<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 14, 1999.
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
METROCALL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4812 54-1215634
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
-------------------------
6677 RICHMOND HIGHWAY
ALEXANDRIA, VIRGINIA 22306
(703) 660-6677
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
WILLIAM L. COLLINS, III
CHIEF EXECUTIVE OFFICER
METROCALL, INC.
6677 RICHMOND HIGHWAY
ALEXANDRIA, VIRGINIA 22306
(703) 660-6677
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
-------------------------
WITH A COPY TO:
GEORGE P. STAMAS, ESQ.
THOMAS W. WHITE, ESQ.
WILMER, CUTLER & PICKERING
2445 M STREET, N.W.
WASHINGTON, D.C. 20037
(202) 663-6000
-------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering [ ]
-------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SECURITY PRICE(1) REGISTRATION FEE(2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11% Senior Subordinated Notes
of Metrocall, Inc due 2008......... $250,000,000 100% $250,000,000 $69,500
- ---------------------------------------------------------------------------------------------------------------------------------
Total................................ $250,000,000 100% $250,000,000 $69,500
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Calculated pursuant to Rule 457(f) solely for the purpose of calculating the
registration fee. Such amount represents the aggregate offering price for
11% Senior Subordinated Notes of Metrocall that Metrocall is offering to
accept in exchange for the 11% Senior Subordinated Notes of Metrocall
registered pursuant to this Registration Statement.
(2) Previously paid.
-----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT ISSUE THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS DECLARED EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED APRIL 14, 1999
PROSPECTUS
OFFER FOR ALL OUTSTANDING
11% SENIOR SUBORDINATED NOTES DUE 2008
IN EXCHANGE FOR
11% SENIOR SUBORDINATED NOTES DUE 2008
THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OF
[METROCALL LOGO]
-------------------------
Metrocall, Inc. offers to exchange up to $250,000,000 aggregate principal amount
of new, registered 11% Senior Subordinated Notes due 2008 for a like amount of
its outstanding unregistered 11% Senior Subordinated Notes due 2008.
KEY TERMS OF EXCHANGE OFFER
- - Expires at 5:00 p.m., New York City time, on , 1999, unless
extended.
- - No conditions other than that the exchange offer not violate applicable law or
any applicable interpretations of the Staff of the Securities and Exchange
Commission.
- - All outstanding Notes that are validly tendered and not validly withdrawn will
be exchanged.
- - Tenders of outstanding Notes may be withdrawn any time prior to the expiration
of this exchange offer.
-------------------------
INVESTING IN THE NOTES INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 14.
-------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NOTES TO BE DISTRIBUTED IN THIS
EXCHANGE OFFER, NOR HAVE ANY OF THESE ORGANIZATIONS DETERMINED THAT THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------------
The date of this prospectus is April , 1999
<PAGE> 3
NOTE ABOUT FORWARD-LOOKING STATEMENTS
This prospectus includes or incorporates forward-looking statements. We have
based these forward-looking statements on our current expectations and
projections about future events. These forward-looking statements are subject to
risks, uncertainties and assumptions about Metrocall, including, among other
things:
- Metrocall's high leverage and need for substantial capital;
- Metrocall's ability to service its debt;
- Metrocall's history of operating losses;
- the restrictive covenants governing Metrocall's indebtedness;
- the amortization of Metrocall's intangible assets;
- Metrocall's ability to integrate acquisitions and realize cost savings
from the elimination of duplicative functions of acquired businesses;
- the risks associated with Metrocall's ability to implement its business
strategies;
- the impact of competition and technological developments;
- satellite transmission failures;
- subscriber turnover;
- Metrocall's ability to implement its Year 2000 readiness plan;
- litigation;
- regulatory changes; and
- dependence on key suppliers.
Other matters set forth in this prospectus or in the documents incorporated by
reference may also cause actual results in the future to differ materially from
those described in the forward-looking statements. We undertake no obligation to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. In light of these risks, uncertainties
and assumptions, the forward-looking events discussed in this prospectus might
not occur.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange Act
of 1934, as amended, and, therefore, file reports, proxy statements and other
information with the Securities and Exchange Commission (SEC). You can inspect
and copy all of this information at the Public Reference Room maintained by the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. In addition, the SEC maintains a web site that contains reports,
proxy statements and information statements and other information regarding
issuers, such as us, that file electronically with the SEC. The address of this
web site is http://www.sec.gov.
This prospectus, which constitutes a part of a registration statement on Form
S-4 filed by us with the SEC under the Securities Act of 1933, omits certain of
the information set forth in the registration statement. Accordingly, you should
review the registration statement and its exhibits for further information with
respect to us and our common stock. Copies of the registration statement and its
exhibits are on file at the offices of the
i
<PAGE> 4
SEC. Furthermore, statements contained in this prospectus concerning any
document filed as an exhibit are not necessarily complete and, in each instance,
we refer you to the copy of such document filed as an exhibit to the
registration statement. You should rely only on the information or
representations provided in this prospectus and the registration statement. We
have not authorized anyone to provide you with different information.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to incorporate by reference the information we file with them,
which means that we can disclose important information to you by referring you
to those documents. The information incorporated by reference is considered to
be part of this prospectus, and information that we file later with the SEC will
automatically update and supersede this information. We incorporate by reference
into this Prospectus the following documents or information filed with the SEC:
1. Metrocall's Annual Report on Form 10-K for the year ended December
31, 1998, filed with the SEC on March 31, 1999;
2. Metrocall's Current Report on Form 8-K dated October 2, 1998, as
amended January 27, 1999.
3. All documents filed by Metrocall pursuant to Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act subsequent to the date of the
registration statement of which this Prospectus is part and prior to the
effectiveness thereof or subsequent to the date of this Prospectus and
prior to the termination of the offering made hereby.
As noted above, any statement contained in this prospectus, or in any documents
incorporated or deemed to be incorporated by reference in this prospectus shall
be deemed to be modified or superseded for the purpose of this prospectus to the
extent that a subsequent statement contained in this prospectus or in any
subsequently filed document which also is or is deemed to be incorporated by
reference in this Prospectus modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
We will provide without charge to each person, including any beneficial owner,
to whom this prospectus is delivered, upon written or oral request, a copy of
any or all documents that are incorporated into this prospectus by reference
(other than exhibits to such documents unless such exhibits are specifically
incorporated by reference into the documents that this prospectus incorporates).
You should direct such requests to Metrocall, Inc., 6677 Richmond Highway,
Alexandria, Virginia 22306, Attention: Shirley B. White, Assistant Secretary. In
order to ensure timely delivery of the documents, any request should be made no
later than five (5) business days prior to the expiration date of this exchange
offer.
ii
<PAGE> 5
SUMMARY
You should read the following summary together with the more detailed
information regarding our company, the Notes we are offering, and our financial
statements and notes thereto included elsewhere or incorporated by reference in
this prospectus.
THE COMPANY
We are a leading provider of local, regional and national paging and other
wireless messaging services. Through our nationwide wireless network, we provide
messaging services to over 1,000 U.S. cities, including the top 100 Standard
Metropolitan Statistical Areas. Since 1993, our subscriber base has increased
from less than 250,000 to more than 5.6 million. We have achieved this growth
through a combination of internal growth and a program of mergers and
acquisitions. As of December 31, 1998, we were the second largest messaging
company in the United States based on the number of subscribers.
PAGING AND WIRELESS MESSAGING INDUSTRY OVERVIEW
We believe that paging and wireless messaging is the most cost-effective and
reliable means of conveying a variety of information rapidly over a wide
geographic area either directly to a person traveling or to various fixed
locations. Conventional paging, as a one-way communications tool, is a
lower-cost way to communicate than existing two-way communication methods. For
example, the pagers and air time required to transmit a typical message cost
less than the equipment and air time for cellular and personal communications
services (PCS) telephones. Furthermore, pagers operate for longer periods due to
superior battery life, often exceeding one month on a single battery. Paging
subscribers generally pay a flat monthly service fee, which covers a certain
number of messages sent to the subscriber. In addition, pagers are unobtrusive
and portable and historically have withstood substantial technological advances
in the communications industry. Many mobile telephone customers use pagers in
conjunction with their telephones to screen incoming calls and minimize battery
wear and usage charges.
Although the U.S. paging industry has over 500 licensed paging companies, we
estimate that the ten largest paging companies, including us, currently serve
approximately 75% of the total paging subscribers in the United States. These
paging companies are facilities-based, Commercial Mobile Radio Service (CMRS)
providers, previously classified as either Radio Common Carrier (RCC) or Private
Carrier Paging (PCP) operators, servicing over 100,000 subscribers each in
multiple markets and regions.
We believe that the future of the paging and wireless communications industry
will include technological improvements that permit increased service and
applications, and consolidation of smaller, single-market operators and larger,
multi-market paging companies.
Recent technological advances include new paging services such as "confirmation"
or "response" paging that send a message back to the paging system confirming
that a paging message has been received, digitized voice paging, two-way paging
and notebook and sub-notebook computer wireless data applications. Narrowband
PCS offers the ability to provide some of these services on an expanded basis.
Narrowband PCS utilizes a two-way spectrum, which offers advantages to the
traditional one-way spectrum that some paging networks use. The two-way spectrum
enables a paging device to emit a signal that notifies the network of the paging
device's location and permits the network to send the message to transmitters
closest to the paging device. In contrast, a one-way spectrum requires the
message to be sent to all transmitters within a geographic area and not
necessarily to those
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<PAGE> 6
transmitters closest to the paging device. Therefore, a two-way spectrum
utilizes less air time of the paging network and creates more air time capacity
particularly in the areas farthest from the paging device. While these
narrowband PCS services have been proven technologically feasible, their
economic viability has not been fully tested based on the cost of licenses,
infrastructure and capital requirements; increased operating costs, and
competitive, similarly priced two-way broadband PCS and cellular services.
OUR BUSINESS STRATEGY
Our business strategy is to increase shareholder value by expanding our
subscriber base and increasing revenues, cost efficiencies, and operating cash
flow. Operating cash flow is defined as EBITDA (earnings before interest, taxes,
depreciation and amortization). The principal elements of this strategy include
the following:
MANAGE CAPITAL REQUIREMENTS AND INCREASE FREE CASH FLOW. Our key financial
objective is to manage capital requirements and increase free cash flow. We
define free cash flow as operating cash flow less capital expenditures and
interest expense. To achieve this objective, we focus on the following:
- focusing on selling, rather than leasing, paging units in order to reduce
capital expenditure requirements per subscriber;
- increasing revenues and cash flow through sales of value-added advanced
messaging and information services which generate higher average monthly
revenue per unit (ARPU) than standard messaging or paging services; and
- increasing the utilization of our fully developed nationwide network to
serve more customers per frequency and enter new markets with minimal
capital outlay.
MAXIMIZE INTERNAL GROWTH POTENTIAL. We have grown internally by broadening our
distribution network and expanding our target market to capitalize on the
growing appeal of messaging and other wireless products and services. Since
December 31, 1994, we have added approximately 1.4 million new subscribers
through internal growth. We have expanded our direct and indirect distribution
channels to gain access to different market segments. As part of this strategy,
we have formed strategic alliances with:
- local, long-distance, cellular and PCS providers, such as AT&T Wireless
Services Inc. (AT&T Wireless), Bell Atlantic, Qwest, Vanguard Cellular
and ALLTEL;
- cable television companies, such as Adelphia Cable Communications and
Suburban Cable; and
- retail outlets, such as Circle K Stores, AutoZone, Ritz Camera and
Walgreens.
We have also developed strategic marketing relationships with America Online and
Washington Gas and Light Company, which are designed to further enhance our
market presence. We have also entered into a broadband PCS alliance with AT&T
Wireless Inc., which will enable us to further diversify our product mix by
distributing AT&T's digital PCS wireless products and AT&T's Digital One
Rate(SM) service plans via our direct distribution channels. In 1999, we will
continue to expand our multi-tiered distribution network and marketing
relationships. We believe that these initiatives will continue to increase our
sales and broaden the range and diversity of products that we currently offer to
consumers.
EXPAND MARKET PRESENCE THROUGH CONSOLIDATION. We have expanded our subscriber
base and geographic coverage through consolidation. On October 2, 1998, we
acquired the
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<PAGE> 7
Advanced Messaging Division (AMD) of AT&T Wireless, the paging operations of
AT&T. The AMD acquisition increased the size of our subscriber base by adding
1.2 million subscribers to our existing customer base. As part of the
acquisition, we also acquired a 50KHz/50KHz narrowband personal communications
service license (NPCS license). We expect to realize the following benefits from
the AMD acquisition:
- GREATER SCALE AND SCOPE. The AMD acquisition increases our geographic
presence to include Alaska, Arkansas, Colorado, Kansas, Minnesota,
Missouri, Oklahoma, Oregon, Utah and Washington. In addition, it adds to
our existing presence in the Northeast, Southeast, Midwest, Mid-Atlantic
and Southwest and West.
- PREMIUM, HIGH REVENUE CUSTOMER BASE. The AMD acquisition adds premium,
high revenue subscribers to our existing customer base. AMD's ARPU has
historically been higher than the paging industry average. AMD provided
its paging and messaging services to large business customers, which
typically generate higher ARPU than individual customers. Approximately
23% of AMD's subscribers were high-ARPU alphanumeric customers, one of
the highest percentages in the industry.
- SYNERGIES. As we integrate AMD's operations with our own paging
operations, we expect to realize significant synergies. For example, AMD
provided nationwide paging services without the benefit of a nationwide
network. As a result, AMD spent $29.3 million in 1997 reselling other
carriers' services, which adversely affected its margins. Over time, we
expect to switch a portion of AMD's customers to our nationwide network,
which will reduce third-party costs and increase the utilization of our
network. In addition, we expect to realize significant annual cost
savings from elimination of duplicative AMD functions. We expect to
complete the integration of AMD by the fourth quarter of 1999.
Since July 1996, we have acquired the following companies, which have added
approximately 3.6 million subscribers:
<TABLE>
<CAPTION>
ACQUIRED COMPANY ACQUISITION DATE NO. OF SUBSCRIBERS
- ---------------- ----------------- ------------------
<S> <C> <C>
Parkway Paging, Inc. (Parkway)............ July 16, 1996 140,000
Satellite Paging and Messaging Network
(collectively, Satellite)............... August 30, 1996 100,000
A+ Network, Inc. (A+ Network)............. November 15, 1996 660,000
Page America Group, Inc. (Page America)... July 1, 1997 198,000
ProNet Inc. (ProNet)...................... December 30, 1997 1,286,000
AMD....................................... October 2, 1998 1,215,000
---------
Total................................ 3,599,000
=========
</TABLE>
We believe that our enhanced nationwide coverage will give us a competitive
advantage in gaining additional subscribers in the future. We may continue to
expand our geographic penetration and subscriber base through future
acquisitions, but only if we identify potential candidates that satisfy certain
criteria. These criteria include valuation, geographic coverage, regulatory
licenses, type of consideration, availability of financing and accretive and
de-leveraging benefits.
PURSUE COST-EFFICIENT TECHNOLOGICAL ADVANCES. We have pursued technological
advances that are proven, cost-efficient and consistent with our strategy to
increase free cash flow.
3
<PAGE> 8
For instance, we have historically concentrated our capital spending on
developing our local, regional and nationwide one-way paging networks. We have
also recently taken steps to enter the two-way paging business now that the
technology has been proven and gained initial market acceptance. As part of the
AMD acquisition, we acquired the NPCS license in October 1998. Also, in October
1998, we entered into a five-year strategic alliance with PageMart Wireless,
Inc., a leading provider of paging and messaging services to develop and offer
narrowband PCS. Our alliance consists of two phases: a switch-based resale phase
and a shared network build-out phase. In the first phase, we will provide
narrowband PCS using PageMart's advanced messaging transmit and receive network.
We began offering guaranteed-delivery messaging in the first quarter of 1999. We
expect the first phase to permit us to begin offering two-way messaging by the
middle of 1999. In the second phase, we will install and operate our own
outbound narrowband PCS frequency on our nationwide network and PageMart will
provide turnkey installation and operation of a receiver network. We believe
this alliance will enable us to comply with the FCC's mandated narrowband PCS
build-out requirements. Under the alliance, we will share certain capital
expenditures and operating expenses. We believe that the PageMart alliance will
enable us to provide narrowband PCS in a faster and more cost-effective manner
than if we developed the network ourselves. The development of the NPCS license
acquired in the AMD acquisition and the PageMart alliance will allow us to
increase capacity and reduce our long-term cost of message delivery through
frequency reuse. It will also permit us to enter the market for advanced
messaging services, including two-way paging and data intensive messaging. We
are also pursuing other strategic marketing and development efforts to deliver
advanced messaging services, such as e-mail notification and user-specific data
services, to our paging subscribers through the Internet.
OPTIMIZE CUSTOMER RELATIONSHIPS. We seek to maintain a close relationship with
our existing customers and to develop stronger relationships with the
subscribers of newly acquired companies by maintaining decentralized sales,
marketing and customer service operations and providing value-added services
tailored to customers' needs. The value-added services we provide are billed as
enhancements to our basic service and generally result in higher ARPU. Our
specific value-added services include:
- Direct View, which permits organizations to use our wireless network to
broadcast news, sports, stock data and general and customized information
to LED display signs;
- Pager ID, which identifies the name of the person placing the call to the
pager;
- customized wireless messaging applications for specific segments of the
public, such as the medical community; and
- an enterprise-wide messaging management software and database system.
MAINTAIN LOW COST OPERATIONS AND IMPROVE MARGINS. A key component of our
business strategy is to make investments that improve our operating efficiencies
thereby leading to margin improvement. In 1998, our operating efficiencies
improved because we continued to invest in high quality, large capacity
infrastructure and systems updates and to centralize administrative and
back-office functions. During 1998, we implemented a new financial accounting
management information system, completed a number of billing system upgrades,
added a new inventory management system and began using an Internet based tower
site management application. We also integrated the administrative functions of
newly acquired companies which enabled us to reduce our general and
administrative expenses per subscriber.
4
<PAGE> 9
We also believe that as use of our strategic alliances and other indirect
distribution channels increase, our operating costs will decrease as
participants in these channels typically bear a portion of our sales and
customer service expenses. Similarly, we believe our focus on maximizing monthly
recurring revenues and promoting value-added services will improve operating
margins. We also recently entered into a strategic long-term arrangement with
Motorola to optimize supply chain logistics. As part of this arrangement,
Motorola will ship pager units directly to our strategic retail partners. In
addition, we and Motorola will work to develop an electronic data interchange to
enhance Motorola's ability to supply page units to our customers. We expect this
distribution arrangement to reduce handling costs, inventory levels and cycle
times.
-------------------------
Metrocall was organized as a Delaware corporation in October 1982. Metrocall
common stock is traded on the Nasdaq Stock Market under the symbol "MCLL."
Metrocall's principal executive offices are located at 6677 Richmond Highway,
Alexandria, Virginia 22306 and its telephone number is (703) 660-6677.
5
<PAGE> 10
THE EXCHANGE OFFER
We summarize below the terms of the exchange offer. This summary is not
complete, and you should read the detailed description of the offer under "The
Exchange Offer" below.
GENERAL......................... Metrocall is offering up to $250,000,000
aggregate principal amount of new Notes in
exchange for a like principal amount of old
Notes. Metrocall issued the Notes on
December 22, 1998 to certain placement
agents. The placement agents subsequently
resold the Notes in exempt transactions.
Metrocall is making the exchange offer in
order to satisfy its obligations under a
registration rights agreement.
EXPIRATION DATE................. 5:00 p.m., New York City time, on
, 1999 or any subsequent date to
which the exchange offer is extended.
CONDITIONS TO THE EXCHANGE
OFFER........................... The exchange offer is not subject to any
conditions other than that the offer does
not violate applicable law or any applicable
interpretation of the staff of the SEC. The
offer is not conditioned upon any minimum
principal amount of Notes being tendered.
Metrocall reserves the right
- to delay the acceptance of the Notes for
exchange,
- to terminate the exchange offer,
- to extend the expiration date of the
exchange offer and retain all Notes
tendered pursuant to the exchange offer,
subject to the right of holders of Notes
to withdraw their tendered Notes, or
- to waive any condition or otherwise amend
the terms of the exchange offer in any
respect.
WITHDRAWAL RIGHTS............... You may withdraw a tender of Notes at any
time on or prior to the expiration date by
delivering a written notice of such
withdrawal to the exchange agent.
PROCEDURES FOR TENDERING OLD
NOTES......................... In order to tender your Notes, you must
complete and sign a letter of transmittal in
accordance with the letter's instructions.
You must forward the letter of transmittal
and any other required documents to the
exchange agent, together with the Notes to
be tendered or in compliance with the
specified procedures for guar-
6
<PAGE> 11
anteed delivery of Notes. Certain brokers,
dealers, commercial banks, trust companies
and other nominees may also tender Notes by
book-entry transfer. If your Notes are
registered in the name of one of these
entities, you are urged to contact such
person promptly if you wish them to tender
Notes pursuant to the exchange offer. Do not
send letters of transmittal and certificates
representing Notes to Metrocall. Send them
only to the exchange agent. The exchange
agent can answer your questions regarding
how to tender your Notes.
RESALES OF NEW NOTES............ Metrocall is making the exchange offer in
reliance on the position of the SEC Staff as
set forth in certain interpretive letters
addressed to parties in other transactions.
Based on these interpretations, Metrocall
believes that new Notes issued pursuant to
this exchange offer may be offered for
resale, resold and otherwise transferred by
a holder thereof (other than a holder who is
a broker-dealer) without further compliance
with the registration and prospectus
delivery requirements of the Securities Act,
provided that such new Notes are acquired in
the ordinary course of such holder's
business and that such holder is not
participating, and has no arrangement or
understanding with any person to
participate, in a distribution (within the
meaning of the Securities Act) of such new
notes. Special rules apply, however, to
resales by "affiliates" of Metrocall or
"participating broker-dealers." See "The
Exchange Offer -- Resale of New Notes" and
"Plan of Distribution."
INTEREST........................ Metrocall will pay accrued interest on old
Notes you exchange to, but not including,
the issuance date of the new Notes.
Metrocall will pay such interest to you with
the first interest payments on the new
Notes.
EXCHANGE AGENT.................. The exchange agent is First Union National
Bank. The exchange agent's addresses, and
telephone and facsimile numbers of the are
set forth in "The Exchange Offer -- Exchange
Agent" and in the Letter of Transmittal.
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<PAGE> 12
USE OF PROCEEDS................. Metrocall will not receive any cash proceeds
from the issuance of the new Notes. The net
proceeds from the initial sale of Notes was
approximately $242.6 million, of which $229
million was used to repay outstanding
amounts under Metrocall's existing credit
facility. See "Use of Proceeds."
CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES....... You should review the information set forth
under "Certain United States Federal Income
Tax Consequences" prior to tendering old
Notes in the exchange offer.
8
<PAGE> 13
THE NEW NOTES
We summarize below the key terms of the new Notes. This summary is not complete,
and you should read the detailed description of the Notes under "Description of
Notes," below.
ISSUER.......................... Metrocall, Inc.
NOTES OFFERED................... The terms of the new Notes will be identical
in all material respects to the old Notes,
except that the new Notes will not contain
transfer restrictions and will not provide
for increased interest for certain future
periods.
MATURITY........................ September 15, 2008.
INTEREST........................ Payable semi-annually in cash on March 15
and September 15 of each year.
OPTIONAL REDEMPTION............. We may redeem any of the Notes beginning on
September 15, 2003. The initial redemption
price is 105.5% of the principal amount,
plus accrued interest. The redemption price
will decline each year after 2003 and will
be 100% of the principal amount, plus
accrued interest, beginning on September 15,
2006.
CHANGE OF CONTROL............... Upon a change of control (as defined under
"Description of Notes"), we will be required
to make an offer to purchase the Notes. The
purchase price will equal 101% of the
principal amount of the Notes on the date of
purchase plus accrued interest. We may not
have sufficient funds available at the time
of any change of control to make any
required debt repayment (including
repurchases of the Notes).
RANKING......................... The Notes will rank behind all our existing
and future senior debt. At December 31,
1998, the Notes:
- were subordinated to $44.8 million of
senior debt; and
- ranked equally with $700.3 million of
other senior subordinated debt.
CERTAIN COVENANTS............... The terms of the Notes restrict our ability
and the ability of certain of our
subsidiaries to:
- incur additional indebtedness,
- pay dividends or make distributions in
respect of capital stock,
- repurchase or redeem capital stock,
- make certain investments and other
restricted payments,
9
<PAGE> 14
- create liens,
- enter into transactions with stockholders
or affiliates,
- sell assets,
- issue or sell stock of certain
subsidiaries, and
- merge or consolidate with other companies.
However, these limitations will be subject
to a number of important qualifications and
exceptions.
BOOK-ENTRY: DELIVERY
AND FORM...................... New Notes exchanged for old Notes will be
represented by one or more permanent global
Notes in definitive, fully registered form,
deposited with a custodian for, and
registered in the name of a nominee of, The
Depository Trust Company (DTC). Beneficial
interests in permanent global Notes will be
shown on, and transfers thereof will be
effected through, records maintained by DTC
and its participants.
RISK FACTORS
YOU SHOULD CONSIDER CAREFULLY CERTAIN MATTERS RELATING TO THE COMPANY, ITS
BUSINESS AND AN INVESTMENT IN THE NOTES. SEE "RISK FACTORS."
10
<PAGE> 15
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table presents historical consolidated financial data of Metrocall
for the five years ended December 31, 1998. We derived the historical
consolidated financial data for each of the five years in the period ended
December 31, 1998 from our audited Consolidated Financial Statements. You should
read the following information together with our Consolidated Financial
Statements and notes thereto which are included in our Annual Report on Form
10-K for the year ended December 31, 1998, which has been incorporated by
reference.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1994(a) 1995 1996(a) 1997(a) 1998(a)
-------- -------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS EXCEPT FOR UNIT DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Service, rent and maintenance
revenues......................... $ 49,716 $ 92,160 $ 124,029 $ 249,900 $ 416,352
Product sales...................... 8,139 18,699 25,928 39,464 48,372
-------- -------- ---------- ---------- ----------
Total revenues................ 57,855 110,859 149,957 289,364 464,724
Net book value of products sold.... (6,962) (15,527) (21,633) (29,948) (31,791)
-------- -------- ---------- ---------- ----------
50,893 95,332 128,324 259,416 432,933
Operating expenses:
Service, rent and maintenance...... 10,632 20,080 28,567 61,392 112,774
Selling and marketing.............. 7,313 15,546 24,101 53,802 73,546
General and administrative(b)...... 16,796 33,985 42,905 73,753 121,644
Depreciation and amortization...... 13,829 31,504 58,196 91,699 234,948
-------- -------- ---------- ---------- ----------
Loss from operations............... (2,323) (5,783) (25,445) (21,230) (109,979)
Interest and other income
(expense)(c)..................... 161 314 (607) 156 849
Interest expense................... (3,726) (12,533) (20,424) (36,248) (64,448)
-------- -------- ---------- ---------- ----------
Loss before income tax benefit and
extraordinary item............... (1,242) (18,002) (46,476) (57,322) (173,578)
Income tax provision benefit....... 152 595 1,021 4,861 47,094
-------- -------- ---------- ---------- ----------
Loss before extraordinary item..... (1,090) (17,407) (45,455) (52,461) (126,484)
Extraordinary item(c).............. (1,309) (2,695) (3,675) -- --
-------- -------- ---------- ---------- ----------
Net loss......................... (2,399) (20,102) (49,130) (52,461) (126,484)
Preferred dividends................ -- -- (780) (7,750) (11,767)
-------- -------- ---------- ---------- ----------
Loss attributable to common
stockholders.................. $ (2,399) $(20,102) $ (49,910) $ (60,211) $ (138,251)
======== ======== ========== ========== ==========
</TABLE>
11
<PAGE> 16
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1994(a) 1995 1996(a) 1997(a) 1998(a)
-------- -------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS EXCEPT FOR UNIT DATA)
<S> <C> <C> <C> <C> <C>
OPERATING AND OTHER DATA:
Net cash provided by operating
activities....................... $ 11,796 $ 14,000 $ 15,608 $ 27,166 $ 41,154
Net cash used in investing
activities....................... $(19,227) $(44,528) $ (327,904) $ (176,429) $ (191,747)
Net cash provided by financing
activities....................... $ 9,190 $151,329 $ 199,639 $ 163,242 $ 134,133
EBITDA(d).......................... $ 16,152 $ 27,771 $ 32,751 $ 70,469 $ 124,969
EBITDA margin(d)(e)................ 31.7% 29.1% 25.5% 27.2% 28.9%
Ratio of earnings to fixed
charges(f)....................... -- -- -- -- --
ARPU(g)............................ $ 10.53 $ 9.15 $ 8.01 $ 8.25 $ 7.57
Average monthly operating expense
per unit(h)...................... $ 7.36 $ 6.71 $ 6.28 $ 6.47 $ 5.66
Units in service (end of
period)(a)....................... 755,546 944,013 2,142,351 4,030,836 5,659,550
Units in service per employee (end
of period)....................... 1,007 1,047 1,086 1,366 1,512
Capital expenditures............... $ 19,091 $ 44,058 $ 62,110 $ 69,935 $ 78,658
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents............ $ 2,773 $123,574 $ 10,917 $ 24,896 $ 8,436
Working capital (deficit)............ (5,277) 116,009 (7,267) (24,631) (27,876)
Total assets......................... 200,580 340,614 646,577 1,087,014 1,262,687
Total debt........................... 104,846 154.,055 327,792 599,941 743,334
Redeemable preferred stock........... -- -- 31,231 53,982 160,742
Total stockholders' equity........... 68,136 155,238 166,298 179,496 45,429
</TABLE>
- -------------------------
a) Consolidated statements of operations data for fiscal years 1994, 1996, 1997
and 1998 include the results of operations of acquired companies from their
respective acquisition dates. In May 1997, we sold the assets of our
telemessaging operations (acquired through merger on November 15, 1996);
therefore, results of operations for the year ended December 31, 1997 include
telemessaging operations through the date of sale only. Consolidated
statements of operations data for fiscal year 1997 exclude the operations of
ProNet because the merger was completed on December 30, 1997. Units in
service at December 31, 1997, include approximately 1.3 million units
acquired in the ProNet merger.
b) Includes the impact of one-time, non-recurring amounts for severance and
other compensation costs incurred as part of a management reorganization of
approximately $2.0 million in fiscal year 1995.
c) In fiscal years 1994 and 1995, we refinanced balances outstanding under our
then existing credit facilities and recorded extraordinary items of $1.3
million and $2.7 million, respectively, representing charges to expense
unamortized deferred financing costs and other costs, net of any income tax
benefits, related to those credit facilities. In 1996, we recorded an
extraordinary item
12
<PAGE> 17
for costs of approximately $3.7 million paid to purchase the A+ Network
11 7/8% senior subordinated notes outstanding. In 1995, we incurred breakage
fees of approximately $1.7 million associated with the termination of two
interest rate swap agreements, which have been included in interest and other
income (expense).
d) EBITDA (earnings before interest, taxes, depreciation and amortization, and
certain one-time charges), while not a measure under generally accepted
accounting principles (GAAP), is a standard measure of financial performance
in the paging industry; EBITDA should not be considered in isolation or as an
alternative to net income (loss), income (loss) from operations, cash flows
from operating activities, or any other measure of performance under GAAP.
EBITDA is, however, an approximation of the primary financial measure by
which our covenants are calculated under our indentures and our credit
facility. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Financial Condition, Liquidity and Capital
Resources" included in our Annual Report on Form 10-K for the year ended
December 31, 1998 and incorporated herein by reference for discussion of
significant capital requirements and commitments. In 1995, EBITDA excludes
non-recurring amounts of approximately $2.0 million incurred as part of a
management reorganization.
e) EBITDA margin is calculated by dividing (a) EBITDA by (b) the amount of total
revenues less the net book value of products sold.
f) Earnings were insufficient to cover fixed charges in 1994, 1995, 1996, 1997
and 1998 by $1.2 million, $18.0 million, $46.5 million, $57.3 million and
$173.6 million, respectively.
g) ARPU (average monthly paging revenue per unit) is calculated by dividing (a)
service, rent and maintenance revenues for the period by (b) the average
number of units in service for the period. The ARPU calculation excludes
revenues derived from non-paging services such as telemessaging, long
distance and cellular telephone.
h) Average monthly operating expense per unit is calculated by dividing (a)
total recurring operating expenses before depreciation and amortization for
the period by (b) the average number of units in service for the period. For
this calculation, operating expenses exclude non-recurring amounts for
severance and other compensation costs incurred as part of a management
reorganization of approximately $2.0 million in 1995.
13
<PAGE> 18
RISK FACTORS
You should carefully consider those risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing us; additional risks and uncertainties not presently known to
us or that we currently deem immaterial may also impair our business operations.
If any of these risks actually occur, our business, financial condition or
results of operations could be materially adversely affected. In such case, you
may lose all or part of your investment. You should refer to documents we file
with the SEC after the date of this prospectus, which may include new or updated
information regarding the risks described below.
METROCALL'S BUSINESS IS SUBJECT TO VARIOUS RISKS
This prospectus incorporates by reference the risk factors described in our
Annual Report on Form 10-K for the year ended December 31, 1998 under
"Additional Factors Affecting Future Operating Results and Financial Condition."
THE NOTES WILL BE SUBORDINATED TO METROCALL'S SENIOR DEBT
The Notes will be subordinated to all of our present and future senior debt. As
of December 31, 1998, we had $44.8 million of senior debt. The Notes will not be
secured by any of our assets. Our obligations under our credit facility are
secured by substantially all of our assets.
If we became insolvent or were liquidated, or if payments under the credit
facility were accelerated, our assets would be available to pay obligations on
the Notes only after all payments had been made on our secured and other senior
debt. We cannot assure you that sufficient assets will remain to make any
payments on the Notes. In addition, all payments on the Notes will be blocked in
the event of a payment default on senior debt and may be blocked for up to 179
of 360 consecutive days in the event of certain non-payment defaults on senior
debt.
The Notes will rank equally with our existing senior subordinated debt. As of
December 31, 1998, we had $700.3 million principal amount of existing senior
subordinated debt, including the Notes. If our assets remaining after the senior
debt was paid were insufficient to repay all senior subordinated debt, the Notes
would share proportionately with the other senior subordinated debt.
THERE WILL BE NO PUBLIC TRADING MARKET FOR THE NOTES
No active trading market currently exists for the Notes and none may develop.
The Notes will not be listed on any securities exchange. If any of the Notes are
traded after we issue them, the Notes may trade at a discount from the initial
offering price. The trading price may depend upon prevailing interest rates, the
market for similar securities, and other factors, including general economic
conditions and our financial condition, performance and prospects. Although the
placement agents have informed us that they intend to make a market in the
Notes, they are not obligated to do so and may discontinue any market-making
activities at any time without notice.
NOTES THAT ARE NOT EXCHANGED WILL BE SUBJECT TO TRANSFER RESTRICTIONS
The old Notes were not registered under the Securities Act or any state
securities laws. Therefore, they may not be offered, sold or otherwise
transferred except in compliance with the registration requirements of the
Securities Act and any other applicable securities
14
<PAGE> 19
laws, or pursuant to an applicable exemption. Untendered Notes which remain
outstanding after consummation of the exchange offer will continue to bear a
legend reflecting these restrictions on transfer. If you still hold untendered
Notes after completion of the exchange offer, you will not be entitled to any
rights to have such Notes registered under the Securities Act. See "Description
of the Old Notes." We do not intend to register any untendered Notes that remain
outstanding after consummation of the exchange offer.
Your ability to sell unregistered Notes that are not tendered or accepted in the
exchange offer could be adversely affected by other holders tendering and
receiving registered Notes.
In the event that the exchange offer is not consummated and a shelf registration
statement is not declared effective on or prior to June 22, 1999, the annual
interest rate borne by the Notes will be increased by .5% per annum until the
exchange offer is consummated or a shelf registration statement is declared
effective.
USE OF PROCEEDS
Metrocall will not receive any cash proceeds from the issuance of the new Notes.
On December 22, 1998, Metrocall received net proceeds of $242.6 million from the
issuance of the Notes, which were used to repay outstanding indebtedness under
its credit facility and for other corporate purposes.
15
<PAGE> 20
CAPITALIZATION
This table sets forth Metrocall's capitalization as of December 31, 1998. Since
the exchange offer will involve an exchange of outstanding securities, it will
have no effect on capitalization. You should read the information set forth
below together with "Unaudited Pro Forma Condensed Combined Financial Data,"
included herein, and Metrocall's Consolidated Financial Statements and the AMD
Combined Financial Statements and the notes thereto which have been incorporated
by reference.
<TABLE>
<CAPTION>
DECEMBER 31, 1998
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Cash and cash equivalents................................ $ 8,436
=========
Short-term debt:
Current portion of long-term debt...................... $ 771
=========
Long-term debt:
Borrowings under Credit Facility....................... $ 40,000
11 7/8% Senior Subordinated Notes Due 2005 (A+
Notes).............................................. 284
11 7/8% Senior Subordinated Notes Due 2005 (ProNet
Notes).............................................. 100,000
10 3/8% Senior Subordinated Notes Due 2007............. 150,000
9 3/4% Senior Subordinated Notes Due 2007.............. 200,000
11% Senior Subordinated Notes Due 2008(1).............. 248,260
New Notes offered hereby(1)............................
Capital lease obligations.............................. 3,575
Other long-term debt................................... 444
---------
742,563
---------
Series A Convertible Preferred Stock..................... 45,441
Series B Junior Convertible Preferred Stock(2)........... 18,391
Series C Convertible Preferred Stock..................... 96,910
Stockholders' equity:
Common stock........................................... 416
Additional paid-in capital............................. 340,249
Retained deficit....................................... (295,236)
---------
Total stockholders' equity.......................... 45,429
---------
Total capitalization.............................. $ 984,734
=========
</TABLE>
- -------------------------
1) Net of a discount of $1.74 million.
2) In January 1999, Metrocall repurchased and retired all the Series B Junior
Convertible Preferred Stock for $16.2 million. The transaction was financed
with borrowings under Metrocall's credit facility .
16
<PAGE> 21
THE EXCHANGE OFFER
This section sets forth the terms and conditions on which Metrocall (referred to
here as the "Company") is offering to exchange new, registered Notes ("New
Notes") for its outstanding, unregistered Notes ("Old Notes"). The offer made by
this prospectus and the related letter of transmittal is referred to as the
"Exchange Offer" and certain other terms are defined below.
PURPOSE AND EFFECT
In connection with the initial sale of the Old Notes, the Company entered into a
registration rights agreement with the placement agents, pursuant to which the
Company agreed, among other things, to use its best efforts to file under the
Securities Act a registration statement relating to an offer to exchange the Old
Notes for New Notes with terms identical in all material respects (except as
described below) and to have such Registration Statement remain effective until
the closing of the Exchange Offer. The Exchange Offer is being made to satisfy
the contractual obligations of the Company under the registration rights
agreement. The approval of Federal or State authorities is not required for
consummation of the Exchange Offer.
The Old Notes provide, among other things, that in the event the Exchange Offer
is not consummated and a shelf registration statement is not declared effective
on or prior to June 22, 1999, the annual interest rate of the Old Notes will
increase by .5% per annum until the Exchange Offer is consummated or a shelf
registration statement is declared effective. The form and terms of the New
Notes are identical in all material respects to the form and terms of the Old
Notes except that the New Notes have been registered under the Securities Act
and therefore will not contain terms with respect to transfer restrictions and
will not provide for an increase in interest payments or other distributions
thereon as a consequence of a failure to take certain actions in connection with
their registration under the Securities Act.
The Exchange Offer is not being made to, and the Company will not accept tenders
for exchange from, holders of Old Notes in any jurisdiction in which the
Exchange Offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to the
Exchange Offer means any person in whose name the Old Notes are registered on
the books of the Company or any other person who has obtained a properly
completed bond power from the registered holder, or any person whose Old Notes
are held of record by The Depository Trust Company who desires to deliver such
Old Notes by book-entry transfer at The Depository Trust Company.
TERMS OF THE EXCHANGE
The Company hereby offers, upon the terms and subject to the conditions set
forth in this prospectus and in the accompanying letter of transmittal, to
exchange up to $250,000,000 aggregate principal amount of New Notes for a like
aggregate principal amount of Old Notes properly tendered on or prior to the
Expiration Date (as defined below) and not properly withdrawn in accordance with
the procedures described below. The Company will issue, promptly after the
Expiration Date, an aggregate principal amount of up to $250,000,000 of New
Notes in exchange for a like principal amount of outstanding Old
17
<PAGE> 22
Notes tendered and accepted in connection with the Exchange Offer. The Exchange
Offer is not conditioned upon any minimum principal amount of Old Notes being
tendered.
Holders of Old Notes do not have any appraisal or dissenters' rights in
connection with the Exchange Offer. Old Notes that are not tendered for, or are
tendered but not accepted in connection with the Exchange Offer, will remain
outstanding and be entitled to the benefits of the Indenture, but will not be
entitled to any further registration rights under the Registration Rights
Agreement. If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for a such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof promptly after the Expiration
Date, or, if such unaccepted Old Notes are uncertificated, such securities will
be returned, without expense to the tendering holder thereof promptly after the
Expiration Date via book entry transfer.
Each Holder who tenders Old Notes pursuant to the Exchange Offer will be
required to pay all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Old Notes. The Company will
generally pay all other fees and expenses in connection with the registration
statement for the Exchange Offer. See "-- Fees and Expenses."
METROCALL'S BOARD OF DIRECTORS DOES NOT MAKE ANY RECOMMENDATION TO HOLDERS OF
OLD NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION
OF THEIR OLD NOTES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN
AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD NOTES MUST MAKE THEIR
OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER AND, IF SO, THE
AGGREGATE AMOUNT OF OLD NOTES TO TENDER AFTER READING THIS PROSPECTUS AND THE
LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR ADVISERS, IF ANY, BASED ON THEIR
OWN FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on
, 1999 unless the Exchange Offer is extended by the Company, in
which case Expiration Date shall be the latest date and time to which the
Exchange Offer is extended. The Company expressly reserves the right in its sole
and absolute discretion, subject to applicable law, at any time and from time to
time, (1) to delay the acceptance of the Old Notes for exchange, (2) to
terminate the Exchange Offer (3) to extend the Expiration Date of the Exchange
Offer and retain all Old Notes tendered pursuant to the Exchange Offer, subject,
however, to the right of holders of Old Notes to withdraw their tendered Old
Notes as described under "-- Withdrawal Rights," and (4) to waive any condition
or otherwise amend the terms of the Exchange Offer in any respect. If the
Exchange Offer is amended in a manner determined by the Company to constitute a
material change, or if the Company waives a material condition of the Exchange
Offer, the Company will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered holders of the
Old Notes, and the Company will extend the Exchange Offer to the extent required
by Rule 14e-1 under the Exchange Act.
Following any such delay in acceptance, extension, termination or amendment, the
Company will promptly give oral or written notice thereof to the Exchange Agent
and make a public announcement thereof, and in the case of an extension, the
Company will
18
<PAGE> 23
make such announcement no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Company may choose to make any public announcement and
subject to applicable law, the Company shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to an appropriate news agency.
ACCEPTANCE OR EXCHANGE AND ISSUANCE OF NEW NOTES
Upon the terms and subject to the conditions of the Exchange Offer, the Company
will exchange, and will issue to the Exchange Agent, New Notes for Old Notes
validly tendered and not withdrawn (pursuant to the withdrawal rights described
under "-- Withdrawal Rights") promptly after the Expiration Date. In all cases,
delivery of New Notes in exchange for Old Notes tendered and accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of (1) Old Notes or a book-entry confirmation of a
book-entry transfer of Old Notes into the Exchange Agent's account at The
Depository Trust Company (DTC), (2) the letter of transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, and (3) any other documents required by the letter of transmittal.
The term "book-entry confirmation" means a timely confirmation of a book-entry
transfer of Old Notes into the Exchange Agent's account at DTC.
Subject to the terms and conditions of the Exchange Offer, the Company will be
deemed to have accepted for exchange, and thereby exchanged, Old Notes validly
tendered and not withdrawn as, if and when the Company gives oral or written
notice to the Exchange Agent of the Company's acceptance of such Old Notes for
exchange pursuant to the Exchange Offer. The Exchange Agent will act as agent
for the Company for the purpose of receiving tenders of Old Notes, letters of
transmittal and related documents, and as agent for tendering holders for the
purpose of receiving Old Notes, letters of transmittal and related documents and
transmitting New Notes to validly tendering holders. Such exchange will be made
promptly after the Expiration Date. If for any reason whatsoever, acceptance for
exchange or the exchange of any Old Notes tendered pursuant to the Exchange
Offer is delayed (whether before or after the Company's acceptance for exchange
of Old Notes) or the Company extends the Exchange Offer or is unable to accept
for exchange or exchange Old Notes tendered pursuant to the Exchange Offer,
then, without prejudice to the Company's rights set forth herein, the Exchange
Agent may, nevertheless, on behalf of the Company and subject to Rule 14e-1(c)
under the Exchange Act, retain tendered Old Notes and such Old Notes may not be
withdrawn except to the extent tendering holders are entitled to withdrawal
rights as described under "-- Withdrawal Rights."
A holder of Old Notes will warrant and agree in the letter of transmittal that
it has full power and authority to tender, exchange, sell, assign and transfer
Old Notes, that the Company will acquire good, marketable and unencumbered title
to the tendered Old Notes, free and clear of all liens, restrictions, charges
and encumbrances, and that the Old Notes tendered for exchange are not subject
to any adverse claims or proxies. The holder also will warrant and agree that it
will, upon request, execute and deliver any additional documents deemed by the
Company or the Exchange Agent to be necessary or desirable to complete the
exchange, sale, assignment, and transfer of the Old Notes tendered pursuant to
the Exchange Offer.
19
<PAGE> 24
PROCEDURES FOR TENDERING OLD NOTES
VALID TENDER. Except as set forth below, in order for Old Notes to be validly
tendered pursuant to the Exchange Offer, a properly completed and duly executed
letter of transmittal (or facsimile thereof), with any required signature
guarantees and any other required documents, must be received by the Exchange
Agent at its address set forth under "-- Exchange Agent," and either (1)
tendered Old Notes must be received by the Exchange Agent, or (2) such Old Notes
must be tendered pursuant to the procedures for book-entry transfer set forth
below and a book-entry confirmation must be received by the Exchange Agent, in
each case on or prior to the Expiration Date, or (3) the guaranteed delivery
procedures set forth below must be complied with.
If less than all of the Old Notes delivered are tendered for exchange, a
tendering holder should fill in the amount of Old Notes being tendered in the
appropriate box on the letter of transmittal. The entire amount of Old Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER, AND
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT.
IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED, PROPERLY
INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK ENTRY TRANSFER. The Exchange Agent will establish an account with respect
to the Old Notes at DTC for purposes of the Exchange Offer within two business
days after the date of this Prospectus. Any financial institution that is a
participant in DTC's book-entry transfer facility system may make a book-entry
delivery of the Old Notes by causing DTC to transfer such Old Notes into the
Exchange Agent's account at DTC in accordance with DTC's procedures for
transfers. However, although delivery of Old Notes may be effected through
book-entry transfer into the Exchange Agent's account at DTC, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other required documents, must in any
case be delivered to and received by the Exchange Agent at its address set forth
under "-- Exchange Agent" on or prior to the Expiration Date, or the guaranteed
delivery procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
SIGNATURE GUARANTEES. Certificates for the Old Notes need not be endorsed and
signature guarantees on the letter of transmittal are unnecessary unless (a) a
certificate for the Old Notes is registered in a name other than that of the
person surrendering the certificate or (b) such registered holder completes the
box entitled "Special Issuance Instructions" or "Special Delivery Instructions"
in the letter of transmittal. In the case of (a) or (b) above, such certificates
for Old Notes must be duly endorsed or accompanied by a properly executed bond
power, with the endorsement or signature on the bond power and on the letter of
transmittal guaranteed by a firm or other entity identified in Rule 17Ad-15
under the Exchange Act as an "eligible guarantor institution," including (as
such terms are defined therein): (1) a bank; (2) a broker, dealer, municipal
securities broker or dealer
20
<PAGE> 25
or government securities broker or dealer; (3) a credit union; (4) a national
securities exchange, registered securities association or clearing agency; or
(5) a savings association that is a participant in a Securities Transfer
Association (an "Eligible Institution"), unless surrendered on behalf of such
Eligible Institution. See Instruction 1 to the Letter of Transmittal.
GUARANTEED DELIVERY. If a holder desires to tender Old Notes pursuant to the
Exchange Offer and the certificates for such Old Notes are not immediately
available or time will not permit all required documents to reach the Exchange
Agent on or before the Expiration Date, or the procedures for book-entry
transfer cannot be completed on a timely basis, such Old Notes may nevertheless
be tendered, provided that all of the following guaranteed delivery procedures
are complied with:
(1) such tenders are made by or through an Eligible Institution;
(2) a properly completed and duly executed notice of guaranteed delivery,
substantially in the form accompanying the letter of transmittal, is
received by the Exchange Agent, as provided below, on or prior to
Expiration Date; and
(3) the certificates (or a book-entry confirmation) representing all
tendered Old Notes, in proper form for transfer, together with a
properly completed and duly executed letter of transmittal (or
facsimile thereof), with any required signature guarantees and any
other documents required by the letter of transmittal, are received by
the Exchange Agent within three Nasdaq Stock Market trading days after
the date of execution of such notice of guaranteed delivery.
The notice of guaranteed delivery may be delivered by hand, or transmitted by
facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New Notes in
exchange for Old Notes tendered and accepted for exchange pursuant to the
Exchange Offer will in all cases be made only after timely receipt by the
Exchange Agent of Old Notes, or of a book-entry confirmation with respect to
such Old Notes, and a properly completed and duly executed letter of transmittal
(or facsimile thereof), together with any required signature guarantees and any
other documents required by the letter of transmittal. Accordingly, the delivery
of New Notes might not be made to all tendering holders at the same time, and
will depend upon when Old Notes, book-entry confirmations with respect to Old
Notes and other required documents are received by the Exchange Agent.
The acceptance by the Company for exchange of Old Notes tendered pursuant to any
of the procedures described above will constitute a binding agreement between
the tendering holder and the Company upon the terms and subject to the
conditions of the Exchange Offer.
DETERMINATION OF VALIDITY. All questions as to the form of documents, validity,
eligibility (including time of receipt) and acceptance for exchange of any
tendered Old Notes will be determined by the Company, in its sole discretion,
whose determination shall be final and binding on all parties. The Company
reserves the absolute right, in its sole and absolute discretion, to reject any
and all tenders determined by them not to be in proper form or the acceptance of
which, or exchange for, may, in the view of counsel to the Company, be unlawful.
The Company also reserves the absolute right, subject to applicable law, to
waive any of the conditions of the Exchange Offer as set forth under
"-- Conditions to the Exchange Offer" or any condition or irregularity in any
tender of Old Notes of any
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<PAGE> 26
particular holder whether or not similar conditions or irregularities are waived
in the case of other holders.
The Company's interpretation of the terms and conditions of the Exchange Offer
(including the letter of transmittal and the instructions thereto) will be final
and binding. No tender of Old Notes will be deemed to have been validly made
until all irregularities with respect to such tender have been cured or waived.
None of the Company, any affiliates or assigns of the Company, the Exchange
Agent or any other person shall be under any duty to give any notification of
any irregularities in tenders or incur any liability for failure to give any
such notification.
If any letter of transmittal, endorsement, bond power, power of attorney, or any
other document required by the Letter of Transmittal is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, such person
should so indicate when signing, and unless waived by the Company, proper
evidence satisfactory to the Company, in its sole discretion, of such person's
authority to so act must be submitted.
A beneficial owner of Old Notes that are held by or registered in the name of a
broker, dealer, commercial bank, trust company or other nominee or custodian is
urged to contact such entity promptly if such beneficial holder wishes to
participate in the Exchange Offer.
RESALES OF NEW NOTES
The Company is making the Exchange Offer for the Old Notes in reliance on the
position of the staff of the Division of Corporation Finance of the Commission
(the "Staff") as set forth in certain interpretive letters addressed to third
parties in other transactions. However, the Company has not sought its own
interpretive letter and there can be no assurance that the Staff would make a
similar determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
Staff, and subject to the two immediately following sentences, the Company
believes that New Notes issued pursuant to this Exchange Offer in exchange for
Old Notes may be offered for resale, resold and otherwise transferred by a
holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holder's business and that such holder is not participating, and has no
arrangement or understanding with any person to participate, in a distribution
(within the meaning of the Securities Act) of such New Notes. However, any
holder of Old Notes who is an "affiliate" of the Company or who intends to
participate in the Exchange Offer for the purpose of distributing New Notes, or
any broker-dealer who purchased Old Notes from the Company to resell pursuant to
Rule 144A or any other available exemption under the Securities Act, (a) will
not be able to rely on the interpretations of the Staff set out in the
above-mentioned interpretive letters, (b) will not be permitted or entitled to
tender such Old Notes in the Exchange Offer and (c) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Notes unless such sale is
made pursuant to an exemption from such requirements. In addition, as described
below, if any broker-dealer holds Old Notes acquired for its own account as a
result of market-making or other trading activities and exchanges such Old Notes
for New Notes, then such broker-dealer must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of such New
Notes.
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<PAGE> 27
Each holder of Old Notes who wishes to exchange Old Notes for New Notes in the
Exchange Offer will be required to represent that at the time of the
consummation of the Exchange Offer (1) it is not an "affiliate" of the Company
within the meaning of Rule 405 under the 1933 Act, (2) any New Notes to be
received by it are being acquired in the ordinary course of its business, (3) it
has no arrangement or understanding with any person to participate in a
distribution (within the meaning of the Securities Act) of such New Notes. Each
broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it acquired the Old Notes for its own
account as the result of market-making activities or other trading activities
and must agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes. The letter of
transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. Based on the position taken by the Staff in the
interpretive letters referred to above, the Company believes that broker-
dealers who acquired Old Notes for their own accounts as a result of
market-making activities or other trading activities ("Participating
Broker-Dealers") may fulfill their prospectus delivery requirements with respect
to the New Notes received upon exchange of such Old Notes (other than Old Notes
which represent an unsold allotment from the original sale of the Old Notes)
with a prospectus meeting the requirements of the Securities Act, which may be
the prospectus prepared for an exchange offer so long as it contains a
description of the plan of distribution with respect to the resale of such New
Notes. Accordingly, this prospectus, as it may be amended or supplemented from
time to time, may be used by a Participating Broker-Dealer during the period
referred to below in connection with resales of New Notes received in exchange
for Old Notes where such Old Notes were acquired by such Participating
Broker-Dealer for its own account as a result of market-making or other trading
activities. Subject to certain provisions set forth in the Registration Rights
Agreement, the Company has agreed that this prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer in
connection with resales of such New Notes for a period ending 180 days after the
Expiration Date or, if earlier, when all such New Notes have been disposed of by
such Participating Broker-Dealer. See "Plan of Distribution." Any Participating
Broker-Dealer who is an "affiliate" of the Company may not rely on such
interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction.
In that regard, each Participating Broker-Dealer who surrenders Old Notes
pursuant to the Exchange Offer will be deemed to have agreed, by execution of
the letter of transmittal, that, upon receipt of notice from the Company of the
occurrence of any event or the discovery of any fact which makes any statement
contained or incorporated by reference in this prospectus untrue in any material
respect or which causes this prospectus to omit to state a material fact
necessary in order to make the statements contained or incorporated by reference
herein, in light of the circumstances under which they were made, not misleading
or of the occurrence of certain other events specified in the registration
rights agreement, such Participating Broker-Dealer will suspend the sale of New
Notes pursuant to this prospectus until the Company has amended or supplemented
this Prospectus to correct such misstatement or omission and has furnished
copies of the amended or supplemented prospectus to such Participating
Broker-Dealer or the Company has given notice that the sale of the New Notes may
be resumed, as the case may be.
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<PAGE> 28
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn at
any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at its addresses set forth under "-- Exchange Agent" on or
prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Notes to be withdrawn, the aggregate
principal amount of Old Notes to be withdrawn, and (if certificates for such Old
Notes have been tendered) the name of the registered holder of the Old Notes as
set forth on the Old Notes, if different from that of the person who tendered
such Old Notes. If Old Notes have been delivered or otherwise identified to the
Exchange Agent, then prior to the physical release of such Old Notes, the
tendering holder must submit the serial numbers shown on the particular Old
Notes to be withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution, except in the case of Old Notes tendered
for the account of an Eligible Institution. If Old Notes have been tendered
pursuant to the procedures for book-entry transfer set forth in "-- Procedures
for Tendering Old Notes," the notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawal of Old Notes, in
which case a notice of withdrawal will be effective if delivered to the Exchange
Agent by written, telegraphic, telex or facsimile transmission. Withdrawals of
tenders of Old Notes may not be rescinded. Old Notes properly withdrawn will not
be deemed validly tendered for purposes of the Exchange Offer, but may be
retendered at any subsequent time on or prior to the Expiration Date by
following any of the procedures described above under "-- Procedures for
Tendering Old Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
None of the Company, any affiliates or assigns of the Company, the Exchange
Agent or any other person shall be under any duty to give any notification of
any irregularities in any notice of withdrawal or incur any liability for
failure to give any such notification. Any Old Notes which have been tendered
but which are withdrawn will be returned to the holder thereof promptly after
withdrawal.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any extension of
the Exchange Offer, the Company will not be required to accept for exchange, or
to exchange, any Old Notes for any New Notes, and may terminate the Exchange
Offer (whether or not any Old Notes have theretofore been accepted for exchange)
or may waive any conditions to or amend the Exchange Offer, if, the Company
determines that the consummation of the Exchange Offer or any portion thereof
would violate any applicable law or any applicable interpretation of the
Commission or its staff. In such event, if the Company determines to amend the
Exchange Offer and such amendment constitutes a material change to the Exchange
Offer, the Company will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered holders of the
Old Notes, and the Company will extend the Exchange Offer to the extent required
by Rule 14e-1 under the Exchange Act. Holders of Old Notes are entitled to
certain rights under the Registration Rights Agreement in the event the Company
is unable to consummate the Exchange Offer. See "Description of the Old Notes."
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<PAGE> 29
EXCHANGE AGENT
First Union National Bank has been appointed as Exchange Agent for the Exchange
Offer. Delivery of the Letter of Transmittal and any other required documents,
questions, requests for assistance, and requests for additional copies of this
Prospectus or of the Letter of Transmittal should be directed to the Exchange
Agent as follows:
First Union National Bank
Customer Information Center -- NC1153
1525 West W.T. Harris Blvd., 3C3,
Charlotte, North Carolina 28262-1153
Phone: 704-590-7408
Facsimile: 704-590-7628
Attn: Michael Klotz
Delivery to other than the above address or facsimile number will not constitute
a valid delivery.
FEES AND EXPENSES
The Company has agreed to pay the Exchange Agent reasonable and customary fees
for its services and will reimburse it for its reasonable out-of-pocket expenses
in connection therewith. The Company will also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus and related documents
to the beneficial owners of Old Notes, and in handling or tendering for their
customers.
Each Holder who tenders Old Notes pursuant to the Exchange Offer will be
required to pay all underwriting discounts and commissions, if any, relating to
the sale or disposition of the Old Notes. If New Notes are to be delivered to,
or are to be issued in the name of, any person other than the registered holder
of the Old Notes tendered, or if a transfer tax is imposed for any reason other
than the exchange of Old Notes in connection with the Exchange Offer, then the
amount of any such transfer taxes (whether imposed on the registered holder or
any other persons) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
the Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
The Company will generally pay all fees and expenses in connection with the
registration statement for the Exchange Offer. The Company will not make any
payment to brokers, dealers or others soliciting acceptances of the Exchange
Offer.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as of the Old Notes as
reflected in the Metrocall's accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized by the
Company. The expense related to the issuance of the New Notes and of the
Exchange Offer will be capitalized and amortized over the term of the New Notes.
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<PAGE> 30
DESCRIPTION OF THE NEW NOTES
The New Notes are issued under the Indenture between Metrocall (referred to here
as the "Company") and First Union National Bank, as Trustee. The terms of the
Notes include those terms stated in the Indenture and those terms made part of
the Indenture by reference to the Trust Indenture Act of 1939 (the "Trust
Indenture Act"). You can find the definitions of certain terms used in this
description under "-- Certain Definitions." Capitalized terms not defined in
this description under "-- Certain Definitions" are defined in the Indenture.
The following description is a summary of the material provisions of the
Indenture. It does not restate the Indenture in its entirety. We urge you to
read the Indenture because it and not this description defines your rights as
holders of these Notes. You may obtain a copy of the Indenture from the Company.
GENERAL DESCRIPTION OF THE NEW NOTES
The New Notes:
- are general, unsecured obligations of the Company.
- are subordinated in right of payment to all existing and future Senior
Debt of the Company.
- rank equally with all other senior subordinated debt of the Company,
including $150.0 million aggregate principal amount of 10 3/8% senior
subordinated notes, $200.0 aggregate principal amount million of 9 3/4%
senior subordinated notes, $100.0 million aggregate principal amount of
ProNet senior subordinated notes, $0.284 million aggregated principal
amount of A+ Network senior subordinated notes and any of the Old Notes
not exchanged.
PRINCIPAL, MATURITY AND INTEREST
The Company will issue New Notes with a maximum aggregate principal amount of
$250.0 million. The Company will issue Notes in denominations of $1,000 and
integral multiples of $1,000. The Notes will mature on September 15, 2008.
Subject to the covenants described below under "-- Certain Covenants," the
Company may issue additional Notes under the Indenture. The Notes offered hereby
and any additional Notes subsequently issued would be treated as a single class
for all purposes under the Indenture.
Interest on the Notes will accrue at the rate of 11% per annum and will be
payable semi-annually in arrears on each March 15 and September 15 (each an
"Interest Payment Date"). Interest on each New Note shall accrue from the last
Interest Payment Date on which interest was paid on the Old Notes so
surrendered. The Company will make each interest payment to the persons in whose
names the Notes are registered at the close of business on the preceding March 1
and September 1. Interest will accrue from the date of original issuance or, if
interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
Principal of, and premium, if any, and interest on each Note will be payable and
the Notes may be presented for transfer or exchange at the office or agency of
the Company maintained for such purpose. At the option of the Company, payment
of interest may be made by check mailed to registered holders of the Notes at
the addresses set forth on the registry books maintained by the Trustee, who
will initially act as registrar for the Notes. No service charge will be made
for any exchange or registration of transfer of Notes, but the Company may
require payment of a sum sufficient to cover any tax or other
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<PAGE> 31
governmental charge payable in connection therewith. Unless otherwise designated
by the Company, the Company's office or agency will be the corporate trust
office of the Trustee.
OPTIONAL REDEMPTION
On or after September 15, 2003, the Company may redeem all or a part of the
Notes upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest thereon to but not including the applicable
redemption date. The following redemption prices shall apply to any optional
redemption of Notes by the Company during the 12-month period beginning on
September 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2003................................................ 105.500%
2004................................................ 103.667%
2005................................................ 101.833%
2006 and thereafter................................. 100.000%
</TABLE>
If less than all the Notes are to be redeemed or to be purchased pursuant to any
purchase offer required under the Indenture, selection of Notes for redemption
or purchase will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are
listed, or, if the Notes are not so listed, on a pro rata basis, by lot or by
such method as the Trustee shall deem fair and appropriate; provided, however,
that any Notes with a principal amount of less than $1,000 shall not be redeemed
or purchased in part. Notice of redemption shall be mailed by first class mail
at least 30 but not more than 60 days before the redemption date to each holder
of Notes to be redeemed at the last address for such holder then shown on the
registry books. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount to be redeemed, which portion shall not be less than $1,000. A new Note
in principal amount equal to the unredeemed or unpurchased portion will be
issued in the name of the holder thereof upon cancellation of the original Note.
If the Notes are to be redeemed in part, the Company will not be required (i) to
exchange or register the transfer of any Notes for a period of 15 days before
the selection of Notes for redemption or (ii) to exchange or register the
transfer of any Notes so selected, except the unredeemed portion of any such
Notes being redeemed in part. On and after the redemption or purchase date,
interest will cease to accrue on the Notes or portions thereof called for
redemption or purchase, whether or not such Notes are presented for payment at
the office of the paying agent for the Notes in New York, New York unless the
Company defaults in the payment of the redemption or purchase price.
SINKING FUND
There will be no sinking fund payments for the Notes.
RANKING
The Notes will, to the extent set forth in the Indenture, be subordinate in
right of payment to the prior payment in full of all existing and future Senior
Debt. Upon any payment or distribution of assets of the Company to creditors
upon any liquidation, dissolution, winding up, reorganization, assignment for
the benefit of creditors, marshalling of assets, bankruptcy, insolvency or any
similar proceedings of the Company, the holders of Senior Debt will first be
entitled to receive payment in full of principal of, premium, if any, and
27
<PAGE> 32
interest on such Senior Debt before the holders of Notes are entitled to receive
any payment of principal of, premium, if any, or interest on the Notes or on
account of the purchase or redemption or other acquisition of Notes by the
Company or any subsidiary of the Company. Notwithstanding the foregoing, in the
event that the Trustee or the holder of any Note receives any payment or
distribution of assets of the Company of any kind or character (excluding shares
of Capital Stock of the Company or securities of the Company provided for in a
plan of reorganization or readjustment that are subordinate in right of payment
to all Senior Debt to substantially the same extent as the Notes are so
subordinated) before all the Senior Debt is paid in full, then such payment or
distribution will be required to be paid over or delivered forthwith to the
trustee in bankruptcy or other Person making payment or distribution of assets
of the Company for application to the payment of all Senior Debt remaining
unpaid, to the extent necessary to pay the Senior Debt in full.
The Company may not make any payments on account of the Notes or on account of
the purchase or redemption or other acquisition of Notes if there shall have
occurred and be continuing a default in the payment when due of principal of,
premium, if any, or interest on any Senior Debt, including without limitation
any default in the payment when due of any commitment or facility fees, letter
of credit fees or agency fees under the Credit Facility, or any default in
payment when due of any reimbursement obligation of the Company with respect to
any letter of credit issued under the Credit Facility (a "Senior Payment
Default"). In addition, if there shall have occurred and be continuing any
default (other than a Senior Payment Default) with respect to the Credit
Facility or any Designated Senior Debt that permits, or with the giving of
notice or lapse of time (or both) would permit, the holders thereof (or a
trustee on behalf thereof) to accelerate the maturity thereof (a "Senior
Nonmonetary Default"), and the Company and the Trustee have received written
notice thereof from the agent bank for the Credit Facility or from an authorized
person on behalf of any Designated Senior Debt, then the Company may not make
any payments on account of the Notes or on account of the purchase or redemption
or other acquisition of Notes for a period (a "blockage period") commencing on
the date the Company and the Trustee receive such written notice and ending on
the earlier of (x) 179 days after such date and (y) the date, if any, on which
the Senior Debt to which such default relates is discharged or such default is
waived or otherwise cured. In any event, not more than one blockage period may
be commenced during any period of 360 consecutive days, and there shall be a
period of at least 181 consecutive days in each period of 360 consecutive days
when no blockage period is in effect. No Senior Nonmonetary Default that existed
or was continuing on the date of the commencement of any blockage period with
respect to the Senior Debt initiating such blockage period will be, or can be,
made the basis for the commencement of a subsequent blockage period, unless such
default has been cured or waived for a period of not less than 90 consecutive
days. In the event that, notwithstanding the foregoing, the Company makes any
payment to the Trustee or the holder of any Note prohibited by the subordination
provisions, then such payment will be required to be paid over and delivered
forthwith to the holders of the Senior Debt remaining unpaid, to the extent
necessary to pay in full all the Senior Debt. For the purposes hereof,
"Designated Senior Debt" means any Senior Debt (other than under the Credit
Facility) in an original principal or committed amount of not less than $50.0
million where the instrument governing such Senior Debt expressly states that
such Debt is "Designated Senior Debt" for purposes of the Indenture and a Board
Resolution setting forth such designation by the Company has been filed with the
Trustee.
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<PAGE> 33
By reason of such subordination, in the event of insolvency of the Company,
creditors of the Company who are not holders of Senior Debt or of the Notes may
recover less, ratably, than holders of Senior Debt and may recover more,
ratably, than the holders of the Notes.
The subordination provisions described above will cease to be applicable to the
Notes upon any defeasance or covenant defeasance of the Notes as described below
under "Defeasance."
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Acquired Debt" means, with respect to any Person, (i) Debt of such Person
existing at the time such Person becomes a Subsidiary of the Company (or such
Person is merged into a Subsidiary of the Company) and (ii) Debt assumed by such
Person in connection with the acquisition of assets by such Person from another
Person (other than the Company or any of its Subsidiaries), provided that such
Debt was not Incurred in connection with or in contemplation of such Person
becoming a Subsidiary of the Company or such acquisition of assets, as the case
may be.
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Asset Disposition" by any Person means any transfer, conveyance, sale, lease or
other disposition by such Person or any of its Subsidiaries (including a
consolidation or merger or other sale of any such Subsidiary with, into or to
another Person in a transaction in which such Subsidiary ceases to be a
Subsidiary, but excluding a disposition by a Subsidiary of such Person to such
Person or a wholly owned Subsidiary of such Person or by such Person to a wholly
owned Subsidiary of such Person, and excluding the creation of a lien, pledge or
security interest) of (i) shares of Capital Stock (other than directors'
qualifying shares) or other ownership interests of a Subsidiary of such Person,
(ii) substantially all of the assets of such Person or any of its Subsidiaries
representing a division or line of business or (iii) other assets or rights of
such Person or any of its Subsidiaries outside of the ordinary course of
business, in any case where the consideration received by such Person or a
Subsidiary of such Person or the fair market value of the assets subject to such
disposition exceeds $1.0 million.
"Asset Exchange Transaction" means any transaction pursuant to which properties
or assets of the Company or a Subsidiary of the Company constituting a paging
system within a geographically identifiable area and related properties and
assets (an "Identifiable Paging System") or all of the shares of Capital Stock
of a Subsidiary of the Company, the properties and assets of which constitute an
Identifiable Paging System, are to be exchanged for properties or assets
constituting an Identifiable Paging System of another Person or Persons or all
of the shares of Capital Stock of another Person or Persons the properties and
assets of which constitute an Identifiable Paging System.
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<PAGE> 34
"Attributable Debt" in respect of a sale and leaseback transaction means, at the
time of determination, the present value (discounted at the interest rate
implicit in the lease, compounded semiannually) of the obligation of the lessee
of the property subject to such sale and leaseback transaction for rental
payments during the remaining term of the lease included in such transaction
including any period for which such lease has been extended or may, at the
option of the lessor, be extended or until the earliest date on which the lessee
may terminate such lease without penalty or upon payment of penalty (in which
case the rental payments shall include such penalty), after excluding all
amounts required to be paid on account of maintenance and repairs, insurance,
taxes, assessments, water, utilities and similar charges.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which
is not a day on which banking institutions in New York, New York or the city in
which the Corporate Trust Office is located are authorized or obligated by law
or executive order to close.
"Capital Lease Obligation" of any Person means the obligation to pay rent or
other payment amounts under a lease of real or personal property of such Person
which is required to be classified and accounted for as a capital lease or a
liability on the face of a balance sheet of such Person in accordance with GAAP.
The stated maturity of such obligation shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be terminated by the lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock of
such Person and all other equity interests in such Person.
"Change of Control" means the occurrence of one or more of the following events:
(i) a person or entity or group (as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of persons or
entities shall have become the beneficial owner (as defined in Rules 13d-3 and
13d-5 under the Exchange Act) of a majority of the securities of the Company
ordinarily having the right to vote in the election of directors; (ii) during
any consecutive three-year period commencing on or after the date of the
Indenture, individuals who at the beginning of such period constituted the Board
of Directors of the Company (together with any directors who are members of such
Board of Directors of the Company on the date of the Indenture and any new
directors whose election by such Board of Directors of the Company or whose
nomination for election by the stockholders of the Company was approved by a
vote of at least 66 2/3% of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office; (iii) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, the assets of the Company to
any person or entity or group (as so defined) of persons or entities (other than
any wholly owned Subsidiary of the Company); (iv) the merger or consolidation of
the Company with or into another corporation or the merger of another
corporation into the Company with the effect that immediately after such
transaction any person or entity or group (as so defined) of persons or entities
shall have become the beneficial owner of securities of the surviving
corporation of such merger or consolidation representing a majority of the
combined voting power of the outstanding securities of the
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surviving corporation ordinarily having the right to vote in the election of
directors; or (v) the adoption of a plan leading to the liquidation or
dissolution of the Company.
"Common Stock" of any Person means Capital Stock of such Person that does not
rank prior, as to the payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Cash Flow" of any Person means for any period the Consolidated Net
Income of such Person for such period plus (i) Consolidated Interest Expense of
such Person for such period, plus (ii) the consolidated income tax expense of
such Person and its consolidated Subsidiaries for such period, plus (iii) the
consolidated depreciation and amortization expense included in the income
statement of such Person and its consolidated Subsidiaries for such period, plus
(iv) other non-cash charges reducing Consolidated Net Income for such period
(excluding any such non-cash charge to the extent that it represents an accrual
of or reserve for cash charges in any future period), minus (v) non-cash items
increasing Consolidated Net Income for such period. Notwithstanding the
foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization and other non-cash charges of, a Subsidiary of the
referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent (and in the same proportion) that the
net income of such Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if and to the extent such Subsidiary could have
paid such amount at the date of determination as a dividend to the Company by
such Subsidiary without prior governmental approval (that has not been
obtained), pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to that Subsidiary or its stockholders.
"Consolidated Fixed Charges" of any Person means for any period (i) Consolidated
Interest Expense of such Person plus (ii) Preferred Stock dividends declared and
payable in cash or in kind in such period (or accrued in such period, whether or
not declared and payable, in the case of cumulative Preferred Stock) by such
Person or any of its consolidated Subsidiaries, other than any such dividends
payable only in shares of Common Stock or options, warrants or other rights to
purchase or acquire Common Stock, or payable by a Subsidiary of such Person to
such Person or one of its wholly owned Subsidiaries.
"Consolidated Interest Expense" of any Person means for any period the
consolidated interest expense included in a consolidated income statement
(without deduction of interest income) of such Person and its consolidated
Subsidiaries for such period determined in accordance with GAAP, including
without limitation or duplication (or, to the extent not so included, with the
addition of), (i) the amortization of Debt discounts; (ii) any payments of fees
with respect to letters of credit, bankers' acceptances or similar facilities;
(iii) fees with respect to interest rate swap or similar agreements or foreign
currency hedge, exchange or similar agreements, other than fees or charges
related to the acquisition or termination thereof which are not allocable to
interest expense in accordance with GAAP; and (iv) the interest component
associated with Capital Lease Obligations.
"Consolidated Net Income" of any Person means for any period the net income (or
loss) of such Person and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP; provided, that there shall be
excluded therefrom (i) the net income (but not the net loss) of any Subsidiary
of such Person which is subject to restrictions which prevent the payment of
dividends and the making of distributions (by
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loans, advances, intercompany transfers or otherwise) to such Person except to
the extent of the amount of dividends or other distributions actually paid to
such Person by such Subsidiary without violation of any such restrictions, (ii)
the net income (or loss) of any Person that is not a consolidated Subsidiary of
such Person except to the extent of the amount of dividends or other
distributions actually paid to such Person by such other Person during such
period, (iii) any gain or loss on any Asset Disposition by such Person or any of
its Subsidiaries and (iv) any extraordinary gain or loss.
"Corporate Trust Office" means the principal corporate trust office of the
Trustee at which, at any particular time, its corporate trust business shall be
administered, which office at the date of execution of the Indenture is located
at 800 East Main Street -- LM Level, Richmond, Virginia 23219.
"Credit Facility" means the Fourth Amended and Restated Loan Agreement dated as
of December 22, 1998, among the Company, certain lenders and Toronto Dominion
(Texas), Inc., as administrative agent for the lenders, providing for a senior
secured credit facility, as the same may be amended (including any amendment and
restatement thereof), modified, supplemented, extended, renewed, restated,
refunded, refinanced, restructured or replaced from time to time.
"Debt" means (without duplication), with respect to any Person, whether recourse
is to all or a portion of the assets of such Person, and whether or not
contingent, (i) indebtedness of such Person for money borrowed, (ii)
indebtedness of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person, (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business), (v) every Capital Lease Obligation of such Person, (vi) Attributable
Debt of such Person, (vii) the maximum fixed redemption or repurchase price of
Redeemable Stock of such Person at the time of determination, (viii) every
obligation of another Person secured by a Lien on any asset of such Person
(whether or not such obligation is assumed by such Person), provided, however,
that unless such Debt constitutes Debt of the referent Person pursuant to any
other clause of this definition, the amount of such Debt shall be the lesser of
(A) the fair market value of such asset and (B) the amount of such Debt and (ix)
every obligation of the type referred to in clauses (i) through (viii) of
another Person and all dividends of another Person the payment of which, in
either case, such Person has Guaranteed or for which such Person is responsible
or liable, directly or indirectly, as obligor, Guarantor or otherwise.
"Default" means any event which is, or after notice or passage of time (as
provided in the Indenture), or both, would be, an Event of Default (as described
in "Events of Default" below).
"Guaranty" by any Person means any obligation, contingent or otherwise, of such
Person guaranteeing or having the economic effect of guaranteeing any Debt of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including, without limitation, any obligation of such Person (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Debt or to purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Debt, (ii) to purchase property, securities or
services for the purpose of assuring the holder of such Debt of the payment of
such Debt, or (iii) to maintain working capital, equity capital or other
financial condition or liquidity of the primary obligor so as to enable the
primary
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obligor to pay such Debt (and "Guarantee," "Guaranteeing" and "Guarantor" shall
have meanings correlative to the foregoing); provided, however, that the
Guaranty by any Person shall not include endorsements by such Person for
collection or deposit, in either case, in the ordinary course of business.
"Incur" means, with respect to any Debt or other obligation of any Person, to
create, issue, incur (by conversion, exchange or otherwise), assume, Guarantee
or otherwise become liable in respect of such Debt or other obligation, or the
recording, as required pursuant to GAAP or otherwise, of any such Debt or other
obligation on the balance sheet of such Person (and "Incurrence," "Incurred,"
"Incurrable" and "Incurring" have meanings correlative to the foregoing);
provided, however, that a change in GAAP that results in an obligation of such
Person that exists at such time becoming Debt shall not be deemed an Incurrence
of such Debt.
"Lien" means, with respect to any property or assets, any mortgage or deed of
trust, pledge, security interest, lien, charge, encumbrance of any kind in
respect of such properties or assets or other security agreement (including,
without limitation, any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing).
"Net Available Proceeds" from any Asset Disposition by any Person means cash or
readily marketable cash equivalents received (including by way of sale or
discounting of a note, installment receivable or other receivable, but excluding
any other consideration received in the form of assumption by the acquiree of
Debt or other obligations relating to such properties or assets or received in
any other non-cash form) therefrom by such Person, net of (i) all legal, title
and recording tax expenses, commissions and other fees and expenses incurred and
all federal, state, provincial, foreign and local taxes required to be accrued
as a liability as a consequence of such Asset Disposition, (ii) all payments
made by such Person or its Subsidiaries on any Debt which is secured by the
assets subject to such Asset Disposition in accordance with the terms of any
Lien upon or with respect to such assets or which must by the terms of such
Lien, or in order to obtain a necessary consent to such Asset Disposition or by
applicable law, be repaid out of the proceeds from such Asset Disposition, (iii)
all distributions and other payments made to minority interest holders in
Subsidiaries of such Person or joint ventures as a result of such Asset
Disposition, and (iv) a reasonable reserve for the after-tax costs of any
indemnification payments (fixed or contingent) attributable to the seller's
indemnities to the purchaser undertaken by the Company or any of its
Subsidiaries in connection with such Asset Disposition.
"Permitted Liens" means: (i) Liens incurred and pledges and deposits made in the
ordinary course of business in connection with liability insurance, workers'
compensation, unemployment insurance, old-age pensions, and other social
security benefits other than in respect of employee benefit plans subject to
ERISA; (ii) Liens securing performance, surety, and appeal bonds and other
obligations of like nature incurred in the ordinary course of business; (iii)
Liens on goods and documents securing trade letters of credit; (iv) Liens
imposed by law, such as carriers', warehousemen's, mechanics', materialmen's,
and vendors' liens, incurred in the ordinary course of business and securing
obligations which are not yet due or which are being contested in good faith by
appropriate proceedings; (v) Liens securing the payment of taxes, assessments,
and governmental, charges or levies (a) either (1) not delinquent or (2) being
contested in good faith by appropriate legal or administrative proceedings and
(b) as to which adequate reserves shall have been established on the books of
the relevant Person in conformity with GAAP; (vi) zoning restrictions,
easements, rights of way, reciprocal easement agreements,
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operating agreements, covenants, conditions, or restrictions on the use of any
parcel of property that are routinely granted in real estate transactions or do
not interfere in any material respect with the ordinary conduct of the business
of the Company and its Subsidiaries or the value of such property for the
purpose of such business; (vii) Liens on property existing at the time such
property is acquired and Liens on the assets of any Subsidiary of the Company at
the time such Subsidiary is acquired, provided such Liens apply only to such
acquired property; (viii) Liens existing as of the date of the Indenture; (ix)
Liens securing Debt Incurred for the purpose of financing all or any part of the
cost of acquiring any property, equipment or other assets (whether by merger,
consolidation, purchase of assets or otherwise), provided that such Debt is
Incurred prior to, at the time of, or within 60 days after the acquisition of
such assets solely for the purpose of financing the acquisition of such assets
in compliance with the provision described under "Limitation on Incurrence of
Debt" covenant below; (x) any attachment or judgment Lien, unless the judgment
it secures would constitute an Event of Default; (xi) Liens with respect to
assets of a Subsidiary granted by such Subsidiary to the Company to secure Debt
owing to the Company, (xii) rights of banks to set off deposits against debts
owed to said banks; (xiii) any interest or title of a lessor in property of the
Company or a Subsidiary of the Company subject to any capitalized lease or
operating lease, as each are defined under generally accepted accounting
principles; (xiv) other Liens incidental to the conduct of the business of the
Company or any of its Subsidiaries, as the case may be, or the ownership of
their assets that do not materially detract from the value of the property of
the Company or a Subsidiary of the Company subject thereto; (xv) Liens securing
Refinancing Debt, provided that such Liens only extend to the property or assets
securing the Debt being refinanced, such refinanced Debt was previously secured
by similar Liens on such property or assets and the Debt (or other obligations)
secured by such Liens is not increased; and (xvi) Liens in addition to the
foregoing securing Debt not to exceed $500,000 in the aggregate outstanding at
any time.
"Permitted Stock Repurchase" means, with respect to the Company, the purchase or
redemption for fair market value (as determined by a majority of the Board of
Directors of the Company, including a majority of the independent, disinterested
directors, and evidenced by a resolution of the Board of Directors of the
Company) of shares of Capital Stock of the Company (including stock appreciation
rights and similar securities) held by any present or former officer of the
Company or by an employee stock ownership plan or similar trust for the account
of such present or former officer upon such person's death, disability,
retirement or termination of employment or under the terms of any such plan or
any other agreement under which such shares were originally issued.
"Person" means an individual, partnership, corporation, limited liability
company, trust or unincorporated organization, and a government or agency or
political subdivision thereof.
"Preferred Stock," as applied to the Capital Stock of any Person, means Capital
Stock of such Person of any class or classes (however designated) that ranks
prior, as to the payment of dividends or as to the distribution of assets upon
any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"Pro Forma Consolidated Cash Flow" of any Person means for any period the
Consolidated Cash Flow of such Person for such period calculated on a pro forma
basis to give effect to any Asset Disposition or acquisition of assets not in
the ordinary course of business (including acquisitions of other Persons by
merger, consolidation or purchase of
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Capital Stock) during such period or subsequent to such period, as if such Asset
Disposition or acquisition had taken place on the first day of such period.
"Redeemable Stock" means any equity security that by its terms or otherwise is
required to be redeemed prior to the stated maturity of the Notes, or is
redeemable at the option of the holder thereof at any time prior to the stated
maturity of the Notes.
"Refinancing Debt" means (i) any Debt of the Company that renews, refunds or
extends any outstanding Debt of the Company or a Subsidiary of the Company which
Debt was Incurred in compliance with the Indenture (other than Debt Incurred
under the Credit Facility or in connection therewith), and (ii) any Debt of a
Subsidiary of the Company that renews, refunds or extends any Debt of such
Subsidiary which Debt was Incurred in compliance with the Indenture (other than
Guarantees of Debt Incurred under the Credit Facility or in connection
therewith), in any case in an amount not to exceed the outstanding principal
amount of the Debt so refinanced plus the amount of any premium required to be
paid in connection with such refinancing pursuant to the terms of the Debt
refinanced or the amount of any premium reasonably determined by the Company as
necessary to accomplish such refinancing by means of a tender offer or privately
negotiated repurchase, plus the expenses of the Company Incurred in connection
with such refinancing, provided that (A) in the case of any refinancing of the
Notes or any pari passu Debt, such Refinancing Debt is made pari passu or
subordinate in right of payment to the Notes, (B) in the case of any refinancing
of Debt that is subordinate in right of payment to the Notes, such Refinancing
Debt is made subordinate in right of payment to the Notes to the same extent as
the Debt refinanced thereby, and (C) such Refinancing Debt has a final maturity
date not earlier than the final maturity date of, and has a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life to Maturity
of, the Debt being renewed, refunded or extended.
"Related Person" means any Person owning (i) 5% or more of the outstanding
Common Stock of the Company or a Subsidiary of the Company or (ii) 5% or more of
the Voting Stock of the Company or a Subsidiary of the Company.
"Senior Debt" means (i) the principal of, premium, if any, and interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for postpetition interest is allowed in such proceeding) on, penalties and
any obligation of the Company for reimbursement, indemnities and fees relating
to, Debt outstanding pursuant to the Credit Facility, (ii) all other debt of the
Company referred to in the definition of Debt other than clauses (vii) and (ix)
(with respect to clause (vii) of such definition) thereof, (iii) payment
obligations of the Company under interest rate swap or similar agreements or
foreign currency hedge, exchange or similar agreements required by the Credit
Facility, where the counterparty to such agreement is a lender under the Credit
Facility, and (iv) all renewals, extensions, modifications, refinancings,
refundings and amendments of any Debt or payment obligations referred to in
clause (i), (ii), or (iii) above (including, without limitation, any interest
rate swap or similar agreements or foreign currency hedge, exchange or similar
agreements that are entered into by the Company for the purpose of modifying,
terminating or hedging any agreement that constitutes Senior Debt under clause
(iii) above whether or not such modification, termination or hedge was required
by the Credit Facility and whether or not the counterparty to such agreement is
a lender or former lender under such Credit Facility), unless, in the case of
any particular Debt referred to above, (a) such Debt is owed to a Subsidiary of
the Company, (b) the instrument creating or evidencing the same or pursuant to
which the same is outstanding
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expressly provides that such Debt is not superior in right of payment to the
Notes, (c) such Debt is Incurred in violation of the Indenture, or (d) such Debt
is by its terms subordinate in right of payment in respect of any other Debt of
the Company.
"Significant Subsidiary" means, at any date of determination, any Subsidiary
that, together with its Subsidiaries, (i) for the most recent fiscal year of the
Company, accounted for more than 10% of the consolidated revenues of the Company
and its Subsidiaries or (ii) as of the end of such fiscal year, was the owner of
more than 10% of the consolidated assets of the Company and its Subsidiaries,
all as set forth on the most recently available consolidated financial
statements of the Company for such fiscal year.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person, or by such Person
and one or more other Subsidiaries thereof or (ii) any other Person (other than
a corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the policies,
management and affairs thereof, provided that an Unrestricted Subsidiary shall
be deemed not to be a Subsidiary of the Company for purposes of the Indenture.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at the
time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary
(including any newly acquired or newly formed Subsidiary of the Company) to be
an Unrestricted Subsidiary unless such Subsidiary holds any Lien on any property
of the Company or any Subsidiary that is not, or is not to be designated as, an
Unrestricted Subsidiary; provided, that (A) any Guaranty by the Company or any
Subsidiary of any Debt of the Subsidiary being so designated shall be deemed an
"Incurrence" of Debt and an investment by the Company or such Subsidiary (or
both, if applicable) at the time of such designation; (B) either (I) the
Subsidiary to be so designated has total assets of $10,000 or less or (II) if
such Subsidiary has total assets greater than $10,000, such designation would be
permitted under the "Limitation on Restricted Payments" covenant described below
and (C) if applicable, the Incurrence of Debt and the investment referred to in
clause (A) of this proviso would be permitted under the "Limitation on
Incurrence of Indebtedness" and "Limitation on Restricted Payments" covenants
described below. The Board of Directors may designate any Unrestricted
Subsidiary to be a Subsidiary; provided, that immediately after giving effect to
such designation (x) all Liens and Debt of such Unrestricted Subsidiary
outstanding immediately after such designation would, if Incurred at such time,
have been permitted to be Incurred (and shall be deemed to have been Incurred)
for all purposes of the Indenture and (y) no Default or Event of Default shall
have occurred and be continuing. Any such designation by the Board of Directors
shall be evidenced to the Trustee by promptly filing with the Trustee a copy of
a resolution of the Board of Directors giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"Voting Stock" of any Person means Capital Stock of such Person which ordinarily
has voting power for the election of directors (or persons performing similar
functions) of such Person, whether at all times or only so long as no senior
class of securities has such voting power by reason of any contingency.
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"Weighted Average Life to Maturity" means, when applied to any Debt at any date,
the number of years obtained by dividing (i) the sum of the products obtained by
multiplying (a) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including payment at
final maturity, in respect thereof, by (b) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date and the making of
such payment, by (ii) the then outstanding principal amount of such Debt.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
LIMITATION ON INCURRENCE OF DEBT. The Company may not Incur, and may not permit
any of its Subsidiaries to Incur, any Debt; provided, however, that (a) the
Company may Incur any Debt and (b) the Company may permit a Subsidiary to Incur
Acquired Debt, if, in either case, immediately thereafter the ratio of (A) the
aggregate principal amount of Debt of the Company and its Subsidiaries
outstanding as of the date of such Incurrence to (B) Pro Forma Consolidated Cash
Flow for the most recently ended full fiscal quarter multiplied by four,
determined on a pro forma basis as if any such Debt had been Incurred and the
proceeds thereof had been applied at the beginning of such fiscal quarter, would
be less than 6.0 to 1 but greater than zero.
Notwithstanding the foregoing limitation, the Company may Incur and, as
applicable, may permit its Subsidiaries to Incur, without duplication, the
following Debt: (i) Debt of the Company or any Subsidiary under the Credit
Facility in an aggregate principal amount not to exceed $200.0 million at any
one time outstanding; (ii) Guarantees by Subsidiaries of Debt under the Credit
Facility Incurred by the Company in accordance with this covenant; (iii) Debt of
the Company evidenced by the Notes; (iv) Debt owed by the Company to any
Subsidiary of the Company or owed by any Subsidiary of the Company to the
Company or any other Subsidiary of the Company (but only so long as such Debt is
held by the Company or such Subsidiary); (v) Debt outstanding on the date the
Notes are originally issued under the Indenture; (vi) Debt arising from the
honoring by a bank or other financial institution of a check, draft or similar
instruments drawn against insufficient funds in the ordinary course of business,
provided that such Debt is extinguished within two Business Days of its
Incurrence; (vii) Refinancing Debt; and (viii) renewals of Guarantees permitted
by clause (ii) above.
For purposes of determining any particular amount of Debt under this covenant,
Guarantees of (or obligations with respect to letters of credit supporting) Debt
otherwise included in the determination of such amount shall not also be
included. For the purpose of determining compliance with this covenant, (A) in
the event that an item of Debt meets the criteria of more than one of the types
of Debt described in the above clauses, the Company, in its sole discretion,
shall classify such item of Debt and only be required to include the amount and
type of such Debt in one of such clauses; and (B) the amount of Debt issued at a
price which is less than the principal amount thereof shall be equal to the
amount of the liability in respect thereof determined in accordance with GAAP.
LIMITATION ON CERTAIN DEBT. The Indenture provides that so long as the Notes
are outstanding the Company will not Incur any Debt that is by its terms
subordinate or junior in any respect in right of payment to any Senior Debt and
that is senior in any respect in right of payment to the Notes.
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LIMITATION ON RESTRICTED PAYMENTS. The Company may not, and may not permit any
of its Subsidiaries to, (i) directly or indirectly, declare or pay any dividend,
or make any distribution, in respect of its Capital Stock or to the holders
thereof (including pursuant to a merger or consolidation of the Company, but
excluding any dividends or distributions payable solely in shares of its Capital
Stock (other than Redeemable Stock) or in options, warrants or other rights to
acquire its Capital Stock (other than Redeemable Stock)), other than dividends
or distributions payable to the Company or any wholly owned Subsidiary of the
Company, or by a Subsidiary of the Company to a holder who is not the Company or
a Subsidiary of the Company, provided that such dividend or distribution is paid
to all holders of the Capital Stock of the payor of such dividend pro rata in
accordance with their respective interests, (ii) directly or indirectly
repurchase, redeem or otherwise acquire or retire for value (a) any Capital
Stock of the Company or any Related Person or (b) any options, warrants or
rights to purchase or acquire shares of Capital Stock of the Company or any
Related Person, (iii) purchase or otherwise acquire any Capital Stock of, or
make any loan, advance, capital contribution to or investment in, or any payment
on a Guarantee of any obligation of, any Affiliate or any Related Person (other
than the Company or a Subsidiary of the Company), inclusive of any such
purchase, loan, advance, capital contribution to or investment in, or payment on
a Guarantee of any obligation of, any Affiliate or Related Person pursuant to a
transaction whereby any such Person becomes an Affiliate or Related Person, but
exclusive of any such purchase, loan, advance, capital contribution to or
investment in, or payment on a Guarantee of any obligation of, any Person
pursuant to a transaction whereby any such Person becomes a Subsidiary of the
Company, in each case unless otherwise prohibited by the terms of the Indenture,
or (iv) redeem, defease, repurchase, retire or otherwise acquire or retire for
value prior to any scheduled maturity, repayment or sinking fund payment (other
than with the proceeds of Refinancing Debt) Debt of the Company which is
subordinate in right of payment to the Notes (each of clauses (i) through (iv)
being a "Restricted Payment"), if at the time of such Restricted Payment, or
after giving effect thereto: (1) an Event of Default, or an event that with the
lapse of time or the giving of notice, or both, would constitute an Event of
Default, shall have occurred and be continuing, (2) the Company could not incur
$1.00 of additional Debt pursuant to the first paragraph of the Covenant
described under "-- Limitation on Incurrence of Debt" above, or (3) the
aggregate of all Restricted Payments from June 30, 1995 exceeds the sum of: (a)
the excess of (x) 100% of cumulative Consolidated Cash Flow after June 30, 1995
through the last day of the last full fiscal quarter immediately preceding such
Restricted Payment for which quarterly or annual financial statements of the
Company are available (as determined in good faith by the Company) over (y) the
product of 2.0 times cumulative Consolidated Fixed Charges after June 30, 1995
through the last day of the last full fiscal quarter immediately preceding such
Restricted Payment for which quarterly or annual financial statements of the
Company are available (as determined in good faith by the Company); and (b) 100%
of the aggregate net proceeds received by the Company from the issuance or sale
after June 30, 1995 of (A) Capital Stock (other than Redeemable Stock) of the
Company or options, warrants or other rights to acquire Capital Stock (other
than Redeemable Stock) of the Company or (B) Debt of the Company that has been
converted or exchanged into Capital Stock (other than Redeemable Stock) of the
Company (to the extent such Debt is so converted or exchanged).
The foregoing provision will not be violated by reason of (i) the payment of any
dividend within 60 days after declaration thereof if at the declaration date
such payment would have complied with the foregoing provision; (ii) any payment
for the purchase, redemption, acquisition or retirement of any shares of Capital
Stock of the Company in exchange for,
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or out of the net proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Company) of, other shares of Capital Stock (other than
Redeemable Stock) of the Company; (iii) the purchase, redemption, defeasance or
other acquisition or retirement of Debt of the Company which is subordinate in
right of payment to the Notes, in exchange for, by conversion into, or out of
the net proceeds of, a substantially concurrent (a) issuance or sale (other than
to a Subsidiary) of Capital Stock (other than Redeemable Stock) of the Company,
or (b) Incurrence of Refinancing Debt with respect to such subordinated Debt;
(iv) Permitted Stock Repurchases by the Company not to exceed $2.0 million
individually or $6.0 million in the aggregate during such time as any of the
Notes is outstanding; (v) Restricted Payments consisting of investments in
telecommunications businesses in an aggregate amount not exceeding $20.0
million; or (vi) the making of other Restricted Payments in an aggregate amount
not exceeding $10.0 million, provided that no Default or Event of Default shall
have occurred and be continuing at the time, or shall occur as a result, of any
of the actions contemplated in clauses (ii) through (vi) above. Any payment made
pursuant to clauses (i) through (iv) of this paragraph (other than subclause
(iii)(b) of this paragraph) shall be a Restricted Payment for purposes of
calculating aggregate Restricted Payments under the preceding paragraph.
LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES. The Company may not, and may not permit any Subsidiary of the
Company to, create, assume or otherwise suffer to exist any encumbrance or
restriction on the ability of any Subsidiary of the Company, directly or
indirectly, (i) to pay dividends or make any other distributions in respect of
its Capital Stock or pay any Debt or other obligation owed to the Company or any
other Subsidiary of the Company; (ii) to make loans or advances to the Company
or any Subsidiary of the Company; or (iii) to transfer any of its property or
assets to the Company or a Subsidiary of the Company. Notwithstanding the
foregoing, the Company may, and may permit any of its Subsidiaries to, create,
assume or otherwise suffer to exist any such encumbrance or restriction on the
ability of any Subsidiary of the Company if and to the extent (a) subject to the
provisions described under "-- Limitations on Mergers, Consolidations and
Certain Sales of Assets," such encumbrance or restriction existed prior to the
time any Person became a Subsidiary of the Company and such restriction or
encumbrance was not incurred in anticipation of such acquisition of such Person
by the Company; provided, however, that such restriction or encumbrance applies
only to such Person, its Subsidiaries and their respective properties and
assets, and is not applicable to any other Person, properties or assets; (b)
such encumbrance or restriction is contained in an operating lease for real
property and is effective only upon the occurrence and during the continuance of
a default in the payment of rent; (c) such encumbrance or restriction is the
result of applicable corporate law or regulation relating to the payment of
dividends or distributions; (d) such encumbrance or restriction is the result of
any applicable statute, regulation or administrative rule that restricts the
transfer of licenses or permits; or (e) such encumbrance or restriction is
contained in (and for the benefit only of the lenders under) the Credit Facility
on the date of the Indenture, including any amendment, modification, supplement,
restatement or replacement of such Credit Facility after the date of the
Indenture, provided that the terms and conditions of such amendment,
modification, supplement, restatement or replacement in respect of such
encumbrance or restriction are not less favorable to the holders of the Notes
than the terms and conditions in respect of such encumbrance or restriction of
the Credit Facility on the date of the Indenture.
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LIMITATION ON LIENS. The Company will not, and will not permit any Subsidiary
of the Company to, create, incur, assume or suffer to exist any Lien (other than
Permitted Liens) upon or in respect of any of its property or assets to secure
any Debt that is pari passu with or subordinate in right of payment to the
Notes, unless the Notes are secured equally and ratably substantially
simultaneously with or prior to the creation, Incurrence or assumption of such
Lien; provided, however, that if such Debt is expressly subordinate to the
Notes, the Lien securing such subordinated Debt shall be subordinate and junior
to the Lien securing the Notes with the same relative priority as such
subordinated Debt shall have with respect to the Notes.
LIMITATION ON TRANSACTIONS WITH AFFILIATES AND RELATED PERSONS. The Company may
not, and may not permit any Subsidiary of the Company to, directly or
indirectly, enter into any transaction or series of related transactions on or
after the date of the Indenture with any Affiliate or Related Person (other than
the Company or a wholly owned Subsidiary of the Company), unless (i) such
transaction or series of transactions is on terms no less favorable to the
Company or such Subsidiary than those that could be obtained in a comparable
arm's-length transaction with an entity that is not an Affiliate or a Related
Person; and (ii) if such transaction or series of transactions involves
aggregate consideration in excess of $1.0 million, (A) such transaction or
series of transactions is approved by a majority of the Board of Directors of
the Company, including the approval of a majority of the independent,
disinterested directors, as fair to the Company from a financial point of view
and is evidenced by a resolution of the Board of Directors of the Company, or
(B) the Company shall have obtained the written opinion of a nationally
recognized independent financial advisor stating that such transaction or series
of transactions is fair to the Company from a financial point of view.
This covenant will not apply to (a) transactions between the Company or any of
its Subsidiaries and any employee of the Company or any of its Subsidiaries that
are entered into in the ordinary course of business, (b) the payment of
reasonable and customary regular fees and expenses to directors of the Company,
(c) the making of indemnification, contribution or similar payments to any
director or officer of the Company or any Subsidiary of the Company under the
Company's or such Subsidiary's charter or bylaws (as each may be amended after
the closing date of the Offering) or any indemnification or similar agreement
between the Company or any such Subsidiary and any of its directors or officers
(collectively, the "Indemnification Agreements"), (d) the entering into any
Indemnification Agreements with any current or future directors or officers of
the Company or any Subsidiary of the Company or (e) Restricted Payments (other
than investments) permitted under the "Limitation on Restricted Payments"
covenant.
LIMITATION ON CERTAIN ASSET DISPOSITIONS. The Company may not, and may not
permit any Subsidiary of the Company to, make any Asset Disposition in one or
more transactions unless: (i) the Company (or such Subsidiary, as the case may
be) receives consideration at the time of such Asset Disposition at least equal
to the fair market value of the assets sold or disposed of as determined by the
Board of Directors of the Company; (ii) at least 80% of the consideration for
such Asset Disposition consists of cash or readily marketable cash equivalents
or the assumption of Senior Debt or Debt of the Company that ranks pari passu in
right of payment with the Notes ("pari passu Debt") to the extent that the
Company is released in writing from all liability on such Senior Debt or pari
passu Debt; and (iii) all Net Available Proceeds of such Asset Disposition, less
any amounts invested within 180 days of such Asset Disposition in assets related
to the business of the Company (or invested within one year of such Asset
Disposition in assets related to the business of the Company, pursuant to an
agreement to make such investment entered into within
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180 days of such Asset Disposition), are applied within such 180- (or 360-) day
period, (a) to the permanent reduction of any Debt then outstanding under the
Credit Facility, (b) to the repayment of any other Senior Debt, or (c) to the
extent Net Available Proceeds are not applied in accordance with the foregoing
clause (a) or (b), to make an offer to purchase, on a pro rata basis according
to their respective principal amounts then outstanding (or accreted value, in
the case of Debt issued with original issue discount), the outstanding Notes
and/or pari passu Debt, at 100% of their principal amount (or accreted value, as
the case may be) plus accrued interest to the date of the purchase.
Notwithstanding clause (c) of the preceding paragraph, the Company shall not be
required to offer to purchase Notes or other pari passu Debt until the Net
Available Proceeds from any Asset Disposition together with the Net Available
Proceeds from any prior Asset Disposition not otherwise applied in accordance
with clauses (a), (b) or (c) of the preceding paragraph, less any amounts
invested within 180 days (or 360 days, as the case may be) after such
disposition or dispositions in assets related to the business of the Company,
exceed $5.0 million. To the extent that the aggregate purchase price of the
Notes tendered pursuant to such an offer to purchase is less than the aggregate
purchase price offered in such offer, the Company may use such shortfall for
general corporate purposes. The Company shall not be entitled to any credit
against such obligation to purchase Notes for the principal amount of any Notes
acquired by the Company other than pursuant to such offer to purchase. Upon
completion of any such offer, the amount of Net Available Proceeds shall be
deemed to be reset at zero. If, within 180 days after an Asset Disposition, the
Company or a Subsidiary enters into a contract providing for the investment of
Net Available Proceeds in assets relating to the business of the Company and
such contract is terminated without fault on part of the Company or such
Subsidiary prior to the making of such investment, the Company or such
Subsidiary, as the case may be, shall within 90 days after the termination of
such agreement, or within 180 days after such Asset Disposition, whichever is
later, invest or otherwise apply the funds that were to be invested pursuant to
such agreement in accordance with clause (iii) of the preceding paragraph, and
any funds so invested or applied shall for all purposes hereof be deemed to have
been so invested or applied within the 180- (or 360-) day period provided for in
such clause (iii). These provisions will not apply to a transaction which is
permitted under the provisions described under "-- Limitation on Mergers,
Consolidations and Certain Sales of Assets."
The provisions of this covenant shall not apply to any Asset Disposition which
is part of an Asset Exchange Transaction if (i) the Board of Directors of the
Company shall determine that the Asset Exchange Transaction is fair and
reasonable to, and in the best interests of, the Company, which determination
shall be evidenced by a resolution of the Board of Directors of the Company
filed with the Trustee and (ii) in the event that such transfer is made to an
Affiliate or Related Person, the Company shall have complied with the provisions
of the covenant described under "-- Limitation on Transactions with Affiliates
and Related Persons."
LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF SUBSIDIARIES. The Company
(i) shall not, and shall not permit any Subsidiary of the Company to, transfer,
convey, sell, lease or otherwise dispose of any Capital Stock of such or any
other Subsidiary to any Person (other than the Company or a Subsidiary of the
Company) unless such transfer, conveyance, sale, lease or other disposition is
of all the Capital Stock of such Subsidiary owned by the Company or such other
Subsidiary and the Net Available Proceeds from such transfer, conveyance, sale,
lease or other disposition are applied in accordance with the provisions
described under "-- Limitation on Certain Asset Dispositions" and (ii) shall
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not permit any Subsidiary to issue shares of its Capital Stock (other than
directors' qualifying shares and shares of Common Stock), or securities
convertible into, or warrants, rights or options to subscribe for or purchase
shares of, its Capital Stock to any Person other than the Company or a
Subsidiary of the Company; provided that any Subsidiary may issue warrants,
rights or options to subscribe for or purchase shares of its Common Stock.
LIMITATION ON MERGERS, CONSOLIDATIONS AND CERTAIN SALES OF ASSETS. The Company
(i) may not consolidate with or merge into any other Person or permit any other
Person to consolidate with or merge into the Company or any Subsidiary of the
Company (in a transaction in which such Subsidiary remains a Subsidiary of the
Company) and (ii) may not, directly or indirectly, transfer, convey, sell, lease
or otherwise dispose of all or substantially all of its assets, unless, in
either such case: (1) immediately before and after giving effect to such
transaction and treating any Debt Incurred by the Company or a Subsidiary of the
Company as a result of such transaction as having been Incurred by the Company
or such Subsidiary at the time of the transaction, no Event of Default or event
that with the passing of time or the giving of notice, or both, would constitute
an Event of Default, shall have occurred and be continuing; (2) in a transaction
in which the Company does not survive or in which the Company conveys, sells,
leases or otherwise disposes of all or substantially all of its assets, the
successor entity to the Company is organized under the laws of the United States
or any State thereof or the District of Columbia and expressly assumes, by a
supplemental Indenture executed and delivered to the Trustee in form
satisfactory to the Trustee, all of the Company's obligations under the
Indenture; and (3) immediately after giving effect to such transaction, the
Company or the successor entity to the Company (x) could incur at least $1.00 of
additional Debt pursuant to the first paragraph of the covenant described under
"-- Limitation on Incurrence of Debt" above or (y) would have a lower positive
ratio of (A) the aggregate principal amount of Debt of the Company and its
Subsidiaries outstanding as of the date of such Incurrence to (B) Pro Forma
Consolidated Cash Flow for the most recently ended full fiscal quarter
multiplied by four, determined on a pro forma basis as if any such Debt had been
Incurred and the proceeds thereof had been applied at the beginning of such
fiscal quarter.
Notwithstanding the preceding paragraph, any wholly owned Subsidiary may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each holder of the Notes shall have
the right to require that the Company repurchase such holder's Notes, in whole
or in part (equal to $1,000 or integral multiples of $1,000), at a repurchase
price in cash equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of repurchase, pursuant to the offer
described in the immediately following paragraph (the "Change of Control
Offer").
Within 30 days following any Change of Control, the Company shall mail a notice
to each holder, with a copy to the Trustee, stating: (i) that a Change of
Control has occurred and that such holder has the right to require the Company
to repurchase such holder's Notes, in whole or in part (equal to $1,000 or
integral multiples of $1,000), at a repurchase price in cash equal to 101% of
the principal amount thereof plus accrued and unpaid interest, if any, to the
date of repurchase; (ii) the circumstances and relevant facts regarding such
Change of Control (including, to the extent known to the Company, relevant
information with respect to the transaction giving rise to such Change of
Control and, if applicable,
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information with respect to pro forma historical income, cash flow and
capitalization after giving effect to such Change of Control); (iii) the
repurchase date (which shall be not earlier than 30 days or later than 60 days
from the date such notice is mailed ) (the "Repurchase Date"); (iv) that any
Note not tendered will continue to accrue interest; (v) that any Note accepted
for payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Repurchase Date unless the Company defaults in payment of the
purchase price; (vi) that holders electing to have a Note purchased pursuant to
a Change of Control Offer will be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the paying agent (which may be the Company) at the address
specified in the notice prior to the close of business on the Repurchase Date;
(vii) that holders will be entitled to withdraw their election if the paying
agent receives, not later than the close of business on the third business day
(or such shorter periods as may be required by applicable law) preceding the
Repurchase Date, a telegram, telex, facsimile transmission or other written
communication setting forth the name of the holder, the principal amount of
Notes the holder delivered for purchase, and a statement that such holder is
withdrawing his election to have such Notes purchased; and (viii) that holders
which elect to have their Notes purchased only in part will be issued new Notes
in a principal amount equal to the unpurchased portion of the Notes surrendered.
On the Repurchase Date, the Company shall (i) accept for payment Notes or
portions thereof tendered pursuant to the Change of Control Offer, (ii) deposit
with the Trustee or a paying agent (or segregate, if the Company is acting as
its own paying agent) money sufficient to pay the purchase price of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee Notes so accepted, together with an officers' certificate indicating the
Notes or portions thereof which have been tendered to the Company. The Trustee
or a paying agent shall promptly mail to the holders of Notes so accepted
payment in an amount equal to the purchase price therefor and promptly
authenticate and mail to such holders a new Note in a principal amount equal to
any unpurchased portion of the Note surrendered. The Company will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Repurchase Date.
In the event a Change of Control occurs and any repurchase pursuant to the
foregoing constitutes a "tender offer" for purposes of Rule 14e-1 under the
Exchange Act, the Company will comply with the requirements of Rule 14e-l as
then in effect, to the extent applicable, and any other applicable securities
laws or regulations with respect to such repurchase. The Change of Control
provisions described above may deter certain mergers, tender offers and other
takeover attempts involving the Company.
The Company's ability to repurchase Notes upon a Change of Control may be
limited by the terms of its then existing contractual obligations. Repurchase of
the Notes upon a Change of Control may constitute a default under the Credit
Facility, and any future credit agreements or other agreements relating to
Senior Debt may contain provisions that would restrict the Company's ability to
repurchase Notes upon a change in control. If the Company makes a Change of
Control Offer following a Change of Control, the Company may not have adequate
financial resources to repurchase all Notes tendered. The Company's failure to
repurchase tendered Notes or to make a Change of Control Offer following a
Change of Control would constitute an Event of Default under the Indenture, but
the subordination provisions in the Indenture may restrict payments to the
holders of Notes.
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The provisions of the Indenture may not afford holders of the Notes protection
in the event of a highly leveraged transaction involving the Company that may
adversely affect the holders of the Notes, if such transaction does not result
in a Change of Control, violate the covenant described under "-- Limitation on
Incurrence of Debt," or otherwise violate the Indenture.
REPORTS
So long as any of the Notes are outstanding, the Company will file with the
Commission the annual reports, quarterly reports and other documents that the
Company would have been required to file with the Commission pursuant to Section
13(a) or 15(d) of the Exchange Act, if the Company were subject to such Sections
and will also provide to all holders of the Notes and file with the Trustee
copies of such reports.
EVENTS OF DEFAULT
The following are Events of Default with respect to the Notes: (a) failure to
pay any interest on any Note when due, and continuance of such failure for 30
days; (b) failure to pay principal of, or premium, if any, on any Note when due;
(c) failure to pay principal of, premium, if any, and interest on Notes required
to be purchased pursuant to an offer to purchase as described under
"-- Limitation on Certain Asset Dispositions" or a Change of Control Offer as
described under "-- Change of Control" when due and payable; (d) failure to
perform or comply with the provisions described under "-- Limitation on Mergers,
Consolidations and Certain Sales of Assets"; (e) failure to perform or breach of
any other covenant or warranty of the Company in the Indenture, continued for 60
days after written notice from the Trustee or holders of at least 25% in
aggregate principal amount of the outstanding Notes as provided in the
Indenture; (f) the occurrence of a default under any bonds, debentures, notes or
other evidences of indebtedness of the Company or any Subsidiary of the Company
or under any mortgages, indentures or instruments under which there may be
issued or by which there may be secured or evidenced any indebtedness by the
Company or any Subsidiary of the Company, in any case with a principal amount of
at least $5.0 million outstanding, and such indebtedness already is due and
payable in full or such default has resulted in the acceleration of the maturity
of such indebtedness; (g) the rendering of a final judgment or judgments (not
subject to appeal) against the Company or any of its Subsidiaries in an
aggregate amount in excess of $5.0 million which remain unstayed, in effect and
unpaid for a period of 60 consecutive days thereafter; and (h) certain events of
bankruptcy, insolvency or reorganization affecting the Company or any
Significant Subsidiary of the Company.
Subject to the provisions of the Indenture relating to the duties of the Trustee
in case an Event of Default shall occur and be continuing, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request or direction of any of the holders, unless such holders shall
have offered to the Trustee reasonable indemnity. Subject to such provisions for
the indemnification of the Trustee, the holders of a majority in aggregate
principal amount of the outstanding Notes will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee.
If an Event of Default (other than Events of Default with respect to certain
events of bankruptcy, insolvency or reorganization affecting the Company or any
Significant Subsidiary of the Company) shall occur and be continuing, either the
Trustee or the holders of at least 25% in aggregate principal amount of the
outstanding Notes may
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accelerate the maturity of all Notes; provided, however, that after such
acceleration, but before a judgment or decree based on acceleration, the holders
of a majority in aggregate principal amount of outstanding Notes, may under
certain circumstances, rescind and annul such acceleration if all Events of
Default, other than the non-payment of accelerated principal, have been cured or
waived as provided in the Indenture. If a specified Event of Default with
respect to certain events of bankruptcy, insolvency or reorganization affecting
the Company or any Subsidiary of the Company occurs, the principal of the Notes
then outstanding shall become immediately due and payable without any
declaration or other act on the part of the Trustee or any holder of the Notes.
For information as to waiver of defaults, see "-- Modification and Waiver."
No holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and unless also the holders of at least 25% in aggregate principal
amount of the outstanding Notes shall have made written request, and offered
reasonable indemnity, to the Trustee to institute such proceeding as trustee,
and the Trustee shall not have received from the holders of a majority in
aggregate principal amount of the outstanding Notes a direction inconsistent
with such request and shall have failed to institute such proceeding within 60
days. However, such limitations do not apply to a suit instituted by a holder of
a Note for enforcement of payment of the principal of, premiums, if any, or
interest on such Note or after the respective due dates expressed in such Note.
The Company is required to furnish to the Trustee annually a statement as to the
performance by the Company of certain of its obligations under the Indenture and
as to any default in such performance. Additionally, the Company is required to
notify the Trustee within five business days of the occurrence of a Default or
an Event of Default.
DEFEASANCE
The Indenture provides that (A) if applicable, the Company will be discharged
from any and all obligations in respect of the outstanding Notes (including the
provisions described under "-- Ranking") or (B) if applicable (and subject to
compliance with the Trust Indenture Act), the Company may omit to comply with
certain restrictive covenants, and that such omission shall not be deemed to be
an Event of Default under the Indenture and the Notes, in either case (A) or (B)
upon irrevocable deposit with the Trustee, in trust, of money and/or U.S.
government obligations which will provide money in an amount sufficient in the
opinion of a nationally recognized firm of independent certified public
accountants to pay the principal of and premium, if any, and each installment of
interest, if any, on the outstanding Notes. With respect to clause (B), the
obligations under the Indenture other than with respect to such covenants and
the Events of Default other than the Event of Default relating to such covenants
(and, under certain circumstances, certain bankruptcy related defaults) shall
remain in full force and effect. Such trust may only be established if, among
other things (i) with respect to clause (A), the Company has received from, or
there has been published by, the Internal Revenue Service a ruling or there has
been a change in law, which in an opinion of counsel to the Company provides
that holders of the Notes will not recognize income, gain or loss for Federal
income tax purposes as a result of such deposit, defeasance and discharge and
will be subject to Federal income tax on the same amount, in the same manner and
at the same times as would have been the case if such deposit, defeasance and
discharge had not occurred; and, with respect to clause (B), the Company has
delivered to the Trustee an opinion of counsel to the Company to the effect that
the holders of the Notes will not recognize gain
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or loss for Federal income tax purposes as a result of such deposit and
defeasance and will be subject to Federal income tax on the same amount, in the
same manner and at the same times as would have been the case if such deposit
and defeasance had not occurred; (ii) no Default or Event of Default shall have
occurred and be continuing; (iii) no default on any Senior Debt shall have
occurred and be continuing; and (iv) certain other customary conditions
precedent are satisfied.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company and the
Trustee with the consent of the holders of a majority in aggregate principal
amount of the outstanding Notes; provided, however, that no such modification or
amendment may, without the consent of the holder of each outstanding Note
affected thereby, (i) change the stated maturity of the principal of, or any
installment of interest on, any Note, (ii) reduce the principal amount of (or
the premium) or interest on, any Note, (iii) change the place or currency of
payment of principal of (or the premium) or interest on, any Note, (iv) impair
the right to institute suit for the enforcement of any payment on or with
respect to any Note, (v) reduce the above-stated percentage of outstanding Notes
necessary to modify or amend the Indenture, (vi) reduce the percentage of
aggregate principal amount of outstanding Notes necessary for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults, (vii) modify any provisions of the Indenture relating to the
modification and amendment of the Indenture or the waiver of past defaults or
covenants, (viii) modify any of the provisions of the Indenture relating to the
subordination of the Notes in a manner adverse to such holders, or (ix)
following the mailing of an offer with respect to an offer to purchase the Notes
as described under "-- Limitation on Certain Asset Dispositions" or a Change of
Control Offer as described under "-- Change of Control," modify the Indenture
with respect to such Offer to Purchase in a manner adverse to such holders.
The holders of a majority in aggregate principal amount of the outstanding Notes
may waive compliance by the Company with certain restrictive provisions of the
Indenture. The holders of a majority in aggregate principal amount of the
outstanding Notes may waive any past default under the Indenture, except a
default in the payment of principal, premium, if any, or interest.
NO RECOURSE AGAINST OTHERS
The Indenture provides that a director, officer, employee or stockholder of the
Company, as such, shall not have any liability for any obligations of the
Company under the Notes or the Indenture, or for any claim based on, in respect
of or by reason of such obligations or their creation. Each holder, by accepting
the Notes, waives and releases all such liability.
THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. During the continuance of an Event of Default, the Trustee
will exercise such rights and powers vested in it under the Indenture and use
the same degree of care and skill in its exercise as a prudent person would
exercise under the circumstances in the conduct of such person's own affairs.
The Indenture contains limitations on the rights of the Trustee, should it
become a creditor of the Company, to obtain payment of claims in certain cases
or to realize on
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certain property received by it in respect of any such claim as security or
otherwise. The Trustee is permitted to engage in other transactions with the
Company or any Affiliate; provided, however, that if it acquires any conflicting
interest (as defined in the Indenture or in the Trust Indenture Act), it must
eliminate such conflict or resign.
BOOK-ENTRY; DELIVERY AND FORM
The certificates representing the New Notes will be issued in fully registered
form without interest coupons. New Notes received in the Exchange Offer in
exchange for Old Notes originally issued in reliance on Rule 144A will be
represented by one or more permanent global Notes in definitive, fully
registered form without interest coupons (each a "Restricted Global Note") and
will be deposited with the Trustee as custodian for, and registered in the name
of a nominee of, DTC.
New Notes exchanged in offshore transactions in reliance on Regulation S under
the Securities Act will initially be represented by one or more permanent global
Notes in definitive, fully registered form without interest coupons (each a
"Regulation S Global Note"; and together with the Restricted Global Note, the
"Global Notes") and will be deposited with the Trustee as custodian for, and
registered in the name of a nominee of, DTC for the accounts of Euroclear and
Cedel Bank.
Ownership of beneficial interests in a Global Note will be limited to persons
who have accounts with DTC ("participants") or persons who hold interests
through participants. Ownership of beneficial interests in a Global Note will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants). Qualified institutional buyers may hold their
interests in a Restricted Global Note directly through DTC, if they are
participants in such system, or indirectly through organizations which are
participants in such system.
Investors may hold their interests in a Regulation S Global Note directly
through Cedel Bank or Euroclear, if they are participants in such systems, or
indirectly through organizations that are participants in such system. Cedel
Bank and Euroclear will hold interests in the Regulation S Global Notes on
behalf of their participants through DTC.
So long as DTC, or its nominee, is the registered owner or holder of a Global
Note, DTC or such nominee, as the case may be, will be considered the sole owner
or holder of the New Notes represented by such Global Note for all purposes
under the Indenture and the New Notes. No beneficial owner of an interest in a
Global Note will be able to transfer that interest except in accordance with
DTC's applicable procedures, in addition to those provided for under the
Indenture and, if applicable, those of Euroclear and Cedel Bank.
Payments of the principal of, and interest on, a Global Note will be made to DTC
or its nominee, as the case may be, as the registered owner thereof. Neither the
Company, the Trustee nor any Paying Agent will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in a Global Note or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal or interest in respect of a Global Note, will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Note as shown on the records of
DTC or its nominee. The Company also expects that payments by participants to
owners of beneficial interests in such Global Note
47
<PAGE> 52
held through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers registered in the names of nominees for such customers. Such payments
will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way in
accordance with DTC rules and will be settled in same-day funds. Transfers
between participants in Euroclear and Cedel Bank will be effected in the
ordinary way in accordance with their respective rules and operating procedures.
The Company expects that DTC will take any action permitted to be taken by a
holder of New Notes (including the presentation of Notes for exchange as
described below) only at the direction of one or more participants to whose
account the DTC interests in a Global Note is credited and only in respect of
such portion of the aggregate principal amount of New Notes as to which such
participant or participants has or have given such direction. However, if there
is an Event of Default under the Notes, DTC will exchange the applicable Global
Note for Certificated Notes, which it will distribute to its participants and
which may be legended as set forth under the heading "Transfer Restrictions."
DEPOSITORY TRUST COMPANY
The Company understands that DTC is a limited purpose trust company organized
under the laws of the State of New York, a "banking organization" within the
meaning of New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the Uniform Commercial Code and a
"Clearing Agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for its participants and
facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of certificates
and certain other organizations. Indirect access to the DTC system is available
to others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly ("indirect participants").
Although DTC, Euroclear and Cedel Bank are expected to follow the foregoing
procedures in order to facilitate transfers of interests in a Global Note among
participants of DTC, Euroclear and Cedel Bank, they are under no obligation to
perform or continue to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC, Euroclear or Cedel Bank or their
respective participants or indirect participants of their respective obligations
under the rules and procedures governing their operations.
If DTC is at any time unwilling or unable to continue as a depositary for the
Global Notes and a successor depositary is not appointed by the Company within
90 days, the Company will issue Certificated Notes, which may bear the legend
referred to under "Transfer Restrictions," in exchange for the Global Notes.
Holders of an interest in a Global Note may receive Certificated Notes, which
may bear the legend referred to under "Transfer Restrictions," in accordance
with the DTC's rules and procedures in addition to those provided for under the
Indenture.
REGISTRAR AND TRANSFER AGENT
The Trustee will act as registrar and transfer agent for the New Notes (the
"Notes Registrar").
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<PAGE> 53
As described under "-- Book-Entry Securities; The Depository Trust Company;
Delivery and Form," so long as the New Notes are in book-entry form,
registration of transfers and exchanges of New Notes will be made through Direct
Participants and Indirect Participants in DTC. If physical certificates
representing the New Notes are issued, registration of transfers and exchanges
of New Notes will be effected without charge by or on behalf of the Company,
but, in the case of a transfer, upon payment (with the giving of such indemnity
as the Company may require) in respect of any tax or other governmental charges
which may be imposed in relation to it.
The Company will not be required to register or cause to be registered any
transfer of New Notes during a period beginning 15 days prior to the mailing of
notice of redemption of New Notes and ending on the day of such mailing.
DESCRIPTION OF THE OLD NOTES
The terms of the Old Notes are identical in all material respects to those of
the New Notes, except that the Old Notes (i) have not been registered under the
Securities Act and accordingly, contain certain transfer restrictions, (ii) are
entitled to certain registration rights under the registration rights agreement
(which rights will terminate upon consummation of the Exchange Offer) and (iii)
are entitled under the registration rights agreement to an increase in the rate
of interest payments if Metrocall fails to comply with certain terms of the
registration rights agreement. Certain relevant terms of the registration rights
agreement are described more fully below.
REGISTRATION RIGHTS
Metrocall has agreed with the placement agents, for the benefit of the holders
of the Notes, that it will use its best efforts, at its cost, to file and cause
to become effective a registration statement with respect to the Exchange Offer.
The Exchange Offer will effectuate an exchange of the Old Notes for an issue of
New Notes with terms identical to the Old Notes, except that the New Notes will
not bear legends restricting the transfer thereof or include provisions for
additional interest. Upon such registration statement being declared effective,
the Company shall offer the New Notes in return for surrender of the Old Notes.
The Exchange Offer shall remain open for not less than 20 business days after
the date notice of the Exchange Offer is mailed to holders. For each Old Note
surrendered under the Exchange Offer, the holder will receive a New Note of
equal principal amount. In the event that applicable interpretations of the
Staff do not permit the Exchange Offer, or under certain other circumstances,
the Company shall, at its cost, use its best efforts to cause to become
effective a shelf registration statement with respect to resales of the Notes
and to keep such shelf registration statement effective until the expiration of
the time period referred to in Rule 144(k) under the Securities Act after the
initial sale of Notes, or such shorter period that will terminate when all Notes
covered by the shelf registration statement have been sold pursuant to the shelf
registration statement. The Company shall, in the event of such a shelf
registration, provide to each holder copies of the prospectus, notify each
holder when the shelf registration statement for the Notes has become effective
and take certain other actions as are required to permit resales of the Notes. A
holder that sells its Notes pursuant to the shelf registration statement
generally will be required to be named as a selling security holder in the
related prospectus and to deliver a prospectus to purchasers, will be subject to
certain of the civil liability provisions under the Securities Act in connection
with such sales and will be bound by the provisions
49
<PAGE> 54
of the registration rights agreement that are applicable to such a holder
(including certain indemnification obligations).
In the event that the Exchange Offer is not consummated and a shelf Registration
statement is not declared effective on or prior to June 22, 1999, the annual
interest rate borne by the Notes will be increased by .5% until the Exchange
Offer is consummated or the shelf registration statement is declared effective.
TRANSFER RESTRICTIONS
The Old Notes have not been registered under the Securities Act and may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain United States federal income tax
consequences of the purchase, ownership and disposition of the New Notes. This
summary is based on the following legal authorities: (1) the Internal Revenue
Code of 1986, as amended (the "Code"), (2) existing and proposed U.S. Treasury
regulations, and (3) administrative and judicial rulings.
The Internal Revenue Service may interpret these authorities differently and
these authorities could be changed with retroactive application. Thus, the
actual tax consequences may differ from the treatment described below.
The following summary may not apply to all holders of New Notes because:
- - the tax treatment of a holder of New Notes may vary depending on the holder's
particular situation;
- - this summary does not address the tax consequences to subsequent purchasers of
the New Notes, and is limited to investors who will hold the New Notes as
capital assets (as defined in Section 1221 of the Code);
- - this summary does not discuss the tax consequences to holders that may be
subject to special tax rules (such as certain financial institutions,
insurance companies, tax exempt entities, dealers in securities or foreign
currencies or persons who hold the Notes as a position in a straddle or as
part of a "conversion transaction" or who have hedged the interest rate on the
Notes);
- - this summary is for general information only and does not constitute, nor
should it be considered as, legal or tax advice to prospective holders of the
New Notes;
- - this summary does not address all aspects of United States federal income
taxation that may be relevant to holders of the Notes in light of their
particular circumstances; and
- - this summary does not address any tax consequences arising under the laws of
any state, local or foreign taxing jurisdiction.
Because the following summary may not apply to all New Notes Holders,
prospective holders should consult their own tax advisors as to the particular
tax consequences to them of acquiring, holding or disposing of the New Notes.
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<PAGE> 55
CERTAIN DEFINITIONS
A "United States Holder" of a Note means:
- - a citizen or resident of the United States (including certain former citizens
and former long-time residents),
- - a corporation, partnership or other entity created or organized under the laws
of the United States or any political subdivision,
- - an estate if its income is subject to United States federal income taxation,
or
- - a trust if (1) a U.S. court is able to exercise primary supervision over the
administration of the trust and (2) one or more U.S. persons have the
authority to control all substantial decisions of the trust.
A "Foreign Holder" is a holder that is not a United States Holder.
The term "Note(s)" by itself refers to both New Notes and exchanged Old Notes.
CONSEQUENCES OF THE EXCHANGE OFFER
There should be no federal income tax consequences for holders who exchange Old
Notes for New Notes. An exchange of Old Notes for New Notes pursuant to the
Exchange Offer should not be treated as an "exchange" for federal income tax
purposes because the New Notes are not materially different from the Old Notes.
Rather, the New Notes should be treated as a continuation of the Old Notes.
Exchanging holders will have the same tax basis and holding period in the New
Notes as they had in the Old Notes.
STATED INTEREST ON NOTES
Interest on a Note will generally be taxable to a United States Holder as
ordinary income from domestic sources at the time it is paid or accrued, in
accordance with the United States Holder's method of accounting for tax
purposes. Certain exceptions to this general rule are set forth below.
MARKET DISCOUNT
If a United States Holder purchases a Note for an amount that is less than its
principal amount, the amount of the difference will be treated as "market
discount" for U.S. federal income tax purposes, unless such difference is less
than a specified minimal amount. The United States Holder will be required to
treat any partial principal payment on, or any gain on the disposition of, a
Note as ordinary income to the extent of the market discount, unless such amount
has previously been included in the income of that holder. In addition, the
United States Holder may be required to defer the deduction of a portion of the
interest expense on any debt incurred or continued to purchase or carry such
Note until the earlier of the Note's maturity or the holder's taxable
disposition of the Note.
Any market discount will be considered to accrue ratably during the period from
the date of acquisition to the maturity date of the Note, unless the United
States Holder elects to accrue on a constant interest method. A United States
Holder may elect to include market discount in income currently as it accrues
(on either a ratable or constant interest method), in which case the rule
described above regarding deferral of interest deductions will not apply. This
election to include market discount in income currently, once made, applies to
all market discount obligations acquired on or after the first taxable year to
51
<PAGE> 56
which the election applies and may not be revoked without the consent of the
Internal Revenue Service.
AMORTIZABLE BOND PREMIUM
A United States Holder that purchases a Note for more than the principal amount
will be considered to have purchased the Note at a "premium." A United States
Holder generally may elect to amortize the premium over the remaining term of
the Note on a constant yield method. However, if the Note may be optionally
redeemed for more than its principal amount at the time it is purchased, the
amortization of the premium might have to be deferred. The amount amortized for
a year will be treated as a reduction of interest income from the Note. If the
United States Holder does not elect amortization, the premium will decrease the
gain or increase the loss otherwise recognized upon the disposition of the Note.
The election to amortize premium on a constant yield method, once made, applies
to all debt obligations held or acquired by the electing United States Holder on
or after the first day of the first taxable year to which the election applies
and may not be revoked without the consent of the IRS.
OPTIONAL REDEMPTION OR REPAYMENT
Under applicable Treasury regulations, certain redemption rights and obligations
which significantly increase the likelihood of redemption may affect the imputed
yield of an obligation and create original issue discount ("OID"). Upon the
occurrence of certain events, the Notes may be redeemed before their stated
maturity at the option of either the Company or the holder, or automatically
under the terms of the Notes. The Company believes that the redemption rights
and obligations do not significantly increase the likelihood of redemption and
do not affect the yield of the Note. Therefore, the Company believes that the
redemption rights and obligations do not create OID.
SALE, EXCHANGE AND RETIREMENT OF NOTES
When a United States Holder disposes of a Note, that holder generally will
recognize capital gain or loss equal to the difference between:
(A) the amount of cash and the fair market value of any property
received (except to the extent such amount is attributable to
accrued and unpaid interest which is taxable as ordinary income),
and
(B) such holder's adjusted tax basis in the Note.
A United States Holder's adjusted tax basis in a Note will, in general, be:
- the cost of the Note,
- increased by any market discount previously included in such
holder's income, and
- reduced by any amortized premium previously deducted from income by
that holder.
Such capital gain or loss generally will be long-term capital gain or loss if
the holding period of the Note exceeds one year at the time of the disposition.
Certain noncorporate taxpayers (including individuals) are eligible for
preferential rates of taxation of such long-term capital gain. The deductibility
of capital losses is subject to limitations.
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<PAGE> 57
FOREIGN HOLDERS
The exchange of an Old Note by a Foreign Holder for a New Note should not
constitute a taxable exchange. A Foreign Holder will have the same tax basis and
holding period in the New Note as it did in the Old Note.
Any gain or income realized on the disposition of a Note by a Foreign Holder
generally will not be subject to U.S. federal income tax provided (A) such gain
is not effectively connected with the conduct by such holder of a trade or
business in the United States, and (B) in the case of gains realized by an
individual, such individual is not present in the United States for 183 days or
more in the taxable year of the disposition.
Under present United States federal income and estate tax law, and subject to
the discussion below concerning backup withholding:
(1) no United States federal withholding tax will be imposed with
respect to the payment by the Company or the paying agent of
principal, premium, if any, or interest on a Note owned by a
Foreign Holder (the "Portfolio Interest Exception"), provided:
- that such Foreign Holder does not actually or constructively own
10% or more of the total combined voting power of all classes of
stock of the Company entitled to vote within the meaning of
section 871(h)(3) of the Code and the regulations thereunder,
- such Foreign Holder is not a controlled foreign corporation that
is related, directly or indirectly, to the Company through stock
ownership,
- such Foreign Holder is not a bank whose receipt of interest on a
Note is described in section 881(c)(3)(A) of the Code, and
- such Foreign Holder satisfies the statement requirement
(described generally below) set forth in section 871(h) and
section 881(c) of the Code and the regulations thereunder;
(2) no United States federal withholding tax will be imposed generally
with respect to any gain or income realized by a Foreign Holder
upon the disposition of a Note; and
(3) a Note beneficially owned by an individual who at the time of
death is a Foreign Holder will not be subject to United States
federal estate tax as a result of such individual's death,
provided that:
- such individual does not actually or constructively own 10% or
more of the total combined voting power of all classes of stock
of the Company entitled to vote within the meaning of section
871(h)(3) of the Code, and
- the interest payments with respect to such Note would not have
been, if received at the time of such individual's death,
effectively connected with the conduct of a United States trade
or business by such individual.
To satisfy the statement requirement referred to in (1) above, the beneficial
owner of such Note, or a financial institution holding the Note on behalf of
such owner, must provide, in accordance with specified procedures, a paying
agent of the Company with a statement to the effect that the beneficial owner is
a Foreign Holder. Pursuant to current Treasury regulations, this statement will
satisfy the certification requirements if (A) the beneficial owner provides his
name and address, and certifies, under penalties of perjury, that he is a
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<PAGE> 58
Foreign Holder (which certification may be made on an IRS Form W-8 or Form
W-8BEN), or (B) a financial institution holding the Note on behalf of the
beneficial owner certifies, under penalties of perjury, that such statement has
been received by it and furnishes a paying agent with a copy.
With respect to Notes held by a foreign partnership, under current law, the Form
W-8 or a Form W-8IMY may be provided by the foreign partnership. However, for
interest and disposition proceeds paid with respect to a Note after December 31,
1999, unless the foreign partnership has entered into a withholding agreement
with the IRS, a foreign partnership will be required, in addition to providing
an intermediary Form W-8 or Form W-8IMY, to attach an appropriate certification
by each partner. Prospective investors, including foreign partnerships and their
partners, should consult their tax advisors regarding possible additional
reporting requirements.
If a Foreign Holder cannot satisfy the requirements of the Portfolio Interest
Exception described in (1) above, payments on a Note made to that holder will be
subject to a 30% withholding tax unless the beneficial owner of the Note
provides the Company or the paying agent, as the case may be, with a properly
executed (A) IRS Form 1001 or Form W-8BEN claiming an exemption from or
reduction of withholding under the benefit of a tax treaty or (B) IRS Form 4224
or Form W-8ECI stating that interest paid on the Note is not subject to
withholding tax because it is effectively connected with the beneficial owner's
conduct of a trade or business in the United States.
Treasury regulations which will become generally effective for payments made
beginning January 1, 2000 (the "New Regulations"), modify certain of the
certification requirements described above. In general, the New Regulations do
not significantly alter the substantive withholding and information reporting
requirements but rather unify current certification procedures and forms and
clarify reliance standards. In addition, the New Regulations impose different
conditions on the ability of financial intermediaries acting for a Foreign
Holder to provide certifications on behalf of the Foreign Holder, which may
include entering into an agreement with the IRS to audit certain documentation
with respect to such certifications. It is possible that the Company and other
withholding agents may request new withholding exemption forms from holders in
order to qualify for continued exemption from withholding under the Treasury
regulations when they become effective. Foreign Holders should consult their own
tax advisors to determine the effects of the application of the New Regulations
to their particular circumstances.
If a Foreign Holder is engaged in a trade or business in the United States and
payment on a Note is effectively connected with the conduct of such trade or
business, the Foreign Holder, although exempt from United States federal
withholding tax as discussed above, generally will be subject to United States
federal income tax on such payment on a net income basis in the same manner as
if it were a United States Holder. In addition, if such Foreign Holder is a
foreign corporation, it may be subject to a branch profits tax equal to 30% or
applicable lower tax treaty rate on its effectively connected earnings and
profits for the taxable year, subject to adjustments. For this purpose, such
payment on a Note will be included in such foreign corporation's earnings and
profits.
INFORMATION REPORTING AND BACKUP WITHHOLDING
UNITED STATES HOLDERS. In general, information reporting requirements will
apply to payments on a Note and to the proceeds of the sale of a Note to certain
noncorporate
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<PAGE> 59
United States Holders. A 31% backup withholding tax may apply to such payments
if the United States Holder:
- - fails to furnish or certify its correct taxpayer identification number to the
payer in the manner required,
- - is notified by the IRS that it has failed to report payments of interest and
dividends properly, or
- - under certain circumstances, fails to certify that it has not been notified by
the IRS that it is subject to backup withholding for failure to report
interest and dividend payments.
Any amounts withheld under the backup withholding rules will be allowed as a
credit against the holder's United States federal income tax. Provided that the
holder has filed a return and the required information is furnished to the IRS,
the holder may be entitled to a refund of the excess of the amount withheld over
the holder's federal income tax liability.
FOREIGN HOLDERS. Under current regulations, no information reporting or backup
withholding will apply to payments to Foreign Holders if a statement described
in the previous section regarding Foreign Holders has been received and the
payor does not have actual knowledge that the beneficial owner is a United
States person. If these conditions are not satisfied, information reporting and
backup withholding will apply. These rules also apply to payments on a Note paid
to the beneficial owner by a U.S. office of an agent or broker.
In addition, backup withholding and information reporting will not apply if
payments on a Note are paid or collected by a foreign agent on behalf of the
beneficial owner of such Note, or if a foreign office of a broker (as defined in
applicable United States Treasury regulations) pays the proceeds of the sale of
a Note to the owner thereof. Information reporting, however, may be required in
certain circumstances. If such agent or broker is, for United States federal
income tax purposes:
- - a United States person,
- - a controlled foreign corporation,
- - a foreign person that derives 50% or more of its gross income for certain
periods from the conduct of a trade or business in the United States, or
- - with respect to payments made beginning January 1, 2000, a foreign partnership
if, at any time during its tax year, one or more of its partners are "U.S.
persons" (as defined in United States Treasury regulations) who in the
aggregate hold more than 50% of the income or capital interest in the
partnership if, at any time during the tax year, the partnership is engaged in
a United States trade or business,
such payments will be subject to information reporting (but not backup
withholding), unless (1) such agent or broker has documentary evidence in its
records that the beneficial owner is not a United States person and certain
other conditions are met or (2) the beneficial owner otherwise establishes an
exemption.
The New Regulations modify certain of the certification requirements for backup
withholding. It is possible that the Company and other withholding agents may
request a new withholding exemption form from holders in order to qualify for
continued exemption from backup withholding under Treasury regulations when they
become effective.
THE FEDERAL INCOME TAX SUMMARY SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS NOT TAX ADVICE. THIS SUMMARY MAY NOT BE APPLICABLE
DEPENDING UPON A
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<PAGE> 60
HOLDER'S PARTICULAR SITUATION. PROSPECTIVE UNITED STATES HOLDERS AND FOREIGN
HOLDERS OF THE NOTES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF
THE NOTES, INCLUDING THE TAX CONSEQUENCES UNDER UNITED STATES FEDERAL, STATE,
LOCAL, FOREIGN AND OTHER TAX LAWS AND THE EFFECTS OF CHANGES IN SUCH LAWS.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account in connection
with the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by Participating
Broker-Dealers during the period referred to below in connection with resales of
New Notes received in exchange for Old Notes if such Old Notes were acquired by
such Participating Broker-Dealers for their own accounts as a result of
market-making activities or other trading activities. The Company has agreed
that this prospectus, as it may be amended or supplemented from time to time,
may be used by a Participating Broker-Dealer in connection with resales of such
New Notes for a period ending 180 days after the last date of acceptance for the
Exchange Offer. See "The Exchange Offer -- Resales of New Notes."
New Notes received by broker-dealers for their own accounts in connection with
the Exchange Offer may be sold from time to time in one or more transactions in
the over-the-counter market, in negotiated transactions, through the writing of
options on the new Notes or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such prevailing
market prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such New Notes. Any broker-dealer that resells New Notes that
were received by it for its own account in connection with the Exchange Offer
and any broker or dealer that participates in a distribution of such New Notes
may be deemed to be an "underwriter" within the meaning of the Securities Act,
and any profit on any such resale of New Notes and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The Company shall not be liable for any delay by the Depository or any
Participant or Indirect Participant in identifying the beneficial owners of the
related New Notes and each such person may conclusively rely on, and shall be
protected in relying on, instructions from the Depository for all purposes
(including with respect to the registration and delivery, and the respective
principal amounts, of the New Notes to be issued).
LEGAL MATTERS
The validity of the New Notes being offered hereby and certain other legal
matters regarding the Notes will be passed upon for the Company by Wilmer,
Cutler & Pickering, Washington, D.C.
EXPERTS
The financial statements and schedule of Metrocall, Inc. included in Metrocall,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1998 and
incorporated by
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reference in this prospectus and elsewhere in this registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
The combined financial statements of AT&T Wireless Services, Inc. -- Messaging
Division at December 31, 1996 and 1997, and for the three years ended December
31, 1997 and the notes thereto and incorporated by reference, have been audited
by PricewaterhouseCoopers LLP (successor to Coopers & Lybrand L.L.P.),
independent accountants, as set forth in their report with respect thereon.
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The unaudited pro forma condensed combined statement of operations for the year
ended December 31, 1998 that follows gives effect to each of the following
transactions as if each had occurred on January 1, 1998.
(1) Pro Forma Metrocall and AMD -- which gives effect to the AMD
acquisition which occurred on October 2, 1998.
(2) Pro Forma Metrocall and AMD as Adjusted -- which gives effect to the
AMD acquisition and the Exchange Offer and the application of the net
proceeds.
We have omitted a pro forma condensed combined balance sheet as of December 31,
1998 that gives effect to the Exchange Offer because we expect our pro forma
assets, liabilities including total debt, and stockholders' equity to
approximate our historical balances at December 31, 1998 had we given effect to
the Exchange Offer.
You should read this information with the accompanying notes herein, Metrocall's
Consolidated Financial Statements and the AMD Combined Financial Statements
which have been incorporated by reference herein. The information regarding AMD
reflects unaudited results of operations for the nine months ended September 30,
1998. The unaudited pro forma condensed combined financial data does not purport
to represent what Metrocall's results of operations would have been had such
transactions and events occurred on the date specified, or to project
Metrocall's results of operations for any future period or date. The pro forma
adjustments are based on available information and certain adjustments that
management of Metrocall believes are reasonable. In the opinion of Metrocall's
management, all adjustments have been made that are necessary to present fairly
the unaudited pro forma condensed combined data.
F-1
<PAGE> 63
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL AMD PRO FORMA NOTES METROCALL
-------------------- PRO FORMA METROCALL EXCHANGE AND AMD
METROCALL AMD(a) ADJUSTMENTS AND AMD ADJUSTMENTS AS ADJUSTED
--------- -------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Service, rent and
maintenance................ $ 416,352 $142,967 $ -- $ 559,319 $ -- $ 559,319
Product sales................ 48,372 5,520 -- 53,892 -- 53,892
--------- -------- -------- --------- ------- ---------
Total revenues.......... 464,724 148,487 -- 613,211 -- 613,211
Net book value of products
sold....................... (31,791) (4,274) (3,000)(b) (39,065) -- (39,065)
--------- -------- -------- --------- ------- ---------
432,933 144,213 (3,000) 574,146 -- 574,146
--------- -------- -------- --------- ------- ---------
Operating expenses:
Service, rent and
maintenance............. 112,774 44,484 -- 157,258 -- 157,258
Selling and marketing...... 73,546 21,312 -- 94,858 -- 94,858
General and
administrative.......... 121,644 46,552 -- 168,196 168,196
Depreciation and
amortization............ 234,948 35,014 18,685(c) 288,647 -- 288,647
--------- -------- -------- --------- ------- ---------
Total operating expenses... 542,912 147,362 18,685 708,959 -- 708,959
--------- -------- -------- --------- ------- ---------
Loss from operations......... (109,979) (3,149) (21,685) (134,813) -- (134,813)
Interest expense............. (64,448) -- (6,683)(d) (71,131) (6,573)(f) (77,704)
Interest and other income,
net........................ 849 155 -- 1,004 -- 1,004
--------- -------- -------- --------- ------- ---------
Net loss before taxes...... (173,578) (2,994) (28,368) (204,940) (6,573) (211,513)
Income tax benefit
(provision)................ 47,094 (208) 16,817(e) 63,703 -- 63,703
--------- -------- -------- --------- ------- ---------
Net loss................... (126,484) (3,202) (11,551) (141,237) (6,573) (147,810)
========= ======== ======== ========= ======= =========
</TABLE>
See accompanying notes to this unaudited pro forma statement.
F-2
<PAGE> 64
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED STATEMENT OF OPERATIONS
(a) Represents the historical operating results of AMD for the nine months ended
September 30, 1998.
(b) Reflects the estimated difference in the net book value of products sold
based upon Metrocall's estimated useful lives of subscriber equipment of 3
years compared to AMD's useful life of 2 years.
(c) Reflects incremental depreciation and amortization based upon the
allocation of depreciable and amortizable assets and useful lives of 10
years for FCC licenses, 3 years for subscriber lists and 5 years for
noncompete agreements, offset by the difference in useful lives of
subscriber equipment described in Note(b).
(d) Represents the estimated incremental increase in interest expense at an
average rate of approximately 8.1% per year under the Metrocall credit
facility that would have been incurred assuming the AMD acquisition was
completed on January 1, 1998.
(e) Represents the tax benefits resulting from the amortization of acquired
intangibles in connection with the AMD acquisition assuming an effective tax
rate of approximately 40%.
(f) Reflects the estimated incremental increase in interest expense as a result
of the Old Notes Offering as if that offering had been completed on January
1, 1998. For pro forma purposes, the annual interest rate on the Old Notes
issued is 11.0% per year and the average annual interest rate on refinanced
bank debt is 8.1%. Amount also includes amortization of the discount on the
Old Notes and of estimated deferred debt offering costs of $637,000. The
exchange of Old Notes for New Notes will have no impact on the pro forma
condensed combined statement of operations.
F-3
<PAGE> 65
- ------------------------------------------------------
- ------------------------------------------------------
WE HAVE NOT AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, YOU MUST
NOT RELY ON SUCH INFORMATION OR REPRESENTATIONS AS HAVING BEEN AUTHORIZED BY US.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THE
NEW NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO ANY PERSON IN ANY
JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AS OF ANY
DATE SUBSEQUENT TO THE DATE OF THE PROSPECTUS.
-------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Note About Forward-looking
Statements........................ i
Where You Can Find More
Information....................... i
Incorporation of Certain Documents
by Reference...................... ii
Summary............................. 1
Risk Factors........................ 14
Use of Proceeds..................... 15
Capitalization...................... 16
The Exchange Offer.................. 17
Description of the New Notes........ 26
Description of the Old Notes........ 49
Certain United States Federal Tax
Considerations.................... 50
Plan of Distribution................ 56
Legal Matters....................... 56
Experts............................. 56
Unaudited Pro Forma Condensed
Combined Financial Data........... F-1
</TABLE>
-------------------------
UNTIL , 1999, WHICH IS 180 DAYS AFTER THE DATE OF THIS PROSPECTUS,
ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
OFFER FOR ALL OUTSTANDING
11% SENIOR SUBORDINATED NOTES DUE 2008
IN EXCHANGE FOR
11% SENIOR SUBORDINATED NOTES DUE 2008
THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
OF
[METROCALL LOGO]
-------------------------
PROSPECTUS
, 1999
-------------------------
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 66
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Metrocall Restated Certificate of Incorporation provides for indemnification
of the directors, officers, employees and agents of Metrocall to the full extent
currently permitted by law.
Section 145 of the Delaware General Corporation Law ("DGCL") empowers a Delaware
corporation to indemnify any person who was or is, or is threatened to be made,
a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of such corporation) by reason of the fact that such person
is or was a director, officer, employee or agent of such corporation, or is or
was serving at the request of such corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise. The indemnity may include expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding, provided that
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, such person had no reasonable
cause to believe his conduct was unlawful. A Delaware corporation may indemnify
such persons against expenses (including attorneys' fees) in actions brought by
or in the right of the corporation to procure a judgment in its favor under the
same conditions, except that no indemnification is permitted in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and to the extent the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought shall
determine upon application that, in view of all circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses as the
Court of Chancery or other such court shall deem proper. To the extent such
person has been successful on the merits or otherwise in defense of any action
referred to above, or in defense of any claim, issue or matter therein, the
corporation must indemnify such person against expenses (including attorneys'
fees) actually and reasonably incurred by such person in connection therewith.
The indemnification and advancement of expenses provided for in, or granted
pursuant to, Section 145 is not exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors or otherwise.
Section 145 also provides that a corporation may maintain insurance against
liabilities for which indemnification is not expressly provided by the statute.
In addition, the Metrocall Restated Certificate of Incorporation, as permitted
by Section 102(b) of the DGCL, limits directors' liability to Metrocall and its
stockholders by eliminating liability in damages for breach of fiduciary duty.
Section 5.5 of the Metrocall Amended and Restated Certificate of Incorporation
provides that neither Metrocall nor its stockholders may recover damages from
Metrocall directors for breach of their fiduciary duties in the performance of
their duties as directors of Metrocall. As limited by Section 102(b), this
provision cannot, however, have the effect of indemnifying any director of
Metrocall in the case of liability (i) for a breach of the director's duty of
loyalty, (ii) for acts of omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for unlawful
payments of dividends or unlawful stock
II-1
<PAGE> 67
repurchases or redemptions as provided in Section 174 of the DGCL or (iv) for
any transactions for which the director derived an improper personal benefit.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The exhibits to this registration statement are listed in the Exhibit Index to
this registration statement, which Exhibit Index is hereby incorporated by
reference.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned registrant also hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The registrant undertakes that every prospectus (i) that is filed pursuant to
the immediately preceding paragraph, or (ii) that purports to meet the
requirements of section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for
II-2
<PAGE> 68
indemnification against such liabilities (other than the payment by the
registrants of expenses incurred or paid by a director, officer or controlling
person of the registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by them is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE> 69
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has duly
caused this Amendment No. 1 to the registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Alexandria, Virginia on
this 14th day of April, 1999.
METROCALL, Inc.
By: /s/ VINCENT D. KELLY
------------------------------------
Vincent D. Kelly
Chief Financial Officer and
Executive Vice President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below under the heading "Signatures" constitutes and appoints William L. Collins
and Vincent D. Kelly as his or her true and lawful attorneys-in-fact each acting
alone, with full power of substitution and resubstitution, for him or her and in
his or her name, place and stead in any and all capacities to sign any or all
amendments (including post-effective amendments) to this registration statement
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact full power and authority to do and perform each and every
act and thing requisite and necessary to be done in and about the premises, as
fully for all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact, or their
substitutes, each acting alone, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board April 14, 1999
- ---------------------------------------------------
Richard M. Johnston
* Vice Chairman of the Board, April 14, 1999
- --------------------------------------------------- President, Chief Executive
William L. Collins, III Officer and Director
(Principal Executive
Officer)
* Chief Financial Officer, April 14, 1999
- --------------------------------------------------- Executive Vice President and
Vincent D. Kelly Treasurer (Principal
Financial and Accounting
Officer)
* Director April 14, 1999
- ---------------------------------------------------
Harry L. Brock, Jr.
</TABLE>
II-4
<PAGE> 70
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Director April 14, 1999
- ---------------------------------------------------
Francis A. Martin, III
* Director April 14, 1999
- ---------------------------------------------------
Ronald V. Aprahamian
* Director April 14, 1999
- ---------------------------------------------------
Elliott H. Singer
* Director April 14, 1999
- ---------------------------------------------------
Michael Greene
* Director April 14, 1999
- ---------------------------------------------------
Royce R. Yudkoff
* Director April 14, 1999
- ---------------------------------------------------
Jackie R. Kimzey
* Director April 14, 1999
- ---------------------------------------------------
Edward E. Jungerman
* Director April 14, 1999
- ---------------------------------------------------
Max D. Hopper
*By: /s/ VINCENT D. KELLY
---------------------------------------------
Vincent D. Kelly
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 71
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ------- ----------- ------------
<C> <S> <C>
3.1 Restated Certificate of Incorporation of Metrocall, Inc.
(Metrocall)(a)
3.2 Eighth Amended and Restated Bylaws of Metrocall(a)
4.1 Indenture for Metrocall Senior Subordinated Notes Due 2008,
dated as of December 22, 1998, including form of Notes(b)
5.1 Opinion of Wilmer, Cutler & Pickering as to the legality of
the securities being registered
8.1 Opinion of Wilmer, Cutler & Pickering as to certain tax
matters
10.1 Registration Rights Agreement dated December 22, 1998
between Metrocall and Morgan Stanley & Co. Incorporated,
Nationsbanc Montgomery Securities LLC, TD Securities (USA)
Inc., First Union Capital Markets, a division of Wheat First
Securities, Inc. and BancBoston Robertson Stephens, Inc.(a)
12.1 Ratio of Earnings to Fixed charges *
23.1 Consent of Wilmer, Cutler & Pickering (included in Exhibits
5.1 and 8.1)
23.2 Consent of Arthur Andersen LLP, as independent public
accountants for Metrocall
23.3 Consent of PricewaterhouseCoopers LLP (successor to Coopers
& Lybrand L.L.P.), as independent accountants for AT&T
Wireless Services, Inc. -- Messaging Division
24 Power of Attorney (included in signature pages of this
Registration Statement).
25 Form T-1 Statement of Eligibility of First Union National
Bank to act as trustee under the Indenture *
99.1 Form of Letter of Transmittal *
99.2 Form of Notice of Guaranteed Delivery *
99.3 Form of Exchange Agent Agreement *
</TABLE>
- -------------------------
(a) Incorporated by reference to Metrocall's Annual Report on Form 10-K for the
year ended December 31, 1998, filed with the Commission on March 31, 1999.
(b) Incorporated by reference to Metrocall's Current Report on Form 8-K filed
with the Commission on January 4, 1999.
* Previously filed
II-6
<PAGE> 1
EXHIBIT 5.1
Washington
WILMER, CUTLER & PICKERING Baltimore
2445 M STREET, N.W. New York
WASHINGTON, D.C. 20037-1420 London
Brussels
---------------- Berlin
TELEPHONE (202) 663-6000
FACSIMILE (202) 663-6363
April 12, 1999
Metrocall, Inc.
6677 Richmond Highway
Alexandria, Virginia 22306
Re: Metrocall, Inc. Exchange Offer Registration Statement on Form
S-4
Ladies and Gentlemen:
We have acted as special counsel to Metrocall, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing of a
Registration Statement on Form S-4 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with the Securities
and Exchange Commission (the "Commission") with respect to an exchange offer
(the "Exchange Offer") pursuant to which the Company is offering to exchange up
to $250,000,000 principal amount of its outstanding 11% Senior Subordinated
Notes due 2008 (the "Old Notes") for a like principal amount of the Company's
11% Senior Subordinated Notes due 2008 that have been registered under the
Securities Act (the "New Notes"). The New Notes will be offered pursuant to an
indenture, dated as of December 22, 1998 (the "Indenture"), by and among, the
Company, and First Union National Bank, as trustee.
In so acting, we have examined originals or copies of the (1) the
Registration Statement; (2) the Prospectus that is a part of the Registration
Statement (the "Prospectus"); (3) the Indenture; and (4) the Registration Rights
Agreement dated as of December 22, 1998 by and among the Company and the
Placement Agents (as defined therein) (collectively with the foregoing
documents, the "Operative Documents").
We have also examined original, reproduced or certified copies of
resolutions adopted by the Company's boards of directors and such other
documents, corporate records, certificates of public officials, officers and
representatives of the Company and other instruments
<PAGE> 2
Metrocall, Inc.
April 12,1999
Page 2
as we have deemed necessary or appropriate to render the opinions set forth
below, and have considered such questions of law as we have deemed necessary to
enable us to render the opinions expressed below.
In our examination of documents and records, we have assumed, without
investigation, the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to us as originals, the
conformity with originals of all documents submitted to us as telecopied,
certified, photostatic or reproduced copies and the authenticity of all such
documents. We have also assumed, but not independently verified, that all
documents executed by a party other than the Company or any respective
subsidiaries thereof were duly and validly authorized, executed and delivered by
such party, that such party has the requisite power and authority to execute,
deliver and perform such agreements and other documents, and that such
agreements and other documents are legal, valid and binding obligations of such
party and enforceable against such party in accordance with their respective
terms.
This opinion is limited to the laws of the United States of America, New
York law, and the General Corporation Law of the State of Delaware. We express
no opinion whatsoever as to any other laws or regulations or as to laws relating
to choice of law or conflicts of law principles.
Based upon the foregoing, subject to the assumptions, limitations and
exceptions contained herein, and subject to the issuance by the Commission of an
order declaring the Registration Statement effective, we are of the opinion that
when the New Notes, in the form filed as an exhibit to the Indenture, have been
duly executed and authenticated in accordance with the Indenture and have been
duly issued and delivered by the Company in exchange for an equal principal
amount of Old Notes pursuant to the terms of the Indenture and the Exchange
Offer, the New Notes will (x) be the legal and binding obligations of the
Company enforceable against the Company in accordance with their terms except as
(a) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors, rights generally, and (b) rights of
acceleration, if applicable, and the availability of equitable remedies may be
limited by
<PAGE> 3
Metrocall, Inc.
April 12, 1999
Page 3
equitable principles of general applicability, as well as concepts of
materiality, reasonableness, good faith and fair dealing, and (y) be entitled to
the benefits of the Indenture.
The information set forth herein is as of the date hereof. We assume no
obligation to advise you of changes which may thereafter be brought to our
attention. Our opinions are based on statutory and judicial decisions in effect
at the date hereof, and we do not opine with respect to any law, regulation,
rule or governmental policy or decision which may be enacted determined or
adopted after the date hereof, nor assume any responsibility to advise you of
future changes in our opinions.
This opinion is furnished by us, as special counsel to the Company, to
you and is solely for your benefit in connection with the Exchange Offer. We
hereby consent to the use of this opinion as an exhibit to the Registration
Statement. We also consent to any and all references to our firm under the
caption "Legal Matters" in the Prospectus. This opinion may not be relied on by
you for any other purpose or by any other person for any purpose without our
written consent.
Very truly yours,
WILMER, CUTLER & PICKERING
By: /s/ THOMAS W. WHITE
-----------------------------------
Thomas W. White, a partner
<PAGE> 1
EXHIBIT 8.1
April 13, 1999
Metrocall, Inc.
6677 Richmond Highway
Alexandria, Virginia 22306
Dear Ladies and Gentlemen:
We have acted as special counsel to Metrocall, Inc. in connection
with the preparation and filing with the Securities and Exchange Commission (the
"Commission") of a Prospectus, dated April 13, 1999 (the "Prospectus"), to the
Registration Statement on Form S-4 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), for the registration
of the 11% Senior Subordinated Notes due 2008 (the "New Notes") which are to be
offered in exchange for all the outstanding 11% Senior Subordinated Notes due
2008 (the "Old Notes"). All capitalized terms not otherwise defined herein shall
have the same meaning ascribed to such terms in the Prospectus.
We have examined copies of the following documents: (1) the
Prospectus (2) the Registration Statement; and (3) such other documents as we
have deemed relevant for purposes of the opinion set forth herein.
<PAGE> 2
Metrocall, Inc.
April 13, 1999
Page 2
In our examination of such documents, we have assumed, without
independent inquiry, the genuineness of all signatures, the proper execution of
all documents, the authenticity of all documents submitted to us as originals,
the conformity to originals of all documents submitted to us as copies, the
authenticity of the originals of any such copies, and the legal capacity of all
natural persons.
Based on and subject to the foregoing, it is our opinion that the
discussion set forth in the Prospectus under the heading "Certain United States
Federal Tax Considerations" constitutes, in all material respects, a fair and
accurate summary under current law of the United States federal income tax
consequences of the purchase, ownership, and disposition of the New Notes and
the exchange of Old Notes for New Notes.
The foregoing opinion is based on relevant provisions of the
Internal Revenue Code of 1986, as amended, the Treasury Regulations issued
thereunder, court decisions, and administrative determinations as currently in
effect, all of which are subject to change, prospectively or retroactively, at
any time. We undertake no obligation to update or supplement this opinion to
reflect any changes in laws that may occur after the date hereof.
This opinion has been prepared solely for your use in connection
with the filing of the Prospectus and should not be quoted in whole or in part
or otherwise be referred to, nor otherwise be filed with or furnished to any
governmental agency or other person or entity, without our express prior written
consent.
We hereby consent to the filing of this opinion as an exhibit to the
Prospectus as filed with the SEC and to the use of our name therein.
Very Truly Yours,
WILMER, CUTLER & PICKERING
By: /s/ WILLIAM J. WILKINS
-------------------------------
William J. Wilkins
A Partner
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 5, 1999
included in Metrocall's Form 10-K for the year ended December 31, 1998 and to
all references to our Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
-----------------------
Arthur Andersen LLP
Washington, D.C.
April 9, 1999
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Metrocall, Inc.'s registration
statement on Form S-4 of our report dated February 27, 1998, except for Note 10
as to which the date is December 1, 1998, on our audit of the 1997 and 1996
combined financial statements of AT&T Wireless Services, Inc. - Messaging
Division. We also consent to the reference to our firm under the caption
"Experts."
/s/ PRICEWATERHOUSECOOPERS LLP
- -------------------------------
PricewaterhouseCoopers LLP
Seattle, Washington
April 12, 1999
