<PAGE> 1
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Metrocall, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[METROCALL (R) LOGO]
April 5, 1999
Dear Stockholder:
On behalf of the Board of Directors and employees of Metrocall, Inc., I
cordially invite you to attend the 1999 Annual Meeting of the Stockholders of
Metrocall, Inc. We will hold the Annual Meeting on Wednesday, May 5, 1999 at
9:00 a.m. eastern daylight savings time at The Ritz Carlton Hotel, located at
1250 South Hayes Street, Arlington, Virginia 22202.
Enclosed with this letter is a Notice of the Annual Meeting, a Proxy
Statement, a proxy card, and a return envelope. Both the Notice of the Annual
Meeting and the Proxy Statement provide details of the business that we will
conduct at the Annual Meeting and other information about Metrocall, Inc.
Whether or not you plan to attend the Annual Meeting, please sign, date and
promptly return the proxy card in the enclosed prepaid return envelope. Your
shares will be voted at the Annual Meeting in accordance with your proxy
instructions. Of course, if you attend the Annual Meeting you may vote in
person. If you plan to attend the meeting, please mark the appropriate box on
the enclosed proxy card.
Sincerely,
/s/ RICHARD M. JOHNSTON
-----------------------
Richard M. Johnston
Chairman of the Board
YOUR VOTE IS IMPORTANT.
Please Sign, Date and Return Your Proxy Card Before the Annual Meeting.
If you have any questions about voting your shares, please contact Paul
Liberty, Vice President, Investor Relations, at (703) 660-6677 extension 6260.
<PAGE> 3
METROCALL, INC.
6677 RICHMOND HIGHWAY
ALEXANDRIA, VIRGINIA 22306
(703) 660-6677
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<CAPTION>
<S> <C>
DATE: WEDNESDAY, MAY 5, 1999
TIME: 9:00 A.M. EASTERN DAYLIGHT SAVINGS TIME
LOCATION: RITZ CARLTON, PENTAGON CITY
1250 SOUTH HAYES STREET
ARLINGTON, VIRGINIA 22202
</TABLE>
Dear Stockholders:
At the 1999 Annual Meeting of the Stockholders, you and the other
stockholders will be able to vote on the following proposals, together with any
other business that may properly come before the Annual Meeting.
1. Election of three directors.
2. Ratification of the Board's selection of Arthur Andersen LLP as
Metrocall's independent public accountants for the fiscal year ending
December 31, 1999.
3. Amendment of Metrocall's 1996 Stock Option Plan to increase the
number of shares of common stock reserved for issuance under the plan
and to increase the number of shares of common stock that Metrocall
may grant an individual in a year.
4. Amendment of Metrocall's Restated Certificate of Incorporation to
effect a one-for-two and one-half reverse stock split of Metrocall's
outstanding common stock.
Only stockholders of record at the close of business on March 12, 1999 will
be able to vote their shares at the Annual Meeting.
By Order of the Board of Directors
/s/ RICHARD M. JOHNSTON
-----------------------
Richard M. Johnston
Chairman of the Board
Alexandria, Virginia,
April 5, 1999
YOUR VOTE AT THE ANNUAL MEETING IS IMPORTANT.
PLEASE INDICATE YOUR VOTE ON THE ENCLOSED PROXY AND RETURN IT IN THE
ENCLOSED ENVELOPE AS SOON AS POSSIBLE, EVEN IF YOU PLAN TO ATTEND THE MEETING.
IF YOU ATTEND THE MEETING, YOU WILL BE ABLE TO WITHDRAW YOUR PROXY AND VOTE
IN PERSON.
IF YOU HAVE QUESTIONS ABOUT VOTING YOUR SHARES, PLEASE CONTACT PAUL
LIBERTY, VICE PRESIDENT, INVESTOR RELATIONS, AT (703) 660-6677 EXTENSION 6260.
<PAGE> 4
[METROCALL (R) LOGO]
April 5, 1999
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 5, 1999
This Proxy Statement provides information that you should read before you
vote on the proposals that will be presented to you at the 1999 Annual Meeting
of the Stockholders of Metrocall, Inc. ("Metrocall"). The Annual Meeting will be
held on Wednesday, May 5, 1999, at 9:00 a.m. eastern daylight savings time at
The Ritz Carlton Hotel, located at 1250 Hayes Street, Alexandria, Virginia
22202.
This Proxy Statement provides information about the Annual Meeting, the
proposals on which you will be asked to vote at the Annual Meeting and other
relevant information.
On April 5, 1999, we began mailing information to people who, according to
our records, owned shares of Metrocall's common stock at the close of business
on March 12, 1999.
FORWARD-LOOKING STATEMENTS
This Proxy Statement contains forward-looking statements that involve risks
and uncertainties. When used in this Proxy Statement, the words "believe,"
"intend," "may," "will" and "expect" and similar expressions as they relate to
Metrocall or Metrocall's management are intended to identify such
forward-looking statements. Metrocall undertakes no obligation to revise these
forward-looking statements to reflect any future events or circumstances.
Metrocall's actual results, performance or achievements could differ materially
from the results expressed in or implied by these forward-looking statements.
Factors that could cause or contribute to such differences include, among
others, those discussed under the heading "Additional Factors Affecting Future
Operating Results and Financial Condition" included within "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
Metrocall's Annual Report on Form 10-K, which is incorporated by reference into
this Proxy Statement.
<PAGE> 5
CONTENTS
<TABLE>
<CAPTION>
PAGE
NO.
----
<S> <C>
INFORMATION ABOUT THE 1999 ANNUAL
MEETING AND VOTING............. 1
PROPOSALS........................ 4
1. Election of Directors.... 4
2. Ratification of Arthur
Andersen LLP as
Independent Public
Accountants.............. 8
3. Amendment of 1996 Stock
Option Plan.............. 8
4. Amendment of Restated
Certificate of
Incorporation............ 12
STOCK OWNERSHIP.................. 16
</TABLE>
<TABLE>
<CAPTION>
PAGE
NO.
----
<S> <C>
EXECUTIVE OFFICERS............... 18
EXECUTIVE COMPENSATION........... 19
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS................... 24
OTHER INFORMATION................ 26
APPENDIX A: 1996 STOCK OPTION
PLAN........................... A-1
APPENDIX B: AMENDMENT OF RESTATED
CERTIFICATE OF INCORPORATION... B-1
</TABLE>
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<PAGE> 6
INFORMATION ABOUT THE 1999 ANNUAL MEETING AND VOTING
The Board of Directors is soliciting your proxy to encourage your
participation in the voting at the Annual Meeting and to obtain your support on
each of the proposals. You are invited to attend the Annual Meeting and vote
your shares directly. If you do not attend the Annual Meeting, you may vote by
proxy, which allows you to direct another person to vote your shares at the
Annual Meeting on your behalf.
THE ANNUAL MEETING
Metrocall will hold the Annual Meeting on Wednesday, May 5, 1999, at 9:00
a.m. eastern daylight savings time at The Ritz Carlton Hotel, located at 1250
Hayes Street, Arlington, Virginia 22202.
THIS PROXY SOLICITATION
This solicitation contains two parts: the proxy card and this Proxy
Statement. The proxy card is the means by which you authorize another person to
vote your shares in accordance with your instructions. This Proxy Statement
provides you with information on the proposals and other matters that you may
find useful in determining how to vote. On April 5, 1999, Metrocall began
mailing this Proxy Statement to all people who, according to our stockholder
records, owned shares of Metrocall's common stock at the close of business on
March 12, 1999.
Metrocall will pay for soliciting these proxies. Metrocall's directors,
officers and employees may solicit proxies in person or by telephone, mail,
facsimile or otherwise but they will not receive additional compensation for
their services. Metrocall has also retained Corporate Investor Communications,
Inc. to assist in distributing proxy solicitation materials and soliciting
proxies at a cost of approximately $6,000, plus reasonable out-of-pocket
expenses. Metrocall will also reimburse brokers and other nominees for their
reasonable out-of-pocket expenses for forwarding proxy materials to beneficial
owners of stock held by record by them.
HOW TO VOTE YOUR SHARES
You have one vote for each share of Metrocall's common stock that you owned
of record at the close of business on March 12, 1999. The number of shares you
own and may vote at the Annual Meeting is listed on the enclosed proxy card. You
may vote your shares at the Annual Meeting in person or by proxy. To vote in
person, you must attend the Annual Meeting and obtain and submit a ballot.
Metrocall will have ballots for voting in person available at the Annual
Meeting. To vote by proxy, you must complete and return the enclosed proxy card.
By completing and returning the proxy card, you will direct the persons
designated on the proxy card (those persons are known as "proxies") to vote your
shares at the Annual Meeting in accordance with your instructions. Edward E.
Jungerman and Elliott H. Singer will serve as proxies for the Annual Meeting.
If you decide to vote by proxy, your proxy card will be valid only if you
sign, date and return the proxy card before the Annual Meeting. IF YOU COMPLETE
ALL OF THE PROXY CARD EXCEPT THE VOTING INSTRUCTIONS, THE DESIGNATED PROXIES
WILL VOTE YOUR SHARES FOR EACH OF THE FOUR PROPOSALS. If any nominee for
election to the Board is unable to serve as director, which is not anticipated,
or if any other matters properly come before the meeting, the designated proxies
will vote your shares in accordance with their best judgment.
HOW TO REVOKE YOUR PROXY
You may revoke your proxy at any time before it is voted by any of the
following means:
- Notifying Metrocall's assistant secretary in writing that you wish to
revoke your proxy.
- Submitting a proxy dated later than your original proxy.
- Attending the Annual Meeting and voting. Your attendance at the Annual
Meeting will not by itself revoke a proxy. You must obtain a ballot and
vote your shares to revoke the proxy.
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VOTE REQUIRED FOR APPROVAL
<TABLE>
<CAPTION>
<S> <C>
Proposal 1: Election of Three Directors The three nominees who receive the most votes
will be elected. If you indicate "withhold
authority to vote" for a particular nominee on
your proxy card, your vote will not count
either for or against the nominee. If you hold
your shares with a broker and do not instruct
your broker how to vote, your broker has
authority to vote on this proposal.
Proposal 2: Ratification of Selection of Proposal 2 requires that the votes cast for
Independent Public Accountants each proposal exceed the votes cast against
each proposal. If you abstain from voting, it
will have no effect on the outcome. If you
hold your shares with a broker and do not
instruct your broker how to vote, your broker
has authority to vote on this proposal.
Proposal 3: Amendment of 1996 Stock Option Proposal 3 requires that the votes cast for
Plan each proposal exceed the votes cast against
each proposal. If you abstain from voting, it
will have no effect on the outcome. Broker
non-votes have no effect on the outcome. (A
broker non-vote can occur if you hold your
shares with a broker and are asked to instruct
your broker how to vote your shares. If you do
not instruct your broker how to vote, your
broker will not be able to vote for or against
a proposal. If your broker returns a proxy
card for your shares without any voting
instructions, your shares will be counted as
"broker non-vote" shares.)
Proposal 4: Amendment of Restated Proposal 4 will be approved if holders of a
Certificate of Incorporation majority of the shares of Metrocall's common
to Effect Reverse Stock Split stock vote in favor of the amendment. If you
abstain from voting, it has the same effect as
if you voted against this proposal. Broker
non-votes have the same effect as a vote
against this proposal.
</TABLE>
Proxies that are executed but unmarked will be voted FOR all proposals set
forth in this Proxy Statement.
Quorum. On the record date for the Annual Meeting (March 12, 1999),
41,640,269 shares of Metrocall's common stock were issued and outstanding.
Metrocall's Bylaws require that a "quorum" be present at the Annual Meeting to
transact business. A quorum will be present if a majority of Metrocall's common
stock, or 20,820,136 shares, is represented at the Annual Meeting, in person or
by proxy. If a quorum is not present, a vote cannot occur. Abstentions and
broker non-votes will be counted in determining whether a quorum is present at
the Annual Meeting.
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<PAGE> 8
WHERE TO FIND VOTING RESULTS
Metrocall will publish the voting results in its Form 10-Q for the second
quarter 1999, which we will file with the Securities and Exchange Commission in
August 1999.
ADDITIONAL INFORMATION
Under section 262 of the Delaware General Corporation Law, you are not
entitled to appraisal rights whether or not you vote against the proposals.
Metrocall's Annual Report to Stockholders for the fiscal year ended
December 31, 1998, including consolidated financial statements, is being mailed
to all stockholders entitled to vote at the Annual Meeting together with this
Proxy Statement. The Annual Report does not constitute a part of the proxy
solicitation material. The Annual Report tells you how to get additional
information about Metrocall.
On March 31, 1999, Metrocall filed its Annual Report on Form 10-K with the
Securities and Exchange Commission. Stockholders may obtain a copy free of
charge by writing to:
Metrocall, Inc.
Attn: Investor Relations
6677 Richmond Highway
Alexandria, Virginia 22306
-------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
ALL PROPOSALS SET FORTH IN THIS PROXY STATEMENT.
-------------------------
3
<PAGE> 9
PROPOSALS
We will present the following four proposals at the Annual Meeting. We do
not intend to bring before the Annual Meeting any matters other than the four
proposals. We do not know of any matters other than those set forth in this
Proxy Statement that may come before the Annual Meeting. If any other matters
are properly presented at the Annual Meeting for action, it is intended that the
persons named in the applicable form or proxy will vote in accordance with their
best judgment on such matters.
Any proposal intended to be presented by any stockholder for action at the
2000 Annual Meeting of the Stockholders must be received at Metrocall's
principal executive offices no later than November 30, 1999.
1. ELECTION OF DIRECTORS
The Board of Directors has nominated three current directors to serve as
Class I directors for three-year terms beginning at this Annual Meeting and
expiring at the 2002 Annual Meeting of the Stockholders. Those nominees are:
Harry L. Brock, Jr.
Richard M. Johnston
Jackie R. Kimzey
It is the intention of the persons named in the proxy to vote the shares
represented by each properly executed proxy for the election as directors of the
persons named as nominees. The nominees have consented to serve as directors,
and the Board believes that the nominees will serve if elected as directors.
However, if any of the persons nominated by the Board is unable to serve for any
reason (which is not anticipated), the Board may designate a substitute nominee
or nominees. In that event, the proxies will be voted for the election of such
substitute nominee or nominees. The Board may also decide to leave the Board
seat or seats open until a suitable candidate or candidates are located, or it
may decide to reduce the size of the Board. Proxies for the Annual Meeting may
not be voted for more than three nominees.
BOARD OF DIRECTORS
Metrocall's Bylaws provide that Metrocall shall have at least three and no
more than 14 directors, unless certain events have occurred and are continuing
that give the holders of Metrocall's Series A Convertible Preferred Stock the
power to elect additional directors. Pursuant to the Board's authority to adjust
the number of directors, the Board by resolution dated February 3, 1999 reduced
the number of directors from 14 to 11. The holders of Metrocall's Series A
Convertible Preferred Stock are entitled to designate two of the 11 directors.
Under Metrocall's Restated Certificate of Incorporation, the nine directors
elected by the common stock are divided into three classes that are to have as
nearly the same number of directors as possible. The term of office of only one
class of directors expires in each year, and their successors are elected for
terms of three years and until new successors are elected and qualified. The
Class I directors are up for election at the Annual Meeting, and the nominees
for election are all currently Class I directors.
NOMINEES AND CONTINUING DIRECTORS
The following table sets forth the names of the nominees for election as
directors and the directors who will continue to serve after the Annual Meeting.
The table also sets forth each such person's age at March 12, 1999, the period
during which he has served as a director, the expiration of his term, and the
positions he currently holds with Metrocall.
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<PAGE> 10
<TABLE>
<CAPTION>
DIRECTOR EXPIRATION POSITIONS HELD
NOMINEES AGE SINCE OF TERM WITH METROCALL
-------- --- -------- ---------- --------------
<S> <C> <C> <C> <C>
CLASS I DIRECTORS:
- ---------------
Harry L. Brock, Jr. 63 1982 1999 Director
Richard M. Johnston 64 1994 1999 Chairman of the Board
Jackie R. Kimzey 46 1997 1999 Director
CONTINUING DIRECTORS
- ------------------
CLASS II DIRECTORS:
- ----------------
William L. Collins, III 48 1994 2000 President, Chief Executive
Officer, Director and
Vice Chairman of the
Board
Edward E. Jungerman 56 1997 2000 Director
Francis A. Martin, III 55 1994 2000 Director
CLASS III DIRECTORS:
- -----------------
Ronald V. Aprahamian 52 1995 2001 Director
Max D. Hopper 64 1997 2001 Director
Elliott H. Singer 58 1996 2001 Director
SERIES A PREFERRED STOCK
- ---------------------
DESIGNATED DIRECTORS:
- ------------------
Michael Greene 37 1997 2002 Director
Royce R. Yudkoff 43 1997 2002 Director
</TABLE>
We set forth below certain biographical information regarding the directors
of Metrocall.
NOMINEES
Harry L. Brock, Jr. founded Metrocall and served as Chairman of the Board
(through January 1996) and President (through August 1995). Mr. Brock has been a
director of Metrocall since 1982, and its predecessor companies since 1965. Mr.
Brock was a founding partner of Cellular One of Washington, one of the first
operating cellular systems.
Richard M. Johnston has served as Metrocall's Chairman of the Board since
January 1996, and has been a member of the Board since September 1994. Since
1970, Mr. Johnston has been Vice President-Investments of The Hillman Company
and a director of The Hillman Company since 1994.
Jackie R. Kimzey has been a director of Metrocall since December 1997. Mr.
Kimzey was a founder and director of ProNet Inc. from 1983. He was Chairman of
the Board of ProNet from March 1990 and its Chief Executive Officer from May
1983 until the merger of ProNet with Metrocall in December 1997. Mr. Kimzey
served as President of ProNet from May 1983 until May 1991. Since October 1998,
Mr. Kimzey has been Chief Executive Officer of AirGate Wireless L.L.C.
CONTINUING DIRECTORS -- CLASS II
William L. Collins, III has been President and Chief Executive Officer of
Metrocall since January 1996 and has served as Director and Vice Chairman of the
Board since September 1994. From 1988 to 1994, Mr. Collins was the Chairman of
the Board, Chief Executive Officer, President and a director of FirstPAGE USA,
Inc. and its predecessor companies. Mr. Collins serves as Chairman of the Board
of Directors of USA Telecommunications, Inc. From 1977 to 1988, Mr. Collins was
President of C&C, Inc., a national communications marketing Company.
Edward E. Jungerman has been a director of Metrocall since December 1997.
Mr. Jungerman was a director of ProNet from May 1992 until the merger of ProNet
with
5
<PAGE> 11
Metrocall in December 1997. He has been President of Impulse Telecommunications
Corporation, a strategic telecommunications consulting firm, since 1986. Mr.
Jungerman has over 25 years experience in the telecommunications field,
including senior executive positions at Northern Telecom, Inc. and private,
start-up ventures in the specialized advanced telecommunications services field.
Francis A. Martin, III has been a director of Metrocall since November
1994. Mr. Martin is a principal of U.S. Media Group and Chairman of the Board,
President and Chief Executive officer of Media Holdings, Inc. Mr. Martin
previously served as President and Chief Executive Officer of Chronicle
Broadcasting Company, a publicly-held television broadcasting company.
CONTINUING DIRECTORS -- CLASS III
Ronald V. Aprahamian is a private investor and has been a member of
Metrocall's Board since May 1995. Mr. Aprahamian serves on the board of
directors of Sunrise Assisted Living, Inc. Mr. Aprahamian was Chairman and Chief
Executive Officer of The Compucare Company, a health care computer software
services firm, from January 1988 to October 1996.
Max D. Hopper has been a director of Metrocall since December 1997. Mr.
Hopper was a director of ProNet from May 1997 until ProNet's merger with
Metrocall in December 1997. Since 1995, Mr. Hopper has been the President of Max
D. Hopper Associates, a consulting firm that specializes in creating benefits
for the strategic use of advanced information technologies. Prior to 1995, Mr.
Hopper spent 20 years in several positions with AMR Corporation, American
Airlines' parent company. Mr. Hopper is also a director for Gartner Group, Inc.,
USDATA Corporation, VTEL Corporation, Worldtalk Corporation, Payless Cashways,
Inc., Exodus Communications Inc. and United Stationers Inc.
Elliott H. Singer has been a director of Metrocall since November 1996. Mr.
Singer was Chairman of the Board of A+ Communications, Inc. from its formation
in 1985 and was chairman of A+ Network Inc. from October 1995 until its merger
with Metrocall in November 1996, and also served as Chief Executive Officer of
A+ Network from 1985 to January 15, 1996. Mr. Singer was the owner and Chief
Executive Officer of A+ Network's predecessor entities, through which he had
been engaged in the telemessaging service business since 1974 and in the paging
business since 1983. Mr. Singer has been President and Chief Executive Officer
of Community ISP, Inc. since February 1999.
CONTINUING DIRECTORS -- SERIES A PREFERRED STOCK DESIGNEES
Michael Greene has been a director of Metrocall since January 1997. He is a
Managing Director of UBS Capital LLC, which is the private equity subsidiary of
the Union Bank of Switzerland. Mr. Greene has worked in Union Bank's private
equity and leveraged finance businesses since he joined it in 1990. Mr. Greene
serves on the board of directors of CBP Resources Inc.
Royce R. Yudkoff has been a director of Metrocall since April 1997. Mr.
Yudkoff is the Managing Partner of ABRY Partners, Inc., a private equity
investment firm which invests in the communications and media industries. Prior
to co-founding ABRY in 1988, Mr. Yudkoff was a partner at Bain & Company, an
international management consulting firm where he had significant responsibility
for Bain's media practice. Mr. Yudkoff serves on the board of directors of
Sullivan Broadcasting Company, Pinnacle Towers and several other private
companies.
MEETINGS AND COMMITTEES
During 1998, the Board of Directors held four regular and four special
meetings and took action by written consent three times in lieu of additional
meetings. Every director attended at least 75% of the aggregate of (1) the total
number of Board meetings and (2) total number of the meetings of committees on
which the director served.
6
<PAGE> 12
Nominating Committee. Nominations for director are made by the Board of
Directors. In August 1998, the Board established a Nominating/Corporate
Governance Committee to make recommendations to the Board regarding Board
structure and membership. At December 31, 1998, Messrs. Yudkoff (chair), Brock,
Johnston and Kimzey were members of this committee. During 1998, this committee
held one meeting.
Metrocall's Bylaws permit stockholders eligible to vote for the election of
directors at the Annual Meeting to make nominations for directors, but only if
such nominations are made pursuant to timely notice in writing to the Secretary
of Metrocall. To be timely, notice must be received at the principal executive
offices of Metrocall no later than the date designated for receipt of
stockholder proposals in a prior public disclosure made by Metrocall. For the
2000 Annual Meeting, that date is November 30, 1999.
Audit Committee. The Board of Directors has appointed an Audit Committee
to review the scope of the independent annual audit, the independent public
accountants' letter to the Board of Directors concerning the effectiveness of
Metrocall's internal financial and accounting controls and the Board's response
to that letter, if deemed necessary. At December 31, 1998, Suzanne S. Brock and
Ray D. Russenberger were members of the Audit Committee. During 1998, the Audit
Committee held two meetings.
Compensation Committee. The Board of Directors has appointed a
Compensation Committee to consider compensation matters. At December 31, 1998,
Messrs. Martin (chair), Greene and Singer were members of the Compensation
Committee. During 1998, the Compensation Committee held two meetings.
Strategy Committee. In August 1998, the Board established a Strategy
Committee to consider actions that would further Metrocall's business strategy.
At December 31, 1998, Messrs. Hopper (chair), Aprahamian, Collins, Jungerman and
Kimzey were members of this committee. During 1998, this committee held one
meeting.
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<PAGE> 13
DIRECTOR COMPENSATION
Directors who are full-time officers of Metrocall receive no additional
compensation for serving on the Board or its committees. Directors who are not
full-time officers of Metrocall receive an annual fee of $15,000, plus $2,000
for each regular board meeting attended and $1,000 for each special board or
committee meeting attended (other than a committee meeting that occurs on the
same day as an otherwise scheduled board meeting). Pursuant to a special
agreement, Mr. Johnston receives compensation of $30,000 per year, in addition
to $5,000 for each Board meeting attended and $1,000 for each special board or
committee meeting attended (other than a committee meeting that occurs on the
same days as an otherwise schedule board meeting). Directors are reimbursed for
travel costs and other out-of-pocket expenses incurred in attending meetings.
The Metrocall, Inc. 1996 Stock Option Plan, as amended, provides for
formula grants of stock options to directors who have never been officers or
employees of Metrocall and allows the Board to make discretionary grants to any
director. Under the plan, every eligible director who begins services on the
Board after April 5, 1996 receives an initial option to purchase 10,000 shares
of Metrocall's common stock. Each eligible director also receives an additional
option to purchase 1,000 shares of Metrocall's common stock on each anniversary
of the initial option, provided that the director continues to be an eligible
director on each anniversary date. These options become fully exercisable six
months after the date of grant. The exercise price for options granted to
directors is the fair market value of Metrocall's common stock on the date the
option is granted. During 1998, nonemployee directors received formula options
to purchase 37,000 shares of Metrocall's common stock at prices ranging from
$5.125 per share to $6.75 per share. Directors who are not full-time officers
received discretionary grants to purchase 145,000 shares of Metrocall's common
stock at $5.125 per share.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF MESSRS.
BROCK, JOHNSTON AND KIMZEY AS DIRECTORS.
2. RATIFICATION OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR
FISCAL YEAR 1999
Arthur Andersen has served as our independent public accountants since
1993. Metrocall would like to continue its relationship with Arthur Andersen. We
expect representatives of Arthur Andersen to be present at the Annual Meeting to
answer your questions and make a statement if they desire to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF
ARTHUR ANDERSEN LLP AS METROCALL'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL
YEAR ENDING DECEMBER 31, 1999.
3. AMENDMENT OF 1996 STOCK OPTION PLAN
Metrocall is asking you to approve amendments to the 1996 Stock Option Plan
that will increase the number of shares of Metrocall's common stock Metrocall
can issue from 6,016,000 to 8,016,000, and change the limit on grants to any
individual from 750,000 shares total to up to 1 million shares in a calendar
year. The amendments are effective at and contingent upon stockholder approval.
What follows is a summary of the 1996 Stock Option Plan as it will be if
the stockholders approve the amendment. We intend for this to be a fair and
complete summary of the amended plan, but we are also attaching as Appendix A
the full text of the amended plan, which governs. Unless we note otherwise in
this Proxy Statement, all references to numbers of shares of common stock of
Metrocall do not take into account the effect of the proposed one-for-two and
one-half reverse stock split on those numbers.
8
<PAGE> 14
SUMMARY OF THE PLAN
Purpose and Scope. Metrocall has used and intends to use the plan to
recruit, reward, and retain employees and directors. Under the amended plan, the
Board's Compensation Committee (or the Board) may grant options for up to
8,016,000 shares. (As with the other numbers in this section of this Proxy
Statement, the limit will change to reflect any changes in the number of
Metrocall's common stock if Metrocall issues share dividends, splits its shares,
or makes other specified changes.)
Plan Administration. The amended plan authorizes the Compensation
Committee to administer the plan, unless the Board chooses to do so. (The term
"Administrator" will cover whichever body is administering the plan.) The
Administrator's authority includes granting options to purchase shares,
determining which options are incentive stock options (ISOs) and which are
nonqualified stock options (NQSOs), determining the exercise price of the
options granted, and exercising broad discretion to set or amend other terms.
Only the Board can set or change option terms for outside directors.
Participants. The Administrator may grant options to employees and
directors, a total of approximately 3,700 persons as of March 12, 1999. (We will
refer to persons who receive options as "optionees.") The Administrator may also
grant options or other awards to replace awards granted outside the amended
plan, including situations where Metrocall has acquired or merged with another
entity.
Options. The Administrator can grant options (the right to purchase shares
at a fixed price for up to a fixed length of time). Those options can be either
NQSOs or ISOs. The primary difference between the two forms is that stricter tax
rules and limits apply to ISOs.
ISO Limits. Four limits apply to ISOs under the amended plan. The first is
that ISO treatment is limited based on when the options first become
exercisable -- only the first $100,000 in common stock (valued as of the date of
grant) that becomes exercisable under an individual's ISOs in a given year will
receive ISO tax treatment. The second limitation is that the option price must
at least equal 100% of the fair market value of the shares on the date of grant
of the option. The third limitation is that the option price for stockholders
holding 10% or more of the outstanding shares of the common stock must at least
equal 110% of the fair market value of the common stock. The fourth limitation,
under the amended plan's terms, is that ISOs can cover no more than 3,000,000
shares.
Individual Limit. Under the amended plan, the Administrator cannot grant
NQSOs or ISOs for more than 1,000,000 shares in any calendar year. Counting
against this number would be any options or shares granted in a year that expire
or that the Administrator replaces within the same year. The amended plan has an
individual limit to assist compliance with the tax rule described below that may
limit executive compensation deductions. The Administrator has never granted
options for more than 500,000 shares to any individual in any year and has no
expectation of granting options for 1,000,000 shares in any year.
Exercise Price. The Administrator normally sets the exercise price for all
options (the price someone must pay for a share of common beneficial interest)
at the market price when granted or, if contingent on shareholder approval, when
approved. The plan permits the exercise price to be as low as par value for
NQSOs. Metrocall does not receive separate consideration for the granting of
options, other than the services the optionees provide.
Option Exercise and Transfer Restrictions. Employee optionees who have
received their options from Metrocall (and not as replacement options) generally
can only exercise an option while employed by Metrocall. (Longer terms typically
apply to options granted in replacement of options issued by companies merged
into or acquired by Metrocall.) An optionee cannot transfer his options other
than to someone after death.
Director Options. The amended plan provides for an automatic grant of an
NQSO for 10,000 shares when an eligible director first joins the Board and for
further grants of
9
<PAGE> 15
NQSOs for 1,000 shares on each anniversary of the initial option. These formula
options become exercisable six months after grant and remain in effect until the
tenth anniversary of their date of grant. The amended plan also retains the
plan's provision that gave the Board the authority to make discretionary grants
of options to directors, and those can be under different terms than the formula
options.
Option Expiration. Options will terminate no later than ten years after
their date of grant. However, options intended to be ISOs under the plan will
expire no later than five years after the date of grant if the optionee owns (or
is treated as owning) more than 10% of the outstanding shares. The Administrator
may not grant options under the amended plan after April 5, 2006.
Effects of Certain Changes of Control. The amended plan provides that
option exercisability will accelerate and restrictions will lapse to the extent
option agreements or employment agreements so provide. In certain circumstances,
either an acquirer must assume or replace the options or the optionees will have
some period of time before certain specified transactions occur to exercise
options (including options not yet exercisable) after which time the amended
plan and options will terminate. These circumstances generally include
Metrocall's dissolution or liquidation, its merger into another corporation,
sale of substantially all its assets, or another transaction in which a person
or entity acquires 80% of the voting power of the combined classes of
Metrocall's stock.
Amendments and Termination. The Board may at any time suspend, terminate,
modify or amend the plan but must receive stockholder approval to the extent
required to preserve ISO treatment. No suspension, termination, modification or
amendment of the plan may adversely affect any option previously granted, unless
the optionee consents.
TAX CONSEQUENCES
Nonqualified Stock Options. An optionee will not be taxed when he receives
an NQSO. When he exercises an NQSO, he will generally owe taxes on ordinary
income on the difference between the value of the shares he receives and the
price he pays, with the "spread" treated like additional salary for an employee.
He may then owe taxes again if and when he sells the shares. That tax would be
on the difference between the price he received for the share and his "basis,"
which is the sum of the price he originally paid plus the value of the shares on
which he originally paid income taxes. Depending upon how long he held the
shares before selling, he may be eligible for favorable tax rates for certain
kinds of capital gains. In addition, Metrocall will receive an income tax
deduction for any amounts of "ordinary income" to him.
Incentive Stock Options. An optionee will not be taxed when he receives an
ISO and will not be taxed when he exercises the ISO, unless he is subject to the
alternative minimum tax (AMT). If he holds the shares purchased upon exercise of
the ISO (ISO Shares) for more than one year after the date he exercised the
option and for more than two years after the option grant date, he generally
will realize long-term capital gain or loss (rather than ordinary income or
loss) when he sells or otherwise disposes of the ISO Shares. This gain or loss
will equal the difference between the amount realized upon such disposition and
the amount paid for the ISO Shares.
If the optionee sells the ISO Shares in a "disqualifying disposition" (that
is, within one year from the date he exercises the ISO or within two years from
the date of the ISO grant), he generally will recognize ordinary compensation
income equal to the lesser of (1) the fair market value of the shares on the
date of exercise minus the price he paid or (2) the amount he realized on the
sale. For a gift or another disqualifying disposition where a loss, if
sustained, would not usually be recognized, he will recognize ordinary income
equal to the fair market value of the shares on the date of exercise minus the
price he paid. Any amount realized on a disqualifying disposition that exceeds
the amount treated as ordinary compensation income (or any loss realized) will
be a long-term or a short-term capital gain (or loss), depending, under current
law, on whether
10
<PAGE> 16
he held the shares for at least 12 months. Metrocall can generally take a tax
deduction on a disqualifying disposition corresponding to the ordinary
compensation income he recognizes but cannot deduct the amount of the capital
gains.
Alternative Minimum Tax. The difference between the exercise price and the
fair market value of the ISO Shares on the date of exercise is an adjustment to
income for purposes of the AMT. The AMT (imposed to the extent it exceeds the
taxpayer's regular tax) is a certain percentage of an individual taxpayer's
alternative minimum taxable income that is lower than the regular tax rates but
covers more income. Taxpayers determine their alternative minimum taxable income
by adjusting regular taxable income for certain items, increasing that income by
certain tax preference items, and reducing this amount by the applicable
exemption amount. If a disqualifying disposition of the ISO Shares occurs in the
same calendar year as exercise of the ISO, there is no AMT adjustment with
respect to those ISO Shares. Also, upon a sale of ISO Shares that is not a
disqualifying disposition, alternative minimum taxable income is reduced when he
sells by the excess of the fair market value of the ISO Shares at exercise over
the amount paid for the ISO Shares.
Potential Limitation on Company Deductions. Code Section 162(m) denies a
deduction to any publicly held corporation for compensation it pays to certain
employees in a taxable year to the extent that compensation exceeds $1 million
for a covered employee. The tax rules disregard certain kinds of compensation,
including qualified "performance-based compensation," for purposes of the
deduction limitation. Compensation attributable to share options will qualify as
performance-based compensation, provided that: (1) the plan contains a
per-employee limitation on the number of shares for which options may be granted
during a specified period; (2) the stockholders approve that per-employee
limitation; (3) the option is granted by a compensation committee with voting
members comprised solely of "outside directors"; and (4) either the exercise
price of the option is at least equal to the fair market value of the shares on
the date of grant, or the option is granted (or exercisable) only upon the
achievement (as certified by the compensation committee) of an objective
performance goal established by the compensation committee while the outcome is
substantially uncertain. Metrocall intends and expects the option grants to be
exempt from Section 162(m) as performance-based.
This is a summary of the general principles of current federal income tax
law applicable to the purchase of shares under the amended plan. While we
believe that the description accurately summarizes existing provisions of the
Internal Revenue Code of 1986, as amended, and its legislative history and
regulations, and the applicable administrative and judicial interpretations,
these statements are only summaries, and the rules in question are quite
detailed and complicated. Moreover, legislative, administrative, regulatory or
judicial changes or interpretations may occur that would modify such statements.
Individual financial situations may vary, and state and local tax consequences
may be significant. Therefore, no one should act based on this description
without consulting his own tax advisors concerning the tax consequences of
purchasing shares under the Plan and the disposing of those shares. In addition,
different rules may apply if the optionee is subject to foreign tax laws or pays
the exercise price using shares he already owns.
NEW PLAN BENEFITS
Other than the formula grants to non-employee directors, the Administrator
makes grants under the amended plan in its discretion. Consequently, we cannot
fully determine the amount or dollar value at this time, other than to note that
the Administrator has not granted options contingent on approval of the amended
plan.
11
<PAGE> 17
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE AMENDMENT OF THE 1996
STOCK OPTION PLAN.
4. AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A ONE-FOR-TWO
AND ONE-HALF REVERSE STOCK SPLIT
The Board of Directors has approved an amendment to Metrocall's Restated
Certificate of Incorporation to effect a one-for-two and one-half reverse stock
split of Metrocall's outstanding common stock. The reverse stock split will
result in each 2.5 shares of Metrocall's common stock becoming one share of
Metrocall's common stock. In addition, the number of authorized shares of common
stock will be reduced from 100 million to 40 million.
If the stockholders approve the proposed amendment to effect the reverse
stock split and reduction in authorized shares, the Board of Directors may elect
not to file, or to delay the filing of, the amendment of the Restated
Certificate of Incorporation. The Board may elect not to file or to delay the
filing, if the Board determines that filing the amendment would not be in the
best interests of the stockholders.
PURPOSE OF THE REVERSE STOCK SPLIT
The main purpose of the reverse stock split is to maintain listing of
Metrocall's shares of common stock on the Nasdaq National Market. Metrocall's
shares of common stock have been listed and have traded on the Nasdaq National
Market under the symbol "MCLL" since Metrocall's initial public offering in July
1993. For continued listing on the Nasdaq National Market, Metrocall must comply
with the Nasdaq National Market's maintenance standards. Those standards require
that, among other things, either (1) Metrocall maintain net tangible assets of
$4.0 million or (2) Metrocall's common stock maintain a minimum bid price of at
least $5.00 per share. Net tangible assets are defined as total assets less
goodwill and total liabilities. At December 31, 1998, Metrocall met the net
tangible assets requirement. Metrocall may not be able to meet this requirement
in the future because of the accelerated nature of the amortization expenses
associated with the customer lists and FCC licenses acquired in the ProNet
merger in December 1997 and the acquisition of the Advanced Messaging Division
of AT&T Wireless Services, Inc. in October 1998. As Metrocall amortizes these
acquired assets, their total assets will decrease by the amount of the
amortization expense.
Over the past few months, the bid price of Metrocall's common stock has
fallen below $5.00 per share. If Metrocall's common stock continues to trade
below $5.00 per share for a period of 30 consecutive trading days, Metrocall
will fail to meet the minimum bid price requirement. While the bid price of
Metrocall's common stock has been at or above $5.00 per share periodically over
the past few months, Metrocall cannot ensure that the bid price will remain at
or above $5.00 per share.
If Metrocall fails to meet the Nasdaq National Market's maintenance
standards, Nasdaq will notify Metrocall that it is not in compliance with the
maintenance standards, and Metrocall will have 90 days from the date of
notification to achieve compliance. If Metrocall cannot achieve compliance
within the 90-day period, its common stock will be delisted from the Nasdaq
National Market. The Board believes, but cannot assure, that if the stockholders
approve the reverse stock split at the Annual Meeting and the reverse stock
split is implemented, Metrocall's common stock will trade at or above the $5.00
minimum bid price per share for continued listing on the Nasdaq National Market.
If Metrocall does not satisfy the maintenance standards of the Nasdaq
National Market, it may have to transfer the listing of its common stock from
the Nasdaq National Market to the Nasdaq SmallCap Market.
IMPLEMENTATION OF THE REVERSE STOCK SPLIT AND REDUCTION IN AUTHORIZED SHARES
If the stockholders approve the reverse stock split and reduction in
authorized shares and the Board believes it is in the best interest
12
<PAGE> 18
of the stockholders to give effect to them, the reverse stock split and
reduction in authorized shares would be implemented by amending Article 4 of
Metrocall's current Restated Certificate of Incorporation to add language in the
form annexed to this Proxy Statement as Appendix B and by filing the amendment
with the Secretary of State of the State of Delaware (the "Effective Date").
PRINCIPAL EFFECTS OF THE REVERSE STOCK SPLIT
As a result of the reverse stock split, the number of whole shares of
common stock held by stockholders of record as of the close of business on the
Effective Date will be equal to the number of shares of common stock held
immediately prior to the close of business of the Effective Date divided by 2.5.
Therefore, the approximately 41,640,269 shares of common stock outstanding on
March 12, 1999 will become approximately 16,656,107 shares of common stock, and
any other shares issued after March 12, 1999 and before the Effective Date will
be similarly adjusted. Metrocall believes the number of shares of common stock
outstanding as a result of the reverse stock split represents a sufficient
amount of public float, or shares held by the public to sustain its trading
activity. In addition, on the Effective Date each option and warrant to purchase
Metrocall's common stock and any other convertible security outstanding on the
Effective Date will be adjusted so that the number of shares of Metrocall's
common stock issuable upon their exercise will be divided by 2.5 (and
corresponding adjustments will be made to the number of shares vested under each
outstanding option) and the exercise price of each option and warrant will be
multiplied by 2.5. No fractional shares will be issued upon the reverse stock
split. In lieu of fractional shares, Metrocall will pay each holder of a
fractional interest an amount in cash equal to the value of such fractional
interest as described below.
Metrocall cannot assure that the market price of the common stock after the
reverse stock split will be equal to the market price before the reverse stock
split multiplied by 2.5, or that the market price following the reverse stock
split will either exceed or remain in excess of the current market price.
The reverse stock split may result in some stockholders owning "odd-lots"
of less than 100 shares of common stock. Brokerage commissions and other costs
of transactions in odd-lots are generally somewhat higher than the costs of
transactions in "round-lots" of even multiples of 100 shares.
Metrocall's common stock is currently registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended, and as a result, Metrocall is
subject to the periodic reporting and other requirements of that act. The
reverse stock split will not affect the registration of the common stock under
the Securities Exchange Act of 1934, as amended, and Metrocall has no present
intention of terminating its registration under the act in order to become a
"private" company.
EXCHANGE OF STOCK CERTIFICATES
If the stockholders approve and the Board implements the reverse stock
split, Metrocall will instruct its transfer agent to act as its exchange agent
in implementing the exchange of certificates representing outstanding common
stock. As soon as practicable after the Effective Date, holders of common stock
will be notified and requested to surrender their certificates representing
shares of common stock to the transfer agent in exchange for certificates
representing post-reverse stock split shares of common stock. Beginning on the
Effective Date, each certificate representing shares of Metrocall's common stock
will be deemed for all corporate purposes to evidence ownership of as many
shares of post-reverse stock split common stock after applying the split factor
and otherwise making adjustments for fractional shares as described below.
Metrocall's transfer agent will furnish stockholders with the necessary
materials and instructions for the surrender and exchange of stock certificates
at the appropriate time. Stockholders will not be required to pay a transfer or
other fee in connection with the exchange of
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<PAGE> 19
certificates. STOCKHOLDERS SHOULD NOT SUBMIT CERTIFICATES UNTIL REQUESTED TO DO
SO.
FRACTIONAL SHARES
Metrocall will not issue fractional shares of common stock as a result of
the reverse stock split. In lieu of receiving fractional shares, stockholders
entitled to receive a fractional share of common stock as a consequence of the
reverse stock split will, instead, receive from Metrocall a cash payment in U.S.
dollars equal to such fraction multiplied by 2.5 times the average of the
closing bid and asked price per share of the common stock as quoted on the
Nasdaq National Market for the five trading days immediately preceding the
Effective Date.
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT
The following is a summary of the material U.S. federal income tax
consequences of the reverse stock split to you and the other stockholders. The
summary is based on the Internal Revenue Code of 1986, as amended and
regulations, rulings and judicial decisions as of March 12, 1999, all of which
may be repealed, revoked or modified so as to result in U.S. federal income tax
consequences different from those described below. Those changes could be
applied retroactively and could adversely affect a stockholder. The summary
applies only to holders who hold common stock as a capital asset and does not
address special situations, such as those of dealers in securities or
currencies, financial institutions, insurance companies, tax-exempt
organizations, persons holding common stock as part of a hedging or conversion
transaction or a straddle, persons whose "functional currency" is not the U.S.
dollar and certain U.S. expatriates.
1. Metrocall will not recognize any gain or loss as a result of the reverse
stock split.
2. Except for the cash received in lieu of fractional shares of
post-reverse stock split common stock, a stockholder will not recognize
any gain or loss as a result of the reverse stock split.
3. A stockholder's tax basis in common stock immediately before the reverse
stock split generally will be allocated among the common stock
(including fractional shares) received in the reverse stock split on a
pro rata basis.
4. The holding period of the shares of post-reverse stock split common
stock (including any fractional shares) will include the stockholder's
holding period of the shares of common stock prior to the reverse stock
split.
5. Cash received in lieu of a fractional share of common stock will be
treated as if the fractional share had been issued to the stockholder
and then redeemed by Metrocall for the cash. Accordingly, a stockholder
receiving cash will recognize taxable gain or loss equal to any
difference between the amount of cash received and the stockholder's
basis in the fractional share. Such capital gain or loss will be long
term capital gain or loss if on the Effective Date the stockholder has
held shares for more than one year.
The summary is for general information only. It does not address all
aspects of U.S. federal income taxation and does not address any tax
consequences arising under the laws of any state, local or foreign taxing
jurisdiction. You should consult with your own tax advisor about the U.S.
federal tax consequences of the reverse stock split in light of your particular
circumstances, including the application of any state, local or foreign tax law.
ACCOUNTING EFFECTS OF THE REVERSE STOCK SPLIT
Following the Effective Date, the par value of Metrocall's common stock
will remain at $0.01 per share. As a result, Metrocall's stated capital will be
reduced and capital in excess of par value (paid-in capital) will be increased
accordingly. Stockholders' equity will remain unchanged, except for a minimal
reduction in stockholders' equity due to cash payments to
14
<PAGE> 20
stockholders in lieu of fractional shares of common stock.
MISCELLANEOUS
The Board may abandon the reverse stock split and reduction in authorized
shares at any time before or after the Annual Meeting and prior to the filing of
the amendment to the Restated Certificate of Incorporation to effect the reverse
stock split and reduction in authorized shares with the Secretary of State of
the State of Delaware, if for any reason the Board deems it advisable to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE AMENDMENT OF THE
RESTATED CERTIFICATE OF INCORPORATION.
15
<PAGE> 21
STOCK OWNERSHIP
There were 41,640,269 shares of Metrocall's common stock issued and
outstanding on March 12, 1999. The following table sets forth certain
information, as of March 12, 1999, regarding beneficial ownership of Metrocall's
common stock by (1) each director and executive officer of Metrocall, (2) all
directors and executive officers of Metrocall as a group and (3) each person who
is known to Metrocall to own more than 5% of Metrocall's common stock.
Under the rules of the Securities and Exchange Commission, a beneficial
owner of Metrocall's common stock is a person who directly or indirectly has or
shares voting power or investment power with respect to the shares of common
stock. Voting power is the power to direct the vote of the shares. Investment
power is the power to dispose of or direct the disposition of the shares.
Beneficial ownership of the shares also includes those shares as to which voting
power or investment power may be acquired within 60 days.
The information on beneficial ownership in the table and the footnotes is
based upon Metrocall's records and the most recent Schedule 13D or 13G filed by
each such person or entity. Unless otherwise indicated, each person has sole
voting power and sole investment power with respect to the shares shown.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
BENEFICIALLY COMMON STOCK
NAME OWNED OUTSTANDING
---- ---------------- ------------
<S> <C> <C>
Richard M. Johnston, Chairman of the Board and Director 104,305(a) *
William L. Collins, III, President, Chief Executive
Officer,
Vice Chairman of the Board and Director 574,933(b) 1.4%
Vincent D. Kelly, Chief Financial Officer, Treasurer
and Executive Vice President 331,588(c) *
Steven D. Jacoby, Chief Operating Officer
and Executive Vice President 232,079(d) *
Ronald V. Aprahamian, Director 99,000(e) *
Harry L. Brock, Jr., Director 3,682,710(f) 8.8%
Michael Greene, Director 2,085,019(g) 4.9%
Max D. Hopper, Director 38,000(h) *
Edward E. Jungerman, Director 41,150(i) *
Jackie R. Kimzey, Director 249,315(j) *
Francis A. Martin, III, Director 81,000(k) *
Elliott H. Singer, Director 733,215(l) 1.8%
Royce R. Yudkoff, Director 38,061(m) *
All directors and executive officers as a group (13
persons) 8,290,375(n) 18.8%
Page America Group, Inc. 3,056,857 7.3%
125 State Street, Suite 100
Hackensack, NJ 07601
Ray D. Russenberger 2,198,043(o) 5.3%
119 W. Intendencia Street
Pensacola, Florida 32501
Wellington Management Company, LLP 3,482,809(p) 8.4%
75 State Street
Boston, Massachusetts 02109
</TABLE>
16
<PAGE> 22
- -------------------------
<TABLE>
<S> <C>
* Less than 1%.
(a) Includes 104,000 shares of Metrocall's common stock issuable
upon the exercise of options granted under Metrocall's stock
option plans.
(b) Includes 19,396 shares owned of record by USA
Telecommunications, Inc. ("USA Tel"); 305 shares owned by
William L. Collins, III; and 211,846 shares issuable upon
the exercise of options.
(c) Includes 256,588 shares issuable upon the exercise of
options granted under Metrocall's stock option plans.
(d) Includes 988 shares owned of record by USA Tel and 159,477
shares issuable upon the exercise of options.
(e) Includes 29,000 shares of Metrocall's common stock issuable
upon exercise of options granted under Metrocall's stock
option plans.
(f) Excludes 200,000 shares of Metrocall's common stock held of
record by Suzanne S. Brock, Mr. Brock's wife, of which Mr.
Brock disclaims beneficial ownership. Includes 137,510
shares issuable upon exercise of options granted under
Metrocall's stock option plans.
(g) Includes 970,365 shares held by UBS Capital LLC, of which
Mr. Greene is a Managing Director. Also includes 1,088,654
shares of Metrocall's common stock that may be acquired upon
exercise of warrants held by UBS Capital LLC and 26,000
shares of Metrocall's common stock issuable upon exercise of
options granted under Metrocall's stock options plans.
(h) Includes 29,000 shares of Metrocall's common stock issuable
upon exercise of options granted under Metrocall's stock
option plans.
(i) Includes 40,250 shares of Metrocall's common stock issuable
upon exercise of options granted under Metrocall's stock
option plans.
(j) Includes 240,500 shares of Metrocall's common stock issuable
upon exercise of options granted under Metrocall's stock
option plans and 7,920 shares owned of record by certain
members of Mr. Kimzey's family.
(k) Includes 31,000 shares of Metrocall's common stock issuable
upon exercise of options granted under Metrocall's stock
option plans.
(l) Includes 167,452 shares of Metrocall's common stock issuable
upon exercise of options granted under Metrocall's stock
options plans.
(m) Includes 26,000 shares of Metrocall's common stock issuable
upon exercise of options granted under Metrocall's stock
option plans.
(n) Includes an aggregate of 1,119,623 shares of Metrocall's
common stock issuable upon the exercise of options granted
under Metrocall's stock option plans; 1,088,654 shares
issuable upon exercise of warrants held by UBS Capital LLC;
and 1,045,954 shares through beneficial ownership.
(o) Includes 26,000 shares of Metrocall's common stock issuable
upon the exercise of options granted under Metrocall's stock
option plans.
(p) Wellington Management Company, LLP, in its capacity as
investment adviser, may be deemed to beneficially own
3,482,809 shares of Metrocall, which shares are held of
record by clients of Wellington Management Company, LLP.
Includes 1,333,809 shares as to which Wellington Management
Company, LLP has shared power to vote or to direct the vote,
and 3,482,809 shares as to which it has shared power to
dispose or direct the disposition.
</TABLE>
17
<PAGE> 23
EXECUTIVE OFFICERS
Executive officers of Metrocall serve at the pleasure of the Board of
Directors, subject to the provisions of their employment agreements. This table
sets forth the names of the executive officers of Metrocall, their ages as of
March 12, 1999, and their positions with Metrocall.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
William L. Collins, III............ 48 President and Chief Executive Officer
Vincent D. Kelly................... 39 Chief Financial Officer, Treasurer, and
Executive Vice President
Steven D. Jacoby................... 41 Chief Operating Officer and Executive Vice
President
</TABLE>
We set forth below certain biographical information concerning the
individuals listed above.
William L. Collins, III has been President and Chief Executive Officer of
Metrocall since January 1996. He served as Director and Vice Chairman of the
Board since September 1994. From 1988 to 1994, Mr. Collins was the Chairman of
the Board, Chief Executive Officer, President and a director of FirstPAGE USA,
Inc. and its predecessor companies. Mr. Collins serves as Chairman of the Board
of Directors of USA Telecommunications, Inc. From 1977 to 1988, Mr. Collins was
President of C&C, Inc., a national communications marketing and management
company.
Vincent D. Kelly has been the Chief Financial Officer and Vice President of
Metrocall since January 1989. Mr. Kelly has also served as Treasurer since
August 1995. He was appointed Executive Vice President in February 1997. Mr.
Kelly served as Chief Operating Officer and Chief Financial Officer of Metrocall
from February 1993 through August 31, 1994, when Metrocall acquired FirstPAGE
USA, Inc. Mr. Kelly was a director of Metrocall from 1990 until November 1996.
Mr. Kelly is a certified public accountant.
Steven D. Jacoby has been Chief Operating Officer and Vice President of
Metrocall since September 1994. Mr. Jacoby was appointed Executive Vice
President in February 1997. Mr. Jacoby joined Metrocall from FirstPAGE USA, Inc.
where he had served as Chief Operating Officer, Vice President and Secretary
since 1988. Mr. Jacoby was a director of Metrocall from September 1994 until
November 1996.
18
<PAGE> 24
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of all compensation during the
last three fiscal years for (1) Metrocall's Chief Executive Officer, and (2) the
executive officers of Metrocall whose aggregate annual salary and bonus exceeded
$100,000 for the year ended December 31, 1998 (the "named executive officers").
<TABLE>
<CAPTION>
FOR THE LONG TERM
YEAR COMPENSATION
NAME AND ENDED -------------- ALL OTHER
PRINCIPAL POSITION DECEMBER 31 SALARY BONUS(A) OPTIONS COMPENSATION
- ------------------------------------------ ------------- -------- -------- -------------- --------------
<S> <C> <C> <C> <C> <C>
William L. Collins, III................... 1998 $496,159 $425,000 500,000 $36,442(b)(e)
President and Chief Executive Officer 1997 372,690 337,500 200,000(c) 35,000(b)
1996 288,696 225,000 100,000 35,000(b)
Vincent D. Kelly.......................... 1998 322,692 325,000 150,000 2,500(e)
Chief Financial Officer, 1997 249,230 225,000 256,588(c) 688(e)
Treasurer and Executive 1996 224,711 212,500 206,588(d) 2,375(e)
Vice President
Steven D. Jacoby.......................... 1998 322,692 325,000 150,000 1,512(e)
Chief Operating Officer 1997 249,230 225,000 150,000(c) 688(e)
and Executive Vice 1996 224,711 212,500 100,000(d) 1,425(e)
President
</TABLE>
- -------------------------
(a) Includes bonuses earned in the year indicated, whether paid in the year
indicated or the following year.
(b) Payments by Metrocall for life insurance premiums pursuant to Mr. Collins'
employment contract.
(c) Includes options granted in previous years that were repriced during 1997
as follows: Mr. Collins, 100,000 options; Mr. Kelly, 206,588 options; Mr.
Jacoby, 100,000 options.
(d) Includes options granted in previous years that were repriced during 1996
as follows: Mr. Kelly, 156,588 options; Mr. Jacoby, 50,000 options.
(e) Allocation of employer contribution under the Metrocall, Inc. Savings and
Retirement Plan.
OPTION GRANTS IN 1998
The following table sets forth information concerning grants of stock
options to the named executive officers during the fiscal year ended December
31, 1998.
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OF POTENTIAL REALIZABLE
SHARES VALUE AT ASSUMED
NUMBER UNDERLYING ANNUAL RATES OF
OF SHARES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------------
NAME GRANTED(A) FISCAL YEAR (%) ($/SH) DATE 5% ($) 10% ($)
---- ---------- --------------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
William L. Collins, III... 500,000 29.8% $5.13 2/4/08 $1,613,115 $4,087,949
Vincent D. Kelly.......... 150,000 8.9 5.13 2/4/08 483,934 1,226,385
Steven D. Jacoby.......... 150,000 8.9 5.13 2/4/08 483,934 1,226,385
</TABLE>
- -------------------------
(a) Options granted to Messrs. Collins, Kelly, and Jacoby become exercisable on
February 4, 2000, two years from the date of grant.
19
<PAGE> 25
AGGREGATE OPTION EXERCISES IN 1998 AND OPTION YEAR-END VALUE
No options were exercised in 1998. The following table sets forth the
fiscal year-end value of all unexercised options held by the named executive
officers.
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1998 DECEMBER 31, 1998
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- -------------------------
<S> <C> <C>
William L. Collins, III........... 111,846/600,000 $39,625/--
Vincent D. Kelly.................. 206,588/200,000 --/--
Steven D. Jacoby.................. 109,477/200,000 31,701/--
</TABLE>
REPRICING OF OPTIONS
The following table sets forth information concerning the repricing of
options granted to the named executive officers and to Mr. Brock, as former
Chairman of the Board and President, during the fiscal year ended December 31,
1997 and prior years. No options were repriced in 1998.
TEN-YEAR OPTIONS/SAR REPRICING
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET EXERCISE OPTION
UNDERLYING PRICE OF PRICE AT TERM
REPRICED OR STOCK AT TIME OF REMAINING
AMENDED TIME OF REPRICING OR NEW AT TIME OF
OPTIONS REPRICING AMENDMENT EXERCISE REPRICING OR
NAME DATE (#) ($) ($) PRICE ($) AMENDMENT
---- ------- ----------- --------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
William L. Collins, III................... 2/4/97 100,000 $ 6.00 $ 7.9375 $ 6.00 107 months
President and Chief Executive Officer 9/18/96 100,000 $ 7.9375 $19.125 $ 7.9375 112 months
Vincent D. Kelly.......................... 2/4/97 72,000 $ 6.00 $ 7.9375 $ 6.00 81 months
Chief Financial Officer, Treasurer and 34,588 $ 6.00 $ 7.9375 $ 6.00 87 months
Executive Vice President 50,000 $ 6.00 $ 7.9375 $ 6.00 101 months
25,000 $ 6.00 $ 7.9375 $ 6.00 107 months
25,000 $ 6.00 $ 7.9375 $ 6.00 108 months
9/18/96 72,000 $ 7.9375 $19.50 $ 7.9375 86 months
34,588 $ 7.9375 $13.00 $ 7.9375 92 months
50,000 $ 7.9375 $19.125 $ 7.9375 106 months
25,000 $ 7.9375 $19.125 $ 7.9375 112 months
25,000 $ 7.9375 $20.25 $ 7.9375 113 months
1/16/96 50,000 $19.125 $20.25 $19.125 114 months
Steven D. Jacoby.......................... 2/4/97 50,000 $ 6.00 $ 7.9375 $ 6.00 101 months
Chief Operating Officer and Executive 25,000 $ 6.00 $ 7.9375 $ 6.00 107 months
Vice President 25,000 $ 6.00 $ 7.9375 $ 6.00 108 months
9/18/96 50,000 $ 7.9375 $19.125 $ 7.9375 106 months
25,000 $ 7.9375 $19.125 $ 7.9375 112 months
25,000 $ 7.9375 $20.25 $ 7.9375 113 months
1/16/96 50,000 $19.125 $20.25 $19.125 114 months
Harry L. Brock, Jr........................ 2/4/97 76,000 $ 6.00 $ 7.9375 $ 6.00 81 months
Former Chairman of the Board and 36,510 $ 6.00 $ 7.9375 $ 6.00 87 months
President 10,000 $ 6.00 $ 7.9375 $ 6.00 101 months
9/18/96 76,000 $ 7.9375 $19.50 $ 7.9375 86 months
36,510 $ 7.9375 $13.00 $ 7.9375 92 months
10,000 $ 7.9375 $20.25 $ 7.9375 106 months
</TABLE>
20
<PAGE> 26
EMPLOYMENT ARRANGEMENTS
Messrs. Collins, Jacoby and Kelly are parties to employment contracts that,
as extended, provide for terms of employment through December 31, 2001 (with
automatic extensions). Under these agreements, as amended effective January 1,
1998, Messrs. Collins, Jacoby, and Kelly have salaries of $500,000, $325,000,
and $325,000 respectively.
Termination of Employment. Each of Messrs. Collins', Jacoby's and Kelly's
contracts provides for certain payments if the executive's employment is
terminated without cause, if the executive terminates the contract for good
reason or if the executive's employment is terminated by reason of death or
disability. In such event, Metrocall will pay the executive or his estate the
full base salary and benefits (in connection with termination without cause or
resignation for good reason) that would otherwise have been paid to the
executive during the remaining term of the agreement. Terminations without cause
or resignations for good reason would also require Metrocall to pay the
executive, at his election, the difference between the fair market value of
stock subject to options (including those otherwise unexercisable) and the price
he would have had to pay to exercise the options. If the executive voluntarily
terminates employment (other than for good reason), Metrocall will pay the
executive one year's base salary and benefits under the contract. The reasons
for resignation for good reason under each contract include the termination of
any of the other executives for reasons other than cause, death, or disability.
Change of Control. Messrs. Collins, Jacoby and Kelly also are parties to
separate change of control agreements which, as extended, run through December
31, 2001 (with automatic extensions). Changes of control are defined as (1) any
action required to be reported under Item 6(e) of Schedule 14A as a "change of
control" (generally a 50% change in share ownership but other changes may also
qualify); (2) any person's acquiring more than 25% of the voting power of
Metrocall voting stock without the Board's prior approval; (3) changes in Board
membership such that during any two consecutive years, Board members at the
beginning constitute less than a majority of the Board of Directors at the end
(including as Board members at the beginning of the period any directors added
during the period with approval of two-thirds of the Board); (4) a merger or
reorganization in which Metrocall does not survive or in which the outstanding
shares of Metrocall are converted into other shares or securities (except
through a reincorporation or creation of a holding company); (5) a more than 50%
turnover of voting power in a merger, reorganization, or similar transaction
approved by stockholders, unless 75% of the Board of Directors carries over to
the new entity; or (6) any other event the Board determines constitutes a change
of control. A change of control is also deemed to occur if the executive is
removed at the request of a third party who has taken steps to effect a change
of control or the termination was otherwise caused by a change of control. Under
the change of control agreements, executives would be entitled to payment of
three times the sum of their salary and most recent bonus within 30 days after
termination of employment after a change of control (other than termination for
death, disability, or cause), together with a payment of the option spread (as
described above under "Termination of Employment"), paid health coverage for up
to 18 months, and certain other benefits. Payment would be grossed up, as
necessary, to provide that the executive receives his payments net of any excise
taxes and any taxes on the excise payment (but the executive would remain
responsible for any income taxes on the payment).
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Executive Compensation Philosophy. Metrocall's philosophy regarding
executive compensation is to offer competitive and fair compensation that will
attract and retain key executives in the face of high demand for a management
team with experience in consolidating the pager industry and to reward
executives and hold them accountable for Metrocall's
21
<PAGE> 27
overall performance. Particular factors that the Compensation Committee believes
important in assessing performance are growth in revenues, cash flow, number of
pagers in service, on an annual basis, and, on a longer term basis, growth in
stockholder value as measured by stock price. (The Compensation Committee put a
diminished emphasis on short-term improvements in stock price, given the
continuing struggles of many of Metrocall's competitors and the apparent
disfavor of the industry with market analysts.) The Compensation Committee also
considered the more subjective factor of the management team's success in
acquiring and integrating industry players.
In establishing appropriate levels for base salary, the Compensation
Committee considered base salary levels of senior executives at other public
paging and other wireless companies, particularly in the peer group described in
the performance graph set forth in this Proxy Statement on page 26 ("Peer
Group") and the particular officer's overall contributions to Metrocall during
the past year and previously. Annual performance bonuses are based upon the
Compensation Committee's evaluation of the executive's performance in achieving
corporate objectives during the preceding fiscal year. Option grants are
designed to reward an executive officer for his or her overall contribution to
Metrocall and to serve as an incentive to achieve Metrocall's goal of increasing
stockholder value. The Compensation Committee also reviewed and considered
compensation surveys from Towers Perrin and the HayGroup. The total compensation
package was designed to be near the 75th percentile for comparable companies.
Base Salary. In determining the appropriate level of base salaries, the
Compensation Committee considers responsibility, prior experience and
accomplishments and the relative importance of the position in achieving Company
objectives. The Compensation Committee also sets base salaries at levels
necessary to retain key employees. For this purpose, the Compensation Committee
considers base salary levels paid by companies in the Peer Group and salary
levels paid by other companies competing for executive talent.
Bonuses. Bonuses for 1998 were based on the Compensation Committee's
overall qualitative evaluation of the performance and accomplishments of the
executive officers for the year. Messrs. Collins', Jacoby's and Kelly's bonuses
were based on their overall contribution to Metrocall and a general assessment
of Metrocall's performance for the year, together with the factors described
below under Chief Executive Officer's Compensation.
Stock Option Grants. The Compensation Committee believes that stock options
are necessary to focus each executive's attention on Metrocall's goal of
increasing stockholder value as reflected in the stock price. In determining the
level of option grants, the Compensation Committee considers the executive's
level of stock ownership and position in Metrocall. The Compensation Committee
has determined that the overall level of stock options for the year is
consistent with the practice of companies in the Peer Group. During 1998, the
Compensation Committee, with Mr. Singer abstaining, approved awards of options
covering 150,000 shares each for Messrs. Jacoby and Kelly, to be exercisable on
or after February 4, 2000.
Chief Executive Officer's Compensation. In setting Mr. Collins'
compensation for 1998 and awarding bonuses with respect to that year, the
Compensation Committee considered the following factors: growth in revenues,
cash flow and subscribers; successful completion of Metrocall's third offering
of senior subordinated notes; negotiation and completion of Metrocall's
acquisition of the Advanced Messaging Division of AT&T Wireless Services, Inc.,
and the successful integration during 1998 of ProNet and other acquisitions
completed in 1997. It considered each of those to be substantially positive
developments for Metrocall's long-term success. It also decided that additional
stock-based incentives, in the form of options, were appropriate both to bring
Mr. Collins' long-term compensation closer to that of others in the industry and
to continue to tie substantial parts of his compensation to Metrocall's future
stock price appreciation. To that end, the Compensa-
22
<PAGE> 28
tion Committee granted, with Mr. Singer abstaining, an option covering 500,000
shares in 1998 to be exercisable on or after February 4, 2000. The Board
subsequently approved all aspects of Mr. Collins' compensation.
Compensation Deduction Limit. The Securities and Exchange Commission
requires that this report comment on Metrocall's policy with respect to a
special rule under the tax laws, Section 162(m) of the Internal Revenue Code.
That section can limit the deductibility on a corporation's federal income tax
return of compensation of $1 million to any of the named officers. A company can
deduct compensation (including from exercising options) outside that limit if it
pays the compensation under a plan that its shareholders approve and that is
performance-related and non-discretionary. Option exercises are typically
deductible under such a plan if granted with exercise prices at or above the
market price when granted. The Committee's policy with respect to this section
is to make every reasonable effort to ensure that compensation complies with
Section 162(m), while simultaneously providing Company executives with the
proper incentives to remain with and increase the prospects of Metrocall. Given
the way we administer the option plan, we think it is unlikely that Metrocall
will lose a deduction under this section for options. Metrocall did not pay any
compensation with respect to 1998 that would be outside the limits of Section
162(m).
Submitted by the Compensation Committee of Metrocall as of March 5, 1999.
Francis A. Martin, III, Chairman
Michael Greene Elliott H. Singer
23
<PAGE> 29
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Metrocall leases certain of its office space in Alexandria, Virginia from
Beacon Communications Associates, L.L.C., a Virginia limited liability company
that engages in real estate investment and leasing. The lease terminates in July
2010. Metrocall paid rent for the premises during 1998 on a monthly basis in the
annual amount of $229,000. Metrocall expects the annual rent for 1999 to be
approximately $229,000. Beacon Communications is owned by Harry L. Brock, Jr.,
his wife Suzanne S. Brock, a former director of Metrocall, and other members of
their family. On November 6, 1998, Beacon Communications reacquired Metrocall's
20% interest in Beacon Communications for $500,000.
Metrocall also leases an antenna site from Beacon Communications. The lease
terminates in November 2010. Metrocall paid rent for the site during 1998 on a
monthly basis in the annual amount of $50,000. Metrocall expects the annual rent
for 1999 to be approximately $50,000.
Beacon Communications financed the construction of the Alexandria, Virginia
office building with an Industrial Revenue Bond in the principal amount of
$1,800,000 issued by the Fairfax County, Virginia Economic Development
Authority, dated December 20, 1983. Mr. Brock and Ms. Brock, have guaranteed, in
their individual capacities, payment of the final $400,000 due on the Industrial
Revenue Bond.
Metrocall leases its Harrisburg, Pennsylvania office space from 227
Associates, a Virginia general partnership that engages in real estate
investment and leasing. Metrocall is a general partner and has a 10% interest in
227 Associates. Mr. Brock and Ms. Brock are general partners of 227 Associates,
holding 10% and 60% interests, respectively. Metrocall paid rent for the
premises during 1998 on a monthly basis in the annual amount of $37,000.
Metrocall expects the annual rent for 1999 to be approximately $37,000.
Franklin Associates and 314 Associates are Virginia general partnerships
owned and controlled by the Brock family that license to Metrocall radio station
equipment and tower use for some of Metrocall's operations in Virginia. During
1998, Metrocall paid rent on a monthly basis in the annual amounts of
approximately $139,000 to 314 Associates and approximately $46,000 to Franklin
Associates. During 1999, Metrocall expects that its rent to 314 Associates and
Franklin Associates will be approximately $133,000 and $46,000, respectively.
Metrocall believes that its agreements with Beacon Communications, 227
Associates, 314 Associates and Franklin Associates are on terms that are no less
favorable to Metrocall than could be obtained from an unaffiliated party in an
arms-length transaction.
In July 1993, Metrocall entered into a Tax Indemnification Agreement with,
among others, Messrs. Brock and Kelly and Ms. Brock (the "Subchapter S
stockholders"), which agreement relates to their respective income tax
liabilities in connection with Metrocall's earlier status as an S Corporation.
Because Metrocall became subject to corporate income taxation after Metrocall's
initial public offering, the reallocation of income and deductions between the
period during which Metrocall was treated as an S Corporation and the period
during which Metrocall became subject to corporate income taxation may have
increased the taxable income of one party while decreasing that of another
party. Accordingly, the Tax Indemnification Agreement was intended to assure
that taxes are borne by Metrocall on the one hand and the Subchapter S
stockholders on the other hand only to the extent that such parties are required
to report the related income for tax purposes. Subject to certain limitations,
the Tax Indemnification Agreement generally provides that the Subchapter S
stockholders will be indemnified by Metrocall with respect to federal and state
income taxes (plus interest and penalties) shifted from a taxable year
subsequent to the initial public offering to a taxable year in which Metrocall
was an S Corporation. In addition, Metrocall will be indemnified by the
Subchapter S stockholders, subject to certain limitations, with respect to
federal and state
24
<PAGE> 30
income taxes (plus interest and penalties) that arise from a termination of S
Corporation status prior to the date of such termination or which are shifted
from taxable year in which Metrocall was an S Corporation to a taxable year
subsequent to the consummation of the initial public offering. Any payment made
by Metrocall to the Subchapter S stockholders pursuant to the Tax
Indemnification Agreement likely will be considered by the Internal Revenue
Service or the applicable state taxing authorities to be nondeductible by
Metrocall for income tax purposes. As of March 1, 1999, no indemnification
obligations have arisen under the Tax Indemnification Agreement with respect to
any of the parties thereto.
Mr. William L. Collins, III, President, Chief Executive Officer, Director,
and Vice Chairman of the Board of Directors of Metrocall, is a general partner
in three real estate partnerships that leased commercial office space to
Metrocall in Alexandria, Virginia during 1998. Mr. Steven D. Jacoby, Chief
Operating Officer and Executive Vice President, is a general partner in one of
those three real estate partnerships. The lease payments to entities with whom
Messrs. Collins and Jacoby are affiliated amounted to approximately $14,000 for
the year ended December 31, 1998. Metrocall expects that the annual rent for the
remaining lease in 1999 will amount to approximately $14,000.
ProNet (and Metrocall as successor-in-interest) entered into an Incentive
Compensation Agreement dated July 7, 1997 with Impulse Telecommunications
Corporation regarding the development of certain messaging services. Mr.
Jungerman is the President of Impulse Telecommunications Corporation. Maximum
compensation under the Incentive Compensation Arrangement is $350,000. In
addition, during 1998, Metrocall has entered into a consulting services
agreement with Impulse Telecommunications Corporation under which it expects the
cost of services to exceed $60,000 in 1999.
25
<PAGE> 31
OTHER INFORMATION
COMPANY PERFORMANCE
We set forth below a graph that compares the cumulative total stockholder
return on the common stock of Metrocall with the cumulative total return on
(1) the Nasdaq Market Index and (2) a Peer Group Index. The Peer Group Index is
comprised of the following publicly traded companies that engage in the paging
and wireless messaging line of business: Arch Communication Group, Inc. (APGR)
and Paging Network, Inc. (PAGE). The Peer Group Index previously included ProNet
Inc. (PNET) and Page America Group, Inc. (PGG). Metrocall acquired ProNet on
December 30, 1997. Page America was removed from listing on the AMEX in May
1996. Accordingly, no quotations for those companies are available.
The graph plots the growth in value of an initial $100 investment on
December 31, 1993 through December 31, 1998, assuming the reinvestment of
dividends. Measurement points are on December 31, 1993, December 31, 1994,
December 31, 1995, December 31, 1996, December 31, 1997 and December 31, 1998.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
OF METROCALL, NASDAQ MARKET AND PEER GROUP
<TABLE>
<CAPTION>
METROCALL, INC. PEER GROUP NASDAQ MARKET INDEX
--------------- ---------- -------------------
<S> <C> <C> <C>
12/31/1993 100.00 100.00 100.00
12/30/1994 97.14 112.48 104.99
12/29/1995 109.29 160.72 136.18
12/31/1996 28.66 98.09 169.23
12/31/1997 28.21 68.50 207.00
12/31/1998 25.00 29.52 291.96
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on our records and other information, we believe that our directors
and officers reported all transactions in Metrocall's common stock and options
on a timely basis during the fiscal year ended December 31, 1998, except as
follows:
Mr. Ryal B. Poppa filed his annual statement of changes in beneficial
ownership on Form 5 with the Securities and Exchange Commission late.
26
<PAGE> 32
PROPOSALS FOR THE 2000 ANNUAL MEETING OF THE STOCKHOLDERS
Metrocall expects that its 2000 Annual Meeting of Stockholders will be held
in May 2000. If you want to include a proposal in the proxy statement for
Metrocall's 2000 Annual Meeting, send the proposal to:
Metrocall, Inc.
Attn: Secretary
6677 Richmond Highway
Alexandria, Virginia 22306
Proposals must be received on or before November 30, 1999, to be included
in next year's proxy statement. Please note that proposals must comply with all
of the requirements of Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, as well as the requirements of Metrocall's Restated Certificate of
Incorporation and Bylaws. Under Rule 14a-4 of the Securities Exchange Act of
1934, as amended, Metrocall will be able to use proxies given to it for next
year's meeting to vote for or against any stockholder proposal that is submitted
other than pursuant to Rule 14a-8 at Metrocall's discretion, unless the proposal
is submitted to Metrocall on or before November 30, 1999.
By Order of the Board of Directors
/s/ RICHARD M. JOHNSTON
-----------------------
Richard M. Johnston
Chairman of the Board
Alexandria, Virginia
April 5, 1999
27
<PAGE> 33
APPENDIX A: 1996 STOCK OPTION PLAN
AS AMENDED, EFFECTIVE FEBRUARY 3, 1999
METROCALL, INC., a Delaware corporation (the "Corporation"), sets forth
herein the terms of the 1996 Stock Option Plan (the "Plan") as follows:
1. PURPOSE
The Plan is intended to advance the interests of the Corporation by
providing eligible employees and outside directors ("Eligible Directors") of the
Corporation, its predecessors, and its affiliates an opportunity to acquire or
increase their proprietary interest in the Corporation, which thereby will
create a stronger incentive to expend maximum effort for the growth and success
of the Corporation and its subsidiaries. Options granted under the Plan (the
"Options") to employees may be nonqualified stock options ("NQSOs") or may be
"incentive stock options" ("ISOs") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended from time to time (the "Code"), or the
corresponding provision of any subsequently enacted tax statute. Options granted
to Eligible Directors must be NQSOs.
2. ADMINISTRATION
2.1 COMMITTEE
The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Corporation (the "Board"). The
Board may remove members, add members, and fill vacancies on the Committee from
time to time, all in accordance with the Certificate of Incorporation and Bylaws
of the Corporation and applicable law. The Board may also act under the Plan as
though it were the Committee.
2.2 ACTION BY COMMITTEE
The Committee shall have such powers and authorities related to the
administration of the Plan as are consistent with the Certificate of
Incorporation and Bylaws of the Corporation and applicable law. The Committee
shall have the full power and authority to take all actions and to make all
determinations required or permitted under the Plan and any Option granted
hereunder. The Committee shall have the full power and authority to take all
other actions and determination not inconsistent with the specific terms and
provisions of the Plan that the Committee deems to be necessary or appropriate
to the administration of the Plan. The Committee's powers shall include, but not
be limited to, the power to amend, waive, or extend any provision or limitation
of any Option. All such actions and determinations shall be by the affirmative
vote of a majority of the members of the Committee present at a meeting or by
unanimous consent of the Committee executed in writing in accordance with the
Certificate of Incorporation and Bylaws of the Corporation and applicable law.
The interpretation and construction by the Committee of any provision of the
Plan or any Option granted hereunder shall be final and conclusive.
Notwithstanding the foregoing, the Committee shall have no discretion over
the amount, price or timing of options granted to Eligible Directors.
2.3. NO LIABILITY
No member of the Board or of the Committee shall be liable for any action
or determination made, or any failure to take or make an action or
determination, in good faith with respect to the Plan.
2.4. APPLICABILITY OF RULE 16B-3
Those provisions of the Plan that make express reference to Rule 16b-3
shall apply only to persons who are required to file reports under Section 16(a)
of the Exchange Act.
3. STOCK AND OTHER RIGHTS
The stock that may be issued pursuant to Options shall be shares of common
stock of the Corporation (the "Stock"), which shares may be treasury shares or
authorized but unissued shares. The number of shares of Stock that may be issued
under the Plan shall not exceed in the
A-1
<PAGE> 34
aggregate 6,000,000 shares of Stock, which number of shares is subject to
adjustment as provided in Section 12 and which number shall increase to
8,000,000 if the stockholders approve the increase and shall be reduced by any
shares previously issued under the Plan or then outstanding under Options. If
any Option expires, terminates or is terminated for any reason prior to exercise
in full, the shares of Stock that were subject to the unexercised portion of
such Option shall be available immediately for future grants of Options under
the Plan (but will be counted against that calendar year's limit for a given
individual).
No additional options will be granted under either the Metrocall, Inc.
Amended and Restated 1993 Stock Option Plan or the Metrocall, Inc. Directors
Stock Option Plan (together, the "Predecessor Plans"). However, any shares of
Stock that were available for grants under the Predecessor Plans as of the date
of such approval but had not been the subject of options granted under the
Predecessor Plans shall be available for grants under this Plan, provided,
however, that such shares shall not be available for the grant of Options
intended to qualify as Incentive Stock Options.
The maximum number of shares that may be granted under Options for a single
individual in a calendar year may not exceed 1,000,000. (The individual maximum
applies only to Options first made under this Plan and not to Options made in
substitution of a prior employer's options or other incentives, except as Code
Section 162(m) otherwise requires.)
The aggregate number of shares of Stock that may be issued under incentive
stock options may not exceed 3,000,000, and their authorization for use with
ISOs does not prevent their use instead with NQSOs.
4. ELIGIBILITY
Options may be granted under the Plan to any employee or director of the
Corporation or any Subsidiary (including any such employee who is an officer or
director of the Corporation or any Subsidiary) and as the Committee shall
determine and designate from time to time prior to expiration or termination of
the Plan. (Individuals who have been granted Options are referred to as
"Optionees.") An individual may hold more than one Option, subject to such
restrictions as are provided herein.
The Administrator may also grant Options in substitution for options or
other equity interests held by individuals who become Employees of the Company
or of an Eligible Subsidiary as a result of the Company's acquiring or merging
with the individual's employer or acquiring its assets or to persons who were
employees or directors of the previous employer and received an option in that
capacity even if they do not become Employees. In addition, the Administrator
may provide for the Plan's assumption of options granted outside the Plan to
persons who would have been eligible under the terms of the Plan to receive a
grant. If necessary to conform the Options to the interests for which they are
substitutes, the Administrator may grant substitute Options under terms and
conditions that vary from those the Plan otherwise requires.
5. EFFECTIVE DATE AND TERM
5.1. EFFECTIVE DATE
The Plan became effective as of April 5, 1996 (the "Effective Date") and
was approved by the stockholders on May 1, 1996. The Board approved amendments
to the Plan on February 5, 1997, December 17, 1997, February 4, 1998, and
February 3, 1999.
5.2. TERM
The Plan shall terminate ten years after the Effective Date unless
previously terminated under Section 11.
6. EMPLOYEE STOCK OPTIONS
6.1 GRANT OF OPTIONS
Subject to the terms and conditions of the Plan, the Committee may, at any
time and from time to time prior to the termination of the Plan, grant to such
eligible persons as the Committee may determine, Options to purchase such number
of shares of Stock on such terms and conditions as the Committee may deter-
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mine, including any terms or conditions that may be necessary to qualify such
Options as Incentive Stock Options under Code Section 422. The date as of which
the Committee approves the grant of an Option shall be considered the date on
which such Option is granted. Neither the employee nor any person entitled to
exercise any rights hereunder shall have any of the rights of a stockholder with
respect to the shares of Stock subject to an Option except to the extent that
the certificates for such shares have been issued upon the exercise of the
Option.
6.2 LIMITATION ON INCENTIVE STOCK OPTIONS
An Option granted to an employee shall constitute an Incentive Stock Option
only to the extent that the aggregate fair market value (determined at the time
the Option is granted) of the Stock with respect to which Incentive Stock
Options are exercisable for the first time by the Optionee during any calendar
year (under the Plan and all other plans of the Corporation and its parent and
subsidiary corporations, within the meaning of the Code Section 422(d)), does
not exceed $100,000. This limitation shall be applied by taking Options into
account in the order in which such Options were granted.
6.3 OPTION AGREEMENTS
All Options granted to employees pursuant to the Plan shall be evidenced by
written agreements in such form or forms as the Committee shall from time to
time determine. Option agreements may be amended by the Committee from time to
time and need not contain uniform provisions.
6.4 OPTION PRICE
The purchase price of each share of Stock subject to an Option issued under
Section 6 shall be fixed by the Committee. In the case of an Option not intended
to constitute an Incentive Stock Option, the option price shall be not less than
the par value of the Stock covered by the Option. In the case of an Option that
is intended to be an Incentive Stock Option, the option price shall be not less
than the greater of par value of the Shares or 100% of the Fair Market Value (as
defined below) of a share of Stock covered by the Option on the date the Option
is granted; provided, however, that in the event the employee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of
Code Sections 422(b)(6) and 424(d) (relating to more-than-10%-stock-owners), the
option price of an Option that is intended to be an Incentive Stock Option shall
be not less than the greater of par value or 110% of the Fair Market Value of a
share of Stock covered by the Option at the time such Option is granted.
Fair Market Value of Stock for purposes of this Plan shall mean, in the
event that the Stock is listed on an established national or regional stock
exchange, is admitted to quotation on the National Association of Security
Dealers Automated Quotation System, or is publicly traded on an established
securities market, the closing price of the Stock on such exchange or system or
in such market (the highest such closing price if there is more than one such
exchange or market on the date the Option is granted) or, if there is no such
closing price, then the mean between the highest bid and lowest asked price or
between the high and low prices on such date, or, if no sale of stock has been
made on such day, on the preceding day on which any such sale shall have been
made.
6.5 TERM
Each Option granted to an employee under the Plan shall terminate and all
rights to purchase Stock thereunder shall cease upon the expiration of ten years
from the date such Option is granted, or on such prior date as may be fixed by
the Committee and stated in the option agreement relating to such Option;
provided, however, that in the event the employee would otherwise be ineligible
to receive an Incentive Stock Option by reason of the provisions of Code
Sections 422(b)(6) and 424(d)(relating to more-than-10%-stock-owners), an Option
granted to such employee that is intended to be an Incentive Stock Option shall
in no event be exercisable after the
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expiration of five years from the date it is granted.
6.6 EXERCISE BY OPTIONEE
Only the employee receiving an Option (or, in the event of the Optionee's
legal incapacity or incompetency, the employee's guardian or legal
representative, and in the case of the employee's death, the employee's estate)
may exercise the Option.
6.7 OPTION PERIOD AND LIMITATIONS ON EXERCISE
Each Option granted under the Plan to an employee shall be exercisable in
whole or in part at any time and from time to time over a period commencing on
or after the date of grant of the Option and ending upon expiration or
termination of the Option, as the Committee shall determine and set forth in the
option agreement. Without limiting the foregoing, the Committee, subject to the
terms and conditions of the Plan, may in its sole discretion provide that the
Option granted to an employee may not be exercised in whole or in part for any
period or periods of time during which such Option is outstanding as the
Committee shall determine and set forth in the option agreement. Any such
limitation on the exercise of an Option may be rescinded, modified or waived by
the Committee, in its sole discretion, at any time and from time to time after
the date of grant of such Option.
6.8 METHOD OF EXERCISE
An Option that is exercisable by an employee hereunder may be exercised by
delivery to the Corporation on any business day, at its principal office
addressed to the attention of the Corporate Secretary, of written notice of
exercise. Such notice shall specify the number of shares for which the Option is
being exercised and shall be accompanied by payment in full of the option price
of the shares for which the Option is being exercised. Payment in full of the
Option price need not accompany the written notice of exercise provided the
notice directs that the stock certificates for the shares issued upon the
exercise be delivered to a licensed broker acceptable to the Corporation as the
agent for the individual exercising the option and at the time the stock
certificates are delivered to the broker, the broker will tender to the
Corporation cash or cash equivalents acceptable to the Corporation equal to the
exercise price.
Payment of the option price for the shares of Stock purchased pursuant to
the exercise of an Option by an employee shall be made, as determined by the
Committee and set forth in the option agreement, as follows:
(a) in cash or by certified check payable to the order of the
Corporation;
(b) through the tender to the Corporation of shares of Stock, which
must have been held by the individual exercising the option for at least
six months at the time of surrender and which shall be valued, for purposes
of determining the extent to which the option price has been paid, at their
Fair Market Value on the date of exercise; or
(c) by a combination of the foregoing methods or any other method that
the Committee may allow.
The Committee may, in the option agreement and after due consideration of
the effect on the Corporation's financial statements, provide that the Optionee
can direct the Corporation to withhold shares of Stock otherwise issuable
pursuant to exercise of an Option equal in value to the option price or any
portion thereof.
Notwithstanding the preceding, the Committee may, in its discretion, impose
and set forth in the option agreement such limitations or prohibitions on the
methods of exercise as the Committee deems appropriate. Promptly after the
exercise of an Option and the payment in full of the option price of the shares
of Stock covered thereby, the individual exercising the Option shall be entitled
to the issuance of a Stock certificate or certificates evidencing such
individual's ownership of such shares. A separate Stock certificate or
certificates shall be issued for any shares purchased pursuant to the exercise
of an Option that is an Incentive Stock
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Option, which certificate or certificates shall not include any shares that were
purchased pursuant to the exercise of an Option that is not an Incentive Stock
Option. An individual holding or exercising an Option shall have none of the
rights of a stockholder until the shares of Stock covered thereby are fully paid
and issued to such individual and, except as provided in Section 12, no
adjustment shall be made for dividends or other rights for which the record date
is prior to the date of such issuance.
6.9 WITHHOLDING
The Corporation shall have the right to withhold, or require an individual
exercising an Option to remit to the Corporation, an amount sufficient to
satisfy any applicable federal, state or local withholding tax requirements
imposed with respect to the exercise of Options. To the extent permissible under
applicable tax, securities and other laws, the option agreement may permit
satisfaction of a tax withholding requirement by withholding shares of Stock
issued as a result of the exercise of an Option.
7. DIRECTOR STOCK OPTIONS
7.1 GRANT OF FORMULA OPTIONS
On the Effective Date, an Eligible Director then serving on the Board shall
be granted a Formula Option to purchase 10,000 shares of Stock. Thereafter, each
Eligible Director whose Commencement of Service is after the Effective Date
shall be granted a Formula Option to purchase 10,000 shares of Stock on the date
of such Commencement of Service. "Commencement of Service" means the date of
commencement of the Eligible Director's first term as an Eligible Director,
which shall be the earlier of (a) the date of the first meeting of the Board
attended by the Eligible Director as a member of the Board, including the
meeting at which such Eligible Director was first appointed as a member of the
Board, if attended by such Eligible Director, or (b) the date of the first
action by written consent joined by the Eligible Director. Each Eligible
Director shall be granted an additional Formula Option to purchase 1,000 shares
of Stock on each anniversary of the date on which he or she was granted the
initial Formula Option pursuant to this Section 7.1, provided the Eligible
Director continues to qualify as such on that anniversary date.
7.2 DISCRETIONARY GRANTS TO DIRECTORS
Subject to the terms and conditions of the Plan, the Board may, at any time
and from time to time, grant to such Eligible Directors as the Board may
determine, Options, in addition to the Formula Options, to purchase such number
of shares of Stock on such terms and conditions as the Board may determine. The
date as of which the Board approves the grant of an Option shall be considered
the date on which such Option is granted. Neither the director nor any person
entitled to exercise any rights hereunder shall have any of the rights of a
stockholder with respect to the shares of Stock subject to an Option except to
the extent that the certificates for such shares have been issued upon the
exercise of the Option.
7.3 EXERCISE PRICE
The exercise price of each Option granted to an Eligible Director shall be
the Fair Market Value of the Stock subject to the Option on the date the Option
is granted, except as the Board otherwise specifies.
7.4 VESTING
Formula Options granted to Eligible Directors shall be fully vested and
exercisable six months after the date of grant. The Board may specify the same
or a different vesting schedule for other Options granted to Eligible Directors.
7.5 EXERCISE OF OPTION
Subject to Section 7.4 hereof, an Eligible Director may, at any time,
exercise an Option with respect to all or any part of the shares of Stock then
subject to such Option by giving the Corporation written notice of exercise,
specifying the number of shares as to which the Option is being exercised. Such
notice shall be addressed to the Corporate Secretary at the Corporation's
principal office, and shall be effective when actually received (by personal
delivery, fax or other delivery) by the Corporate Secretary. Such notice shall
be accompanied by
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an amount equal to the option price of such shares, in the form of any one or
combination of the following: cash or cash equivalents, or shares of Stock
valued at Fair market Value in accordance with the Plan. Shares of Stock
acquired by the Eligible Director through exercise of an Option may be
surrendered in payment of the Option price of Options; provided however, that
any Stock surrendered in payment must have been held by the Eligible Director
for more than six months at the time of surrender. Payment in full of the Option
price need not accompany the written notice of exercise provided the notice
directs that the Stock certificate or certificates for the shares for which the
Option is exercised be delivered to a licensed broker acceptable to the
Corporation as the agent for the individual exercising the Option and, at the
time such Stock certificate or certificates are delivered, the broker tenders to
the Corporation cash (or cash equivalents acceptable to the Corporation) equal
to the Option price.
7.6 TERM OF OPTION
Options granted to Eligible Directors shall terminate and all rights to
purchase shares thereunder shall cease upon the expiration of ten years from the
date such Option is granted. Termination of the Optionee's status as an Eligible
Director shall not cause a Formula Option to terminate, but the Board may
designate termination as a director as a grounds for forfeiture of other Options
granted to Eligible Directors.
All options granted to Directors pursuant to Section 7 shall be evidenced
by uniform, written agreements setting forth the terms specified in this Section
7. The Board, but not the Committee, may amend the terms of any such agreements
relating to the amount, price or timing of the awards granted to Eligible
Directors.
8. TRANSFERABILITY OF OPTIONS
No Option shall be assignable or transferable by the Optionee to whom it is
granted, other than by will or the laws of descent and distribution.
9. USE OF PROCEEDS
The proceeds received by the Corporation from the sale of Stock pursuant to
Options shall constitute general funds of the Corporation.
10. REQUIREMENTS OF LAW
10.1 GENERAL
The Corporation shall not be required to sell or issue any shares of Stock
under any Option if the sale or issuance of such shares would constitute a
violation by the individual exercising the Option or by the Corporation of any
provision of any law or regulation of any governmental authority, including,
without limitation, any federal or state securities laws or regulations. If at
any time the Corporation shall determine, in its discretion, that the listing,
registration or qualification of any shares subject to the Option upon any
securities exchange or under any state or federal law, or the consent of any
government regulatory body, is necessary or desirable as a condition of, or in
connection with, the issuance or purchase of shares, the Option may not be
exercised in whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Corporation, and any delay caused thereby shall in no way
affect the date of termination of the Option. Specifically in connection with
the Securities Act of 1933, as amended (the "Securities Act"), upon exercise of
any Option, unless a registration statement under the Securities Act is in
effect with respect to the shares of Stock covered by such Option, the
Corporation shall not be required to sell or issue such shares unless the
Corporation has received evidence satisfactory to the Corporation that the
Optionee may acquire such shares pursuant to an exemption from registration
under the Securities Act. Any determination in this connection by the Committee
shall be final and conclusive. The Corporation may, but shall in no event be
obligated to, register any securities covered hereby pursuant to the Securities
Act. The Corporation shall not be obligated to take any affirmative action in
order to cause the exercise of an Option or the issuance of shares pursuant
thereto to comply
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with any law or regulation of any governmental authority. As to any jurisdiction
that expressly imposes the requirement that an Option shall not be exercisable
unless and until the shares of Stock covered by such Option are registered or
are subject to an available exemption from registration, the exercise of such
Option (under circumstances in which the laws of such jurisdiction apply) shall
be deemed conditioned upon the effectiveness of such registration or the
availability of such an exemption.
10.2 RULE 16b-3
The Plan is intended to qualify for the exemption provided by Rule 16b-3
under the Exchange Act. To the extent any provision of the Plan or action by the
Committee does not comply with the requirements of Rule 16b-3, it shall be
deemed inoperative, to the extent permitted by law and deemed advisable by the
Committee, and shall not affect the validity of the Plan. In the event Rule
16b-3 is revised or replaced, the Board may exercise discretion to modify the
Plan in any respect necessary to satisfy the requirements of the revised
exemption or its replacement.
11. AMENDMENT AND TERMINATION
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Options have not been
granted; provided, however, that no amendment by the Board with respect to ISOs
shall be made without stockholder approval when required to comply with Section
422 of the Code. The Corporation also may retain the right in an option
agreement to cause a forfeiture of the shares or gain realized by an Optionee on
account of the Optionee taking actions in "competition with the Corporation," as
defined in the applicable option agreement. Furthermore, the Corporation may, in
the option agreement, retain the right to annul the grant of an Option if the
holder of such grant was an employee of the Corporation or a Subsidiary and is
terminated "for cause," as described in the applicable option agreement. Except
as permitted under Sections 10 or 12, no amendment, suspension or termination of
the Plan or option agreement shall, without the consent of the Optionee, alter
or impair rights or obligations under any Option previously granted under the
Plan.
12. EFFECT OF CHANGES IN CAPITALIZATION
12.1 CHANGES IN STOCK
If the number of outstanding shares of Stock is increased or decreased or
changed into or exchanged for a different number or kind of shares or other
securities of the Corporation by reason of any recapitalization,
reclassification, stock split-up, combination of shares, exchange of shares,
stock dividend or other distribution payable in capital stock, or other increase
or decrease in such shares effected without receipt of consideration by the
Corporation, occurring after the Effective Date of the Plan, a proportionate and
appropriate adjustment shall be made by the Corporation in the number and kind
of shares for which Options are outstanding, so that the proportionate interest
of the Optionee immediately following such event shall, to the extent
practicable, be the same as immediately prior to such event. Any such adjustment
in outstanding Options shall not change the aggregate Option Price payable with
respect to shares subject to the unexercised portion of the Option outstanding
but shall include a corresponding proportionate adjustment in the Option Price
per share. Appropriate adjustment shall also be made to the number of shares of
stock subject to options to be granted under Section 7.1 after such adjustment.
12.2 REORGANIZATION WITH CORPORATION SURVIVING
Subject to Section 12.3, if the Corporation is the surviving corporation in
any reorganization, merger or consolidation of the Corporation with one or more
other entities, any Option previously granted pursuant to the Plan shall pertain
to and apply to the securities to which a holder of the number of shares of
Stock subject to such Option would have been entitled immediately following such
reorganization, merger or consolidation, with a corresponding proportionate
adjustment of the option price per share so that the aggregate option price
thereafter
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shall be the same as the aggregate option price of the shares remaining subject
to the Option immediately prior to such reorganization, merger or consolidation.
12.3 OTHER REORGANIZATIONS; SALE OF ASSETS OR STOCK
Upon the dissolution or liquidation of the Corporation, or upon a merger,
consolidation or reorganization of the Corporation with one or more other
corporations in which the Corporation is not the surviving corporation, or upon
a sale of substantially all of the assets of the Corporation to another
corporation, or upon any transaction (including, without limitation, a merger or
reorganization in which the Corporation is the surviving corporation) approved
by the Board that results in any person or entity (other than persons who are
holders of stock of the Corporation at the time the Plan is approved by the
Stockholders and other than an affiliate of the Corporation as defined in Rule
144(a)(1) under the Securities Act) owning 80 percent or more of the combined
voting power of all classes of stock of the Corporation, the Plan and all
Options outstanding hereunder shall terminate, except to the extent provision is
made in connection with such transaction for the continuation of the Plan and/or
the assumption of the Options theretofore granted, or for the substitution for
such Options of new options covering the stock of a successor corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to the number and
kinds of shares and exercise prices, in which event the Plan and Options
theretofore granted shall continue in the manner and under the terms so
provided. In the event of any such termination of the Plan, each Optionee shall
have the right (subject to the general limitations on exercise set forth in the
option agreement relating to such Option), immediately prior to the occurrence
of such termination and during such period occurring prior to such termination
as the Committee in its sole discretion shall designate, to exercise such Option
in whole or in part, whether or not such Option was otherwise exercisable at the
time such termination occurs, but subject to any additional limitations that the
Committee may, in its sole discretion, include in any option agreement. The
Committee shall send written notice of an event that will result in such a
termination to all Optionees not later than the time at which the Corporation
gives notice thereof to its stockholders.
12.4 ADJUSTMENTS
Adjustments under this Section 12 relating to stock or securities of the
Corporation shall be made by the Committee, whose determination in that respect
shall be final and conclusive. No fractional shares of Stock or units of other
securities shall be issued pursuant to any such adjustment, and any fractions
resulting from any such adjustment shall be eliminated in each case by rounding
downward to the nearest whole share or unit.
12.5 NO LIMITATIONS ON CORPORATION
The grant of an Option or pursuant to the Plan shall not affect or limit in
any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.
13. DISCLAIMER OF RIGHTS
No provision in the Plan or any option agreement entered into pursuant to
the Plan shall be construed to confer upon any individual the right to remain in
the service of the Corporation or any Subsidiary, or to interfere in any way
with the right and authority of the Corporation or any Subsidiary either to
increase or decrease the compensation of any individual at any time, or to
terminate any employment or other relationship between any individual and the
Corporation or any Subsidiary. The obligation of the Corporation to pay any
benefits pursuant to the Plan shall be interpreted as a contractual obligation
to pay only those amounts described herein, in the manner and under the
conditions prescribed herein. The Plan shall in no way be interpreted to require
the Corporation to transfer any amounts to a third party trustee or otherwise
hold any amounts in trust or escrow for payment to any
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participant or beneficiary under the terms of the Plan.
14. NONEXCLUSIVITY
Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Corporation for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan.
15. INDEMNIFICATION
To the extent permitted by applicable law, the Committee shall be
indemnified and held harmless by the Corporation against and from any and all
loss, cost, liability or expense that may be imposed upon or reasonably incurred
by the Committee in connection with or resulting from any claim, action, suit or
proceeding to which the Committee may be a party or in which the Committee may
be involved by reason of any action taken or failure to act under the Plan, and
against and from any and all amounts paid by the Committee (with the
Corporation's written approval) in the settlement thereof, or paid by the
Committee in satisfaction of a judgment in any such action, suit or proceeding
except a judgment in favor of the Corporation; subject, however, to the
conditions that upon the institution of any claim, action, suit or proceeding
against the Committee, the Committee shall give the Corporation an opportunity
in writing, at its own expense, to handle and defend the same before the
Committee undertakes to handle and defend it on the Committee's own behalf. The
foregoing right of indemnification shall not be exclusive of any other right to
which such persons may be entitled as a matter of law or otherwise, or any power
the Corporation may have to indemnify the Committee or hold the Committee
harmless.
The Committee and each officer and employee of the Corporation shall be
fully justified in reasonably relying or acting upon any information furnished
in connection with the administration of the Plan by the Corporation or any
employee of the Corporation. In no event shall any persons who are or were
members of the Committee, or an officer or employee of the Corporation, be
liable for any determination made or other action taken or any omission to act
in reliance upon any such information, or for any action (including furnishing
of information) taken or any failure to act, if in good faith.
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APPENDIX B: AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
REVERSE STOCK SPLIT
WHEREAS, the Board deems it advisable and in the best interests of the
Company and its stockholders to amend the Company's Restated Certificate of
Incorporation to effect a one-for-two and one-half reverse stock split (the
"Reverse Stock Split") of the issued and outstanding shares of the Company's
Common Stock, and, therefore, approves and recommends that the stockholders of
the Company adopt the following amendments to Article 4 of the Restated
Certificate of Incorporation of the Company:
Article 4.1 of the Restated Certificate of Incorporation of Metrocall, Inc.
shall be amended as follows (the proposed changes are underlined and in bold
type and the proposed deletions are stricken out):
4.1 AUTHORIZED SHARES.
The total number of shares of all classes of stock that the Corporation
shall have the authority to issue is 41,000,000 101,000,000 shares, of which
1,000,000 shares shall be Preferred Stock, having a par value of $0.01 per share
("Preferred Stock"), and 40,000,000 100,000,000 shall be classified as shares of
Common Stock, par value $0.01 per share ("Common Stock"). The Board of Directors
is expressly authorized to provide for the classification and reclassification
of any unissued shares of Preferred Stock or Common Stock and the issuance
thereof in one or more classes or series without the approval of the
stockholders of the Corporation.
Article 4 of the Restated Certificate of Incorporation of Metrocall, Inc.
shall be amended by adding the following section:
4.6 RECLASSIFICATION.
As of 5:00 p.m., eastern time, on , 1999 (the date of filing the
certificate of amendment with the Delaware Secretary of State) (the "Effective
Time"), each two and one-half (2.5) shares of common stock, par value $.01 per
share, issued and outstanding immediately prior to the Effective Time ("Old
Common Stock"), shall, automatically and without any action on the part of the
holder thereof, be reclassified and changed, pursuant to a reverse stock split,
into one share of outstanding common stock of the Corporation, par value $.01
per share ("New Common Stock"), subject to the treatment of fractional share
interests as described below. Each holder of a certificate or certificates that
immediately prior to the Effective Time represented outstanding shares of Old
Common Stock (the "Old Certificates," whether one or more) shall be entitled to
receive upon surrender of such Old Certificates to the Corporation's Transfer
Agent for cancellation, a certificate or certificates (the "New Certificates,"
whether one or more) representing the number of whole shares of New Common Stock
into and for which the shares of Old Common Stock formerly represented by such
Old Certificates so surrendered are reclassified under the terms hereof. From
and after the Effective Time, Old Certificates shall thereupon be deemed for all
corporate purposes to evidence ownership of New Common Stock in the
appropriately reduced whole number of shares. No certificates or scrip
representing fractional share interests in New Common Stock will be issued, and
no such fractional share interest will entitle the holder thereof to vote, or to
any rights of a stockholder of the Corporation. In lieu of any fraction of a
share of New Common Stock to which the holder would otherwise be entitled, the
holder will receive a cash payment in U.S. dollars equal to such fraction
multiplied by 2.5 times the average of the closing bid and asked price per share
of Common Stock as quoted on Nasdaq National Market for the five trading days
immediately preceding the Effective Time. If more than one Old Certificate shall
be surrendered at one time for the account of the same stockholder, the number
of whole shares of New Common Stock for which New Certificates shall be issued
shall be computed on the basis of the aggregate number of shares represented by
the Old Certificates so surrendered. In the event the Company's Transfer Agent
determines that a holder of Old Certificates has
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not surrendered all his certificates for exchange, the Transfer Agent shall
carry forward any fractional share until all certificates of that holder have
been presented for exchange such that payment for fractional shares to any one
person shall not exceed the value of one share. If any New Certificate is to be
issued in a name other than that in which it was issued, the Old Certificates so
surrendered shall be properly endorsed and otherwise in proper form for
transfer, and the stock transfer tax stamps to the Old Certificates so
surrendered shall be properly endorsed and otherwise in proper form for
transfer, and the person or persons requesting such exchange shall affix any
requisite stock transfer tax stamps to the Old Certificates surrendered, or
provide funds for the their purchase, or establish to the satisfaction of the
Transfer Agent that such taxes are not payable. From and after the Effective
Time, the amount of capital shall be represented by the shares of New Common
Stock into which and for which the shares of Old Common Stock are reclassified,
until thereafter reduced or increased in accordance with applicable law. All
references elsewhere in the Restated Certificate of Incorporation to the "Common
Stock" shall, after the Effective Time, refer to the New Common Stock.
RESOLVED, that the foregoing proposed amendments shall be presented to and
considered at the 1999 Annual Stockholders Meeting, and that the officers of the
Company, or any of them, hereby are authorized and directed to take such actions
as any of them may determine to be necessary or appropriate (such determination
to be conclusively, but not exclusively, evidenced by the taking of such actions
by such officers or officer) to solicit votes or proxies from the stockholders
in favor of such proposed amendments;
RESOLVED, that at any time prior to the filing of the foregoing amendments
to the Restated Certificate of Incorporation of the Company with the Secretary
of State of the State of Delaware with respect to the Reverse Stock Split,
notwithstanding authorization of the amendments by the stockholders of the
Company, the Board may choose not to file or to delay the filing of such
proposed amendments without further action by the stockholders;
RESOLVED, that the officers of the Company, or any of them, hereby are
directed and authorized, in the name and on behalf of the Company, to effect
appropriate adjustments pursuant to the anti-dilution provisions in the
documents governing the Company's convertible preferred stock or other
securities convertible into or exchangeable or exercisable for the Company's
Common Stock.
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PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS OF
METROCALL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P
The undersigned hereby appoints Edward E. Jungerman and Elliott H.
R Singer, and each of them singly, with full power of substitution to act
as the lawful agent and proxy for the undersigned and to vote all shares
O of common stock of Metrocall, Inc. that the undersigned is entitled to
vote and holds of record on March 12, 1999 at the Annual Meeting of
X Stockholders of Metrocall, Inc. to be held at The Ritz-Carlton Hotel,
located at 1250 South Hayes Street, Arlington, Virginia 22202, on May 5,
Y 1999, at 9:00 a.m., local time, and at any adjournments thereof, on all
matters coming before the Annual Meeting.
You may revoke this proxy at any time before it is voted by
delivering to the Assistant Secretary of the Company either a written
revocation of the proxy or a duly executed proxy bearing a later date,
or by appearing at the Annual Meeting and voting in person.
This proxy when properly executed will be voted in the manner you
have directed. If you do not specify any directions, this proxy will be
voted FOR proposals 1, 2, 3 and 4 and in accordance with the discretion
of Edward E. Jungerman and Elliott H. Singer, on such other matters that
may properly come before the meeting to the extent permitted by law.
The Undersigned acknowledges receipt from Metrocall, Inc. prior to
the execution of this proxy of a Notice of the Annual Meeting of
Stockholders and of a Proxy Statement dated April 5, 1999 relating to
the meeting.
ELECTION OF DIRECTORS. The nominees to serve as directors for three-year
terms are:
Harry L. Brock, Jr., Richard M. Johnston, Jackie R. Kimzey.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES ON THE REVERSE SIDE BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO
VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN AND RETURN THIS CARD.
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<PAGE> 45
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[X] PLEASE MARK YOUR 6615
VOTE AS IN THIS
EXAMPLE.
<TABLE>
<CAPTION>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL PROPOSALS
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<S> <C> <C> <C>
FOR WITHHELD
1. Election of [ ] [ ]
Directors.
(see reverse)
For, except vote withheld from the
following nominee(s):
----------------------------------
FOR AGAINST ABSTAIN
2. Ratification of the appointment by [ ] [ ] [ ]
the Board of Directors of Arthur
Andersen LLP as independent public
accountants of Metrocall, Inc. for the
fiscal year ending December 31,
1999.
I plan to attend the Annual Meeting [ ]
FOR AGAINST ABSTAIN
3. Amendment of the Metrocall 1996 [ ] [ ] [ ]
Stock Option Plan.
FOR AGAINST ABSTAIN
4. Amendment of the Restated [ ] [ ] [ ]
Certificate of Incorporation of
Metrocall, Inc.
5. In their discretion, Edward E.
Jungerman and Elliott H. Singer
are authorized to vote
such other business as may properly
come before the meeting or any
adjournments or postponements
thereof to the extent permitted by
law.
</TABLE>
Please sign exactly as name appears on this card. If shares are held jointly,
each holder may sign but only one signature is required. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title as such.
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SIGNATURE(S) DATE
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