocall has employment
contracts with each of the individuals named above.
PENDING LITIGATION
In April 1996, Metrocall entered into an agreement to purchase certain of
the assets of Source One Wireless, Inc. ("Source One") and placed $1.0 million
cash in escrow. On June 26, 1996, Metrocall advised Source One that Source One
had failed to meet certain conditions to completion of the transaction and
terminated the agreement. On September 20, 1996, Source One filed an action in
the Circuit Court of Cook
15
<PAGE> 23
County, Illinois claiming that Metrocall had breached the agreement and seeking
specific performance of the purchase agreement or unspecified damages in excess
of $80.0 million. Metrocall removed the action to the United States District
Court for the Northern District of Illinois. Metrocall intends to vigorously
defend the claims in this action and believes it has meritorious defenses to
this action. Metrocall has denied the claim and asserted affirmative defenses
and counterclaims based on misrepresentations and breaches of contract by Source
One. The period for fact discovery has now closed. No trial date has been set.
INTANGIBLE ASSETS
At September 30, 1997, Metrocall's total assets of approximately $706.3
million included net intangible assets of approximately $491.2 million.
Intangible assets include FCC licenses and certificates, customer lists, debt
financing costs, goodwill and certain other intangibles. Metrocall will record,
for financial reporting purposes, additional intangible assets in connection
with the Offering and the ProNet Merger. 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 book value to the estimated undiscounted
future cash flows expected to result from use of the assets and their eventual
disposition. Metrocall's estimates of anticipated gross revenues, the remaining
estimated lives of tangible and intangible assets, or both, could be reduced
significantly in the future due to changes in technology, regulation, available
financing or competitive pressures in any of Metrocall's individual markets. As
a result, the carrying amount of long-lived assets and intangible assets
including goodwill could be reduced materially in the future. Because a majority
of the Company's assets are intangible, the assets of the Company may not be
sufficient to repay all of the Company's indebtedness (including the New Notes)
in the event secured creditors foreclose on the assets pledged to them.
ABSENCE OF PUBLIC TRADING MARKET FOR THE NEW NOTES
There is no public market for the New Notes. Application has been made to
list the New Notes on the Luxembourg Stock Exchange and the Company does not
intend to apply for listing of the Notes on any other national securities
exchange or for quotation of the New Notes through the Nasdaq Stock Market. The
Company has been advised by the Placement Agents that the Placement Agents
intend to make a market in the New Notes; however, they are under no obligation
to do so and may discontinue any market-making activities at any time without
notice. No assurance can be given as to the liquidity of the trading market for
the New Notes or that an active public market will develop. If an active public
market does not develop or is not maintained, the market price and liquidity of
the New Notes may be adversely affected.
CONSEQUENCES OF A FAILURE TO EXCHANGE OLD NOTES
The Old Notes have not been registered under the Securities Act or any
state securities laws and therefore may not be offered, sold or otherwise
transferred except in compliance with the registration requirements of the
Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions. Old Notes which
remain outstanding after consummation of the Exchange Offer will continue to
bear a legend reflecting such restrictions on transfer. In addition, upon
consummation of the Exchange Offer, holders of Old Notes that remain outstanding
will not be entitled to any rights to have such Old Notes registered under the
Securities Act or to any similar rights under the Registration Rights Agreement.
See "Description of the Old Notes." The Company does not intend to register
under the Securities Act any Old Notes that remain outstanding after
consummation of the Exchange Offer.
To the extent that Old Notes are tendered and accepted in the Exchange
Offer, a holder's ability to sell untendered Old Notes could be adversely
affected. In addition, although the Old Notes have been designated for trading
in the Private Offerings, to the extent that Old Notes are tendered and accepted
in connection with the Exchange Offer, any trading market for Old Notes that
remain outstanding after the Exchange Offer could be adversely affected.
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<PAGE> 24
In the event that the Exchange Offer is not consummated and a Shelf
Registration Statement is not declared effective on or prior to April 21, 1998,
the annual interest rate borne by the Notes will be increased by .5% per annum
until the Exchange Offer is consummated or the Shelf Registration Statement (as
defined in "Registration Rights") is declared effective.
Notes not tendered in the Exchange Offer shall bear interest at the rate of
9 3/4% and be subject to all of the terms and conditions specified in the
Indenture and to the transfer restrictions described in "Description of Old
Notes -- Transfer Restrictions."
EXCHANGE OFFER PROCEDURES
Issuance of the New Notes in exchange for Old Notes pursuant to the
Exchange Offer will be made only after a timely receipt by the Company of such
Old Notes, a properly completed and duly executed Letter of Transmittal and all
other required documents. Therefore, holders of Old Notes desiring to tender
such Old Notes in exchange for New Notes should allow sufficient time to ensure
timely delivery. The Company is under no duty to give notification of defects or
irregularities with respect to the tenders of Old Notes for exchange.
FORWARD-LOOKING STATEMENTS
This Prospectus (including the documents or portions thereof incorporated
herein by reference and any Prospectus Supplement) contains forward-looking
statements. In addition, when used in this Prospectus, the words "intends to,"
"believes," "anticipates," "expects" and similar expressions are intended to
identify forward-looking statements. Such statements are subject to a number of
risks and uncertainties. Actual results in the future could differ materially
and adversely from those described in the forward-looking statements as a result
of various important factors, including the impact of changes in national and
regional economies, successful integration of acquired companies (including
achievement of synergies and cost reductions), the availability of suitable
acquisitions on acceptable terms and the other risk factors set forth above and
the matters set forth in this Prospectus generally. The Company undertakes no
obligation to publicly release the result of any revisions to these
forward-looking statements that may be made to reflect any future events or
circumstances.
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the New
Notes offered hereby. The New Notes will be exchanged for Old Notes of like
principal amount. Old Notes that are exchanged will be retired and cancelled.
Approximately $193.0 million of the net proceeds from the sale of the Old
Notes was used to repay amounts outstanding under Metrocall Credit Facility.
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<PAGE> 25
CAPITALIZATION
The following table sets forth, as of September 30, 1997, the historical
capitalization of Metrocall pro forma for the Note Sale (and application of the
net proceeds thereof) under the heading "Pro Forma Metrocall and Note Sale," and
pro forma for the Note Sale (and application of the net proceeds thereof) and
the ProNet Merger under the heading "Pro Forma Metrocall, Note Sale and ProNet"
as if each had occurred on September 30, 1997. Other than as set forth in
footnotes (a) and (b) below, there has been no material change in the
capitalization of the Company since September 30, 1997. The information set
forth below should be read in conjunction with the Pro Forma Condensed Combined
Financial Data included herein and the historical Consolidated Financial
Statements of the Company incorporated by reference herein.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-------------------------------------------
PRO FORMA
PRO FORMA METROCALL,
METROCALL NOTE SALE
METROCALL AND NOTE SALE AND PRONET
--------- ---------------- ------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents................................. $ 15,851 $ 17,001 $ 20,498
========= ============ =========
Short-term debt:
Current portion of long-term debt....................... $ 926 $ 926 $ 926
========= ============ =========
Long-term debt, net of current portion:
Borrowings under the Metrocall Credit Facility(1)....... $ 225,904 $ 32,904 $ 115,348
10 3/8% Senior Subordinated Notes due 2007.............. 150,000 150,000 150,000
11 7/8% Senior Subordinated Notes due 2005.............. 2,534 2,534 2,534
11 7/8% Senior Subordinated Notes due 2005(2)........... -- -- 100,000
9 3/4% Senior Subordinated Notes Due 2007............... -- 200,000 200,000
Other long-term debt.................................... 5,595 5,595 5,595
--------- ---------------- ------------
Total long-term debt, net of current portion......... 384,033 391,033 573,477
--------- ---------------- ------------
Series A Convertible Preferred Stock...................... 36,041 36,041 36,041
Series B Junior Convertible Preferred Stock............... 15,525 15,525 15,525
Stockholders' equity:
Common stock(3)......................................... 291 291 414
Additional paid-in capital(3)........................... 284,731 284,731 339,987
Accumulated deficit..................................... (140,015) (140,015) (140,015)
--------- ---------------- ------------
Total stockholders' equity(3)........................ 145,007 145,007 200,386
--------- ---------------- ------------
Total capitalization............................ $ 580,606 $ 587,606 $ 825,429
========= ============ =========
</TABLE>
- ---------------
(1) Excludes $24.0 million of borrowings under the Metrocall Credit Facility and
$5 million under the ProNet Credit Facility subsequent to September 30,
1997. The Metrocall Credit Facility currently provides for total borrowings
of up to $300.0 million, subject to certain limitations.
(2) Assumption of ProNet Senior Subordinated Notes.
(3) Assumed per share price for shares issued in the ProNet Merger is $4.50 per
share.
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<PAGE> 26
THE EXCHANGE OFFER
PURPOSE AND EFFECT
In connection with the Note Sale, the Company entered into the Registration
Rights Agreement with the Placement Agents, pursuant to which the Company
agreed, among other things, to use its best efforts to file under the Securities
Act a registration statement relating to an offer to exchange the Old Notes for
new notes with terms identical in all material respects (except as described
below) and to have such Registration Statement remain effective until the
closing of the Exchange Offer. A copy of the Registration Rights Agreement is
incorporated in the Registration Statement of which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations of the
Company under the Registration Rights Agreement. The approval of Federal or
State authorities is not required for consummation of the Exchange Offer.
The Old Notes provide, among other things, that in the event the Exchange
Offer is not consummated and a Shelf Registration Statement is not declared
effective on or prior to April 21, 1998 the annual interest rate of the Old
Notes shall increase by .5% per annum to 10 1/4% per annum until the Exchange
Offer is consummated or a shelf registration statement is declared effective.
See "Risk Factors -- Consequences of a Failure to Exchange Old Notes" and
"Description of the Old Notes." The form and terms of the New Notes are
identical in all material respects to the form and terms of the Old Notes except
that the New Notes have been registered under the Securities Act and therefore
will not contain terms with respect to transfer restrictions and will not
provide for an increase in interest payments or other distributions thereon as a
consequence of a failure to take certain actions in connection with their
registration under the Securities Act.
The Exchange Offer is not being made to, nor will the Company accept
tenders for exchange from, holders of Old Notes in any jurisdiction in which the
Exchange Offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Old Notes are registered
on the books of the Company or any other person who has obtained a properly
completed bond power from the registered holder, or any person whose Old Notes
are held of record by The Depository Trust Company who desires to deliver such
Old Notes by book-entry transfer at The Depository Trust Company.
TERMS OF THE EXCHANGE
The Company hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $200,000,000 aggregate principal amount of New Notes for a like
aggregate principal amount of Old Notes properly tendered on or prior to the
Expiration Date (as defined below) and not properly withdrawn in accordance with
the procedures described below. The Company will issue, promptly after the
Expiration Date, an aggregate principal amount of up to $200,000,000 of New
Notes in exchange for a like principal amount of outstanding Old Notes tendered
and accepted in connection with the Exchange Offer. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Notes being tendered. As of
the date of this Prospectus $200,000,000 aggregate principal amount of the Old
Notes is outstanding.
Holders of Old Notes do not have any appraisal or dissenters' rights in
connection with the Exchange Offer. Old Notes that are not tendered for, or are
tendered but not accepted in connection with the Exchange Offer, will remain
outstanding and be entitled to the benefits of the Indenture, but will not be
entitled to any further registration rights under the Registration Rights
Agreement. See "Risk Factors -- Consequences of a Failure to Exchange Old Notes"
and "Description of the Old Notes." If any tendered Old Notes are not accepted
for exchange because of an invalid tender, the occurrence of certain other
events set forth herein or otherwise, certificates for a such unaccepted Old
Notes will be returned, without expense, to the tendering holder thereof
promptly after the Expiration Date, or, if such unaccepted Old Notes are
uncertificated, such securities will be returned, without expense to the
tendering holder thereof promptly after the Expiration Date via book entry
transfer.
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<PAGE> 27
Each Holder who tenders Old Notes pursuant to the Exchange Offer will be
required to pay all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Old Notes. The Company will
generally pay all other fees and expenses in connection with the registration
statement for the Exchange Offer. See "-- Fees and Expenses."
THE BOARD OF DIRECTORS OF THE COMPANY DOES NOT MAKE ANY RECOMMENDATION TO
HOLDERS OF OLD NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR
ANY PORTION OF THEIR OLD NOTES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO
ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD NOTES
MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER
AND, IF SO, THE AGGREGATE AMOUNT OF OLD NOTES TO TENDER AFTER READING THIS
PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR ADVISERS, IF
ANY, BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on March 5,
1998 unless the Exchange Offer is extended by the Company (in which case the
term "Expiration Date" shall mean the latest date and time to which the Exchange
Offer is extended). The Company expressly reserves the right in its sole and
absolute discretion, subject to applicable law, at any time and from time to
time, (i) to delay the acceptance of the Old Notes for exchange, (ii) to
terminate the Exchange Offer (iii) to extend the Expiration Date of the Exchange
Offer and retain all Old Notes tendered pursuant to the Exchange Offer, subject,
however, to the right of holders of Old Notes to withdraw their tendered Old
Notes as described under "-- Withdrawal Rights," and (iv) to waive any condition
or otherwise amend the terms of the Exchange Offer in any respect. If the
Exchange Offer is amended in a manner determined by the Company to constitute a
material change, or if the Company waives a material condition of the Exchange
Offer, the Company will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered holders of the
Old Notes, and the Company will extend the Exchange Offer to the extent required
by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Company may choose to make any public announcement and
subject to applicable law, the Company shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to an appropriate news agency.
ACCEPTANCE OR EXCHANGE AND ISSUANCE OF NEW NOTES
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will exchange, and will issue to the Exchange Agent, New Notes for Old
Notes validly tendered and not withdrawn (pursuant to the withdrawal rights
described under "-- Withdrawal Rights") promptly after the Expiration Date. In
all cases, delivery of New Notes in exchange for Old Notes tendered and accepted
for exchange pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of (i) Old Notes or a book-entry confirmation of a
book-entry transfer of Old Notes into the Exchange Agent's account at The
Depository Trust Company ("DTC"), (ii) the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, and (iii) any other documents required by the Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Notes into the Exchange Agent's account at DTC.
Subject to the terms and conditions of the Exchange Offer, the Company will
be deemed to have accepted for exchange, and thereby exchanged, Old Notes
validly tendered and not withdrawn as, if and when
20
<PAGE> 28
the Company gives oral or written notice to the Exchange Agent of the Company's
acceptance of such Old Notes for exchange pursuant to the Exchange Offer. The
Exchange Agent will act as agent for the Company for the purpose of receiving
tenders of Old Notes, Letters of Transmittal and related documents, and as agent
for tendering holders for the purpose of receiving Old Notes, Letters of
Transmittal and related documents and transmitting New Notes to validly
tendering holders. Such exchange will be made promptly after the Expiration
Date. If for any reason whatsoever, acceptance for exchange or the exchange of
any Old Notes tendered pursuant to the Exchange Offer is delayed (whether before
or after the Company's acceptance for exchange of Old Notes) or the Company
extends the Exchange Offer or is unable to accept for exchange or exchange Old
Notes tendered pursuant to the Exchange Offer, then, without prejudice to the
Company's rights set forth herein, the Exchange Agent may, nevertheless, on
behalf of the Company and subject to Rule 14e-1(c) under the Exchange Act,
retain tendered Old Notes and such Old Notes may not be withdrawn except to the
extent tendering holders are entitled to withdrawal rights as described under
"-- Withdrawal Rights."
Pursuant to the Letter of Transmittal, a holder of Old Notes will warrant
and agree in the Letter of Transmittal that it has full power and authority to
tender, exchange, sell, assign and transfer Old Notes, that the Company will
acquire good, marketable and unencumbered title to the tendered Old Notes, free
and clear of all liens, restrictions, charges and encumbrances, and that the Old
Notes tendered for exchange are not subject to any adverse claims or proxies.
The holder also will warrant and agree that it will, upon request, execute and
deliver any additional documents deemed by the Company or the Exchange Agent to
be necessary or desirable to complete the exchange, sale, assignment, and
transfer of the Old Notes tendered pursuant to the Exchange Offer.
PROCEDURES FOR TENDERING OLD NOTES
Valid Tender. Except as set forth below, in order for Old Notes to be
validly tendered pursuant to the Exchange Offer, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, must be received by the
Exchange Agent at its address set forth under "-- Exchange Agent," and either
(i) tendered Old Notes must be received by the Exchange Agent, or (ii) such Old
Notes must be tendered pursuant to the procedures for book-entry transfer set
forth below and a book-entry confirmation must be received by the Exchange
Agent, in each case on or prior to the Expiration Date, or (iii) the guaranteed
delivery procedures set forth below must be complied with.
If less than all of the Old Notes delivered are tendered for exchange, a
tendering holder should fill in the amount of Old Notes being tendered in the
appropriate box on the Letter of Transmittal. The entire amount of Old Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book Entry Transfer. The Exchange Agent will establish an account with
respect to the Old Notes at DTC for purposes of the Exchange Offer within two
business days after the date of this Prospectus. Any financial institution that
is a participant in DTC's book-entry transfer facility system may make a
book-entry delivery of the Old Notes by causing DTC to transfer such Old Notes
into the Exchange Agent's account at DTC in accordance with DTC's procedures for
transfers. However, although delivery of Old Notes may be effected through
book-entry transfer into the Exchange Agent's account at DTC, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other required documents, must in any
case be delivered to and received by the Exchange Agent at its address
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<PAGE> 29
set forth under "-- Exchange Agent" on or prior to the Expiration Date, or the
guaranteed delivery procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees. Certificates for the Old Notes need not be endorsed
and signature guarantees on the Letter of Transmittal are unnecessary unless (a)
a certificate for the Old Notes is registered in a name other than that of the
person surrendering the certificate or (b) such registered holder completes the
box entitled "Special Issuance Instructions" or "Special Delivery Instructions"
in the Letter of Transmittal. In the case of (a) or (b) above, such certificates
for Old Notes must be duly endorsed or accompanied by a properly executed bond
power, with the endorsement or signature on the bond power and on the Letter of
Transmittal guaranteed by a firm or other entity identified in Rule 17Ad-15
under the Exchange Act as an "eligible guarantor institution," including (as
such terms are defined therein): (i) a bank; (ii) a broker, dealer, municipal
securities broker or dealer or government securities broker or dealer; (iii) a
credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association (an "Eligible Institution"),
unless surrendered on behalf of such Eligible Institution. See Instruction 1 to
the Letter of Transmittal.
Guaranteed Delivery. If a holder desires to tender Old Notes pursuant to
the Exchange Offer and the certificates for such Old Notes are not immediately
available or time will not permit all required documents to reach the Exchange
Agent on or before the Expiration Date, or the procedures for book-entry
transfer cannot be completed on a timely basis, such Old Notes may nevertheless
be tendered, provided that all of the following guaranteed delivery procedures
are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form accompanying the Letter of Transmittal, is
received by the Exchange Agent, as provided below, on or prior to
Expiration Date; and
(iii) the certificates (or a book-entry confirmation) representing all
tendered Old Notes, in proper form for transfer, together with a
properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees and any
other documents required by the Letter of Transmittal, are received
by the Exchange Agent within three Nasdaq Stock Market trading days
after the date of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New Notes in
exchange for Old Notes tendered and accepted for exchange pursuant to the
Exchange Offer will in all cases be made only after timely receipt by the
Exchange Agent of Old Notes, or of a book-entry confirmation with respect to
such Old Notes, and a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees and any
other documents required by the Letter of Transmittal. Accordingly, the delivery
of New Notes might not be made to all tendering holders at the same time, and
will depend upon when Old Notes, book-entry confirmations with respect to Old
Notes and other required documents are received by the Exchange Agent.
The acceptance by the Company for exchange of Old Notes tendered pursuant
to any of the procedures described above will constitute a binding agreement
between the tendering holder and the Company upon the terms and subject to the
conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Notes will be determined by the Company, in its sole
discretion, whose determination shall be final and binding on all parties. The
Company reserves the absolute right, in its sole and absolute discretion, to
reject any and all tenders determined by them not to be in proper form or the
acceptance of which, or exchange for, may, in the view of counsel to the
Company, be
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<PAGE> 30
unlawful. The Company also reserves the absolute right, subject to applicable
law, to waive any of the conditions of the Exchange Offer as set forth under
"-- Conditions to the Exchange Offer" or any condition or irregularity in any
tender of Old Notes of any particular holder whether or not similar conditions
or irregularities are waived in the case of other holders.
The Company's interpretation of the terms and conditions of the Exchange
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding. No tender of Old Notes will be deemed to have been validly
made until all irregularities with respect to such tender have been cured or
waived. None of the Company, any affiliates or assigns of the Company, the
Exchange Agent or any other person shall be under any duty to give any
notification of any irregularities in tenders or incur any liability for failure
to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the Company,
proper evidence satisfactory to the Company, in its sole discretion, of such
person's authority to so act must be submitted.
A beneficial owner of Old Notes that are held by or registered in the name
of a broker, dealer, commercial bank, trust company or other nominee or
custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
RESALES OF NEW NOTES
The Company is making the Exchange Offer for the Old Notes in reliance on
the position of the staff of the Division of Corporation Finance of the
Commission (the "Staff") as set forth in certain interpretive letters addressed
to third parties in other transactions. However, the Company has not sought its
own interpretive letter and there can be no assurance that the Staff would make
a similar determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
Staff, and subject to the two immediately following sentences, the Company
believes that New Notes issued pursuant to this Exchange Offer in exchange for
Old Notes may be offered for resale, resold and otherwise transferred by a
holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holder's business and that such holder is not participating, and has no
arrangement or understanding with any person to participate, in a distribution
(within the meaning of the Securities Act) of such New Securities. However, any
holder of Old Notes who is an "affiliate" of the Company or who intends to
participate in the Exchange Offer for the purpose of distributing New Notes, or
any broker-dealer who purchased Old Notes from the Company to resell pursuant to
Rule 144A or any other available exemption under the Securities Act, (a) will
not be able to rely on the interpretations of the Staff set out in the
above-mentioned interpretive letters, (b) will not be permitted or entitled to
tender such Old Notes in the Exchange Offer and (c) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Notes unless such sale is
made pursuant to an exemption from such requirements. In addition, as described
below, if any broker-dealer holds Old Notes acquired for its own account as a
result of market-making or other trading activities and exchanges such Old Notes
for New Notes, then such broker-dealer must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of such New
Notes.
Each holder of Old Notes who wishes to exchange Old Notes for New Notes in
the Exchange Offer will be required to represent that at the time of the
consummation of the Exchange Offer (i) it is not an "affiliate" of the Company
within the meaning of Rule 405 under the 1933 Act, (ii) any New Notes to be
received by it are being acquired in the ordinary course of its business, (iii)
it has no arrangement or understanding with any person to participate in a
distribution (within the meaning of the Securities Act) of such New Notes. Each
broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it acquired the Old Notes for its own
account as the result of market-making activities or other trading activities
and must agree that it will deliver a prospectus meeting the requirements of the
Securities Act in
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<PAGE> 31
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. Based on the position taken by the Staff in the interpretive
letters referred to above, the Company believes that broker-dealers who acquired
Old Notes for their own accounts as a result of market-making activities or
other trading activities ("Participating Broker-Dealers") may fulfill their
prospectus delivery requirements with respect to the New Notes received upon
exchange of such Old Notes (other than Old Notes which represent an unsold
allotment from the original sale of the Old Notes) with a prospectus meeting the
requirements of the Securities Act, which may be the prospectus prepared for an
exchange offer so long as it contains a description of the plan of distribution
with respect to the resale of such New Notes. Accordingly, this Prospectus, as
it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer during the period referred to below in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired by such Participating Broker-Dealer for its own account as a
result of market-making or other trading activities. Subject to certain
provisions set forth in the Registration Rights Agreement, the Company has
agreed that this Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection with resales of
such New Notes for a period ending 180 days after the Expiration Date or, if
earlier, when all such New Notes have been disposed of by such Participating
Broker-Dealer. See "Plan of Distribution." Any Participating Broker-Dealer who
is an "affiliate" of the Company may not rely on such interpretive letters and
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.
In that regard, each Participating Broker-Dealer who surrenders Old Notes
pursuant to the Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal, that, upon receipt of notice from the Company of the
occurrence of any event or the discovery of any fact which makes any statement
contained or incorporated by reference in this Prospectus untrue in any material
respect or which causes this Prospectus to omit to state a material fact
necessary in order to make the statements contained or incorporated by reference
herein, in light of the circumstances under which they were made, not misleading
or of the occurrence of certain other events specified in the Registration
Rights Agreement, such Participating Broker-Dealer will suspend the sale of New
Notes pursuant to this Prospectus until the Company has amended or supplemented
this Prospectus to correct such misstatement or omission and has furnished
copies of the amended or supplemented Prospectus to such Participating
Broker-Dealer or the Company has given notice that the sale of the New Notes may
be resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at its addresses set forth under "-- Exchange Agent" on or
prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Notes to be withdrawn, the aggregate
principal amount of Old Notes to be withdrawn, and (if certificates for such Old
Notes have been tendered) the name of the registered holder of the Old Notes as
set forth on the Old Notes, if different from that of the person who tendered
such Old Notes. If Old Notes have been delivered or otherwise identified to the
Exchange Agent, then prior to the physical release of such Old Notes, the
tendering holder must submit the serial numbers shown on the particular Old
Notes to be withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution, except in the case of Old Notes tendered
for the account of an Eligible Institution. If Old Notes have been tendered
pursuant to the procedures for book-entry transfer set forth in "-- Procedures
for Tendering Old Notes," the notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawal of Old Notes, in
which case a notice of withdrawal will be effective if delivered to the Exchange
Agent by written, telegraphic, telex or facsimile transmission. Withdrawals of
tenders of Old Notes may not be rescinded. Old Notes properly withdrawn will not
be deemed validly tendered for purposes of the Exchange Offer, but may be
retendered at any subsequent time on or prior to the
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<PAGE> 32
Expiration Date by following any of the procedures described above under
"-- Procedures for Tendering Old Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
None of the Company, any affiliates or assigns of the Company, the Exchange
Agent or any other person shall be under any duty to give any notification of
any irregularities in any notice of withdrawal or incur any liability for
failure to give any such notification. Any Old Notes which have been tendered
but which are withdrawn will be returned to the holder thereof promptly after
withdrawal.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Company will not be required to accept for
exchange, or to exchange, any Old Notes for any New Notes, and may terminate the
Exchange Offer (whether or not any Old Notes have theretofore been accepted for
exchange) or may waive any conditions to or amend the Exchange Offer, if, the
Company determines that the consummation of the Exchange Offer or any portion
thereof would violate any applicable law or any applicable interpretation of the
Commission or its staff. In such event, if the Company determines to amend the
Exchange Offer and such amendment constitutes a material change to the Exchange
Offer, the Company will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered holders of the
Old Notes, and the Company will extend the Exchange Offer to the extent required
by Rule 14e-1 under the Exchange Act. Holders of Old Notes are entitled to
certain rights under the Registration Rights Agreement in the event the Company
is unable to consummate the Exchange Offer. See "Description of the Old Notes."
EXCHANGE AGENT
First Union National Bank has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letter of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent as follows:
First Union National Bank
Attn: Michael Klotz
Reorganization Department
1525 West W.T. Harris Blvd., 3C3,
Charlotte, North Carolina 28262-1153
Phone: 704-590-7408
Facsimile: 704-590-7628
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
The Company has agreed to pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith. The Company will also pay brokerage houses and
other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus and related documents
to the beneficial owners of Old Notes, and in handling or tendering for their
customers.
Each Holder who tenders Old Notes pursuant to the Exchange Offer will be
required to pay all underwriting discounts and commissions, if any, relating to
the sale or disposition of the Old Notes. If New Notes are to be delivered to,
or are to be issued in the name of, any person other than the registered holder
of the Old Notes tendered, or if a transfer tax is imposed for any reason other
than the exchange of Old Notes in connection with the Exchange Offer, then the
amount of any such transfer taxes (whether imposed on the
25
<PAGE> 33
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
The Company will generally pay all fees and expenses in connection with the
registration statement for the Exchange Offer. The Company will not make any
payment to brokers, dealers or others soliciting acceptances of the Exchange
Offer.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as of the Old
Notes, which is face value, as reflected in the Company's accounting records on
the date of the exchange. Accordingly, no gain or loss for accounting purposes
will be recognized by the Company. The expense related to the issuance of the
New Notes and of the Exchange Offer will be amortized over the term of the New
Notes.
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<PAGE> 34
DESCRIPTION OF THE NEW NOTES
The New Notes offered hereby are issued pursuant to an Indenture dated as
of October 21, 1997, between the Company and First Union National Bank, as
trustee (the "Trustee"). The following summary of certain provisions of the
Indenture does not purport to be complete and is qualified in its entirety by
reference to the Indenture, including the definitions therein of certain terms
used below. The definitions of certain terms used in the following summary are
set forth below under "-- Certain Definitions." Capitalized terms not otherwise
defined below or elsewhere in this Prospectus have the meanings given them in
the Indenture. A copy of the Indenture may be obtained from the Company or the
Placement Agents.
GENERAL
The New Notes will be general unsecured senior subordinated obligations of
the Company and will be subordinate and junior in right of payment to all
existing and future Senior Debt of the Company and effectively subordinated to
liabilities, including trade payables, of the Company's Subsidiaries. In
addition, the New Notes will rank pari passu with all other Senior Subordinated
Debt of the Company.
The New Notes will be limited to an aggregate principal amount of $200.0
million and will mature in 2007.
Interest on the New Notes will be payable semi-annually in arrears on each
January 15 and July 15 (each an "Interest Payment Date") to the persons in whose
names the New Notes are registered at the close of business on the preceding
January 1 and July 1, as the case may be. Interest will accrue from the most
recent Interest Payment Date to which interest has been paid or duly provided
for or, if no interest has been paid or duly provided for, from the date of
original issuance. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. The New Notes will bear interest until maturity at the
rate of 9 3/4% per annum. Holders of Old Notes whose Old Notes are accepted for
exchange will receive, in cash, accrued interest thereon to, but not including,
the date of issuance of the New Notes. Such interest will be paid with the first
interest payments on the New Notes.
The Luxembourg Stock Exchange will be informed of each change in the
interest rate payable on the New Notes on the date of such change. The Company
will cause a copy of such notice to be published in a daily newspaper with
general circulation in Luxembourg (which is expected to be the Luxemborger
Wort).
The New Notes are issuable only in fully registered form, without coupons,
in denominations of $1,000 or any integral multiple thereof. Principal of, and
premium, if any, and interest on each New Note will be payable and the New Notes
may be presented for transfer or exchange at the office or agency of the Company
maintained for such purpose. At the option of the Company, payment of interest
may be made by check mailed to registered holders of the New Notes at the
addresses set forth on the registry books maintained by the Trustee, who will
initially act as registrar for the New Notes. No service charge will be made for
any exchange or registration of transfer of New Notes, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. Unless otherwise designated by the
Company, the Company's office or agency will be the corporate trust office of
the Trustee.
For so long as the New Notes are listed on the Luxembourg Stock Exchange
and the rules of such stock exchange so require, the Company will maintain a
Listing Agent and Paying Agent in Luxembourg.
OPTIONAL REDEMPTION
The New Notes will not be redeemable at the Company's option prior to
November 1, 2002. Thereafter, the New Notes will be subject to redemption at the
option of the Company, in whole or in part, upon not less than 30 nor more than
60 days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest thereon to but not
including the applicable
27
<PAGE> 35
redemption date. The following redemption prices shall be applicable to any
optional redemption of New Notes by the Company during the 12-month period
beginning on November 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
------------------------------------------------------------------ ----------
<S> <C>
2002.............................................................. 104.8750%
2003.............................................................. 102.4375
2004 and thereafter............................................... 100.0000
</TABLE>
If less than all the New Notes are to be redeemed or to be purchased
pursuant to any purchase offer required under the Indenture, selection of New
Notes for redemption or purchase will be made by the Trustee in compliance with
the requirements of the principal national securities exchange, if any, on which
the New Notes are listed, or, if the New Notes are not so listed, on a pro rata
basis, by lot or by such method as the Trustee shall deem fair and appropriate;
provided, however, that any New Notes with a principal amount of less than
$1,000 shall not be redeemed or purchased in part. Notice of redemption shall be
mailed by first class mail at least 30 but not more than 60 days before the
redemption date to each holder of New Notes to be redeemed at the last address
for such holder then shown on the registry books. The Company will cause a copy
of such notice to be published in a daily newspaper with general circulation in
Luxembourg (which is expected to be the Luxembourger Wort). If any New Note is
to be redeemed in part only, the notice of redemption that relates to such New
Note shall state the portion of the principal amount to be redeemed, which
portion shall not be less than $1,000. A New Note in principal amount equal to
the unredeemed or unpurchased portion will be issued in the name of the holder
thereof upon cancellation of the original New Note. If the New Notes are to be
redeemed in part, the Company will not be required (i) to exchange or register
the transfer of any New Notes for a period of 15 days before the selection of
New Notes for redemption or (ii) to exchange or register the transfer of any New
Notes so selected, except the unredeemed portion of any such New Notes being
redeemed in part. On and after the redemption or purchase date, interest will
cease to accrue on the New Notes or portions thereof called for redemption or
purchase, whether or not such New Notes are presented for payment at the office
of the paying agent for the New Notes in New York, New York or Luxembourg,
unless the Company defaults in the payment of the redemption or purchase price.
SINKING FUND
There will be no sinking fund payments for the Notes.
RANKING
The New Notes will, to the extent set forth in the Indenture, be
subordinate in right of payment to the prior payment in full of all existing and
future Senior Debt. Upon any payment or distribution of assets of the Company to
creditors upon any liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors, marshalling of assets, bankruptcy,
insolvency or any similar proceedings of the Company, the holders of Senior Debt
will first be entitled to receive payment in full of principal of, premium, if
any, and interest on such Senior Debt before the holders of New Notes are
entitled to receive any payment of principal of, premium, if any, or interest on
the New Notes or on account of the purchase or redemption or other acquisition
of New Notes by the Company or any subsidiary of the Company. Notwithstanding
the foregoing, in the event that the Trustee or the holder of any New Note
receives any payment or distribution of assets of the Company of any kind or
character (excluding shares of Capital Stock of the Company or securities of the
Company provided for in a plan of reorganization or readjustment that are
subordinate in right of payment to all Senior Debt to substantially the same
extent as the New Notes are so subordinated) before all the Senior Debt is paid
in full, then such payment or distribution will be required to be paid over or
delivered forthwith to the trustee in bankruptcy or other Person making payment
or distribution of assets of the Company for application to the payment of all
Senior Debt remaining unpaid, to the extent necessary to pay the Senior Debt in
full.
The Company may not make any payments on account of the New Notes or on
account of the purchase or redemption or other acquisition of New Notes if there
shall have occurred and be continuing a default in
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<PAGE> 36
the payment when due of principal of, premium, if any, or interest on any Senior
Debt, including without limitation any default in the payment when due of any
commitment or facility fees, letter of credit fees or agency fees under the
Credit Facility, or any default in payment when due of any reimbursement
obligation of the Company with respect to any letter of credit issued under the
Credit Facility (a "Senior Payment Default"). In addition, if there shall have
occurred and be continuing any default (other than a Senior Payment Default)
with respect to the Credit Facility or any Designated Senior Debt that permits,
or with the giving of notice or lapse of time (or both) would permit, the
holders thereof (or a trustee on behalf thereof) to accelerate the maturity
thereof (a "Senior Nonmonetary Default"), and the Company and the Trustee have
received written notice thereof from the agent bank for the Credit Facility or
from an authorized person on behalf of any Designated Senior Debt, then the
Company may not make any payments on account of the New Notes or on account of
the purchase or redemption or other acquisition of New Notes for a period (a
"blockage period") commencing on the date the Company and the Trustee receive
such written notice and ending on the earlier of (x) 179 days after such date
and (y) the date, if any, on which the Senior Debt to which such default relates
is discharged or such default is waived or otherwise cured. In any event, not
more than one blockage period may be commenced during any period of 360
consecutive days, and there shall be a period of at least 181 consecutive days
in each period of 360 consecutive days when no blockage period is in effect. No
Senior Nonmonetary Default that existed or was continuing on the date of the
commencement of any blockage period with respect to the Senior Debt initiating
such blockage period will be, or can be, made the basis for the commencement of
a subsequent blockage period, unless such default has been cured or waived for a
period of not less than 90 consecutive days. In the event that, notwithstanding
the foregoing, the Company makes any payment to the Trustee or the holder of any
New Note prohibited by the subordination provisions, then such payment will be
required to be paid over and delivered forthwith to the holders of the Senior
Debt remaining unpaid, to the extent necessary to pay in full all the Senior
Debt. For the purposes hereof, "Designated Senior Debt" means any Senior Debt
(other than under the Credit Facility) in an original principal or committed
amount of not less than $50.0 million where the instrument governing such Senior
Debt expressly states that such Debt is "Designated Senior Debt" for purposes of
the Indenture and a Board Resolution setting forth such designation by the
Company has been filed with the Trustee.
By reason of such subordination, in the event of insolvency of the Company,
creditors of the Company who are not holders of Senior Debt or of the Notes may
recover less, ratably, than holders of Senior Debt and may recover more,
ratably, than the holders of the Notes.
The subordination provisions described above will cease to be applicable to
the New Notes upon any defeasance or covenant defeasance of the New Notes as
described below under "Defeasance."
As of December 31, 1997, the aggregate amount of Senior Debt outstanding
was $147.5 million. The Company may from time to time hereafter incur additional
Debt constituting Senior Debt under the Credit Facility or otherwise, subject to
the provisions of "Limitation on Incurrence of Debt" described below.
In addition, the New Notes will rank pari passu with all other Senior
Subordinated Debt. As of December 31, 1997, the Company had $452.5 million in
Senior Subordinated Debt. The Indenture provides that the Company will not incur
any debt that is subordinate in right of payment to any Senior Debt of the
Company and senior in right of payment to the New Notes. The Company may from
time to time incur additional Senior Subordinated Debt ranking pari passu with
the New Notes, subject to the provisions of "Limitation on Incurrence of Debt"
described below.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Acquired Debt" means, with respect to any Person, (i) Debt of such Person
existing at the time such Person becomes a Subsidiary of the Company (or such
Person is merged into a Subsidiary of the Company) and (ii) Debt assumed by such
Person in connection with the acquisition of assets by such Person from another
Person (other than the Company or any of its Subsidiaries), provided that such
Debt was not Incurred
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in connection with or in contemplation of such Person becoming a Subsidiary or
such acquisition of assets, as the case may be.
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Asset Disposition" by any Person means any transfer, conveyance, sale,
lease or other disposition by such Person or any of its Subsidiaries (including
a consolidation or merger or other sale of any such Subsidiary with, into or to
another Person in a transaction in which such Subsidiary ceases to be a
Subsidiary, but excluding a disposition by a Subsidiary of such Person to such
Person or a wholly owned Subsidiary of such Person or by such Person to a wholly
owned Subsidiary of such Person, and excluding the creation of a lien, pledge or
security interest) of (i) shares of Capital Stock (other than directors'
qualifying shares) or other ownership interests of a Subsidiary of such Person,
(ii) substantially all of the assets of such Person or any of its Subsidiaries
representing a division or line of business or (iii) other assets or rights of
such Person or any of its Subsidiaries outside of the ordinary course of
business, in any case where the consideration received by such Person or a
Subsidiary of such Person or the fair market value of the assets subject to such
disposition exceeds $1.0 million.
"Asset Exchange Transaction" means any transaction pursuant to which
properties or assets of the Company or a Subsidiary of the Company constituting
a paging system within a geographically identifiable area and related properties
and assets (an "Identifiable Paging System") or all of the shares of Capital
Stock of a Subsidiary of the Company, the properties and assets of which
constitute an Identifiable Paging System, are to be exchanged for properties or
assets constituting an Identifiable Paging System of another Person or Persons
or all of the shares of Capital Stock of another Person or Persons the
properties and assets of which constitute an Identifiable Paging System.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the interest rate
implicit in the lease, compounded semiannually) of the obligation of the lessee
of the property subject to such sale and leaseback transaction for rental
payments during the remaining term of the lease included in such transaction
including any period for which such lease has been extended or may, at the
option of the lessor, be extended or until the earliest date on which the lessee
may terminate such lease without penalty or upon payment of penalty (in which
case the rental payments shall include such penalty), after excluding all
amounts required to be paid on account of maintenance and repairs, insurance,
taxes, assessments, water, utilities and similar charges.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York, New York or the
city in which the Corporate Trust Office is located are authorized or obligated
by law or executive order to close.
"Capital Lease Obligation" of any Person means the obligation to pay rent
or other payment amounts under a lease of (or other Debt arrangements conveying
the right to use) real or personal property of such Person which is required to
be classified and accounted for as a capital lease or a liability on the face of
a balance sheet of such Person in accordance with GAAP. The stated maturity of
such obligation shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock of
such Person and all other equity interests in such Person.
"Change of Control" means the occurrence of one or more of the following
events: (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 (the "Exchange
Act")) of persons or entities shall have become the beneficial owner of a
majority (by voting power or otherwise) of the securities of the Company
ordinarily having the right to vote in the election of directors; (ii) during
any consecutive three-year period commencing on or after the date of the
Indenture,
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individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any directors who are members of such
Board of Directors of the Company on the date of the Indenture and any new
directors whose election by such Board of Directors of the Company or whose
nomination for election by the stockholders of the Company was approved by a
vote of at least 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 Company 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 Company to
any person or entity or group (as so defined) of persons or entities (other than
any wholly-owned Subsidiary of the Company); (iv) the merger or consolidation of
the Company with or into another corporation or the merger of another
corporation into the Company with the effect that immediately after such
transaction any person or entity or group (as so defined) 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; or (v) the
adoption of a plan leading to the liquidation or dissolution of the Company.
"Common Stock" of any Person means 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.
"Consolidated Cash Flow" of any Person means for any period the
Consolidated Net Income of such Person for such period plus (i) Consolidated
Interest Expense of such Person for such period, plus (ii) the consolidated
income tax expense of such Person and its consolidated Subsidiaries for such
period, plus (iii) the consolidated depreciation and amortization expense
included in the income statement of such Person and its consolidated
Subsidiaries for such period, plus (iv) other non-cash charges reducing
Consolidated Net Income for such period (excluding any such non-cash charge to
the extent that it represents an accrual of or reserve for cash charges in any
future period), minus (v) non-cash items increasing Consolidated Net Income for
such period. Notwithstanding the foregoing, the provision for taxes on the
income or profits of, and the depreciation and amortization and other non-cash
charges of, a Subsidiary of the referent Person shall be added to Consolidated
Net Income to compute Consolidated Cash Flow only to the extent (and in the same
proportion) that the net income of such Subsidiary was included in calculating
the Consolidated Net Income of such Person and only if and to the extent such
Subsidiary could have paid such amount at the date of determination as a
dividend to the Company by such Subsidiary without prior governmental approval
(that has not been obtained), pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Fixed Charges" of any Person means for any period (i)
Consolidated Interest Expense of such Person plus (ii) Preferred Stock dividends
declared and payable in cash or in kind in such period (or accrued in such
period, whether or not declared and payable, in the case of cumulative Preferred
Stock) by such Person or any of its consolidated Subsidiaries, other than any
such dividends payable only in shares of Common Stock or options, warrants or
other rights to purchase or acquire Common Stock, or payable by a Subsidiary of
such Person to such Person or one of its wholly owned Subsidiaries.
"Consolidated Interest Expense" of any Person means for any period the
consolidated interest expense included in a consolidated income statement
(without deduction of interest income) of such Person and its consolidated
Subsidiaries for such period determined in accordance with GAAP, including
without limitation or duplication (or, to the extent not so included, with the
addition of), (i) the amortization of Debt discounts; (ii) any payments of fees
with respect to letters of credit, bankers' acceptances or similar facilities;
(iii) fees with respect to interest rate swap or similar agreements or foreign
currency hedge, exchange or similar agreements, other than fees or charges
related to the acquisition or termination thereof which are not allocable to
interest expense in accordance with GAAP; and (iv) the interest component
associated with Capital Lease Obligations.
"Consolidated Net Income" of any Person means for any period the net income
(or loss) of such Person and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP; provided,
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that there shall be excluded therefrom (i) the net income (but not the net loss)
of any Subsidiary of such Person which is subject to restrictions which prevent
the payment of dividends and the making of distributions (by loans, advances,
intercompany transfers or otherwise) to such Person except to the extent of the
amount of dividends or other distributions actually paid to such Person by such
Subsidiary without violation of any such restrictions, (ii) the net income (or
loss) of any Person that is not a consolidated Subsidiary of such Person except
to the extent of the amount of dividends or other distributions actually paid to
such Person by such other Person during such period, (iii) any gain or loss on
any Asset Disposition by such Person or any of its Subsidiaries and (iv) any
extraordinary gain or loss.
"Corporate Trust Office" means the principal corporate trust office of the
Trustee at which, at any particular time, its corporate trust business shall be
administered, which office at the date of execution of the Indenture is located
at 901 East Cary Street, 2nd Floor, Richmond, Virginia 23219.
"Credit Facility" means the Amended and Restated Loan Agreement dated as of
September 20, 1996, and amended on April 30, 1997, August 11, 1997 and October
16, 1997, among the Company, certain lenders and Toronto Dominion (Texas), Inc.,
as administrative agent for the lenders, providing for a senior secured credit
facility, as the same may be amended (including any amendment and restatement
thereof), modified, supplemented, extended, renewed, restated, refunded,
refinanced, restructured or replaced from time to time.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person, and whether or not
contingent, (i) every obligation of such Person for money borrowed, (ii) every
obligation of such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) every reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for the
account of such Person, (iv) every obligation of such Person issued or assumed
as the deferred purchase price of property or services (but excluding trade
accounts payable or accrued liabilities arising in the ordinary course of
business), (v) every Capital Lease Obligation of such Person, (vi) Attributable
Debt of such Person, (vii) the maximum fixed redemption or repurchase price of
Redeemable Stock of such Person at the time of determination, (viii) every
obligation of another Person secured by a Lien on any asset of such Person
(whether or not such obligation is assumed by such Person), provided, however,
that unless such Debt constitutes Debt of the referent Person pursuant to any
other clause of this definition, the amount of such Debt shall be the lesser of
(A) the fair market value of such asset and (B) the amount of such Debt and (ix)
every obligation of the type referred to in clauses (i) through (viii) of
another Person and all dividends of another Person the payment of which, in
either case, such Person has Guaranteed or for which such Person is responsible
or liable, directly or indirectly, as obligor, Guarantor or otherwise.
"Default" means any event which is, or after notice or passage of time (as
provided in the Indenture), or both, would be, an Event of Default (as described
in "Events of Default" below).
"Guaranty" by any Person means any obligation, contingent or otherwise, of
such Person guaranteeing or having the economic effect of guaranteeing any Debt
of any other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including, without limitation, any obligation of such Person (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Debt or to purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Debt, (ii) to purchase property, securities or
services for the purpose of assuring the holder of such Debt of the payment of
such Debt, or (iii) to maintain working capital, equity capital or other
financial condition or liquidity of the primary obligor so as to enable the
primary obligor to pay such Debt (and "Guarantee," "Guaranteeing" and
"Guarantor" shall have meanings correlative to the foregoing); provided,
however, that the Guaranty by any Person shall not include endorsements by such
Person for collection or deposit, in either case, in the ordinary course of
business.
"Incur" means, with respect to any Debt or other obligation of any Person,
to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Debt or other
obligation, or the recording, as required pursuant to GAAP or otherwise, of any
such Debt or other obligation on the balance sheet of such Person (and
"Incurrence," "Incurred," "Incurrable" and "Incurring" have meanings correlative
to the foregoing); provided, however, that a change in GAAP that results in an
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obligation of such Person that exists at such time becoming Debt shall not be
deemed an Incurrence of such Debt.
"Lien" means, with respect to any property or assets, any mortgage or deed
of trust, pledge, security interest, lien, charge, encumbrance of any kind in
respect of such properties or assets or other security agreement (including,
without limitation, any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing).
"Net Available Proceeds" from any Asset Disposition by any Person means
cash or readily marketable cash equivalents received (including by way of sale
or discounting of a note, installment receivable or other receivable, but
excluding any other consideration received in the form of assumption by the
acquiree of Debt or other obligations relating to such properties or assets or
received in any other non-cash form) therefrom by such Person, net of (i) all
legal, title and recording tax expenses, commissions and other fees and expenses
incurred and all federal, state, provincial, foreign and local taxes required to
be accrued as a liability as a consequence of such Asset Disposition, (ii) all
payments made by such Person or its Subsidiaries on any Debt which is secured by
the assets subject to such Asset Disposition in accordance with the terms of any
Lien upon or with respect to such assets or which must by the terms of such
Lien, or in order to obtain a necessary consent to such Asset Disposition or by
applicable law, be repaid out of the proceeds from such Asset Disposition, (iii)
all distributions and other payments made to minority interest holders in
Subsidiaries of such Person or joint ventures as a result of such Asset
Disposition, and (iv) a reasonable reserve for the after-tax costs of any
indemnification payments (fixed or contingent) attributable to the seller's
indemnities to the purchaser undertaken by the Company or any of its
Subsidiaries in connection with such Asset Disposition.
"Permitted Liens" means: (i) Liens incurred and pledges and deposits made
in the ordinary course of business in connection with liability insurance,
workers' compensation, unemployment insurance, old-age pensions, and other
social security benefits other than in respect of employee benefit plans subject
to ERISA; (ii) Liens securing performance, surety, and appeal bonds and other
obligations of like nature incurred in the ordinary course of business; (iii)
Liens on goods and documents securing trade letters of credit; (iv) Liens
imposed by law, such as carriers', warehousemen's, mechanics', materialmen's,
and vendors' liens, incurred in the ordinary course of business and securing
obligations which are not yet due or which are being contested in good faith by
appropriate proceedings; (v) Liens securing the payment of taxes, assessments,
and governmental, charges or levies (a) either (1) not delinquent or (2) being
contested in good faith by appropriate legal or administrative proceedings and
(b) as to which adequate reserves shall have been established on the books of
the relevant Person in conformity with GAAP; (vi) zoning restrictions,
easements, rights of way, reciprocal easement agreements, operating agreements,
covenants, conditions, or restrictions on the use of any parcel of property that
are routinely granted in real estate transactions or do not interfere in any
material respect with the ordinary conduct of the business of the Company and
its Subsidiaries or the value of such property for the purpose of such business;
(vii) Liens on property existing at the time such property is acquired and Liens
on the assets of any Subsidiary of the Company at the time such Subsidiary is
acquired, provided such Liens apply only to such acquired property, (viii) Liens
existing as of the date of the Indenture; (ix) Liens securing Debt Incurred for
the purpose of financing all or any part of the cost of acquiring any property,
equipment or other assets (whether by merger, consolidation, purchase of assets
or otherwise), provided that such Debt is Incurred prior to, at the time of, or
within 60 days after the acquisition of such assets solely for the purpose of
financing the acquisition of such assets in compliance with the provision
described under "Limitation on Incurrence of Debt" covenant below; (x) any
attachment or judgment Lien, unless the judgment it secures would constitute an
Event of Default; (xi) Liens with respect to assets of a Subsidiary granted by
such Subsidiary to the Company to secure Debt owing to the Company, (xii) rights
of banks to set off deposits against debts owed to said banks; (xiii) any
interest or title of a lessor in property of the Company or a Subsidiary of the
Company subject to any capitalized lease or operating lease, as each are defined
under generally accepted accounting principles; (xiv) other Liens incidental to
the conduct of the business of the Company or any of its Subsidiaries, as the
case may be, or the ownership of their assets that do not materially detract
from the value of the property of the Company or a Subsidiary of the Company
subject thereto; (xv) Liens securing Refinancing Debt, provided that such Liens
only extend to the property or assets securing the Debt being refinanced, such
refinanced Debt was previously secured by similar Liens on such property or
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assets and the Debt (or other obligations) secured by such Liens is not
increased; and (xvi) Liens in addition to the foregoing securing Debt not to
exceed $500,000 in the aggregate outstanding at any time.
"Permitted Stock Repurchase" means, with respect to the Company, the
purchase or redemption for fair market value (as determined by a majority of the
Board of Directors of the Company, including a majority of the independent,
disinterested directors and evidenced by a resolution of the Board of Directors
of the Company) of shares of Capital Stock of the Company (including stock
appreciation rights and similar securities) held by any present or former
officer of the Company or by an employee stock ownership plan or similar trust
for the account of such present or former officer upon such person's death,
disability, retirement or termination of employment or under the terms of any
such plan or any other agreement under which such shares were originally issued.
"Person" means an individual, partnership, corporation, limited liability
company, trust or unincorporated organization, and a government or agency or
political subdivision thereof.
"Preferred Stock," as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks 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.
"Pro Forma Consolidated Cash Flow" of any Person means for any period the
Consolidated Cash Flow of such Person for such period calculated on a pro forma
basis to give effect to any Asset Disposition or acquisition of assets not in
the ordinary course of business (including acquisitions of other Persons by
merger, consolidation or purchase of Capital Stock) during such period or
subsequent to such period, as if such Asset Disposition or acquisition had taken
place on the first day of such period.
"Redeemable Stock" means any equity security that by its terms or otherwise
is required to be redeemed prior to the stated maturity of the Notes, or is
redeemable at the option of the holder thereof at any time prior to the stated
maturity of the Notes.
"Refinancing Debt" means (i) any Debt of the Company that renews, refunds
or extends any outstanding Debt of the Company or a Subsidiary of the Company
which Debt was Incurred in compliance with the Indenture (other than Debt
Incurred under the Credit Facility or in connection therewith), and (ii) any
Debt of a Subsidiary of the Company that renews, refunds or extends any Debt of
such Subsidiary which Debt was Incurred in compliance with the Indenture (other
than Guarantees of Debt Incurred under the Credit Facility or in connection
therewith), in any case in an amount not to exceed the outstanding principal
amount of the Debt so refinanced plus the amount of any premium required to be
paid in connection with such refinancing pursuant to the terms of the Debt
refinanced or the amount of any premium reasonably determined by the Company as
necessary to accomplish such refinancing by means of a tender offer or privately
negotiated repurchase, plus the expenses of the Company Incurred in connection
with such refinancing, provided that (A) in the case of any refinancing of the
Notes or any pari passu Debt, such Refinancing Debt is made pari passu or
subordinate in right of payment to the Notes, (B) in the case of any refinancing
of Debt that is subordinate in right of payment to the Notes, such Refinancing
Debt is made subordinate in right of payment to the Notes to the same extent as
the Debt refinanced thereby, and (C) such Refinancing Debt has a final maturity
date not earlier than the final maturity date of, and has a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life to Maturity
of, the Debt being renewed, refunded or extended.
"Related Person" means any Person owning (i) 5% or more of the outstanding
Common Stock of the Company or a Subsidiary of the Company or (ii) 5% or more of
the Voting Stock of the Company or a Subsidiary of the Company.
"Senior Debt" means (i) the principal of, premium, if any, and interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for postpetition interest is allowed in such proceeding) on, penalties and
any obligation of the Company for reimbursement, indemnities and fees relating
to, Debt outstanding pursuant to the Credit Facility, (ii) all other debt of the
Company referred to in the definition of Debt other than clauses (vii) and (ix)
(with respect to clause (vii) of such definition) thereof, (iii) payment
obligations of the Company under interest rate swap
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or similar agreements or foreign currency hedge, exchange or similar agreements
required by the Credit Facility, where the counterparty to such agreement is a
lender under the Credit Facility, and (iv) all renewals, extensions,
modifications, refinancings, refundings and amendments of any Debt or payment
obligations referred to in clause (i), (ii), or (iii) above (including, without
limitation, any interest rate swap or similar agreements or foreign currency
hedge, exchange or similar agreements that are entered into by the Company for
the purpose of modifying, terminating or hedging any agreement that constitutes
Senior Debt under clause (iii) above whether or not such modification,
termination or hedge was required by the Credit Facility and whether or not the
counterparty to such agreement is a lender or former lender under such Credit
Facility), unless, in the case of any particular Debt referred to above, (a)
such Debt is owed to a Subsidiary of the Company, (b) the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Debt is not superior in right of payment to the Notes, (c)
such Debt is Incurred in violation of the Indenture, or (d) such Debt is by its
terms subordinate in right of payment in respect of any other Debt of the
Company.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person, or by such Person
and one or more other Subsidiaries thereof or (ii) any other Person (other than
a corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the policies,
management and affairs thereof, provided that an Unrestricted Subsidiary shall
not be deemed to be a Subsidiary of the Company for purposes of the Indenture.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company which at
the time of determination shall be an Unrestricted Subsidiary (as designated by
the Board of Directors of the Company, as provided below) and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company
may designate any Subsidiary of the Company (other than as provided below but
including any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds
any Lien on any property of, any other Subsidiary of the Company which is not a
Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted
Subsidiary, provided that (a) either (x) the Subsidiary to be so designated has
total assets of $10,000 or less or (y) immediately after giving effect to such
designation, the Company could incur $1.00 of additional Debt pursuant to the
first paragraph of the "Limitation on Incurrence of Debt" covenant and (b)
immediately after giving effect to such designation the Company could make an
additional Restricted Payment of $1.00 pursuant to the first paragraph of the
"Limitation on Restricted Payments" covenant described below, provided that the
holders of Debt thereof do not have direct or indirect recourse against the
Company or any Subsidiary of the Company and neither the Company nor any
Subsidiary of the Company otherwise has liability for any payment obligations in
respect of such Debt. The Board of Directors of the Company may designate any
Unrestricted Subsidiary to be a Subsidiary, provided that immediately after
giving effect to such designation, the Company could incur $1.00 of additional
Debt pursuant to the first paragraph of the "Limitation on Incurrence of Debt"
covenant.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
"Weighted Average Life to Maturity" means, when applied to any Debt at any
date, the number of years obtained by dividing (i) the sum of the products
obtained by multiplying (a) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of principal, including
payment at final maturity, in respect thereof, by (b) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment, by (ii) the then outstanding principal amount of
such Debt.
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CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Incurrence of Debt
The Company may not Incur, and may not permit any of its Subsidiaries to
Incur, any Debt; provided, however, that (a) the Company may Incur any Debt and
(b) the Company may permit a Subsidiary to Incur Acquired Debt, if, in either
case, immediately thereafter the ratio of (A) the aggregate principal amount of
Debt of the Company and its Subsidiaries outstanding as of the date of such
Incurrence to (B) Pro Forma Consolidated Cash Flow for the most recently ended
full fiscal quarter multiplied by four, determined on a pro forma basis as if
any such Debt had been Incurred and the proceeds thereof had been applied at the
beginning of such fiscal quarter, would be less than 6.0 to 1 but greater than
zero.
Notwithstanding the foregoing limitation, the Company may Incur and, as
applicable, may permit its Subsidiaries to Incur, without duplication, the
following Debt: (i) Debt of the Company or any Subsidiary under the Credit
Facility in an aggregate principal amount not to exceed $150.0 million at any
one time outstanding; (ii) Guarantees by Subsidiaries of Debt under the Credit
Facility Incurred by the Company in accordance with this covenant; (iii) Debt of
the Company evidenced by the Notes; (iv) Debt owed by the Company to any wholly
owned Subsidiary of the Company or owed by any wholly owned Subsidiary of the
Company to the Company or any other wholly owned Subsidiary of the Company (but
only so long as such Debt is held by the Company or such wholly owned
Subsidiary); (v) Debt outstanding on the date the Notes were originally issued
under the Indenture; (vi) Debt arising from the honoring by a bank or other
financial institution of a check, draft or similar instruments drawn against
insufficient funds in the ordinary course of business, provided that such Debt
is extinguished within two Business Days of its Incurrence; (vii) Refinancing
Debt; and (viii) renewals of Guarantees permitted by clause (ii) above.
For purposes of determining any particular amount of Debt under this
covenant, Guarantees of (or obligations with respect to letters of credit
supporting) Debt otherwise included in the determination of such amount shall
not also be included. For the purpose of determining compliance with this
covenant, (A) in the event that an item of Debt meets the criteria of more than
one of the types of Debt described in the above clauses, the Company, in its
sole discretion, shall classify such item of Debt and only be required to
include the amount and type of such Debt in one of such clauses; and (B) the
amount of Debt issued at a price which is less than the principal amount thereof
shall be equal to the amount of the liability in respect thereof determined in
accordance with GAAP.
Limitation on Certain Debt
The Indenture provides that so long as the Notes are outstanding the
Company will not Incur any Debt that is by its terms subordinate or junior in
any respect in right of payment to any Senior Debt and that is senior in any
respect in right of payment to the Notes.
Limitation on Restricted Payments
The Company may not, and may not permit any of its Subsidiaries to, (i)
directly or indirectly, declare or pay any dividend, or make any distribution,
in respect of its Capital Stock or to the holders thereof (including pursuant to
a merger or consolidation of the Company, but excluding any dividends or
distributions payable solely in shares of its Capital Stock (other than
Redeemable Stock) or in options, warrants or other rights to acquire its Capital
Stock (other than Redeemable Stock)), other than dividends or distributions
payable to the Company or any wholly owned Subsidiary of the Company, or by a
Subsidiary of the Company to a holder who is not the Company or a Subsidiary of
the Company, provided that such dividend or distribution is paid to all holders
of the Capital Stock of the payor of such dividend pro rata in accordance with
their respective interests, (ii) directly or indirectly repurchase, redeem or
otherwise acquire or retire for value (a) any Capital Stock of the Company or
any Related Person or (b) any options, warrants or rights to purchase or acquire
shares of Capital Stock of the Company or any Related Person, (iii) purchase or
otherwise acquire any Capital Stock of, or make any loan, advance, capital
contribution to or investment in, or any payment on a
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Guarantee of any obligation of, any Affiliate or any Related Person (other than
the Company or a wholly owned Subsidiary of the Company), inclusive of any such
purchase, loan, advance, capital contribution to or investment in, or payment on
a Guarantee of any obligation of, any Affiliate or Related Person pursuant to a
transaction whereby any such Affiliate or Related Person becomes an Affiliate or
Related Person, but exclusive of any such purchase, loan, advance, capital
contribution to or investment in, or payment on a Guarantee of any obligation
of, any Person pursuant to a transaction whereby any such Person becomes a
Subsidiary of the Company, in each case unless otherwise prohibited by the terms
of the Indenture, or (iv) redeem, defease, repurchase, retire or otherwise
acquire or retire for value prior to any scheduled maturity, repayment or
sinking fund payment (other than with the proceeds of Refinancing Debt) Debt of
the Company which is subordinate in right of payment to the Notes (each of
clauses (i) through (iv) being a "Restricted Payment"), if at the time of such
Restricted Payment, or after giving effect thereto: (1) an Event of Default, or
an event that with the lapse of time or the giving of notice, or both, would
constitute an Event of Default, shall have occurred and be continuing, (2) the
Company could not incur $1.00 of additional Debt pursuant to the first paragraph
of the Covenant described under "-- Limitation on Incurrence of Debt" above, or
(3) the aggregate of all Restricted Payments from June 30, 1995 exceeds the sum
of: (a) the excess of (x) 100% of cumulative Consolidated Cash Flow after June
30, 1995 through the last day of the last full fiscal quarter immediately
preceding such Restricted Payment for which quarterly or annual financial
statements of the Company are over (y) the product of 2.0 times cumulative
Consolidated Fixed Charges after June 30, 1995 through the last day of the last
full fiscal quarter immediately preceding such Restricted Payment for which
quarterly or annual financial statements of the Company are available; and (b)
100% of the aggregate net proceeds received by the Company from the issuance or
sale after June 30, 1995 of (A) Capital Stock (other than Redeemable Stock) of
the Company or options, warrants or other rights to acquire Capital Stock (other
than Redeemable Stock) of the Company or (B) Debt of the Company that has been
converted or exchanged into Capital Stock (other than Redeemable Stock) of the
Company (to the extent such Debt is so converted or exchanged).
The foregoing provision will not be violated by reason of (i) the payment
of any dividend within 60 days after declaration thereof if at the declaration
date such payment would have complied with the foregoing provision; (ii) any
payment for the purchase, redemption, acquisition or retirement of any shares of
Capital Stock of the Company in exchange for, or out of the net proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of,
other shares of Capital Stock (other than Redeemable Stock) of the Company;
(iii) the purchase, redemption, defeasance or other acquisition or retirement of
Debt of the Company which is subordinate in right of payment to the Notes, in
exchange for, by conversion into, or out of the net proceeds of, a substantially
concurrent (a) issuance or sale (other than to a Subsidiary) of Capital Stock
(other than Redeemable Stock) of the Company, or (b) Incurrence of Refinancing
Debt with respect to such subordinated Debt; (iv) Permitted Stock Repurchases by
the Company not to exceed $2.0 million individually or $6.0 million in the
aggregate during such time as any of the Notes is outstanding; (v) Restricted
Payments consisting of investments in telecommunications businesses in an
aggregate amount not exceeding $20.0 million; or (vi) the making of other
Restricted Payments in an aggregate amount not exceeding $10.0 million, provided
that no Default or Event of Default shall have occurred and be continuing at the
time, or shall occur as a result, of any of the actions contemplated in clauses
(ii) through (vi) above. Any payment made pursuant to clauses (i) through (iv)
of this paragraph (other than subclause (iii)(b) of this paragraph) shall be a
Restricted Payment for purposes of calculating aggregate Restricted Payments
under the preceding paragraph.
Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries
The Company may not, and may not permit any Subsidiary of the Company to,
create, assume or otherwise suffer to exist any encumbrance or restriction on
the ability of any Subsidiary of the Company, directly or indirectly, (i) to pay
dividends or make any other distributions in respect of its Capital Stock or pay
any Debt or other obligation owed to the Company or any other Subsidiary of the
Company; (ii) to make loans or advances to the Company or any Subsidiary of the
Company; or (iii) to transfer any of its property or assets to the Company or a
Subsidiary of the Company. Notwithstanding the foregoing, the Company may, and
may permit any of its Subsidiaries to, create, assume or otherwise suffer to
exist any such encumbrance or
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<PAGE> 45
restriction on the ability of any Subsidiary of the Company if and to the extent
(a) subject to the provisions described under "-- Limitations on Mergers,
Consolidations and Certain Sales of Assets," such encumbrance or restriction
existed prior to the time any Person became a Subsidiary of the Company and such
restriction or encumbrance was not incurred in anticipation of such acquisition
of such Person by the Company; provided, however, that such restriction or
encumbrance applies only to such Person, its Subsidiaries and their respective
properties and assets, and is not applicable to any other Person, properties or
assets; (b) such encumbrance or restriction is contained in an operating lease
for real property and is effective only upon the occurrence and during the
continuance of a default in the payment of rent; (c) such encumbrance or
restriction is the result of applicable corporate law or regulation relating to
the payment of dividends or distributions; (d) such encumbrance or restriction
is the result of any applicable statute, regulation or administrative rule that
restricts the transfer of licenses or permits; or (e) such encumbrance or
restriction is contained in (and for the benefit only of the lenders under) the
Credit Facility on the date of the Indenture, including any amendment,
modification, supplement, restatement or replacement of such Credit Facility
after the date of the Indenture, provided that the terms and conditions of such
amendment, modification, supplement, restatement or replacement in respect of
such encumbrance or restriction are not less favorable to the holders of the
Notes than the terms and conditions in respect of such encumbrance or
restriction of the Credit Facility on the date of the Indenture.
Limitation on Liens
The Company will not, and will not permit any Subsidiary of the Company to,
create, incur, assume or suffer to exist any Lien (other than Permitted Liens)
upon or in respect of any of its property or assets to secure any Debt that is
pari passu with or subordinate in right of payment to the New Notes, unless the
New Notes are secured equally and ratably simultaneously with or prior to the
creation, incurrence or assumption of such Lien; provided, however, that if such
Debt is expressly subordinate to the New Notes, the Lien securing such
subordinated Debt shall be subordinate and junior to the Lien securing the New
Notes with the same relative priority as such subordinated Debt shall have with
respect to the New Notes.
Limitation on Transactions with Affiliates and Related Persons
The Company may not, and may not permit any Subsidiary of the Company to,
directly or indirectly, enter into any transaction or series of related
transactions after the date of the Indenture with any Affiliate or Related
Person (other than the Company or a wholly owned Subsidiary of the Company),
unless (i) such transaction or series of transactions is on terms no less
favorable to the Company or such Subsidiary than those that could be obtained in
a comparable arm's-length transaction with an entity that is not an Affiliate or
a Related Person; and (ii) if such transaction or series of transactions
involves aggregate consideration in excess of $1.0 million, (A) such transaction
or series of transactions is approved by a majority of the Board of Directors of
the Company, including the approval of a majority of the independent,
disinterested directors, as fair to the Company from a financial point of view
and is evidenced by a resolution of the Board of Directors of the Company, or
(B) the Company shall have obtained the written opinion of a nationally
recognized independent financial advisor stating that such transaction or series
of transactions is fair to the Company from a financial point of view.
This covenant will not apply to (a) transactions between the Company or any
of its Subsidiaries and any employee of the Company or any of its Subsidiaries
that are entered into in the ordinary course of business, (b) the payment of
reasonable and customary regular fees and expenses to directors of the Company,
(c) the making of indemnification, contribution or similar payments to any
director or officer of the Company or any Subsidiary of the Company under the
Company's or such Subsidiary's charter or bylaws (as each may be amended after
the Closing Date) or any indemnification or similar agreement between the
Company or any such Subsidiary and any of its directors or officers
(collectively, the "Indemnification Agreements") or (d) the entering into any
Indemnification Agreements with any current or future directors or officers of
the Company or any Subsidiary of the Company.
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Limitation on Certain Asset Dispositions
The Company may not, and may not permit any Subsidiary of the Company to,
make any Asset Disposition in one or more transactions unless: (i) the Company
(or such Subsidiary, as the case may be) receives consideration at the time of
such Asset Disposition at least equal to the fair market value of the assets
sold or disposed of as determined by the Board of Directors of the Company; (ii)
at least 80% of the consideration for such Asset Disposition consists of cash or
readily marketable cash equivalents or the assumption of Senior Debt or Debt of
the Company that ranks pari passu in right of payment with the Notes ("pari
passu Debt") to the extent that the Company is released from all liability on
such Senior Debt or pari passu Debt; and (iii) all Net Available Proceeds of
such Asset Disposition, less any amounts invested within 180 days of such Asset
Disposition in assets related to the business of the Company (or invested within
one year of such Asset Disposition in assets related to the business of the
Company, pursuant to an agreement to make such investment entered into within
180 days of such Asset Disposition), are applied within such 180-(or 360-) day
period, (a) to the permanent reduction of any Debt then outstanding under the
Credit Facility, (b) to the repayment of any other Senior Debt, or (c) to the
extent Net Available Proceeds are not applied in accordance with the foregoing
clause (a) or (b), to make an offer to purchase, on a pro rata basis according
to their respective principal amounts then outstanding (or accreted value, in
the case of Debt issued with original issue discount), the outstanding Notes and
pari passu Debt, at 100% of their principal amount (or accreted value, as the
case may be) plus accrued interest to the date of the purchase.
Notwithstanding clause (c) of the preceding paragraph, the Company shall
not be required to offer to purchase New Notes or other pari passu Debt until
the Net Available Proceeds from any Asset Disposition together with the Net
Available Proceeds from any prior Asset Disposition not otherwise applied in
accordance with clauses (a), (b) or (c) of the preceding paragraph, less any
amounts invested within 180 days (or 360 days, as the case may be) after such
disposition or dispositions in assets related to the business of the Company,
exceed $5.0 million. To the extent that the aggregate purchase price of the
Notes tendered pursuant to such an offer to purchase is less than the aggregate
purchase price offered in such offer, the Company may use such shortfall for
general corporate purposes. The Company shall not be entitled to any credit
against such obligation to purchase New Notes for the principal amount of any
New Notes acquired by the Company other than pursuant to such offer to purchase.
Upon completion of any such offer, the amount of Net Available Proceeds shall be
deemed to be reset at zero. If, within 180 days after an Asset Disposition, the
Company or a Subsidiary enters into a contract providing for the investment of
Net Available Proceeds in assets relating to the business of the Company and
such contract is terminated without fault on part of the Company or such
Subsidiary prior to the making of such investment, the Company or such
Subsidiary, as the case may be, shall within 90 days after the termination of
such agreement, or within 180 days after such Asset Disposition, whichever is
later, invest or otherwise apply the funds that were to be invested pursuant to
such agreement in accordance with clause (iii) of the preceding paragraph, and
any funds so invested or applied shall for all purposes hereof be deemed to have
been so invested or applied within the 180- (or 360-) day period provided for in
such clause (iii). These provisions will not apply to a transaction which is
permitted under the provisions described under "-- Limitation on Mergers,
Consolidations and Certain Sales of Assets."
The provisions of this covenant shall not apply to any Asset Disposition
which is part of an Asset Exchange Transaction if (i) the Board of Directors of
the Company shall determine that the Asset Exchange Transaction is fair and
reasonable to, and in the best interests of, the Company, which determination
shall be evidenced by a resolution of the Board of Directors of the Company
filed with the Trustee and (ii) in the event that such transfer is made to an
Affiliate or Related Person, the Company shall have complied with the provisions
of the covenant described under "-- Limitation on Transactions with Affiliates
and Related Persons."
Limitation on Issuances and Sales of Capital Stock of Subsidiaries
The Company (i) shall not, and shall not permit any Subsidiary of the
Company to, transfer, convey, sell, lease or otherwise dispose of any Capital
Stock of such or any other Subsidiary to any Person (other than the Company or a
wholly owned Subsidiary of the Company) unless such transfer, conveyance, sale,
lease or other disposition is of all the Capital Stock of such Subsidiary owned
by the Company or such other Subsidiary and
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<PAGE> 47
the Net Available Proceeds from such transfer, conveyance, sale, lease or other
disposition are applied in accordance with the provisions described under
"-- Limitation on Certain Asset Dispositions" and (ii) shall not permit any
Subsidiary to issue shares of its Capital Stock (other than directors'
qualifying shares), or securities convertible into, or warrants, rights or
options to subscribe for or purchase shares of, its Capital Stock to any Person
other than the Company or a wholly owned Subsidiary of the Company.
Limitation on Mergers, Consolidations and Certain Sales of Assets
The Company (i) may not consolidate with or merge into any other Person or
permit any other Person to consolidate with or merge into the Company or any
Subsidiary of the Company (in a transaction in which such Subsidiary remains a
Subsidiary of the Company) and (ii) may not, directly or indirectly, transfer,
convey, sell, lease or otherwise dispose of all or substantially all of its
assets, unless, in either such case: (1) immediately before and after giving
effect to such transaction and treating any Debt Incurred by the Company or a
Subsidiary of the Company as a result of such transaction as having been
Incurred by the Company or such Subsidiary at the time of the transaction, no
Event of Default or event that with the passing of time or the giving of notice,
or both, would constitute an Event of Default, shall have occurred and be
continuing; (2) in a transaction in which the Company does not survive or in
which the Company conveys, sells, leases or otherwise disposes of all or
substantially all of its assets, the successor entity to the Company is
organized under the laws of the United States or any State thereof or the
District of Columbia and expressly assumes, by a supplemental Indenture executed
and delivered to the Trustee in form satisfactory to the Trustee, all of the
Company's obligations under the Indenture; and (3) immediately after giving
effect to such transaction, the Company or the successor entity to the Company
could incur at least $1.00 of additional Debt pursuant to the first paragraph of
the covenant described under "-- Limitation on Incurrence of Debt" above.
Notwithstanding the preceding paragraph, any wholly owned Subsidiary may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company.
Change of Control
Upon the occurrence of a Change of Control, each holder of the New Notes
shall have the right to require that the Company repurchase such holder's New
Notes, in whole or in part (equal to $1,000 or integral multiples of $1,000), at
a repurchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of repurchase, pursuant to the
offer described in the immediately following paragraph (the "Change of Control
Offer"). The Company will cause a copy of such notice to be published in a daily
newspaper with general circulation in Luxembourg (which is expected to be the
Luxembourger Wort).
Within 30 days following any Change of Control, the Company shall mail a
notice to each holder, with a copy to the Trustee, stating: (i) that a Change of
Control has occurred and that such holder has the right to require the Company
to repurchase such holder's New Notes, in whole or in part (equal to $1,000 or
integral multiples of $1,000), at a repurchase price in cash equal to 101% of
the principal amount thereof plus accrued and unpaid interest, if any, to the
date of repurchase; (ii) the circumstances and relevant facts regarding such
Change of Control (including, to the extent known to the Company, relevant
information with respect to the transaction giving rise to such Change of
Control and, if applicable, information with respect to pro forma historical
income, cash flow and capitalization after giving effect to such Change of
Control); (iii) the repurchase date (which shall be not earlier than 30 days or
later than 60 days from the date such notice is mailed ) (the "Repurchase
Date"); (iv) that any New Note not tendered will continue to accrue interest;
(v) that any New Note accepted for payment pursuant to the Change of Control
Offer shall cease to accrue interest after the Repurchase Date unless the
Company defaults in payment of the purchase price; (vi) that holders electing to
have a New Note purchased pursuant to a Change of Control Offer will be required
to surrender the New Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the New Note completed, to the paying agent (which
may be the Company) at the address specified in the notice prior to the close of
business on the Repurchase Date; (vii) that holders will be entitled to withdraw
their election if the paying agent receives, not later than the close of
business on the third business day (or such shorter periods as may be required
by applicable law) preceding the Repurchase Date, a telegram, telex,
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<PAGE> 48
facsimile transmission or other written communication setting forth the name of
the holder, the principal amount of New Notes the holder delivered for purchase,
and a statement that such holder is withdrawing his election to have such New
Notes purchased; and (viii) that holders which elect to have their New Notes
purchased only in part will be issued new New Notes in a principal amount equal
to the unpurchased portion of the New Notes surrendered.
On the Repurchase Date, the Company shall (i) accept for payment New Notes
or portions thereof tendered pursuant to the Change of Control Offer, (ii)
deposit with the Trustee or a paying agent (or segregate, if the Company is
acting as its own paying agent) money sufficient to pay the purchase price of
all New Notes or portions thereof so tendered and (iii) deliver or cause to be
delivered to the Trustee New Notes so accepted, together with an officers'
certificate indicating the New Notes or portions thereof which have been
tendered to the Company. The Trustee or a paying agent shall promptly mail to
the holders of New Notes so accepted payment in an amount equal to the purchase
price therefor and promptly authenticate and mail to such holders a new New Note
in a principal amount equal to any unpurchased portion of the New Note
surrendered. The Company will publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Repurchase Date.
In the event a Change of Control occurs and any repurchase pursuant to the
foregoing constitutes a "tender offer" for purposes of Rule 14e-1 under the
Exchange Act the Company will comply with the requirements of Rule 14e-l as then
in effect, to the extent applicable, and any other applicable securities laws or
regulations with respect to such repurchase. The Change of Control provisions
described above may deter certain mergers, tender offers and other takeover
attempts involving the Company.
The Company's ability to repurchase New Notes upon a Change of Control may
be limited by the terms of its then existing contractual obligations. Repurchase
of the New Notes upon a Change of Control may, under certain circumstances,
constitute a default under the Credit Facility, and any future credit agreements
or other agreements relating to Senior Debt may contain provisions that would
restrict the Company's ability to repurchase New Notes upon a change in control.
If the Company makes a Change of Control Offer following a Change of Control,
the Company may not have adequate financial resources to repurchase all New
Notes tendered. The Company's failure to repurchase tendered New Notes or to
make a Change of Control Offer following a Change of Control would constitute an
Event of Default under the Indenture, but the subordination provisions in the
Indenture may restrict payments to the holders of New Notes.
The provisions of the Indenture may not afford holders of the New Notes
protection in the event of a highly leveraged transaction involving the Company
that may adversely affect the holders of the New Notes, if such transaction does
not result in a Change of Control, violate the covenant described under
"-- Limitation on Incurrence of Debt," or otherwise violate the Indenture.
REPORTS
So long as any of the New Notes are outstanding, the Company will file with
the Commission the annual reports, quarterly reports and other documents that
the Company would have been required to file with the Commission pursuant to
Section 13 (a) or 15 (d) of the Exchange Act, if the Company were subject to
such Sections and will also provide to all holders of the New Notes and file
with the Trustee copies of such reports.
EVENTS OF DEFAULT
The following are Events of Default with respect to the New Notes: (a)
failure to pay any interest on any Note when due, and continuance of such
failure for 30 days; (b) failure to pay principal of, or premium, if any, on any
New Note when due; (c) failure to pay principal of, premium, if any, and
interest on New Notes required to be purchased pursuant to an Offer to Purchase
as described under "-- Limitation on Certain Asset Dispositions" and "-- Change
of Control" when due and payable; (d) failure to perform or comply with the
provisions described under "-- Limitation on Mergers, Consolidations and Certain
Sales of Assets"; (e) failure to perform or breach of any other covenant or
warranty of the Company in the Indenture, continued for 60 days after written
notice from the Trustee or holders of at least 25% in aggregate principal amount
of the outstanding Notes as provided in the Indenture; (f) the occurrence of a
default under any
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bonds, debentures, notes or other evidences of indebtedness of the Company or
any Subsidiary of the Company or under any mortgages, indentures or instruments
under which there may be issued or by which there may be secured or evidenced
any indebtedness by the Company or any Subsidiary of the Company, in any case
with a principal amount of at least $5.0 million outstanding, and such
indebtedness already is due and payable in full or such default has resulted in
the acceleration of the maturity of such indebtedness; (g) the rendering of a
final judgment or judgments (not subject to appeal) against the Company or any
of its Subsidiaries in an aggregate amount in excess of $5.0 million which
remain unstayed, in effect and unpaid for a period of 60 consecutive days
thereafter; and (h) certain events of bankruptcy, insolvency or reorganization
affecting the Company or any Subsidiary of the Company. Subject to the
provisions of the Indenture relating to the duties of the Trustee in case an
Event of Default shall occur and be continuing, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the holders, unless such holders shall have
offered to the Trustee reasonable indemnity. Subject to such provisions for the
indemnification of the Trustee, the holders of a majority in aggregate principal
amount of the outstanding Notes will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee.
If an Event of Default (other than Events of Default with respect to
certain events of bankruptcy, insolvency or reorganization affecting the Company
or any Subsidiary of the Company) shall occur and be continuing, either the
Trustee or the holders of at least 25% in aggregate principal amount of the
outstanding Notes may accelerate the maturity of all Notes; provided, however,
that after such acceleration, but before a judgment or decree based on
acceleration, the holders of a majority in aggregate principal amount of
outstanding Notes, may under certain circumstances, rescind and annul such
acceleration if all Events of Default, other than the non-payment of accelerated
principal, have been cured or waived as provided in the Indenture. If a
specified Event of Default with respect to certain events of bankruptcy,
insolvency or reorganization affecting the Company or any Subsidiary of the
Company occurs, the principal of the Notes then outstanding shall become
immediately due and payable without any declaration or other act on the part of
the Trustee or any holder of the Notes. For information as to waiver of
defaults, see "-- Modification and Waiver."
No holder of any New Note will have any right to institute any proceeding
with respect to the Indenture or for any remedy thereunder, unless such holder
shall have previously given to the Trustee written notice of a continuing Event
of Default and unless also the holders of at least 25% in aggregate principal
amount of the outstanding Notes shall have made written request, and offered
reasonable indemnity, to the Trustee to institute such proceeding as trustee,
and the Trustee shall not have received from the holders of a majority in
aggregate principal amount of the outstanding Notes a direction inconsistent
with such request and shall have failed to institute such proceeding within 60
days. However, such limitations do not apply to a suit instituted by a holder of
a New Note for enforcement of payment of the principal of, premiums, if any, or
interest on such New Note or after the respective due dates expressed in such
New Note.
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. Additionally, the Company
is required to notify the Trustee within five business days of the occurrence of
a Default or an Event of Default.
DEFEASANCE
The Indenture provides that (A) if applicable, the Company will be
discharged from any and all obligations in respect of the outstanding Notes
(including the provisions described under "-- Ranking") or (B) if applicable
(and subject to compliance with the Trust Indenture Act), the Company may omit
to comply with certain restrictive covenants, and that such omission shall not
be deemed to be an Event of Default under the Indenture and the Notes, in either
case (A) or (B) upon irrevocable deposit with the Trustee, in trust, of money
and/or U.S. government obligations which will provide money in an amount
sufficient in the opinion of a nationally recognized firm of independent
certified public accountants to pay the principal of and premium, if any, and
each installment of interest, if any, on the outstanding Notes. With respect to
clause (B), the obligations under the Indenture other than with respect to such
covenants and the
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<PAGE> 50
Events of Default other than the Event of Default relating to such covenants
(and, under certain circumstances, certain bankruptcy related defaults) shall
remain in full force and effect. Such trust may only be established if, among
other things (i) with respect to clause (A), the Company has received from, or
there has been published by, the Internal Revenue Service a ruling or there has
been a change in law, which in an opinion of counsel to the Company provides
that holders of the New Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to Federal income tax on the same amount, in the
same manner and at the same times as would have been the case if such deposit,
defeasance and discharge had not occurred; and, with respect to clause (B), the
Company has delivered to the Trustee an opinion of counsel to the Company to the
effect that the holders of the New Notes will not recognize gain or loss for
Federal income tax purposes as a result of such deposit and defeasance and will
be subject to Federal income tax on the same amount, in the same manner and at
the same times as would have been the case if such deposit and defeasance had
not occurred; (ii) no Default or Event of Default shall have occurred and be
continuing; (iii) no default on any Senior Debt shall have occurred and be
continuing; and (iv) certain other customary conditions precedent are satisfied.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the holders of a majority in aggregate
principal amount of the outstanding Notes; provided, however, that no such
modification or amendment may, without the consent of the holder of each
outstanding Note affected thereby, (i) change the stated maturity of the
principal of, or any installment of interest on, any Note, (ii) reduce the
principal amount of (or the premium) or interest on, any Note, (iii) change the
place or currency of payment of principal of (or the premium) or interest on,
any Note, (iv) impair the right to institute suit for the enforcement of any
payment on or with respect to any Note, (v) reduce the above-stated percentage
of outstanding Notes necessary to modify or amend the Indenture, (vi) reduce the
percentage of aggregate principal amount of outstanding Notes necessary for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults, (vii) modify any provisions of the Indenture relating to the
modification and amendment of the Indenture or the waiver of past defaults or
covenants, (viii) modify any of the provisions of the Indenture relating to the
subordination of the Notes in a manner adverse to such holders, or (ix)
following the mailing of an offer with respect to an Offer to Purchase the Notes
as described under "-- Limitation on Certain Asset Dispositions" and "-- Change
of Control," modify the Indenture with respect to such Offer to Purchase in a
manner adverse to such holders.
The holders of a majority in aggregate principal amount of the outstanding
Notes may waive compliance by the Company with certain restrictive provisions of
the Indenture. The holders of a majority in aggregate principal amount of the
outstanding Notes may waive any past default under the Indenture, except a
default in the payment of principal, premium, if any, or interest.
NO RECOURSE AGAINST OTHERS
The Indenture provides that a director, officer, employee or stockholder of
the Company, as such, shall not have any liability for any obligations of the
Company under the Notes or the Indenture, or for any claim based on, in respect
of or by reason of such obligations or their creation. Each holder, by accepting
the New Notes, waives and releases all such liability.
THE TRUSTEE
The Trustee is First Union National Bank, a National banking association
with its principal corporate office in Richmond, Virginia. The Indenture
provides that, except during the continuance of an Event of Default, the Trustee
will perform only such duties as are specifically set forth in the Indenture.
During the continuance of an Event of Default, the Trustee will exercise such
rights and powers vested in it under the Indenture and use the same degree of
care and skill in its exercise as a prudent person would exercise under the
circumstances in the conduct of such person's own affairs.
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The Indenture contains limitations on the rights of the Trustee, should it
become a creditor of the Company, to obtain payment of claims in certain cases
or to realize on certain property received by it in respect of any such claim as
security or otherwise. The Trustee is permitted to engage in other transactions
with the Company or any Affiliate; provided, however, that if it acquires any
conflicting interest (as defined in the Indenture or in the Trust Indenture
Act), it must eliminate such conflict or resign.
LISTING
Application has been made to list the Notes on the Luxembourg Stock
Exchange. The Certificate of Incorporation of the Company and the legal notice
relating to the issue of the Notes and the Certificate of Incorporation of the
Company will be registered prior to the listing with the Registrar of the
District Court in Luxembourg (Greffier en chef due Tribunal d' Arrondissement a
Luxembourg) where such documents are available for inspection and where copies
thereof can be obtained upon request. As long as the New Notes are listed on the
Luxembourg Stock Exchange, an agent for making payments on, and transfer of,
Notes will be maintained in Luxembourg. The Company expects to initially
designate Banque Internationale a Luxembourg S.A. as its agent for such
purposes.
BOOK-ENTRY; DELIVERY AND FORM
The certificates representing the New Notes will be issued in fully
registered form without interest coupons. New Notes exchanged in offshore
transactions in reliance on Regulation S under the Securities Act will initially
be represented by one or more permanent global Notes in definitive, fully
registered form without interest coupons (each a "Regulation S Global Note") and
will be deposited with the Trustee as custodian for, and registered in the name
of a nominee of, DTC for the accounts of Euroclear and Cedel Bank.
New Notes received in the Exchange Offer in exchange for Old Notes
originally issued reliance on Rule 144A will be represented by one or more
permanent global New Notes in definitive, fully registered form without interest
coupons (each a "Restricted Global Note"; and together with the Regulation S
Global Note, the "Global Notes") and will be deposited with the Trustee as
custodian for, and registered in the name of a nominee of, DTC.
Ownership of beneficial interests in a Global Note will be limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interests in a Global
Note will be shown on, and the transfer of that ownership will be effected only
through, records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants). Qualified institutional buyers may hold their
interests in a Restricted Global Note directly through DTC if they are
participants in such system, or indirectly through organizations which are
participants in such system.
Investors may hold their interests in a Regulation S Global Note directly
through Cedel Bank or Euroclear, if they are participants in such systems, or
indirectly through organizations that are participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the New Notes represented by such Global Note for all
purposes under the Indenture and the New Notes. No beneficial owner of an
interest in a Global Note will be able to transfer that interest except in
accordance with DTC's applicable procedures, in addition to those provided for
under the Indenture and, if applicable, those of Euroclear and Cedel Bank.
Payments of the principal of, and interest on, a Global Note will be made
to DTC or its nominee, as the case may be, as the registered owner thereof.
Neither the Company, the Trustee nor any Paying Agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Note or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal or interest in respect of a Global Note, will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Note as shown on the records of
DTC or its nominee. The Company also expects that payments by participants to
owners of beneficial interests in such
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Global Note held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds. Transfers
between participants in Euroclear and Cedel Bank will be effected in the
ordinary way in accordance with their respective rules and operating procedures.
The Company expects that DTC will take any action permitted to be taken by
a holder of New Notes (including the presentation of Notes for exchange as
described below) only at the direction of one or more participants to whose
account the DTC interests in a Global Note is credited and only in respect of
such portion of the aggregate principal amount of New Notes as to which such
participant or participants has or have given such direction. However, if there
is an Event of Default under the Notes, DTC will exchange the applicable Global
Note for Certificated Notes, which it will distribute to its participants and
which may be legended as set forth under the heading "Transfer Restrictions."
DEPOSITORY TRUST COMPANY
The Company understands that DTC is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code and a "Clearing Agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities for its participants
and facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of certificates
and certain other organizations. Indirect access to the DTC system is available
to others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly ("indirect participants").
Although DTC, Euroclear and Cedel Bank are expected to follow the foregoing
procedures in order to facilitate transfers of interests in a Global Note among
participants of DTC, Euroclear and Cedel Bank, they are under no obligation to
perform or continue to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC, Euroclear or Cedel Bank or their
respective participants or indirect participants of their respective obligations
under the rules and procedures governing their operations.
If DTC is at any time unwilling or unable to continue as a depositary for
the Global Notes and a successor depositary is not appointed by the Company
within 90 days, the Company will issue Certificated Notes, which may bear the
legend referred to under "Transfer Restrictions," in exchange for the Global
Notes. Holders of an interest in a Global Note may receive Certificated Notes,
which may bear the legend referred to under "Transfer Restrictions," in
accordance with the DTC's rules and procedures in addition to those provided for
under the Indenture.
REGISTRAR AND TRANSFER AGENT
The Trustee will act as registrar and transfer agent for the New Notes (the
"Notes Registrar").
As described under "-- Book-Entry Securities; The Depository Trust Company;
Delivery and Form," so long as the New Notes are in book-entry form,
registration of transfers and exchanges of New Notes will be made through Direct
Participants and Indirect Participants in DTC. If physical certificates
representing the New Notes are issued, registration of transfers and exchanges
of New Notes will be effected without charge by or on behalf of the Company,
but, in the case of a transfer, upon payment (with the giving of such indemnity
as the Company may require) in respect of any tax or other governmental charges
which may be imposed in relation to it.
The Company will not be required to register or cause to be registered any
transfer of New Notes during a period beginning 15 days prior to the mailing of
notice of redemption of New Notes and ending on the day of such mailing.
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DESCRIPTION OF THE OLD NOTES
The terms of the Old Notes are identical in all material respects to those
of the New Notes, except that the Old Notes (i) have not been registered under
the Securities Act, and, accordingly, contain terms with respect to transfer
restrictions, (ii) are entitled to certain registration rights under the
Registration Rights Agreement (which rights will terminate upon consummation of
the Exchange Offer, and (iii) are entitled under the Registration Rights
Agreement to an increase in the rate of interest payments thereon in the event
that the Company fails to comply with certain terms of the Registration Rights
Agreement. Certain relevant terms of the Registration Rights Agreement are
described more fully below.
REGISTRATION RIGHTS
The Company agreed with the Placement Agents, for the benefit of the
holders of the Old Notes, that the Company will use its best efforts, at its
cost, to file and cause to become effective a registration statement with
respect to a registered offer (the "Exchange Offer") to exchange the Old Notes
for an issue of senior subordinated notes of the Company (the "New Notes") with
terms identical to the Old Notes (except that the New Notes will not bear
legends restricting the transfer thereof). Upon such registration statement
being declared effective, the Company shall offer the New Notes in return for
surrender of the Old Notes. Such offer shall remain open for not less than 20
business days after the date notice of the Exchange Offer is mailed to holders.
For each Old Note surrendered to the Company under the Exchange Offer, the
holder will receive a New Note of equal principal amount. In the event that
applicable interpretations of the staff of the Securities and Exchange
Commission (the "Commission") do not permit the Company to effect the Exchange
Offer, or under certain other circumstances, the Company shall, at its cost, use
its best efforts to cause to become effective a shelf registration statement
(the "Shelf Registration Statement") with respect to resales of the Notes and to
keep such Shelf Registration Statement continuously effective until the second
anniversary of the Closing Date, or such shorter period that will terminate when
all Notes covered by the Shelf Registration Statement have been sold pursuant to
the Shelf Registration Statement. The Company shall, in the event of such a
shelf registration, provide to each holder copies of the prospectus, notify each
holder when the Shelf Registration Statement for the Notes has become effective
and take certain other actions as are required to permit resales of the Notes. A
holder that sells its Notes pursuant to the Shelf Registration Statement
generally will be required to be named as a selling security holder in the
related prospectus and to deliver a prospectus to purchasers, will be subject to
certain of the civil liability provisions under the Securities Act in connection
with such sales and will be bound by the provisions of the Registration Rights
Agreement that are applicable to such a holder (including certain
indemnification obligations).
In the event that the Exchange Offer is not consummated and a Shelf
Registration Statement is not declared effective on or prior to April 21, 1998,
the annual interest rate borne by the Notes will be increased by .5% per annum
until the Exchange Offer is consummated or the Shelf Registration Statement is
declared effective.
If the Company effects the Exchange Offer, the Company will be entitled to
close the Exchange Offer 20 business days after the commencement thereof,
provided that it has accepted all Old Notes theretofore validly surrendered in
accordance with the terms of the Exchange Offer. Old Notes not tendered in the
Exchange Offer shall continue to accrue interest and to be subject to all of the
terms and conditions specified in the Indenture and to the transfer restrictions
described in "Transfer Restrictions," but will not retain any rights under the
Registration Rights Agreement.
This summary of certain provisions of the Registration Rights Agreement
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which is available from the Company upon request.
TRANSFER RESTRICTIONS
The Old Notes have not been registered under the Securities Act and may not
be offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act.
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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following summary describes certain United States federal income tax
consequences of the acquisition, ownership and disposition of the New Notes. The
summary is based on the Internal Revenue Code of 1986, as amended (the "Code"),
and regulations, rulings and judicial decisions as of the date hereof, all of
which may be repealed, revoked or modified so as to result in federal income tax
consequences different from those described below. Such changes could be applied
retroactively in a manner that could adversely affect holders of the Notes. In
addition, the authorities on which this summary is based are subject to various
interpretations. It is therefore possible that the consequences of the
acquisition, ownership and disposition of the Notes may differ from the
treatment described below.
The tax treatment of a holder of the New Notes may vary depending upon the
particular situation of the holder. This summary is limited to investors who
will hold the New Notes as capital assets within the meaning of Section 1221 of
the Code and does not deal with holders that may be subject to special tax rules
(including, but not limited to, insurance companies, tax-exempt organizations,
financial institutions, dealers in securities or currencies, holders whose
functional currency is not the U.S. dollar or holders who will hold the New
Notes as a hedge against currency risks or as part of a straddle, synthetic
security, conversion transaction or other integrated investment comprised of the
New Notes and one or more other investments). The discussion is limited to
holders of New Notes exchanged for Old Notes of which such holders were the
original purchasers and does not address the tax consequences to other, as
subsequent, holders of the New Notes.
This summary is for general information only and does not constitute, nor
should it be considered as, legal or tax advice to prospective holders of the
New Notes. Moreover, the summary does not address all aspects of federal income
taxation that may be relevant to holders of the New Notes in light of their
particular circumstances, and it does not address any tax consequences arising
under the laws of any state, local or foreign taxing jurisdiction. Prospective
holders should consult their own tax advisors as to the particular tax
consequences to them of acquiring, holding or disposing of the New Notes.
CONSEQUENCES OF THE EXCHANGE OFFER
An exchange of Old Notes for New Notes pursuant to the Exchange Offer
should not be treated as an "exchange" for federal income tax purposes because
the New Notes should not be considered to differ materially in kind or extent
from the Old Notes. Rather, the New Notes received by a holder should be treated
as a continuation of the Old Notes in the hands of that holder. As a result,
there should be no federal income tax consequences for holders who exchange Old
Notes for New Notes. Such holders will have the same tax basis and holding
period in the New Notes as the Old Notes exchanged therefor. For purposes of the
following discussion, it is assumed that the New Notes and the Old Notes
exchanged therefor will be treated as the same instruments for U.S. federal
income tax purposes, and accordingly references to a "Note" (or with correlative
meaning "Notes") include both a New Note and the Old Note for which that New
Note is exchanged.
STATED INTEREST ON NOTES
Except as set forth below, interest on a Note will generally be taxable to
a United States Holder as ordinary income from domestic sources at the time it
is paid or accrued in accordance with the United States Holder's method of
accounting for tax purposes. As used herein, a "United States Holder" of a Note
means an individual that is a citizen or resident of the United States
(including certain former citizens and former long-time residents), a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, an estate the
income of which is subject to United States federal income taxation regardless
of its source, or a trust if (i) a U.S. court is able to exercise primary
supervision over the administration of the trust and (ii) one or more U.S.
trustees or fiduciaries have the authority to control all substantial decisions
of the trust. A "Non-United States Holder" is a holder that is not a United
States Holder.
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MARKET DISCOUNT
If a United States Holder purchases a Note for an amount that is less than
its principal amount, the amount of the difference will be treated as "market
discount" for U.S. federal income tax purposes, unless such difference is less
than a specified de minimis amount. Under the market discount rules, a United
States Holder will be required to treat any partial principal payment on, or any
gain on the sale, exchange, retirement or other disposition of, a Note as
ordinary income to the extent of the market discount which has not previously
been included in income and is treated as having accrued on such Note at the
time of such payment or disposition. In addition, the United States Holder may
be required to defer, until the maturity of the Note or its earlier disposition
in a taxable transaction, the deduction of all or a portion of the interest
expense on any indebtedness incurred or continued to purchase or carry such
Note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the Note, unless the United
States Holder elects to accrue on a constant interest method. A United States
Holder may elect to include market discount in income currently as it accrues
(on either a ratable or constant interest method), in which case the rule
described above regarding deferral of interest deductions will not apply. This
election to include market discount in income currently, once made, applies to
all market discount obligations acquired on or after the first taxable year to
which the election applies and may not be revoked without the consent of the
Internal Revenue Service (the "IRS").
AMORTIZABLE BOND PREMIUM
A United States Holder that purchases a Note for an amount in excess of the
principal amount will be considered to have purchased the Note at a "premium." A
United States Holder generally may elect to amortize the premium over the
remaining term of the Note on a constant yield method. However, if the Note is
purchased at a time when the Note may be optionally redeemed for an amount that
is in excess of its principal amount, special rules would apply that could
result in a deferral of the amortization of bond premium until later in the term
of the Note. The amount amortized in any year will be treated as a reduction of
the United States Holder's interest income from the Note. Bond premium on a Note
held by a United States Holder that does not make such an election will decrease
the gain or increase the loss otherwise recognized on disposition of the Note.
The election to amortize premium on a constant yield method, once made, applies
to all debt obligations held or subsequently acquired by the electing United
States Holder on or after the first day of the first taxable year to which the
election applies and may not be revoked without the consent of the IRS.
SALE, EXCHANGE AND RETIREMENT OF NOTES
Upon the sale, exchange, redemption, retirement or other disposition of a
Note, a United States Holder generally will recognize gain or loss equal to the
difference between the amount realized upon the sale, exchange, redemption,
retirement or other disposition and such holder's adjusted tax basis of the
Note. A United States Holder's adjusted tax basis in a Note will, in general, be
the United States Holder's cost therefor, increased by market discount
previously included in income by the United States Holder and reduced by any
amortized premium previously deducted from income by the United States Holder.
Except as described above with respect to market discount or except to the
extent the gain or loss is attributable to accrued but unpaid stated interest,
such gain or loss will be capital gain or loss. For certain noncorporate
taxpayers (including individuals), the rate of taxation of capital gains will
depend upon (i) the taxpayer's holding period in the capital asset (with the
preferential rates available for capital assets held more than 12 months or 18
months) and (ii) the taxpayer's marginal tax rate for ordinary income. The
deductibility of capital losses is subject to limitations.
NON-UNITED STATES HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) no United States federal withholding tax will be imposed with
respect to the payment by the Company or its paying agent of principal,
premium, if any, or interest on a Note owned by a Non-United
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States Holder (the "Portfolio Interest Exception"), provided (i) that such
Non-United States Holder does not actually or constructively own 10% or
more of the total combined voting power of all classes of stock of the
Company entitled to vote within the meaning of section 871(h)(3) of the
Code and the regulations thereunder, (ii) such Non-United States Holder is
not a controlled foreign corporation that is related, directly or
indirectly, to the Company through stock ownership, (iii) such Non-United
States Holder is not a bank whose receipt of interest on a Note is
described in section 881(c)(3)(A) of the Code and (iv) such Non-United
States Holder satisfies the statement requirement (described generally
below) set forth in section 871(h) and section 881(c) of the Code and the
regulations thereunder.
(b) no United States federal withholding tax will be imposed generally
with respect to any gain or income realized by a Non-United States Holder
upon the sale, exchange, redemption, retirement or other disposition of a
Note; and
(c) a Note beneficially owned by an individual who at the time of
death is a Non-United States Holder will not be subject to United States
federal estate tax as a result of such individual's death, provided that
such individual does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Company entitled
to vote within the meaning of section 871(h)(3) of the Code and provided
that the interest payments with respect to such Note would not have been,
if received at the time of such individuals death, effectively connected
with the conduct of a United States trade or business by such individual.
To satisfy the requirement referred to in (a)(iv) above, the beneficial
owner of such Note, or a financial institution holding the Note on behalf of
such owner, must provide, in accordance with specified procedures, a paying
agent of the Company with a statement to the effect that the beneficial owner is
not a United States Holder. Pursuant to current temporary U.S. Treasury
regulations, these requirements will be met if (1) the beneficial owner provides
his name and address, and certifies, under penalties of perjury, that he is not
a United States Holder (which certification may be made on an IRS Form W-8 (or
substitute form)) or (2) a financial institution holding the Note on behalf of
the beneficial owner certifies, under penalties of perjury, that such statement
has been received by it and furnishes a paying agent with a copy thereof.
If a Non-United States Holder cannot satisfy the requirements of the
Portfolio Interest Exception described in (a) above, payments on a Note made to
such Non-United States Holder will be subject to a 30% withholding tax unless
the beneficial owner of the Note provides the Company or its paying agent, as
the case may be, with a properly executed (1) IRS Form 1001 (or substitute form)
claiming an exemption from or reduction of withholding under the benefit of a
tax treaty or (2) IRS Form 4224 (or substitute form) stating that interest paid
on the Note is not subject to withholding tax because it is effectively
connected with the beneficial owner's conduct of a trade or business in the
United States.
Recently issued Treasury regulations modify certain of the certification
requirements described above. These modifications will become generally
effective January 1, 1999. It is possible that the Company and other withholding
agents may request new withholding exemption forms from holders in order to
qualify for continued exemption from withholding under the Treasury regulations
when they become effective.
If a Non-United States Holder is engaged in a trade or business in the
United States and payment on a Note is effectively connected with the conduct of
such trade or business, the Non-United States Holder, although exempt from
United States federal withholding tax as discussed above, will be subject to
United States federal income tax on such payment on a net income basis in the
same manner as if it were a United States Holder. In addition, if such Holder is
a foreign corporation, it may be subject to a branch profits tax equal to 30% of
its effectively connected earnings and profits for the taxable year, subject to
adjustments. For this purpose, such payment on a Note will be included in such
foreign corporation's earnings and profits.
Any gain or income realized upon the sale, exchange, retirement or other
disposition of a Note generally will not be subject to United States federal
income tax unless (i) such gain or income is effectively connected with a trade
or business in the United States of the Non-United States Holder or (ii) in the
case of a Non-United States Holder who is an individual, such individual is
present in the United States for 183 days or more
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in the taxable year of such sale, exchange, retirement or other disposition, and
certain other conditions are met.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to payments on a
Note and to the proceeds of the sale of a Note made to United States Holders
other than certain exempt recipients (such as corporations). A 31% backup
withholding tax will apply to such payments if the United States Holder fails to
provide a taxpayer identification number or certification of foreign or other
exempt status or fails to report in full dividend and interest income.
No information reporting or backup withholding will be required with
respect to payments made by the Company or any paying agent to Non-United States
Holders if a statement described in (a)(iv) under "-- Non-United States Holders"
has been received and the payor does not have actual knowledge that the
beneficial owner is a United States person.
In addition, backup withholding and information reporting will not apply if
payments on a Note are paid or collected by a foreign office of a custodian,
nominee or other foreign agent on behalf of the beneficial owner of such Note,
or if a foreign office of a broker (as defined in applicable U.S. Treasury
regulations) pays the proceeds of the sale of a Note to the owner thereof. If,
however, such nominee, custodian, agent or broker is, for United States federal
income tax purposes, a United States person, a controlled foreign corporation or
a foreign person that derives 50% or more of its gross income for certain
periods from the conduct of a trade or business in the United States, such
payments will be subject to information reporting (but not backup withholding),
unless (1) such custodian, nominee, agent or broker has documentary evidence in
its records that the beneficial owner is not a United States person and certain
other conditions are met or (2) the beneficial owner otherwise establishes an
exemption. Recently issued Treasury regulations modify certain of the
certification requirements for backup withholding. These modifications will
become generally effective January 1, 1999. It is possible that the Company and
other withholding agents may request a new withholding exemption form from
holders in order to qualify for continued exemption from backup withholding
under Treasury regulations when they become effective.
Payments on a Note paid to the beneficial owner of a Note by a United
States office of a custodian, nominee or agent, or the payment by the United
States office of a broker of the proceeds of sale of a Note, will be subject to
both backup withholding and information reporting unless the beneficial owner
provides the statement referred to in (a)(iv) above and the payor does not have
actual knowledge that the beneficial owner is a United States person or
otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules will be credited
toward such Holder's United States federal income tax liability, if any. To the
extent that the amounts withheld exceed the Holder's tax liability, the excess
may be refunded to the Holder provided the required information is furnished to
the IRS. In addition to providing the necessary information, the Holder must
file a United States tax return in order to obtain a refund of the excess
withholding.
THE FEDERAL INCOME TAX SUMMARY SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. PROSPECTIVE AND CURRENT UNITED STATES HOLDERS AND NON-UNITED STATES
HOLDERS OF THE NOTES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF
THE NOTES, INCLUDING THE TAX CONSEQUENCES UNDER FEDERAL, STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS AND THE EFFECTS OF CHANGES IN SUCH LAWS.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account in
connection with the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. This
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Prospectus, as it may be amended or supplemented from time to time, may be used
by Participating Broker-Dealers during the period referred to below in
connection with resales of New Notes received in exchange for Old Notes if such
Old Notes were acquired by such Participating Broker-Dealers for their own
accounts as a result of market-making activities or other trading activities.
The Company has agreed that this Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer in
connection with resales of such New Notes for a period ending 180 days after the
last date of acceptance for the Exchange Offer. See "The Exchange
Offer -- Resales of New Notes."
New Notes received by broker-dealers for their own accounts in connection
with the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account in
connection with the Exchange Offer and any broker or dealer that participates in
a distribution of such New Notes may be deemed to be an "underwriter" within the
meaning of the Securities Act, and any profit on any such resale of New Notes
and any commissions or concessions received by any such persons may be deemed to
be underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The Company shall not be liable for any delay by the Depository or any
Participant or Indirect Participant in identifying the beneficial owners of the
related New Notes and each such person may conclusively rely on, and shall be
protected in relying on, instructions from the Depository for all purposes
(including with respect to the registration and delivery, and the respective
principal amounts, of the New Notes to be issued).
LEGAL MATTERS
The validity of the New Notes being offered hereby and certain other legal
matters regarding the Notes will be passed upon for the Company by Wilmer,
Cutler & Pickering, Washington, D.C. Certain legal matters regarding FCC
regulation have been passed upon for the Company by Joyce & Jacobs, Attorneys at
Law, LLP.
EXPERTS
The consolidated financial statements of the Company at December 31, 1995
and 1996, and for each of the three years in the period ended December 31, 1996
incorporated by reference, have been examined by Arthur Andersen LLP,
independent public accountants, as set forth in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
The consolidated financial statements of ProNet Inc. and subsidiaries at
December 31, 1995 and 1996, and for each of the three years in the period ended
December 31, 1996 incorporated by reference herein, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
51
<PAGE> 59
GENERAL LISTING INFORMATION
LISTING
Application has been made to list the Notes on the Luxembourg Stock
Exchange. The Certificate of Incorporation of the Company and the legal notice
relating to the issue of the Notes will be deposited prior to the listing with
the Registrar of the District Court in Luxembourg (Greffier en Chef du Tribunal
d' Arrondissement a Luxembourg), where such documents are available for
inspection and where copies thereof can be obtained upon request. As long as the
Notes are listed on the Luxembourg Stock Exchange, an Agent for making payments
on, and transfers of, Notes will be maintained in Luxembourg.
52
<PAGE> 60
======================================================
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFER MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY
OTHER THAN THE NEW NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary............................... 1
Risk Factors.......................... 11
Use of Proceeds....................... 17
Capitalization........................ 18
The Exchange Offer.................... 19
Description of the New Notes.......... 27
Description of the Old Notes.......... 46
Certain United States Federal Tax
Considerations...................... 47
Plan of Distribution.................. 50
Legal Matters......................... 51
Experts............................... 51
</TABLE>
------------------------
UNTIL AUGUST 2, 1998 (180 DAYS AFTER THE DATE OF THIS PROSPECTUS) ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
======================================================
======================================================
OFFER FOR ALL OUTSTANDING
9 3/4% SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR
9 3/4% SENIOR SUBORDINATED NOTES DUE 2007
THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
OF
LOGO
------------------------
PROSPECTUS
FEBRUARY 3, 1998
------------------------
======================================================
<PAGE> 61
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 6 of the Metrocall Amended and Restated Certificate of
Incorporation provides for indemnification of the directors, officers, employees
and agents of Metrocall to the full extent currently permitted by law.
Section 145 of the Delaware General Corporation Law ("DGCL") empowers a
Delaware corporation to indemnify any person who was or is, or is threatened to
be made, a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of such corporation) by reason of the fact that
such person is or was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. The indemnity may include 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, provided that such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, such person had no reasonable cause to believe his conduct was
unlawful. A Delaware corporation may indemnify such persons against expenses
(including attorneys' fees) in actions brought by or in the right of the
corporation to procure a judgment in its favor under the same conditions, except
that no indemnification is permitted 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 to the extent the Court of Chancery of the State of Delaware or the
court in which such action or suit was brought shall determine upon application
that, in view of all circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the Court of Chancery or
other such court shall deem proper. To the extent such person has been
successful on the merits or otherwise in defense of any action referred to
above, or in defense of any claim, issue or matter therein, the corporation must
indemnify such person against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith. The indemnification
and advancement of expenses provided for in, or granted pursuant to, Section 145
is not exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 145 also provides that a corporation may maintain insurance against
liabilities for which indemnification is not expressly provided by the statute.
In addition, the Metrocall Amended and Restated Certificate of
Incorporation, as permitted by Section 102(b) of the DGCL, limits directors'
liability to Metrocall and its stockholders by eliminating liability in damages
for breach of fiduciary duty. Section 5.5 of the Metrocall Amended and Restated
Certificate of Incorporation provides that neither Metrocall nor its
stockholders may recover damages from Metrocall directors for breach of their
fiduciary duties in the performance of their duties as directors of Metrocall.
As limited by Section 102(b), this provision cannot, however, have the effect of
indemnifying any director of Metrocall in the case of liability (i) for a breach
of the director's duty of loyalty, (ii) for acts of omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchases or redemptions as
provided in Section 174 of the DGCL or (iv) for any transactions for which the
director derived an improper personal benefit.
II-1
<PAGE> 62
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------------------------------------------------------------------
<S> <C> <C>
3.1 Amended and Restated Certificate of Incorporation of Metrocall, Inc. as
amended.+
3.3 Sixth Amended and Restated Bylaws of Metrocall, Inc.+
4.1 Indenture for 9 3/4% Senior Subordinated Notes Due 2007, dated October
21, 1997, including form of Notes.(a)
5.1 Opinion of Wilmer, Cutler & Pickering as to the legality of securities
being registered.
8.1 Opinion of Wilmer, Cutler & Pickering as to certain tax matters.
10.2 Registration Rights Agreement, dated October 21, 1997 between
Metrocall, Inc. and Morgan Stanley & Co. Incorporated, TD Securities
(USA) Inc., First Union Capital Markets Corp. and Nationsbank
Montgomery Securities, Inc.+
23.1 Consent of Wilmer, Cutler & Pickering (included in Exhibits 5.1 and
8.1).
23.3 Consent of Arthur Andersen LLP, as independent public accountants for
Metrocall, Inc.
23.4 Consent of Ernst & Young LLP, as independent auditors for ProNet Inc.
25 Power of Attorney (included in signature pages of this Registration
Statement).+
25.1 Form T-1 Statement of Eligibility of First Union National Bank to act
as trustee under the Indenture.+
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Exchange Agent Agreement.
</TABLE>
-----------------------
(a) Incorporated by reference to Metrocall's Current Report on Form 8-K
filed with the Commission on October 23, 1997.
(b) Incorporated by reference to Metrocall's Proxy Statement filed for
the Annual Meeting of Stockholders to be held on May 7, 1997.
+ Previously filed.
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant also hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
II-2
<PAGE> 63
The registrant undertakes that every prospectus (i) that is filed pursuant
to the immediately preceding paragraph, or (ii) that purports to meet the
requirements of section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrants of expenses incurred
or paid by a director, officer or controlling person of the registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by them is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE> 64
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused Amendment No. 1 to this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Alexandria,
Virginia on February 3, 1998.
METROCALL, INC.
By: /s/ VINCENT D. KELLY
------------------------------------
Name: Vincent D. Kelly
Title: Executive Vice President and
CFO
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------------ ------------------------------------ -----------------
<C> <C> <S>
* President, Chief Executive Officer February 3, 1998
- ------------------------------------ and
WILLIAM L. COLLINS, III Director (Principal Executive
Officer)
/s/ VINCENT D. KELLY Executive Vice President, Treasurer February 3, 1998
- ------------------------------------ and Chief Financial Officer
VINCENT D. KELLY (Principal Financial and Accounting
Officer)
* Chairman of the Board February 3, 1998
- ------------------------------------
RICHARD M. JOHNSTON
* Director February 3, 1998
- ------------------------------------
RONALD V. APRAHAMIAN
* Director February 3, 1998
- ------------------------------------
HARRY L. BROCK, JR.
* Director February 3, 1998
- ------------------------------------
SUZANNE S. BROCK
* Director February 3, 1998
- ------------------------------------
FRANCIS A. MARTIN, III
* Director February 3, 1998
- ------------------------------------
RYAL R. POPPA
* Director February 3, 1998
- ------------------------------------
RAY D. RUSSENBERGER
</TABLE>
II-4
<PAGE> 65
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------------ ------------------------------------ -----------------
<C> <C> <S>
* Director February 3, 1998
- ------------------------------------
ELLIOTT H. SINGER
* Director February 3, 1998
- ------------------------------------
MICHAEL GREENE
* Director February 3, 1998
- ------------------------------------
ROYCE YUDKOFF
* Director February 3, 1998
- ------------------------------------
JACKIE R. KIMZEY
* Director February 3, 1998
- ------------------------------------
MAX HOPPER
* Director February 3, 1998
- ------------------------------------
EDWARD E. JUNGERMAN
* By: /s/ VINCENT D. KELLY
- ------------------------------------
VINCENT D. KELLY
ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE> 66
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- -------------------------------------------------------------------- ------------
<C> <S> <C>
3.1 Amended and Restated Certificate of Incorporation of Metrocall, Inc.
as amended+.........................................................
3.3 Sixth Amended and Restated Bylaws of Metrocall, Inc.+...............
4.1 Indenture for 9 3/4% Senior Subordinated Notes Due 2007, dated
October 21, 1997, including form of Notes.(a).......................
5.1 Opinion of Wilmer, Cutler & Pickering as to the legality of
securities being registered. .......................................
8.1 Opinion of Wilmer, Cutler & Pickering as to certain tax matters. ...
10.2 Registration Rights Agreement, dated October 21, 1997 between
Metrocall, Inc. and Morgan Stanley & Co. Incorporated, TD Securities
(USA) Inc., First Union Capital Markets Corp. and Nationsbank
Montgomery Securities, Inc.+........................................
23.1 Consent of Wilmer, Cutler & Pickering (included in Exhibits 5.1 and
8.1). ..............................................................
23.3 Consent of Arthur Andersen LLP, as independent public accountants
for Metrocall, Inc. ................................................
23.4 Consent of Ernst & Young LLP, as independent auditors for ProNet
Inc. ...............................................................
25 Power of Attorney (included in signature pages of this Registration
Statement).+........................................................
25.1 Form T-1 Statement of Eligibility of First Union National Bank to
act as trustee under the Indenture.+................................
99.1 Form of Letter of Transmittal. .....................................
99.2 Form of Notice of Guaranteed Delivery. .............................
99.3 Form of Exchange Agent Agreement. ..................................
</TABLE>
- ---------------
(a) Incorporated by reference to Metrocall's Current Report on Form 8-K filed
with the Commission on October 23, 1997.
(b) Incorporated by reference to Metrocall's Proxy Statement filed for the
Annual Meeting of Stockholders to be held on May 7, 1997.
+ To be filed by amendment.
<PAGE> 1
EXHIBIT 5.1
Washington
WILMER, CUTLER & PICKERING Baltimore
2445 M Street, N.W.
Washington, D.C. 20037-1420 London
--------------- Brussels
TELEPHONE (202)663-6000 Berlin
FACSIMILE (202)663-6363
February 3, 1998
Metrocall, Inc.
6677 Richmond Highway
Alexandria, VA 22306
Re: Metrocall, Inc. Exchange Offer Registration Statement on Form S-4
Ladies and Gentlemen:
We have acted as special counsel to Metrocall, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing of a
Registration Statement on Form S-4 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with the Securities
and Exchange Commission (the "Commission") with respect to an exchange offer
(the "Exchange Offer") pursuant to which the Company is offering to exchange up
to $200,000,000 principal amount of its outstanding 9-3/4% Senior Subordinated
Notes due 2007 (the "Old Notes") for a like principal amount of the Company's
9-3/4% Senior Subordinated Notes due 2007 that have been registered under the
Securities Act (the "New Notes"). The New Notes will be offered pursuant to an
indenture, dated as of October 21, 1997 (the "Indenture"), by and among, the
Company, and First Union National Bank, as trustee.
In so acting, we have examined originals or copies of the (1) the
Registration Statement; (2) the Prospectus that is a part of the Registration
Statement (the "Prospectus"); (3) the Indenture; and (4) the Registration Rights
Agreement dated as of October 21, 1997 by and among the Company and the
Placement Agents (as defined therein) (the "Registration Rights Agreement";
collectively with the foregoing documents, the "Operative Documents").
We have also examined original, reproduced or certified copies of
resolutions adopted by the Company's boards of directors and such other
documents, corporate records, certificates of public officials, officers and
representatives of the Company and other instruments as we have deemed necessary
or appropriate to render the opinions set forth below, and have
<PAGE> 2
Metrocall,Inc.
February 2, 1998
Page 2
considered such questions of laws as we have deemed necessary to enable us to
render the opinions expressed below.
In our examination of documents and records, we have assumed, without
investigation, the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to us as originals, the
conformity with originals of all documents submitted to us as telecopied,
certified, photostatic or reproduced copies and the authenticity of all such
documents. We have also assumed, but not idependently verified, that all
documents executed by a party other than the Company or any respective
subsidiaries thereof were duly and validly authorized, executed and delivered
by such party, that such party has the requisite power and authority to
execute, deliver and perform such agreements and other documents, and that such
agreements and other documents are legal, valid and binding obligations of such
party and enforceable against such party in accordance with their respective
terms.
With respect to questions of fact material to our opinion, we have relied
with your consent, without independent inquiry or verification by us, solely
upon, (a) the representations and warranties and factual matters set forth in
each of the Operative Documents, including any exhibits or schedules attached
thereto, respectively, (b) written and oral representations of officers of the
Company and (c) certificates of public officials. We do not opine in any respect
as to the accuracy of any such facts contained in items (a)-(c).
This opinion is limited to the laws of the United States of America, New
York law, and the General Corporation Law of State of Delaware. We express no
opinion whatsoever as to any other laws or regulations or as to laws relating to
choice of law or conflicts of law principles.
Based upon the foregoing, subject to the assumptions, limitations and
expectations contained herein, and subject to the issuance by the Commission of
an order declaring the Registration Statement effective, we are of the opinion
that when the New Notes, in the form filed as an exhibit to the Registration
Statement, have been duly executed and authenticated in accordance with the
Indenture and have been duly issued and delivered by the Company in exchange for
an equal principal amount of Old Notes pursuant to the terms of the Indenture
and the Exchange Offer, the New Notes will (x) be the legal and binding
obligations of the Company enforceable against the Company in accordance with
their terms except as (a) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally,
and (b) rights of acceleration, if applicable, and the availability of equitable
remedies may be limited by equitable principles of general applicability, as
well as concepts of materiality, reasonableness, good faith and fair dealing,
and (y) be entitled to the benefits of the Indenture.
<PAGE> 3
Metrocall,Inc.
February 2, 1998
Page 3
The information set forth herein is as of the date hereof. We assume no
obligation to advise you of changes which may thereafter be brought to our
attention. Our opinions are based on statutory and judicial decisions in effect
at the date hereof, and we do not opine with respect to any law, regulation,
rule or governmental policy or decision which may be enacted determined or
adopted after the date hereof, nor assume any responsibility to advise you of
future changes in our opinions.
This opinion is furnished by us, as special counsel to the Company, to
you and is solely for your benefit in connection with the Exchange Offer. We
hereby consent to the use of this opinion as an exhibit to the Registration
Statement. We also consent to any and all references to our firm under the
caption "Legal Matters" in the Prospectus. This opinion may not be relied on by
you for any other purpose or by any other person for any purpose without our
written consent.
Very truly yours,
WILMER, CUTLER & PICKERING
By:
-------------------------
Thomas W. White, a partner
<PAGE> 1
EXHIBIT 8.1
[WILMER, CUTLER & PICKERING LETTERHEAD]
February 3, 1998
Metrocall, Inc.
6677 Richmond Highway
Alexandria, Virginia 22306
Dear Ladies and Gentlemen:
We have acted as special counsel to Metrocall, Inc. ("Metrocall") in
connection with the preparation and filing with the Securities and Exchange
Commission (the "Commission") of a Prospectus, dated January 30, 1998 (the
"Prospectus"), to the Registration Statement on Form S-4 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), for the registration of the 9-3/4% Senior Subordinated Notes due 2007
(the "New Notes") which are to be offered in exchange for all the outstanding
9-3/4% Senior Subordinated Notes due 2007 (the "Old Notes"). All capitalized
terms not otherwise defined herein shall have the same meaning ascribed to such
terms in the Prospectus.
We have examined copies of the following documents: (1) the
Prospectus (2) the Registration Statement; and (3) such other documents as we
have deemed relevant for purposes of the opinion set forth herein.
<PAGE> 2
Metrocall, Inc.
January 30, 1998
Page 2
In our examination of such documents, we have assumed, without
independent inquiry, the genuineness of all signatures, the proper execution of
all documents, the authenticity of all documents submitted to us as originals,
the conformity to originals of all documents submitted to us as copies, the
authenticity of the originals of any such copies, and the legal capacity of all
natural persons.
Based on and subject to the foregoing, it is our opinion that the
discussion set forth in the Prospectus under the heading "Certain United States
Federal Tax Considerations" constitutes, in all material respects, a fair and
accurate summary under current law of the United States federal income tax
consequences of the purchase, ownership, and disposition of the New Notes and
the exchange of Old Notes for New Notes.
The foregoing opinion is based on relevant provisions of the Internal
Revenue Code of 1986, as amended, the Treasury Regulations issued thereunder,
court decisions, and administrative determinations as currently in effect, all
of which are subject to change, prospectively or retroactively, at any time.
We undertake no obligation to update or supplement this opinion to reflect any
changes in laws that may occur after the date hereof.
This opinion has been prepared solely for your use in connection with
the filing of the Prospectus and should not be quoted in whole or in part or
otherwise be referred to, nor otherwise be filed with or furnished to any
governmental agency or other person or entity, without our express prior
written consent.
We hereby consent to the filing of this opinion as an exhibit to the
Prospectus as filed with the SEC and to the use of our name therein.
Very Truly Yours,
WILMER, CUTLER & PICKERING
By: /s/ WILMER, CUTLER & PICKERING
------------------------------------
William J. Wilkins
A Partner
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our reports dated February 13,
1997, included in Metrocall, Inc.'s Form 10-K/A for the three years ended
December 31, 1996, and to all references to our Firm included in this
registration statement filed on Form S-4.
Arthur Andersen LLP
Washington, D.C.
January 30, 1998
<PAGE> 1
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 Amendment No. 1 and related Prospectus of
Metrocall, Inc. for the registration of $200,000,000 9 3/4% Senior Subordinated
Notes due 2007 and to the incorporation by reference therein of our report dated
February 5, 1997 except for Note N, as to which the date is March 4, 1997, with
respect to the consolidated financial statements of ProNet, Inc. and
Subsidiaries included in its Annual Report (Form 10-K) for the year ended
December 31, 1996 and filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Dallas, Texas
February 2, 1998
<PAGE> 1
LETTER OF TRANSMITTAL
METROCALL, INC.
Offer To Exchange Metrocall, Inc.'s
9 3/4% Senior Subordinated Notes due 2007
That Have Been Registered Under the Securities Act of 1933
For Any and All of Metrocall's
9 3/4% Senior Subordinated Notes due 2007
Pursuant to the Prospectus Dated February 3, 1998
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON MARCH 5, 1998, UNLESS THE EXCHANGE OFFER IS EXTENDED.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
First Union National Bank
<TABLE>
<S> <C> <C>
BY MAIL, HAND BY FACSIMILE TRANSMISSION: TO CONFIRM BY TELEPHONE
OR OVERNIGHT DELIVERY: 704-590-7628 OR FOR INFORMATION:
First Union National Bank 704-590-7408
Attn: Michael Klotz
Reorganization Department
1525 West W.T. Harris Blvd., 3C3,
Charlotte, North Carolina 28262-1153
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A
NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE
INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED. CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN SHALL
HAVE THE SAME MEANING GIVEN THEM IN THE PROSPECTUS (AS DEFINED BELOW).
This Letter of Transmittal is to be completed by holders of Old Notes (as
defined below) either if Old Notes are to be forwarded herewith or if tenders of
Old Notes are to be made by book-entry transfer to an account maintained by
First Union National Bank (the "Exchange Agent" at The Depository Trust Company
("DTC") pursuant to the procedures set forth in "The Exchange Offer --
Procedures for Tendering Old Notes" in the Prospectus.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
------------------------------
1
<PAGE> 2
Please list below the Old Notes to which this Letter of Transmittal
relates. If the space provided below is inadequate, please list the certificate
numbers and aggregate principal amounts on a separately executed schedule and
affix the schedule to this Letter of Transmittal.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
DESCRIPTION OF NOTES TENDERED
- ------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED AGGREGATE
HOLDER(S), PRINCIPAL AGGREGATE PRINCIPAL
EXACTLY AS NAME(S) APPEAR(S) ON AMOUNT OF AMOUNT OF OLD
CERTIFICATE(S) CERTIFICATE OLD NOTES NOTES TENDERED
(PLEASE FILL IN, IF BLANK) NUMBER(S)* DELIVERED FOR EXCHANGE**
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
================================================================================================
</TABLE>
* Need not be completed by book-entry holders. Such holders should check the
appropriate box below and provide the requested information.
** Need not be completed if tendering for exchange all Old Notes delivered to
the Exchange Agent. All Old Notes delivered shall be deemed tendered unless
a lesser number is specified in this column. The minimum permitted tender
is $1,000 in principal amount of Old Notes. All other tenders must be in
integral multiples of $1,000 of principal amount.
- --------------------------------------------------------------------------------
2
<PAGE> 3
<TABLE>
- ------------------------------------------------------------------------------------------------
TENDER OF OLD NOTES
- ------------------------------------------------------------------------------------------------
<S> <C>
[ ] Check here if tendered Old Notes are enclosed herewith.
[ ] Check here if tendered Old Notes are being delivered by book-entry transfer made to the
account maintained by the Exchange Agent at DTC and complete the following:
Name of Tendering Institution:
----------------------------------------------------------
DTC Account Number:
---------------------------------------------------------------------
Transaction Code Number:
----------------------------------------------------------------
[ ] Check here if tendered Old Notes are being delivered pursuant to a Notice of Guaranteed
Delivery previously delivered to the Exchange Agent. In such case, please enclose a
photocopy of the Notice of Guaranteed Delivery and complete the following:
Name of Registered Note Holder(s):
------------------------------------------------------
Window Ticket Number (if any):
----------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-------------------------------------
Name of Eligible Institution that Guaranteed Delivery:
----------------------------------
[ ] Check here if you are a broker-dealer who acquired the Old Notes for its own account as
a result of market making or other trading activities (a "Participating Broker-Dealer")
and wish to receive 10 additional copies of the Prospectus and 10 copies of any
amendments or supplements thereto. In such case, please complete the following:
Name:
-----------------------------------------------------------------------------------
Address:
--------------------------------------------------------------------------------
Area Code and Telephone Number:
---------------------------------------------------------
Contact Person:
-------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 4
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Metrocall, Inc., a Delaware corporation
(the "Company") the above described aggregate principal value of the Company's
9 3/4% Senior Subordinated Notes (the "Old Notes") in exchange for a like
aggregate principal value of the Company's 9 3/4% Senior Subordinated Notes (the
"New Notes") which have been registered under the Securities Act 1933 (the
"Securities Act"), upon the terms and subject to the conditions set forth in the
Prospectus dated February 3, 1998 (as the same may be amended or supplemented
from time to time, the "Prospectus"), receipt of which is acknowledged, and in
this Letter of Transmittal (which, together with the Prospectus, constitute the
"Exchange Offer").
Subject to and effective upon the acceptance for exchange of all or any
portion of the Old Notes tendered herewith in accordance with the terms and
conditions of the Exchange Offer (including, if the Exchange Offer is extended
or amended, the terms and conditions of any such extension or amendment), the
undersigned hereby sells, assigns and transfers to or upon the order of the
Company all right, title and interest in and to such Old Notes as are being
tendered herewith. The undersigned hereby irrevocably constitutes and appoints
the Exchange Agent as its agent and attorney-in-fact (with full knowledge that
the Exchange Agent is also acting as agent of Company in connection with the
Exchange Offer) with respect to the tendered Old Notes, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), subject only to the right of withdrawal described in
the Prospectus, to (i) deliver Certificates for Old Notes to the Company
together with all accompanying evidences of transfer and authenticity to, or
upon the order of, the Company, upon receipt by the Exchange Agent, as the
undersigned's agent, of the New Notes to be issued in exchange for such Old
Notes, (ii) present Certificates for such Old Notes for transfer, and to
transfer the Old Notes on the books of the Company, and (iii) receive for the
account of the Company all benefits and otherwise exercise all rights of
beneficial ownership of such Old Notes, all in accordance with the terms and
conditions of the Exchange Offer.
THE UNDERSIGNED HEREBY REPRESENT(S) AND WARRANT(S) THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE OLD
NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR EXCHANGE, THE
COMPANY WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE THERETO, FREE AND
CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES, AND THAT THE OLD
NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR PROXIES. THE
UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS
DEEMED BY THE COMPANY OR THE EXCHANGE AGENT TO THE NECESSARY OR DESIRABLE TO
COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF THE OLD NOTES TENDERED HEREBY,
AND THE UNDERSIGNED WILL COMPLY WITH ITS OBLIGATIONS UNDER THE REGISTRATION
RIGHTS AGREEMENT. THE UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE
EXCHANGE OFFER.
The name(s) and address(es) of the registered holder(s) of the Old Notes
tendered hereby should be printed on page 2, if they are not already set forth
there, as they appear on the Certificates (or, in the case of book-entry
securities, on the relevant security position listing) representing such Old
Notes. The Certificate number(s) and the Old Notes that the undersigned wishes
to tender should be indicated in the appropriate boxes on page 2.
If any tendered Old Notes are not exchanged pursuant to the Exchange Offer
for any reasons, or if Certificates are submitted for more Old Notes than are
tendered or accepted for exchange, Certificates for such nonexchanged or
nontendered Old Notes will be returned (or, in the case of Old Notes tendered by
book-entry transfer, such Old Notes will be credited to the appropriate account
maintained at DTC), without expense to the tendering holder, promptly following
the expiration or termination of the Exchange Offer.
The undersigned understands that tenders of Old Notes pursuant to any one
of the procedures described in "The Exchange Offer -- Procedures for Tendering
Old Notes" in the Prospectus and in the instructions hereto will, upon the
Company's acceptance for exchange of such tendered Old Notes, constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer. The undersigned recognizes
that, under certain circumstances set forth in the Prospectus, the Company may
not be required to accept for exchange any of the Old Notes tendered hereby.
4
<PAGE> 5
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the New Notes be issued
in the name(s) of the undersigned or, in the case of a book-entry transfer of
Old Notes, that such New Notes be credited to the account indicated above
maintained at DTC. If applicable, substitute Certificates representing Old Notes
not tendered or not accepted for exchange will be issued to the undersigned or,
in the case of a book-entry transfer of Old Notes, will be credited to the
account indicated above maintained at DTC. Similarly, unless otherwise indicated
under "Special Delivery Instructions," the undersigned hereby directs that New
Notes be delivered to the undersigned at the address shown below the
undersigned's signature.
BY TENDERING OLD NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE
UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (I) THE UNDERSIGNED IS NOT AN
"AFFILIATE" OF THE COMPANY WITHIN THE MEANING OF RULE 405 UNDER THE SECURITIES
ACT (II) ANY NEW NOTES TO BE RECEIVED BY THE UNDERSIGNED ARE BEING ACQUIRED IN
THE ORDINARY COURSE OF ITS BUSINESS, AND (III) THE UNDERSIGNED HAS NO
ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A DISTRIBUTION
(WITHIN THE MEANING OF THE SECURITIES ACT) OF NEW NOTES TO BE RECEIVED IN THE
EXCHANGE OFFER. BY TENDERING OLD NOTES PURSUANT TO THE EXCHANGE OFFER AND
EXECUTING THIS LETTER OF TRANSMITTAL, A HOLDER OF OLD NOTES THAT IS A
BROKER-DEALER REPRESENTS AND AGREES, CONSISTENT WITH CERTAIN INTERPRETIVE
LETTERS ISSUED BY THE STAFF OF THE DIVISION OF CORPORATION FINANCE OF THE
SECURITIES AND EXCHANGE COMMISSION (THE "STAFF") TO THIRD PARTIES, THAT (A) SUCH
OLD NOTES HELD BY THE BROKER-DEALER ARE HELD ONLY AS A NOMINEE, OR (B) SUCH OLD
NOTES WERE ACQUIRED BY SUCH BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF
MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES AND IT WILL DELIVER A
PROSPECTUS (AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME) MEETING THE
REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY SALE OF SUCH NEW NOTES
(PROVIDED THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, SUCH
BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE
MEANING OF THE SECURITIES ACT.
THE COMPANY HAS AGREED THAT, SUBJECT TO THE PROVISIONS OF THE REGISTRATION
RIGHTS AGREEMENT, THE PROSPECTUS, AS IT MAY BE AMENDED OR SUPPLEMENTED FROM TIME
TO TIME, MAY BE USED BY A PARTICIPATING BROKER-DEALER (AS DEFINED BELOW) IN
CONNECTION WITH RESALES OF THE NEW NOTES RECEIVED IN EXCHANGE FOR OLD NOTES
WHERE SUCH OLD NOTES WERE ACQUIRED BY SUCH PARTICIPATING BROKER-DEALER FOR ITS
OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES,
FOR A PERIOD ENDING 180 DAYS AFTER THE EXPIRATION DATE (SUBJECT TO EXTENSION
UNDER CERTAIN LIMITED CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS) OF, IF EARLIER,
WHEN ALL SUCH NEW NOTES HAVE BEEN DISPOSED OF BY SUCH PARTICIPATING
BROKER-DEALER. IN THAT REGARD, EACH BROKER-DEALER WHO ACQUIRED OLD NOTES FOR ITS
OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES (A
"PARTICIPATING BROKER-DEALER"), BY TENDERING SUCH OLD NOTES AND EXECUTING THIS
LETTER OF TRANSMITTAL, AGREES THAT, UPON RECEIPT OF NOTICE FROM THE COMPANY OF
THE OCCURRENCE OF ANY EVENT OR THE DISCOVERY OF ANY FACT WHICH MAKES ANY
STATEMENT CONTAINED OR INCORPORATED BY REFERENCE IN THE PROSPECTUS UNTRUE IN ANY
MATERIAL RESPECT OR WHICH CAUSES THE PROSPECTUS TO OMIT TO STATE A MATERIAL FACT
NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED OR INCORPORATED BY REFERENCE
THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT
MISLEADING OR OF THE OCCURRENCE OF CERTAIN OTHER EVENTS SPECIFIED IN THE
REGISTRATION RIGHTS AGREEMENT, SUCH PARTICIPATING BROKER-DEALER WILL SUSPEND THE
SALE OF NEW NOTES PURSUANT TO THE PROSPECTUS UNTIL THE COMPANY HAS AMENDED OR
SUPPLEMENTED THE PROSPECTUS TO CORRECT SUCH MISSTATEMENT OR OMISSION AND HAS
FURNISHED COPIES OF THE AMENDED OR SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING
BROKER-DEALER OR THE COMPANY HAS GIVEN NOTICE THAT THE SALE OF THE NEW NOTES MAY
BE RESUMED, AS THE CASE MAY BE, IF THE COMPANY GIVES SUCH NOTICE TO SUSPEND THE
SALE OF THE NEW NOTES, IT SHALL EXTEND THE 180-DAY PERIOD REFERRED TO ABOVE
DURING WHICH PARTICIPATING BROKER-DEALERS ARE ENTITLED TO USE THE PROSPECTUS IN
CONNECTION WITH THE RESALE OF NEW NOTES BY THE NUMBER OF DAYS DURING THE PERIOD
FROM AND INCLUDING THE DATE OF THE GIVING OF SUCH NOTICE TO AND INCLUDING THE
DATE WHEN PARTICIPATING BROKER-DEALERS SHALL HAVE RECEIVED COPIES OF THE
SUPPLEMENTED OR AMENDED PROSPECTUS NECESSARY TO PERMIT RESALES OF THE NEW NOTES
OR TO AND INCLUDING THE DATE ON WHICH THE COMPANY HAS GIVEN NOTICE THAT THE SALE
OF NEW NOTES MAY BE RESUMED, AS THE CASE MAY BE.
Holders of Old Notes whose Old Notes are accepted for exchange will
receive, in cash, accrued interest thereon to, but not including, the date of
issuance of the New Notes. Such interest will be paid with the first interest
payment on the New Notes. Interest on the Old Notes accepted for exchange will
cease to accrue
5
<PAGE> 6
upon issuance of the New Notes. Interest on the New Notes is payable
semi-annually on each January 15 and July 15 of each year.
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned.
Please be advised that the Company is registering the New Notes in reliance
on the position of the Staff enunciated in Exxon Capital Holdings Corp.
(available April 13, 1989) and Morgan Stanley & Co. Incorporated (available June
5, 1991). The Company has not entered into any arrangement or understanding with
any person to distribute the New Notes to be received in the Exchange Offer and,
to the best of its information and belief, each person participating in the
Exchange Offer is acquiring the New Notes in its ordinary course of business and
has no arrangement or understanding with any person to participate in the
distribution of the New Notes to be received in the Exchange Offer. In this
regard, the undersigned is aware that if the undersigned is participating in the
Exchange Offer for the purpose of distributing the New Notes to be acquired in
the Exchange Offer, the undersigned (a) may not rely on the Staff position
enunciated in Exxon Capital Holdings Corp. or interpretative letters to similar
effect and (b) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction. The undersigned is aware that such a secondary resale transaction
by a person participating in the Exchange Offer for the purpose of distributing
the New Notes should be covered by an effective registration statement
containing the selling securityholder information required by Item 507 of
Regulation S-K.
<TABLE>
<S> <C>
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, AND 6) (SEE INSTRUCTIONS 1, 5, AND 6)
To be completed ONLY if the New Notes To be completed ONLY if the New Notes or
or any Old Notes delivered, but not any Old Notes delivered but not tendered
tendered for exchange are to be sent to for exchange are to be issued in the name
someone other than the registered holder of someone other than the registered
of the Old Notes whose name(s) appear(s) holder of the Old Notes whose name(s)
above, or such registered holder(s) at an appear(s) above.
address other than that shown above. Issue: [ ] New Notes and/or
Issue: [ ] New Notes and/or [ ] Old Notes delivered but not
[ ] Old Notes delivered but not tendered for exchange:
tendered for exchange: Name(s)
Name(s) -----------------------------------------
----------------------------------------- (Please Print)
(Please Print) Address:
Address: ------------------------------------------
------------------------------------------ (Please Print)
(Please Print) ------------------------------------------
------------------------------------------ (Please include ZIP code)
(Please include ZIP code) ------------------------------------------
------------------------------------------ Telephone Number with Area Code
Telephone Number with Area Code ------------------------------------------
------------------------------------------ Tax ID Number
Tax ID Number
</TABLE>
6
<PAGE> 7
HOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(Please Complete Substitute Form W-9 Contained Herein)
(Note: Signatures Must be Guaranteed if Required by Instruction 2)
Must be signed by registered holder(s) exactly as name(s) appear(s) on
Certificates for the Old Notes tendered (or, in the case of book-entry
securities, on the relevant security position listing), or by any person(s)
authorized to become the registered holder(s) by endorsements and documents
transmitted herewith (including such opinions of counsel, certifications and
other information as may be required by the Company to comply with the
restrictions on transfer applicable to the Old Notes). If signature is by an
attorney-in-fact, executor, administrator, trustee, guardian, officer or a
corporation or another acting in a fiduciary capacity or representative
capacity, please set forth the signer's full title. See Instruction 5.
<TABLE>
<S> <C>
GUARANTEE OF SIGNATURES
X (See Instruction 2 and 5 below)
------------------------------------------- Certain Signatures Must be Guaranteed
X by an Eligible Instruction
-------------------------------------------
SIGNATURE(S) OF HOLDER(S) OR AUTHORIZED --------------------------------------------
SIGNATORY) (AUTHORIZED SIGNATURE)
Date: , 1998 --------------------------------------------
-------------------------------- (CAPACITY (FULL TITLE))
--------------------------------------------
Name(s):
------------------------------------ --------------------------------------------
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING
- -------------------------------------------- SIGNATURE)
(PLEASE PRINT)
--------------------------------------------
Capacity: (ADDRESS OF FIRM -- PLEASE INCLUDE ZIP CODE)
-----------------------------------
--------------------------------------------
Address: Telephone No. (with area code) of Firm:
------------------------------------
--------------------------------------------
- --------------------------------------------
(PLEASE INCLUDE ZIP CODE) Date: , 1998
---------------------------------
Telephone No. (with area code):
- --------------------------------------------
Tax ID No.:
---------------------------------
</TABLE>
7
<PAGE> 8
INSTRUCTION
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed either if (a)
Certificates are to be forwarded herewith or (b) tenders are to be made pursuant
to the procedures for tender by book-entry transfer set forth in "The Exchange
Offer -- Procedures for Tendering Old Notes" in the Prospectus. Certificates, or
timely confirmation of a book-entry transfer of such Old Notes into the Exchange
Agent's account at DTC, as well as this Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, and any other documents required by this Letter of Transmittal, must
be received by the Exchange Agent at its address set forth herein on or prior to
the Expiration Date.
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, this Letter of
Transmittal and all other required documents to the Exchange Agent on or prior
to the Expiration Date or (iii) who cannot complete the procedures for delivery
by book-entry transfer on a timely basis, may tender their Old Notes by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedures set forth in "The Exchange Offer -- Procedures
for Tendering Old Notes" in the Prospectus. Pursuant to such procedures: (i)
such tender must be made by or through an Eligible Institution (as defined
below); (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Company, must be
received by the Exchange Agent on or prior to the Expiration Date; and (iii) the
Certificates (or a book-entry confirmation (as defined in the Prospectus))
representing all tendered Old Notes, in proper form for transfer, together with
a Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
within three Nasdaq Stock Market trading days after the date of execution of
such Notice of Guaranteed Delivery, all as provided in "The Exchange
Offer -- Procedures for Tendering Old Notes" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. For Old Notes to be
properly tendered pursuant to the guaranteed delivery procedure, the Exchange
Agent must receive a Notice of Guaranteed Delivery on or prior to the Expiration
Date. As used herein and in the Prospectus, "Eligible Institution" means a firm
or other entity identified in Rule 17Ad-15 under the Exchange Act as "an
eligible guarantor institution," including (as such terms are defined therein)
(i) a bank; (ii) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer; (iii) a credit union; (iv) a national
securities exchange, registered securities association or clearing agency; or
(v) a savings association that is a participant in a Securities Transfer
Association.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT, IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
The Company will not accept any alternative, conditional or contingent
tenders. Each tendering holder, by execution of a Letter of Transmittal (or
facsimile thereof), waives any right to receive any notice of the acceptance of
such tender.
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Consent and Letter of Transmittal is signed by the registered
holder (which term, for purposes of this document, shall include any
participant in DTC whose name appears on the relevant security
position listing as the owner of the Old Notes) of Old Notes tendered
herewith, unless such holder(s) has completed either the box entitled
"Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" above, or
8
<PAGE> 9
(ii) such Old Notes are tendered for the account of a firm that is an
Eligible Institution.
In all other cases, an Eligible Institution must guarantee the signature(s)
on this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Old Notes" is inadequate, the Certificate number(s) and/or the
aggregate principal amount of Old Notes and any other required information
should be listed on a separate signed schedule which is attached to this Letter
of Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. If less than all the Old Notes
evidenced by any Certificate submitted are to be tendered, fill in the aggregate
principal amount of Old Notes which are to be tendered in the box entitled
"Aggregate Principal Amount of Old Notes Tendered for Exchange." In such case,
new Certificates (s) for the remainder of the Old Notes that were evidenced by
your old Certificate(s) will be sent to the holder of the Old Notes (or such
other party as you identify in the box captioned "Special Delivery
Instructions"), promptly after the Expiration Date. All Old Notes represented by
Certificates delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time on or prior to the Expiration Date. In order for a withdrawal to be
effective, a written, telegraphic, telex or facsimile transmission of such
notice of withdrawal must be timely received by the Exchange Agent at its
address set forth above on or prior to the Expiration Date. Any such notice of
withdrawal must specify the name of the person who tendered the Old Notes to be
withdrawn, the aggregate principal amount of Old Notes to be withdrawn, and (if
Certificates for Old Notes have been tendered) the name of the registered holder
of the Old Notes as set forth on the Certificate for the Old Notes, if different
from that of the person who tendered such Old Notes. If Certificates for the Old
Notes have been delivered or otherwise identified to the Exchange Agent, then
prior to the physical release of such Certificates for the Old Notes, the
tendering holder must submit the serial numbers shown on the particular
Certificates for the Old Notes to be withdrawn and the signature on the notice
of withdrawal must be guaranteed by an Eligible Institution, except in the case
of Old Notes tendered for the account of an Eligible Institution. If Old Notes
have been tendered pursuant to the procedures for book-entry transfer set forth
in "The Exchange Offer -- Procedures for Tendering Old Notes," the notice of
withdrawal must specify the name and number of the account at DTC to be credited
with the withdrawal of Old Notes, in which case a notice of withdrawal will be
effective if delivered to the Exchange Agent by written, telegraphic, telex or
facsimile transmission. Withdrawals of tenders of Old Notes may not be
rescinded. Old Notes properly withdrawn will not be deemed validly tendered for
purposes of the Exchange Offer, but may be retendered at any subsequent time on
or prior to the Expiration Date by following any of the procedures described in
the Prospectus under "The Exchange Offer -- Procedures for Tendering Old Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
The Company, any affiliates or assigns of the Company, the Exchange Agent or any
other person shall not be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification. Any Old Notes which have been tendered but which are
withdrawn will be returned to the holder thereof without cost to such holder
promptly after withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Old
Notes tendered hereby, the signatures(s) must correspond exactly with the
name(s) as written on the face of the Certificate(s) (or, in the case of
book-entry securities, on the relevant security position listing) without
alteration, enlargement or any change whatsoever.
If any of the Old Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Old Notes are registered in different name(s) on several
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal (or facsimiles thereof) as there are different
registrations of Certificates.
9
<PAGE> 10
If this Letter of Transmittal or any Certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and must submit proper evidence
satisfactory to the Company, in its sole discretion, of such persons' authority
to so act.
When this Letter of Transmittal is signed by the registered owner(s) of the
Old Notes listed and transmitted hereby, no endorsement(s) of Certificate(s) or
separate bond power(s) are required unless New Notes are to be issued in the
name of a person other than the registered holder(s). Signature(s) on such
Certificate(s) or bond power(s) must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Old Notes listed, the Certificates must be endorsed
or accompanied by appropriate bond powers, signed exactly as the name or names
of the registered owner(s) appear(s) on the Certificates, and also must be
accompanied by such opinions of counsel, certifications and other information as
the Company may require in accordance with the restrictions on transfer
applicable to the Old Notes. Signatures on such Certificates or bond powers must
be guaranteed by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTION. If New Notes are to be issued
in the name of a person other than the signer of this Letter of Transmittal, or
if New Notes are to be sent to someone other than the signer of this Letter of
Transmittal or to an address other than shown above, the appropriate boxes on
this Letter of Transmittal should be completed. Certificates for Old Notes not
exchanged will be returned by mail or, if tendered by book-entry transfer, by
crediting the account indicated above maintained at DTC. See Instruction 4.
7. IRREGULARITIES. The company will determine, in its sole discretion, all
questions as to the form of documents, validity, eligibility (including time of
receipt) and acceptance for exchange of any tender of Old Notes, which
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance of which, or exchange for, may, in the view of
counsel to the Company, be unlawful. The Company also reserves the absolute
right, subject to applicable law, to waive any of the conditions of the Exchange
Offer set forth in the Prospectus under "The Exchange -- Certain Conditions to
the Exchange Offer" or any conditions or irregularity in any tender of Old Notes
of any particular holder whether or not similar conditions or irregularities are
waived in the case of other holders. The Company's interpretation of the terms
and conditions of the Exchange Offer (including this Letter of Transmittal and
the instructions hereto) will be final and binding. No tender of Old Notes will
be deemed to have been validly made until all irregularities with respect to
such tender have been cured or waived. The Company, any affiliates or assigns of
the Company, the Exchange Agent, or any other person shall not be under any duty
to give notification of any irregularities in tenders or incur any liability for
failure to give such notification.
8. QUESTIONS, REQUEST FOR ASSISTANCE AND ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Exchange Agent at its address and
telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
9. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s)
representing Old Notes have been lost, destroyed or stolen, the holder should
promptly notify the Exchange Agent. The holder will then be instructed as to the
steps that must be taken in order to replace the Certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Certificate(s) have been followed.
10. SECURITY TRANSFER TAXES. Holders who tender their Old Notes for
exchange will not be obligated to pay any transfer taxes in connection
therewith. If, however, New Notes are to be delivered to, or are to be issued in
the name of, any person other than the registered holder of the Old Notes
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Notes in connection with the Exchange Offer,
10
<PAGE> 11
then the amount of any such transfer tax (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF) AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE
EXPIRATION DATE.
11
<PAGE> 12
IMPORTANT TAX INFORMATION
Under federal income tax law, a holder whose tendered Old Notes are
accepted for exchange is required by law to provide the Exchange Agent with such
holder's correct taxpayer identification number ("TIN") on Substitute Form W-9
included herein or otherwise establish a basis for exemption from backup
withholding. If such holder is an individual, the TIN is his or her social
security number. If the Exchange Agent is not provided with the correct TIN, the
Internal Revenue Service may subject the holder or transferee to a $50.00
penalty. In addition, delivery of such holder's New Notes may be subject to
backup withholding. Failure to comply truthfully with the backup withholding
requirements also may result in the imposition of severe criminal and/or civil
fines and penalties.
Certain holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt holders should furnish their TIN, write "Exempt" on the
face of the Substitute Form W-9, and sign, date and return the Substitute Form
W-9 to the Exchange Agent. A foreign person, including entities, may qualify as
an exempt recipient by submitting to the Exchange Agent a properly completed
Internal Revenue Service Form W-8, signed under penalties of perjury, attesting
to that holder's foreign status. A Form W-8 can be obtained from the Exchange
Agent. See the enclosed "Guidelines for Certification for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional
instruction.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any payments made to the holder or other transferee. Backup withholding
is not an additional federal income tax. Rather, the federal income tax
liability of persons subject to backup withholding will be reduced by the amount
of tax withheld. If withholding results in an overpayment of taxes, a refund may
be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made with respect to Old Notes
exchanged in the Exchange Offer, the holder is required to provide the Exchange
Agent with either: (i) the holder's correct TIN by completing the form included
herein, certifying that the TIN provided on Substitute Form W-9 is correct (or
that such holder is awaiting a TIN) and that (A) the holder has not been
notified by the Internal Revenue Service that the holder is subject to backup
withholding as a result of failure to report all interest or dividends or (B)
the Internal Revenue Service has notified the holder that the holder is no
longer subject to back withholding; or (ii) an adequate basis for exemption.
NUMBER TO GIVE THE DEPOSITORY
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered holder of
the Old Notes. If the Old Notes are held in more than one name or are held not
in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
12
<PAGE> 13
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
PAYER'S NAME:
- ------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE Social Security number or
FORM W-9 BOX AT RIGHT AND CERTIFY BY SIGNING AND ____________ /__________ /___________
DATING BELOW. Employer identification number
--------------------------------------------------------------------------------------
PAYER'S PART 2 -- Certification -- Under penalties of perjury, I certify that:
REQUEST FOR (1) The number shown on this form is my correct Taxpayer Identification Number (or I am
TAXPAYER waiting for a number to be issued to me) and
IDENTIFICATION (2) I am not subject to backup withholding because (i) I have not been notified by the
NUMBER (TIN) Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of
failure to report all interest or dividends, or (ii) the IRS has notified me that I
am no longer subject to backup withholding.
--------------------------------------------------------------------------------------
Certificate Instructions -- You must cross out item (2) in
Part 2 above if you have been notified by the IRS that you
are subject to backup withholding because of underreporting PART 3 --
interest or dividends on your tax return. However, if after Awaiting TIN
being notified by the IRS that you are subject to backup [ ]
withholding you received another notification from the IRS
stating that you are no longer subject to backup
withholding, do not cross out item (2).
Date , 1998
------------------------------------ ---------
Signature
------------------------------------
Name (please print)
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE
IF YOU CHECKED THE BOX IN PART 3 OF THIS SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all payments made to me on account of the New Notes
shall be retained until I provide a taxpayer identification number to the
Exchange Agent and that, if I do not provide my taxpayer identification number
with 60 days, such retained amounts shall be remitted to the Internal Revenue
Service as backup withholding and 31% of all reportable payments made to me
thereafter will be withheld and remitted to the Internal Revenue Service until
I provide a taxpayer identification number.
<TABLE>
<S> <C>
Signature Date: Date , 1998
-------------------------------------- --------------------------
Name (please print)
---------------------------------
</TABLE>
13
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
For Tender of 9 3/4% Senior Subordinated Notes due 2007
of
Metrocall, Inc.
As set forth in the Exchange Offer (as defined below), this Notice of
Guaranteed Delivery, or one substantially equivalent to this form, must be used
to accept the Exchange Offer if (i) certificates for Metrocall, Inc.'s 9 3/4%
Senior Subordinated Notes due 2007 are not immediately available, (ii) the Old
Notes, the Letter of Transmittal and all other required documents cannot be
delivered to First Union National Bank (the "Exchange Agent") on or prior to the
Expiration Date (as defined in the Prospectus referred to below) or (iii) the
procedures for delivery by book-entry transfer cannot be completed on or prior
to the Expiration Date as set forth below. This Notice of Guaranteed Delivery
may be delivered by hand, overnight courier or mail, or transmitted by facsimile
transmission, to the Exchange Agent on or prior to the Expiration Date. See "The
Exchange Offer -- Procedures for Tendering Old Notes" in the Prospectus.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
First Union National Bank
<TABLE>
<S> <C> <C>
BY MAIL, HAND BY FACSIMILE TRANSMISSION: TO CONFIRM BY TELEPHONE
OR OVERNIGHT DELIVERY: 704-590-7628 OR FOR INFORMATION:
First Union National Bank 704-590-7408
Attn: Michael Klotz
Reorganization Department
1525 West W.T. Harris Blvd., 3C3,
Charlotte, North Carolina 28262-1153
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on the Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to Metrocall, Inc., a Delaware corporation,
upon the terms and subject to the conditions set forth in the Prospectus dated
February 3, 1998 (as the same may be amended or supplemented from time to time,
the "Prospectus"), and the related Letter of Transmittal (which together
constitute the "Exchange Offer") receipt of which is hereby acknowledged, the
aggregate Principal Amount of Old Notes set forth below pursuant to the
guaranteed delivery procedures set forth in the Prospectus under the caption
"The Exchange Offer -- Procedures for Tendering Old Notes."
14
<PAGE> 2
<TABLE>
<S> <C>
Signature(s) Address(es)
--------------------------------------- ---------------------------------------
----------------------------------------
-------------------------------------- Area Code and Tel. No.(s)
Name(s) of Record Holder(s) -----------------------
- -------------------------------------------- Date
- -------------------------------------------- -----------------------------------------,
- -------------------------------------------- 1998
PLEASE TYPE OR PRINT If Old Notes will be tendered by bookentry
Aggregate Principal Amount Tendered transfer, provide the DTC account number:
- -------------------------------------------- --------------------------------------------
- --------------------------------------------
Share Certificate No.(s). (If available)
============================================
</TABLE>
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
15
<PAGE> 3
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm or other entity identified in Rule 17Ad-15 under
the Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker, municipal securities dealer,
government securities broker, government securities dealer, (iii) a credit
union; (iv) a national securities exchange, registered securities association
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association recognized program (each of the foregoing being
referred to as an "Eligible Institution"), hereby guarantees to deliver to the
Exchange Agent, at its address set forth above, either the Old Notes tendered
hereby in proper form for transfer, or confirmation of the book-entry transfer
of such Old Notes to the Exchange Agent's account at The Depository Trust
Company ("DTC"), pursuant to the procedures for book-entry transfer set forth in
the Prospectus, in either case together with one or more properly completed and
duly executed Letters of Transmittal (or facsimile thereof or Agent's Message in
lieu thereof) and any other required documents within three Nasdaq Stock Market
trading days after the date of execution of this Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letters of
Transmittal (or facsimile thereof or Agent's Message in lieu thereof) and the
Old Notes tendered hereby (or a book-entry confirmation) to the Exchange Agent
within the time period set forth above and that failure to do so could result in
a financial loss to the undersigned.
<TABLE>
<S> <C>
------------------------------------------- ----------------------------------------
Name of Firm Authorized Signature
------------------------------------------- Name
Address ----------------------------------------
------------------------------------------- Please Type or Print
Zip Code Title
Area Code and Tel. No. ----------------------------------------
------------------------- Dated ---------------------------------,
1998
</TABLE>
NOTE: DO NOT SEND OLD NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. ACTUAL
SURRENDER OF OLD NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A
PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER
REQUIRED DOCUMENTS.
16
<PAGE> 1
EXHIBIT 99.3
February 3, 1998
EXCHANGE AGENT AGREEMENT
First Union National Bank
Attention: Dante M. Monakil
901 East Cary Street
Second Floor
Richmond, VA 23219
Ladies and Gentlemen:
Metrocall, Inc., a Delaware corporation, as Depositor (the "Company")
hereby appoints First Union National Bank to act as exchange agent (the
"Exchange Agent") in connection with an exchange offer (the "Exchange Offer")
by the Company to exchange up to $200,000,000 aggregate principal amount of the
Company's 9-3/4% Senior Subordinated Notes due 2007 (the "New Notes"), which
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), for a like aggregate principal amount of the Company's
outstanding 9-3/4% senior subordinated notes (the "Old Notes" and, together,
with the New Notes, the "Notes").
The terms and conditions of the exchange offer are set forth in a
Prospectus dated February 3, 1998 (as the same may be amended or supplemented
from time to time, the "Prospectus") and in the related Letter of Transmittal,
which together constitute the "Exchange Offer." The registered holders of the
Notes are hereinafter referred to as the "Holders." Capitalized terms used
herein and not defined shall have the respective meanings ascribed thereto in
the Prospectus. References hereinafter to "you" shall refer to First Union.
The Company intends to commence the Exchange Offer on February 4,
1998. The Letter of Transmittal accompanying the Prospectus is to be used by
the Holders to accept the Exchange Offer, and contains certain instructions
with respect to the Exchange Offer.
The Exchange Offer shall expire at 5:00 p.m., New York City time, on
March 5, 1998, or on such later date or time to which the Company may extend
the Exchange Offer (the "Expiration Date"). Subject to the terms and
conditions set forth in the Prospectus, the Company expressly reserves the
right to extend the Exchange Offer from time to time and may extend the
Exchange Offer by giving oral (promptly confirmed in writing) or written notice
to you no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date.
<PAGE> 2
The Company expressly reserves the right to amend or terminate the
Exchange Offer, and not to accept for exchange any Old Notes not theretofore
accepted for exchange, upon the occurrence of any of the conditions of the
Exchange Offer specified in the Prospectus under the caption "Conditions to the
Exchange Offer." The Company will give oral (promptly confirmed in writing) or
written notice of any amendment, termination or nonacceptance to you as
promptly as practicable.
In carrying out your duties as Exchange Agent, you agree to act in
accordance with the following instructions:
1. You will perform such duties and only such duties as are
specifically set forth in the section of the Prospectus captioned "The Exchange
Offer" and as specifically set forth herein and such duties which are
necessarily incidental thereto; provided, however, that in no way will your
general duty to act in good faith be discharged by the foregoing.
2. You will establish an account with respect to the Old Notes at The
Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of
the Exchange Offer within two business days after the date of the Prospectus,
and any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of the Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into your account in
accordance with the Book-Entry Transfer Facility's procedure for such transfer.
3. You will examine each of the Letters of Transmittal, certificates
for Old Notes and confirmations of book-entry transfers into your account at
the Book-Entry Transfer Facility and any Agent's Message or other documents
delivered or mailed to you by or for holders of the Old Notes to ascertain
whether (i) the Letters of Transmittal and any such other documents are duly
executed and properly completed in accordance with instructions set forth
therein and (ii) the Old Notes have otherwise been properly tendered. In each
case where the Letter of Transmittal or any other document has been improperly
completed or executed or any of the certificates for Old Notes are not in
proper form for transfer or some other irregularity in connection with the
acceptance of the Exchange Offer exists, you will advise the Company of such
irregularity. If the Company does not waive the irregularity as provided in
paragraph 4, you will endeavor to inform the presenters of the need for
fulfillment of all requirements and to take any other action as may be
necessary or advisable to cause such irregularity to be corrected.
4. With the approval of the Chief Executive Officer, the Chief
Financial Officer, the Senior Vice President, Finance, or the Assistant
Secretary of the Company (such approval, if given orally, to be confirmed in
writing) or any other party designated by such officer of the Company in
writing, you are authorized to waive any irregularities in connection with any
tender of Old Notes pursuant to the Exchange Offer.
5. Tenders of Old Notes may be made only as set forth in the section
of the Prospectus captioned "The Exchange Offer -- Procedures for Tendering Old
Notes" or in the Letter of
2
<PAGE> 3
Transmittal, and Old Notes shall be considered properly tendered to you only
when tendered in accordance with the procedures set forth therein.
Notwithstanding the provisions of this paragraph 5, Old Notes which
the Company or any other party designated by the Company in writing shall
approve pursuant to paragraph 4 as having been properly tendered shall be
considered to be properly tendered (such approval, if given orally, shall be
confirmed in writing).
6. You shall advise the Company with respect to any Old Notes
delivered subsequent to the Expiration Date and accept their instructions with
respect to disposition of such Old Notes.
7. You will accept tenders:
(a) in cases where the Old Notes are registered in two or more
names only if signed by all named holders;
(b) in cases where the signing person (as indicated on the
Letter of Transmittal) is acting in a fiduciary or a representative capacity
only when proper evidence of his or her authority to so act is submitted; and
(c) from persons other than the registered holder of Old Notes
provided that customary transfer requirements, including any applicable
transfer taxes, are fulfilled. You will accept partial tenders of Old Notes
where so indicated and as permitted in the Letter of Transmittal and deliver
certificates for Old Notes to the transfer agent for split-up and return any
untendered Old Notes to the holder (or to such other person as may be
designated in the Letter of Transmittal) as promptly as practicable after
expiration or termination of the Exchange Offer.
8. Upon satisfaction or waiver of all of the conditions to the
Exchange Offer, the Company will notify you (such notice if given orally, to be
promptly confirmed in writing) of the Company's acceptance, promptly after the
Expiration Date, of all Old Notes properly tendered and you will exchange such
Old Notes for New Notes and cause such Old Notes to be canceled. Delivery of
New Notes will be made on behalf of the Company by you at the rate of $1,000 of
the aggregate principal amount of New Notes for each $1,000 of the aggregate
principal amount of Old Notes tendered promptly after notice (such notice if
given orally, to be promptly confirmed in writing) of acceptance of said Old
Notes by the Company; provided, however, that in all cases, Old Notes tendered
pursuant to the Exchange Offer will be exchanged only after timely receipt by
you of certificates for such Old Notes (or confirmation of book-entry transfer
into your account at the Book-Entry Transfer Facility), a properly completed
and duly executed Letter of Transmittal (or facsimile thereof) with any
required signature guarantees (or in lieu thereof an Agent's Message) and any
other required document.
9. The Company shall not be required to exchange any Old Notes
tendered if any of the conditions set forth in the Exchange Offer are not met.
Notice of any decision by the Company
3
<PAGE> 4
not to exchange any Old Notes tendered shall be given (such notice, if given
orally, shall be promptly confirmed in writing) by the Company to you.
10. If, pursuant to the Exchange Offer, the Company does not accept
for exchange all or part of the Old Notes tendered because of an invalid tender
or for other reasons you shall as soon as practicable after the expiration or
termination of the Exchange Offer return those certificates for unaccepted Old
Notes (or effect the appropriate book-entry transfer of the unaccepted Old
Notes), and return any related required documents and the Letters of
Transmittal relating thereto that are in your possession, to the persons who
deposited them.
11. All certificates for reissued Old Notes or for unaccepted Old
Notes shall be forwarded by (a) first-class mail, return receipt requested,
under a blanket surety bond protecting you, the Company from loss or liability
arising out of the non-receipt or non-delivery of such certificates or (b) by
registered mail insured separately for the replacement value of such
certificates.
12. You are not authorized to pay or offer to pay any concessions,
commissions or solicitation fees to any broker, dealer, bank or other persons
or to engage or utilize any person to solicit tenders.
13. As Exchange Agent hereunder you:
(a) will be regarded as making no representations and having
no responsibilities as to the validity, sufficiency, value or genuineness of
Old Notes, and will not be required to and will make no representation as to
the validity, value or genuineness of the Exchange Offer; provided, however,
that in no way will your general duty to act in good faith be discharged by the
foregoing;
(b) shall not be obligated to take any legal action hereunder
which might in your reasonable judgment involve any expense or liability,
unless you shall have been furnished with reasonable indemnity;
(c) shall not be liable to the Company for any action taken or
omitted by you, or any action suffered by you to be taken or omitted, without
negligence, misconduct or bad faith on your part, by reason of or as a result
of the administration of your duties hereunder in accordance with the terms and
conditions of this Agreement or by reason of your compliance with the
instructions set forth herein or with any written or oral instructions
delivered to you pursuant hereto, and may reasonably rely on and shall be
protected in acting in good faith in reliance upon any certificate, instrument,
opinion, notice, letter, facsimile or other document or security delivered to
you and reasonably believed by you to be genuine and to have been signed by the
proper party or parties;
(d) may reasonably act upon any tender, statement, request,
comment, agreement or other instrument whatsoever not only as to its due
execution and validity and the effectiveness
4
<PAGE> 5
of its provisions, but also as to the truth and accuracy of any information
contained therein, which you shall in good faith reasonably believe to be
genuine or to have been signed or represented by a proper person or persons;
(e) may rely on and shall be protected in acting upon written
or oral instructions from any officer of the Company with respect to the
Exchange Offer;
(f) shall not advise any person tendering Old Notes pursuant
to the Exchange Offer as to the wisdom of making such tender or as to the
market value or decline or appreciation in market value of any Old Notes; and
(g) may consult with your counsel with respect to any
questions relating to your duties and responsibilities and the written opinion
of such counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by you hereunder in good faith
and in accordance with such written opinion of such counsel.
14. You shall take such action as may from time to time be requested
by the Company or their counsel (and such other action as you may reasonably
deem appropriate) to furnish copies of the Prospectus, Letter of Transmittal
and the Notice of Guaranteed Delivery, or such other forms as may be approved
from time to time by the Company, to all persons requesting such documents and
to accept and comply with telephone requests for information relating to the
Exchange Offer, provided that such information shall relate only to the
procedures for accepting (or withdrawing from) the Exchange Offer and that such
information shall be consistent with the terms of the Exchange Offer and the
Letter of Transmittal. The Company will furnish you with copies of such
documents at your request. All other requests for information relating to the
Exchange Offer shall be directed to the Company, care of Shirley B. White,
Assistant Secretary.
15. You shall advise by facsimile transmission or telephone, and
promptly thereafter confirm in writing to the Company and Wilmer, Cutler &
Pickering, counsel for the Company, and such other person or persons as they
may request, weekly, and more frequently if reasonably requested, up to and
including the Expiration Date, as to the aggregate principal amount of the Old
Notes that have been tendered pursuant to the Exchange Offer and the items
received by you pursuant to this Agreement, separately reporting and giving
cumulative totals as to items properly received and items improperly received
and items covered by Notices of Guaranteed Delivery. In addition, you will
also inform, and cooperate in making available to, the Company or any such
other person or persons as the Company request from time to time prior to the
Expiration Date, such other information as they reasonably request. You shall
prepare a list of persons who failed to tender or whose tenders were not
accepted and the aggregate principal amount of Old Notes not tendered or Old
Notes not accepted and deliver said list to the Company at least seven days
prior to the Expiration Date. You shall also prepare a final list of all
persons whose tenders were accepted, the aggregate principal amount of Old
Notes tendered and the aggregate principal amount of Old Notes accepted and
deliver said list to the Company.
5
<PAGE> 6
16. Letters of Transmittal and Notices of Guaranteed Delivery shall
be stamped by you as to the date and the time of receipt thereof and shall be
preserved by you for a period of time at least equal to the period of time you
preserve other records pertaining to the transfer of securities. You shall
dispose of unused Letters of Transmittal and other surplus materials by
returning them to the Company or destroying them if authorized by the Company.
17. For services rendered as Exchange Agent hereunder you shall be
entitled to a fee of $2,500 and you shall be entitled to reimbursement of your
reasonable expenses (including reasonable and ordinary fees and expenses of
your counsel, which fees are expected under normal circumstances to be not in
excess of $500) incurred in connection with the Exchange Offer.
18. You hereby acknowledge receipt of the Prospectus and the Letter
of Transmittal attached hereto and further acknowledge that you have examined
each of them to the extent necessary to perform your duties hereunder. Any
inconsistency between this Agreement, on the one hand, and the Prospectus and
the Letter of Transmittal (as they may be amended from time to time), on the
other hand, shall be resolved in favor of the latter two documents, except with
respect to the duties, liabilities and indemnification of you as Exchange
Agent, which shall be controlled by this Agreement.
19. The Company agrees to indemnify and hold you harmless in your
capacity as Exchange Agent hereunder against any liability, cost or expense,
including reasonable attorneys' fees, arising out of or in connection with the
acceptance or administration of your duties hereunder, including, without
limitation, in connection with any act, omission, delay or refusal made by you
in reasonable reliance upon any signature, endorsement, assignment,
certificate, order, request, notice, instruction or other instrument or
document reasonably believed by you to be valid, genuine and sufficient and in
accepting any tender or effecting any transfer of Old Notes reasonably believed
by you in good faith to be authorized, and in delaying or refusing in good
faith to accept any tenders or effect any transfer of Old Notes; provided,
however, that the Company shall not be liable for indemnification or otherwise
for any loss, liability, cost or expense to the extent arising out of your
negligence, willful breach of this Agreement, willful misconduct or bad faith.
In no case shall the Company be liable under this indemnity with respect to any
claim against you unless the Company shall be notified by you, by letter or by
facsimile confirmed by letter, of the written assertion of a claim against you
or of any other action commenced against you, promptly after you shall have
received any such written assertion or commencement of action. The Company
shall be entitled to participate in the defense of any such claim or other
action, and, if the Company so elects, the Company shall assume the defense of
any suit brought to enforce any such claim. In the event that the Company
shall assume the defense of any such suit, the Company shall not be liable for
the fees and expenses of any additional counsel thereafter retained by you so
long as the Company shall retain counsel reasonably satisfactory to you to
defend such suit. You shall not compromise or settle any such action or claim
without the written consent of the Company.
6
<PAGE> 7
20. This Agreement and your appointment as Exchange Agent hereunder
shall be construed and enforced in accordance with the laws of the State of
Delaware applicable to agreements made and to be performed entirely within such
state, and without regard to conflicts of law principles, and shall inure to
the benefit of, and the obligations created hereby shall be binding upon, the
successors and assigns of each of the parties hereto.
21. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original and all of which taken together
constitute one and the same agreement.
22. In case any provision of this Agreement shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
23. This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a
written instrument signed by a duly authorized representative of the party to
be charged. This Agreement may not be modified orally.
24. Unless otherwise provided herein, all notices, requests and other
communications to any party hereunder shall be in writing (including facsimile)
and shall be given to such party, addressed to it, at its address or telecopy
number set forth below:
If to the Company :
Metrocall, Inc.
6910 Richmond Highway
Alexandria, Virginia, 22306
Telephone: (703) 660-6677 x5020
Facsimile: (703) 768-3958
Attn: Ron E. Harold
With copies to:
Wilmer, Cutler & Pickering
2445 M Street, NW
Washington, DC 20037
Telephone: (202) 663-6000
Facsimile: (202) 663-6363
Attn: Thomas W. White, Esq.
If to the Exchange Agent:
First Union National Bank
7
<PAGE> 8
901 East Cary Street, Second Floor
Richmond, VA 23219
Telephone: (804) 788-9659
Facsimile: (804) 788-9661
Attn: Dante M. Monakil
25. Unless terminated earlier by the parties hereto, this Agreement
shall terminate 90 days following the Expiration Date. Upon any termination of
this Agreement, you shall promptly deliver to the Company any funds or property
(including, without limitation, Letters of Transmittal and any other documents
relating to the Exchange Offer) then held by you as Exchange Agent under this
Agreement.
26. This Agreement shall be binding and effective as of the date
hereof.
Please acknowledge receipt of this Agreement and confirm the
arrangements herein provided by signing and returning the enclosed copy.
METROCALL, INC.
By: /s/ VINCENT D. KELLY
-------------------------------
Name:
Title:
Accepted as of the date
first above written:
FIRST UNION NATIONAL BANK
By:
-------------------------------
Name:
Title:
8
