UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Form S-4
Wizards-Patriots Holdings, Inc.
Delaware
4812
16-1694797
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification)
(I.R.S. Employer
Identification Number)
6677 Richmond Highway
Vincent D. Kelly
Copies to:
George Z. Moratis
Metrocall Holdings, Inc. 6677 Richmond Highway Alexandria, Virginia 22306 (703) 660-6677 |
André Weiss, Esq.
Jeffrey S. Sabin, Esq. Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 (212) 756-2000 |
C. Edward Baker, Jr.
Patricia A. Gray, Esq. Arch Wireless, Inc. 1800 West Park Drive, Suite 250 Westborough, Massachusetts 01581 (508) 870-6700 |
Eric L. Bernthal, Esq.
William P. ONeill, Esq. Latham & Watkins LLP 555 Eleventh Street, NW, Suite 1000 Washington, D.C. 20004 (202) 637-2200 |
Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective and all other conditions to the proposed merger described herein have been satisfied or waived.
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. o
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, or 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. o
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. o
CALCULATION OF REGISTRATION FEE
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Proposed Maximum | Proposed Maximum | |||||||
Title of Each Class of | Amount to be | Offering Price Per | Aggregate Offering | Amount of | ||||
Securities to be Registered | Registered(1) | Share | Price(2) | Registration Fee(3) | ||||
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Common Stock, $0.0001 par value per share
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27,810,511 shares | Not Applicable | $796,047,377 | $100,859.20 | ||||
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(1) | Based on the maximum number of shares of common stock of Wizards-Patriots Holdings, Inc., also referred to as Holding Company, expected to be issuable in connection with merger of Metrocall and Arch. |
(2) | Estimated solely for the purpose of determining the registration fee required by Section 6(b) of the Securities Act of 1933 and calculated pursuant to Rule 457(f) promulgated thereunder. Pursuant to Rule 457(f), the registration fee was calculated on the basis of the value of the shares of Metrocall and Arch common stock computed in accordance with Rule 457(c) to be exchanged for shares of Holding Company common stock, as follows: (a)(i) $63.90, the average of the high and low prices per share of Metrocall common stock as reported on the NASDAQ Small Cap Market on May 13, 2004 multiplied by (ii) 6,030,125, the maximum aggregate number of shares of Metrocall common stock to be received by Holding Company, minus $150,000,000 of cash consideration to be paid to Metrocall stockholders in exchange for two million shares of Metrocall common stock, and (b)(i) $27.69, the average of the high and low prices per share of Arch Class A common stock as reported on the NASDAQ National Market on May 13, 2004, multiplied by (ii) 20,249,996, the maximum aggregate number of shares of Arch common stock to be received by Holding Company. |
(3) | Calculated by multiplying $796,047,377, the proposed maximum aggregate offering price calculated in (2), by $.00012670. |
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 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.
To the stockholders of Metrocall Holdings, Inc. and Arch Wireless, Inc.
A MERGER PROPOSAL YOUR VOTE IS VERY IMPORTANT
Metrocall and Arch have agreed to combine in a merger of equals transaction where each company will merge with a separate recently formed subsidiary of a new holding company named Wizards-Patriots Holdings, Inc., also referred to as Holding Company. Metrocall and Arch intend that the merger will constitute a tax-free transaction to the extent that stockholders receive stock rather than cash in the merger. We are proposing the merger because we believe that the combined strengths of our two companies will enable us to better position ourselves to effectively compete in the paging and wireless messaging marketplace. We believe that the merger will benefit the stockholders of both companies and are asking for your support in voting for these very important merger proposals at our special meetings.
When the merger is completed:
| Metrocall common stockholders will receive 1.876 shares of Holding Company common stock for each share of Metrocall common stock that they own, subject to adjustment for unanticipated changes in the number of fully diluted shares of common stock of Metrocall and/or Arch prior to the completion of the merger. Holders of two million shares of Metrocall common stock outstanding immediately prior to the effectiveness of the merger will receive, in lieu of Holding Company common stock, $75.00 per share in cash, subject to certain cash election conditions described in the attached joint proxy statement/prospectus. Prior to the effective date of the merger, Metrocall common stockholders will have the right to elect to receive cash consideration for all, none or a portion of their shares of Metrocall common stock. To the extent Metrocall common stockholders as a group elect to receive cash for more or less than two million shares of Metrocall common stock, the mix of stock and cash consideration payable to Metrocall common stockholders will be adjusted on a pro rata basis so that exactly two million shares of Metrocall common stock outstanding immediately prior to the effectiveness of the merger are exchanged for cash. As a result, former stockholders and holders of outstanding options and warrants of Metrocall will own approximately 27.5% of the outstanding common stock of Holding Company on a fully diluted basis. | |
| All of the issued and outstanding shares of Metrocall preferred stock (including shares reserved for issuance under Metrocalls Plan of Reorganization) have been redeemed or defeased as of May 17, 2004. | |
| Arch common stockholders will receive one share of Holding Company common stock for each share of Arch common stock that they own. As a result, former stockholders and holders of outstanding options of Arch will own approximately 72.5% of the outstanding common stock of Holding Company on a fully diluted basis. |
Holding Company intends to apply to list its common stock on the NASDAQ National Market under the symbol [ ].
The boards of directors of both Metrocall and Arch have approved the merger and recommend that their stockholders vote FOR the merger proposals as described in the attached materials. Information about the merger is contained in the attached joint proxy statement/prospectus. We urge you to read these materials carefully, including the section entitled Risk Factors beginning on page 23.
Approval of the merger requires the affirmative vote at the Metrocall special stockholders meeting of the holders of a majority of the voting power of shares of Metrocall common stock outstanding as of the record date and the affirmative vote at the Arch special stockholders meeting of the holders of a majority of the voting power of shares of Arch common stock outstanding as of the record date.
The dates, times and places of the meetings are as follows:
For Arch stockholders:
[ ],
2004
[ ] a.m.
local time
[Address]
[Alexandria], Virginia
[ ],
2004
[ ] a.m.
local time
Hale and Dorr LLP
60 State Street
Boston, Massachusetts
To vote your shares, you may complete and return the enclosed proxy card or voting instructions or submit your proxy or voting instructions by telephone or over the internet. If you are a holder of record, you may also cast your vote in person at the special meeting. If your shares are held in an account at a brokerage firm or bank, you must instruct them on how to vote your shares. If you do not vote or do not instruct your broker or bank how to vote, it will have the same effect as voting against the merger.
Metrocall and Arch strongly support this combination of our
companies and our respective boards of directors
enthusiastically recommend that you vote in favor of the merger.
Mr. C. Edward Baker, Jr.
Chairman and Chief Executive Officer
Arch Wireless, Inc.
Neither the SEC nor any state securities commission has approved or disapproved of the securities to be issued in connection with the merger or determined if the attached joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.
The attached joint proxy statement/prospectus is dated [ ], 2004, and is anticipated to first be mailed to stockholders of Metrocall and Arch on or about [ ], 2004.
ADDITIONAL INFORMATION
This joint proxy statement/prospectus incorporates important
business and financial information about Metrocall and Arch from
other documents that are not included in or delivered with this
joint proxy statement/prospectus. This information is available
to you without charge upon your written or oral request. You can
obtain the documents incorporated by reference in this joint
proxy statement/prospectus by requesting them in writing or by
telephone at one of the following addresses or telephone numbers:
If you would like to request any documents, please do so by
[ ],
2004 in order to receive them before the special meetings.
See Where You Can Find More Information beginning on
page 123.
METROCALL HOLDINGS, INC.
Notice of Special Meeting of Metrocall Stockholders
at
[ ] a.m.
local time
To the stockholders of Metrocall Holdings, Inc.:
Notice is hereby given that a special meeting of stockholders of
Metrocall Holdings, Inc. will be held on
[ ],
2004 at
[ ] a.m.,
local time, at the
[ ],
[Alexandria], Virginia, to consider and vote upon a proposal to
adopt a merger agreement between Metrocall and Arch pursuant to
which Metrocall and Arch will each become a wholly-owned
subsidiary of a new holding company named Wizards-Patriots
Holdings, Inc., referred to herein as Holding
Company, and each share of Metrocall common stock will be
exchanged for 1.876 shares of Holding Company common stock,
subject to adjustment for unanticipated changes in the number of
fully diluted shares of common stock of Metrocall and/or Arch
prior to the completion of the merger. Holders of two million
shares of Metrocall common stock will receive, in lieu of
Holding Company common stock, $75.00 per share, subject to
certain cash election conditions described in the attached joint
proxy statement/prospectus.
We will transact no other business at the special meeting,
except for business properly brought before the special meeting
or any adjournment or postponement of the special meeting.
Approval of the merger agreement requires the affirmative vote
at the Metrocall special stockholders meeting of the holders of
a majority of the voting power of shares of Metrocall common
stock outstanding as of the record date.
Only holders of record of Metrocall common stock at the close of
business on
[ ],
2004, the record date, are entitled to notice of, and to vote
at, the special meeting and any adjournments or postponements of
the special meeting. To vote your shares, you may complete and
return the enclosed proxy card. If you are a holder of record,
you may also cast your vote in person at the special meeting. If
your shares are held in an account at a brokerage firm or bank,
you must instruct them on how to vote your shares. If you do not
vote or do not instruct your broker or bank how to vote, it will
have the same effect as voting against the merger.
Under Delaware law, holders of Metrocall common stock who timely
submit a written demand for appraisal of their shares and
otherwise comply with the applicable statutory procedures under
Delaware law, including not voting in favor of adoption of the
merger agreement, will be entitled to appraisal rights and to
receive payment in cash for the fair value of their shares as
determined by the Delaware Chancery Court. A summary of the
applicable requirements of Delaware law is contained in the
attached joint proxy statement/prospectus under the caption
The Merger Appraisal Rights, beginning
on page 73. In addition, the text of the applicable
provisions of Delaware law is attached as Annex G to the
attached joint proxy statement/prospectus.
Alexandria, Virginia
Important Notice
Your vote is important, regardless of the number of shares you
own. Please vote as soon as possible to make sure that your
shares are represented at the meeting. Whether or not you plan
to attend the special meeting in person, you are urged to read
the attached joint proxy statement/prospectus carefully and then
complete and return the enclosed proxy card or submit your proxy
or voting instructions by telephone or over the internet. If you
later desire to revoke your proxy for any reason, you may do so
in the manner set forth in the attached joint proxy
statement/prospectus.
ARCH WIRELESS, INC.
Notice of Special Meeting of Arch Wireless, Inc.
Stockholders
To the stockholders of Arch Wireless, Inc.:
Notice is hereby given that a special meeting of stockholders of
Arch Wireless, Inc. will be held
on ,
2004 at 10:00 a.m., local time, at Hale and Dorr LLP, 60
State Street, Boston, Massachusetts, for the following purposes:
These items of business are described in the attached joint
proxy statement/prospectus. Holders of record of Arch common
stock at the close of business on
[ ],
2004, the record date, are entitled to notice of, and to vote
at, the special meeting and any adjournments or postponements of
the special meeting.
Your vote is very important, regardless of the number of shares
you own. Please vote as soon as possible to make sure that your
shares are represented at the meeting. To vote your shares, you
may complete and return the enclosed proxy card or you may
submit your proxy or voting instructions by telephone or over
the internet. If you are a holder of record, you may also cast
your vote in person at the special meeting. If your shares are
held in an account at a brokerage firm or bank, you must
instruct them on how to vote your shares. If you do not vote or
do not instruct your broker or bank how to vote, it will have
the same effect as voting against the merger.
Arch Wireless, Inc.
1800 West Park Drive, Suite 250
Westborough, Massachusetts 01581
(508) 870-6700
email: jerry.cimmino@arch.com
By order of the Board of Directors of
Metrocall Holdings, Inc.
Royce Yudkoff
Chairman of the Board
To consider and vote upon a proposal to adopt a merger agreement
between Arch Wireless, Inc. and Metrocall
Holdings, Inc. pursuant to which Arch Wireless, Inc.
and Metrocall Holdings, Inc. will each become a
wholly-owned subsidiary of a new holding company that will be
named Wizards-Patriots Holdings, Inc., referred to herein
as Holding Company, and each share of Arch common
stock will be converted into one share of Holding Company common
stock.
To transact any other business as may properly come before the
special meeting or any adjournment or postponement of the
special meeting.
By order of the Board of Directors of
Arch Wireless, Inc.
Patricia A. Gray
Secretary
TABLE OF CONTENTS
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F-1
F-2
F-3
Agreement and Plan of Merger
Certificate of Incorporation of Holding Company
Bylaws of Holding Company
Organizational Minutes
Fairness Opinion of Lazard Freres & Co.
LLC
Fairness Opinion of Bear, Stearns & Co.
Inc.
Section 262 of the Delaware General
Corporation Law
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: | Why are Metrocall and Arch proposing the merger? |
A: | We are proposing the merger because we believe that a combination of our companies, the two leading independent paging companies and two of the leading wireless messaging companies in the United States, will result in stronger operating and financial results than either company could achieve on its own in the fiercely competitive wireless communications industry. The merger is anticipated to generate substantial synergies and cost reductions from the elimination of duplicative or redundant operations, functions and locations. We anticipate that cash flows generated by combining operations of Metrocall and Arch will be substantial and should allow the combined company, also referred to as Holding Company, to repay any debt incurred to complete the merger within twelve to twenty-four months and to provide significant funds for new product research, development and enhancement, stockholder dividends, stock repurchases or other uses as may be determined by Holding Companys board of directors. |
Although the parties have entered into this transaction to allow stockholders of both companies to realize these benefits, the $150 million of cash consideration is being made available to Metrocall stockholders to increase the likelihood of preserving existing tax attributes, derived primarily from Arch, for the benefit of Holding Company. See the risk factors relating to the preservation of existing tax attributes beginning on page 29. The cash consideration will enable Metrocall stockholders to receive cash for at least a portion of their holdings upon completion of the merger at a price reflective of the historical market price of their shares prior to the announcement of the merger. |
Q: | What will happen in the merger? |
A: | Prior to entering into the merger agreement, Metrocall formed Holding Company as a Delaware corporation. Holding Company, in turn, formed two wholly-owned subsidiaries, Wizards Acquiring Sub, Inc. and Patriots Acquiring Sub, Inc., both as Delaware corporations. In the merger: |
| Wizards Acquiring Sub, Inc. will merge with and into Metrocall, exchanging shares of Holding Company common stock and cash for shares of Metrocall common stock; |
| Patriots Acquiring Sub, Inc. will merge with and into Arch, exchanging shares of Holding Company common stock for shares of Arch Class A common stock, also referred to as Arch common stock; and |
| Holding Company and its subsidiaries are anticipated to incur up to $150 million of indebtedness, depending on the available cash on hand of Metrocall and Arch at the time of the closing of the merger, to pay the cash consideration to the Metrocall stockholders and fees and expenses related to the merger. |
Upon completion of the merger, Metrocall and Arch will each become a wholly-owned subsidiary of Holding Company, and former Metrocall stockholders and holders of options and warrants on Metrocall Common Stock will hold approximately 27.5%, and former Arch stockholders and holders of options on Arch common stock will hold approximately 72.5%, of the outstanding shares of Holding Company common stock, in each case on a fully diluted basis. |
Q: | If I am a Metrocall stockholder, how will the cash election work? |
A: | Here are some of the basics of the cash election Metrocall stockholders may make: |
| Metrocall common stockholders will have the right to elect to receive cash for all or a portion of their shares; |
| Metrocall stockholders will receive cash for a total of two million shares of Metrocall common stock in the merger irrespective of whether the elections made by Metrocall stockholders total more or less than two million shares; |
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| the amount of cash a Metrocall stockholder actually receives may differ from what that Metrocall stockholder elected to receive depending on the total number of shares for which other Metrocall stockholders elected to receive cash; |
| Metrocall and Arch have established [ ], 2004 as the deadline by which the exchange agent, [ ], must receive cash elections from Metrocall stockholders, although that deadline may be extended to a later date prior to consummation of the merger; |
| Metrocall stockholders may revoke a cash election at any time prior to [ ], 2004, or such later date to which the deadline for making the cash election may be extended; and |
| Metrocall stockholders failing to make an election to receive cash in lieu of Holding Company common stock will be treated as if they had elected to receive all Holding Company common stock for their Metrocall shares. |
For a more complete description of the cash election rules, see Summary of the Joint Proxy Statement/Prospectus beginning on page 7 and The Merger Structure of the Merger and Conversion of Metrocall and Arch Stock and Metrocall Stockholder Cash Elections beginning on page 65. |
Q: | What stockholder approvals are needed? |
A: | For Metrocall, the affirmative vote of the holders of a majority of the outstanding shares of Metrocalls common stock voting at the Metrocall stockholders special meeting, provided that holders of at least a majority of Metrocall common stock entitled to vote at the special meeting are present or represented by proxy, is required to adopt the merger agreement. Each holder of common stock is entitled to one vote per share. For Arch, the affirmative vote of a majority of the voting power of the outstanding shares of Archs common stock voting at the Arch stockholders special meeting, provided that holders of at least a majority of Arch common stock entitled to vote at the special meeting are present or represented by proxy, is required to adopt the merger agreement. Each holder of common stock is entitled to one vote per share. |
Q: | What do I need to do now? |
A: | After carefully reading and considering the information contained in this joint proxy statement/prospectus, please respond by completing, signing and dating your proxy card or voting instructions and returning it in the enclosed postage paid envelope or submit your proxy or voting instructions by telephone or over the internet as soon as possible so that your shares may be represented at your special meeting. If you later desire to revoke your proxy for any reason, you may do so as described elsewhere in this joint proxy statement/prospectus. |
Q: | What if I do not vote? |
A: | If you fail to respond, it will have the same effect as voting against the merger. If you respond and do not indicate how you want to vote, your proxy will be counted as a vote in favor of the merger. If you respond and elect to abstain from voting, your proxy will have the same effect as voting against the merger. |
Q: | If my shares are held in street name by my broker, will my broker vote my shares for me? |
A: | Your broker will vote your shares only if you provide instructions to your broker on how to vote. You should follow the directions provided by your broker regarding how to instruct your broker to vote your shares. Without instructions, unless your broker has discretionary authority over matters such as voting, your shares will not be voted, which will have the same effect as voting against the merger. |
Q: | Can I change my vote after I have delivered my proxy? |
A: | Yes. You can change your vote at any time before your proxy is voted at your special meeting. You can do this in one of three ways. First, you can revoke your proxy. Second, you can submit a new proxy. If you choose either of these two methods, you must submit your notice of revocation or your new proxy to the secretary of Metrocall or Arch, as appropriate, before your special meeting. If your shares are held |
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in an account at a brokerage firm or bank, you should contact your brokerage firm or bank to change your vote. Third, if you are a holder of record, you can attend the special meeting thereby revoking your proxy, and vote in person. |
Q: | Should I send in my stock certificates now? |
A: | No. Please do not send in your stock certificates with your proxy. |
Metrocall stockholders | |
If you are a Metrocall stockholder, accompanying this joint proxy statement/prospectus is a form with instructions for electing to receive cash for your shares of Metrocall common stock and a letter of transmittal for delivering your cash-electing shares, including surrendering any Metrocall share certificates representing such shares. The procedures for making this election are described in the section entitled The Merger Metrocall Stockholders Cash Election beginning on page 66. To make an election, you will need to deliver the cash election form, the letter of transmittal and any Metrocall share certificates representing your cash electing shares to the exchange agent before the election deadline which we will announce in the future but will likely be prior to the date of the Metrocall stockholders special meeting. After the merger is completed, you will receive written instructions from the exchange agent on how to exchange Metrocall stock certificates representing your remaining shares for shares of Holding Company. | |
Arch stockholders | |
After the merger is completed, you will receive written instructions from the exchange agent on how to exchange Arch stock certificates for shares of Holding Company. | |
Q: | Will I be able to sell Holding Company common stock that I receive in connection with the merger? |
A: | The shares of Holding Company common stock issued in connection with the merger are anticipated to be listed on the NASDAQ National Market with the ticker symbol [ ] and will, subject to the transfer restrictions, be freely tradable unless you are an affiliate of Metrocall, Arch, or Holding Company. Generally, persons who are deemed to be affiliates of Metrocall or Arch must comply with Rule 145 under the Securities Act if they wish to sell or otherwise transfer any shares of Holding Company common stock received in connection with the merger. Persons who are deemed to be affiliates of Holding Company must comply with Rule 144 under the Securities Act if they wish to sell or otherwise transfer any shares of Holding Company common stock. We will be contacting you if you are an affiliate of Metrocall or Arch. After completion of the merger, you should consult with your legal counsel to determine whether you are an affiliate of Holding Company, however it is likely that you would know or would have been notified if you were such an affiliate. |
Q: | Will I receive a physical stock certificate for the shares of Holding Company common stock that I will receive in the merger? |
A: | If you are a record holder of Metrocall or Arch common stock, you will receive one or more physical stock certificates representing your shares of Holding Company common stock. After the completion of the merger, whether you are a former Metrocall or Arch stockholder, if you currently hold your shares in street name, i.e. through a broker, dealer, bank or other financial institution that serves as your nominee, you will initially hold your shares of Holding Company common stock through that nominee. |
Q: | Will I receive dividends on my Holding Company shares? |
A: | Holding Company has not yet determined whether or when any dividends will be paid on its common stock or the amount of any such dividends. Additionally, indebtedness incurred by Holding Company to finance the merger may impose restrictions on Holding Companys ability to pay dividends. |
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Q: | When do you expect the merger to be completed? |
A: | We are working to complete the merger as quickly as possible, but, the transaction requires certain regulatory consents and approvals, in particular approvals of the U.S. Federal Communications Commission, also referred to as the FCC, and the U.S. Department of Justice, also referred to as the DOJ, for which we have applied and that are currently under review. On May 5, 2004, the DOJ submitted a Request for Additional Information and Documentary Material, also referred to as a second request, to Metrocall and Arch. Metrocall and Arch are in the process of gathering information to respond to this second request, and are working cooperatively with DOJ as it reviews the merger. In addition, Metrocall and Arch have had preliminary discussions with potential lenders regarding debt financing proposed to be incurred by Holding Company and its subsidiaries in connection with the merger sufficient to pay the cash consideration to Metrocall stockholders and expenses related to the merger. If we obtain such regulatory consents and approvals and the requisite financing in a timely manner, we expect to complete the merger during the second half of 2004. |
Q: | How can I obtain admission to the Metrocall or Arch special stockholder meeting? |
A: | You may attend the Metrocall special stockholder meeting only if you were a Metrocall stockholder as of the close of business on [ ], the record date for the Metrocall special meeting, or hold a valid proxy for the Metrocall special meeting. You may attend the Arch special stockholder meeting only if you were an Arch stockholder as of the close of business on [ ] the record date for the Arch special meeting, or hold a valid proxy for the Arch special meeting. You should be prepared to present photo identification to gain admittance. In addition, if you are a record holder, your name may be subject to verification against the list of record holders on the record date prior to your being admitted to the special meeting. If you are not a record holder but hold shares in street name with a broker, dealer, bank or other financial institution, you should be prepared to provide proof of beneficial ownership on the record date, such as your most recent account statement on or prior to the record date, or similar evidence of ownership. If you do not provide photo identification or fail to comply with the other procedures outlined above upon request, you will not be admitted to the special meeting. |
Q: | Who can help answer my questions? |
A: | If you have any questions about the merger or how to submit your proxy, or if you need additional copies of this joint proxy statement/prospectus or the enclosed proxy card or voting instructions, you should contact: |
if you are a Metrocall stockholder:
Metrocall Holdings, Inc.
if you are an Arch stockholder: |
Arch Wireless, Inc.
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SUMMARY OF THE JOINT PROXY STATEMENT/ PROSPECTUS
This summary highlights selected information in the joint proxy statement/prospectus and will likely not contain all of the information that is important to you. You should carefully read this entire joint proxy statement/prospectus and the other documents we refer to herein for a more complete understanding of the merger. In particular, you should read the documents attached to this joint proxy statement/prospectus, including the merger agreement which is attached as Annex A. In addition, we incorporate by reference important business and financial information about Metrocall and Arch into this joint proxy statement/ prospectus. You may obtain the information and materials incorporated by reference into this joint proxy statement/prospectus without charge by following the instructions in the section entitled Where You Can Find More Information beginning on page 123 of this joint proxy statement/prospectus.
The Companies
Metrocall Holdings, Inc. | |
6677 Richmond Highway | |
Alexandria, Virginia 22306 | |
Telephone: (703) 660-6677 |
Metrocall is a leading provider of paging products and other wireless services to business and individual subscribers. In addition to its reliable, nationwide one-way networks, Metrocalls two-way network has the largest high-powered terrestrial ReFLEX TM footprint in the United States with roaming partners in Canada, Mexico, the Caribbean, Central and South America. Metrocall is the preferred ReFLEX TM wireless data network provider for many of the largest telecommunication companies in the United States that source virtual network services and resell under their own brand names. In addition to one and two-way messaging, Metrocall also offers wireless e-mail solutions, as well as mobile voice and data services through AT&T Wireless and Nextel. Also, Metrocall offers Integrated Resource Management Systems with wireless connectivity solutions for medical, business, government and other campus environments. Metrocall focuses on the business-to-business marketplace and supports organizations of all sizes, with a special emphasis on the medical and government sectors. For additional information on Metrocall, please refer to the additional information described in Where You Can Find More Information beginning on page 123 of this joint proxy statement/prospectus, including Metrocalls filings with the Securities and Exchange Commission that are incorporated by reference into this joint proxy statement/prospectus.
Arch Wireless, Inc. | |
1800 West Park Drive, Suite 250 | |
Westborough, Massachusetts 01581 | |
Telephone: (508) 870-6700 |
Arch is a leading wireless messaging and mobile information company with operations throughout the United States. The company offers a full range of wireless messaging services to business and consumers nationwide, including one and two-way messaging services and mobile data solutions in all 50 states, the District of Columbia, Puerto Rico, Canada, Mexico and in the Caribbean. Arch promotes its services through a nationwide sales force and through resellers. For additional information on Arch, please refer to the additional information described in Where You Can Find More Information beginning on page 123 of this joint proxy statement/ prospectus, including Archs filings with the Securities and Exchange Commission that are incorporated by reference into this joint proxy statement/ prospectus.
Wizards-Patriots Holdings, Inc. | |
6677 Richmond Highway | |
Alexandria, Virginia 22306 | |
Telephone: (703) 718-6600 |
Wizards-Patriots Holdings, Inc., also referred to as Holding Company, is a newly formed corporation that has not, to date, conducted any activities other than those incident to its formation, the matters contemplated by the merger agreement and the preparation of this joint proxy statement/prospectus. Upon
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The Structure of the Merger (see page 65)
Prior to entering into the merger agreement, Metrocall formed Holding Company as a Delaware corporation. Holding Company, in turn, formed two wholly-owned subsidiaries, Wizards Acquiring Sub, Inc. and Patriots Acquiring Sub, Inc., both as Delaware corporations. At the effective time of the merger:
| Wizards Acquiring Sub, Inc. will merge with and into Metrocall, exchanging shares of Holding Company common stock and cash for shares of Metrocall common stock; and | |
| Patriots Acquiring Sub, Inc. will merge with and into Arch, exchanging shares of Holding Company common stock for shares of Arch common stock. |
Upon completion of the merger, Metrocall and Arch will become wholly-owned subsidiaries of Holding Company, and former Metrocall stockholders and holders of options and warrants on Metrocall common stock will hold approximately 27.5%, and former Arch stockholders and holders of options on Arch common stock will hold approximately 72.5%, of the outstanding shares of Holding Company common stock, in each case on a fully diluted basis. To pay cash to the Metrocall stockholders and complete the merger, Holding Company and its subsidiaries are anticipated to incur up to $150 million of indebtedness depending on the timing of the closing of the merger and the available cash on hand of Metrocall and Arch at that time.
The Merger Consideration (see page 65)
Metrocall. Holders of shares of Metrocall common stock will receive 1.876 shares of Holding Company common stock for each share of Metrocall common stock owned, subject to adjustment for unanticipated changes in the number of fully diluted shares of common stock of Metrocall and/or Arch prior to the completion of the merger, and subject to the payment of cash for all or a portion of such shares. Accompanying these proxy materials, Metrocall stockholders will receive a cash election form that will allow them to elect to receive in the merger $75.00 per share in cash for all or a portion of their shares of Metrocall common stock in lieu of the 1.876 shares of Holding Company common stock they would otherwise be entitled to receive.
Arch. Holders of shares of Arch common stock will receive one share of Holding Company common stock for each share of Arch common stock owned.
The Metrocall exchange ratio was determined without taking into account 316,007 restricted shares of Arch common stock awarded to ten members of Arch senior management that would otherwise be included in the number of fully diluted shares of Arch common stock used to arrive at the Metrocall exchange ratio and the 27.5%/72.5% split of the ownership of Holding Company common stock. This adjustment was made because in the event these Arch officers are terminated or resign prior to vesting of their restricted shares, their restricted shares may be repurchased by Arch at nominal cost. Because the three most senior of these ten Arch executives will be leaving the employment of Arch immediately prior to the merger, we anticipate that all 184,230 of their restricted shares will be repurchased by Arch at nominal cost immediately prior to closing of the merger. If any of these three executive officers do not resign or are not terminated prior to the earlier of closing of the merger or May 29, 2005, the date on which their restricted shares will no longer be subject to repurchase at nominal cost, or their shares are otherwise not repurchased prior to the merger, the merger agreement provides that the Metrocall exchange ratio will be increased so that former holders of shares and options and warrants for shares of Metrocall common stock would maintain their agreed 27.5% ownership percentage of Holding Company common stock. Assuming all of the restricted shares of these three executive officers remain outstanding immediately prior to the closing, the Metrocall exchange ratio would increase from 1.876 to 1.894. As a result, former holders of shares and options for shares of Arch common stock, other than these three most senior executives of Arch noted above would be diluted in their
6
Metrocall Cash Election. As an initial matter, Metrocall common stockholders will have the right to elect to receive cash for all, none or a portion of their shares. Holders of a total of two million shares will receive cash for their shares in the merger, and the amount of cash and stock each Metrocall stockholder will actually receive may differ from what that Metrocall stockholder elects depending on the total number of shares for which other Metrocall stockholders elect to receive cash.
Metrocall and Arch have established [ ], 2004 as the deadline by which the exchange agent, [ ], must receive duly executed and completed cash election forms from Metrocall stockholders, although that deadline may be extended by Metrocall, in consultation with Arch, to a later date prior to consummation of the merger. In addition, any Metrocall stockholder may revoke its cash election at any time prior to [ ], 2004, or such later date to which the deadline for making the cash election may be extended. Holders of vested options (including options that will vest upon and subject to the consummation of the merger) to purchase Metrocall common stock may make a cash election with respect to the shares to be received upon exercise of their vested options by completing the portion of the cash election form regarding vested options, including the irrevocable commitment to exercise the applicable options upon consummation of the merger.
Metrocall common stockholders who fail to make an election to receive cash in lieu of Holding Company common stock will be treated as if they had elected to receive all Holding Company common stock for their Metrocall shares.
If Metrocall stockholders as a group elect to exchange more than two million of their shares for cash, then each Metrocall stockholders allocation of cash-electing shares will be proportionately reduced so that a total of two million shares are exchanged for cash. Conversely, if Metrocall stockholders as a group elect to exchange less than two million of their shares for cash, then all Metrocall stockholders will receive cash for their cash-electing shares and each Metrocall stockholders other shares will be deemed to be cash-electing shares on a pro-rata basis so that a total of two million shares are exchanged for cash. For a more complete description of the cash election rules, see The Merger Structure of the Merger and Conversion of Metrocall and Arch Stock and Metrocall Stockholder Cash Elections beginning on page 66.
Determination of the Merger Consideration. The ownership split of Holding Company and the cash consideration to be received by Metrocall stockholders were determined through negotiations between the two companies and reflect the relative revenues and cash flows in recently completed fiscal quarters, and each companys projected revenue and cash flows through 2008, at the time of such negotiations and other factors that the boards of directors of Metrocall and Arch considered relevant. The cash consideration of $75 per share of Metrocall common stock to be paid to holders of two million shares of Metrocall common stock, $150 million in the aggregate, and the transfer restrictions on Holding Company common stock comparable to the restrictions currently in place on Arch common stock, are intended to increase the likelihood of preserving Archs tax attributes for the benefit of Holding Company.
Reasons for the Merger (see pages 40 and 44)
For the past several years, paging providers, including Metrocall and Arch, have experienced eroding subscriber bases and declining revenues as a result of intense competition from companies offering mobile telephone service which frequently includes text messaging, e-mail retrieval and other two-way messaging services such as those using Blackberry TM devices. Built during periods of far larger numbers of subscribers and expectations of substantial growth, each of Metrocall and Arch has in place systems and networks that are capable of handling volumes of business that are substantially greater than it has or can be expected to generate on a stand-alone basis.
We are proposing the merger because we believe combining our companies, the two leading independent paging and wireless messaging companies in the United States, will generate the potential for stronger operating and financial results than either company could achieve on its own in the highly competitive
7
| a more efficient organization capable of improved financial performance through the elimination of redundant overhead expenses and duplicative network structures; | |
| a larger company combining our firms best aspects of management, creativity and practices, better suited to compete effectively with large mobile telephone service providers and other providers of wireless communications; | |
| greater cash flow per share for each companys stockholders going forward when compared with each companys respective current stand alone plans; | |
| the opportunity to accelerate utilization of certain consolidated tax attributes due to higher pre-tax profits expected by Holding Company; and | |
| cost reductions and synergies, in addition to what each company expects to achieve on a stand-alone basis. |
Although the parties have entered into this transaction to allow stockholders of both companies to realize these benefits as holders of Holding Company common stock, the cash consideration of $75 per share of Metrocall common stock, $150 million in the aggregate, is being paid to Metrocall stockholders in the cash election to increase the likelihood of preserving and accelerating utilization of Archs tax attributes for the benefit of holders of Holding Company common stock. The $75 per share being paid to Metrocall stockholders for two million shares of Metrocall common stock is reflective of the historical market price of their shares prior to the announcement of the merger.
Recommendation of the Boards of Directors and Opinions of Financial Advisors (see page 46)
Metrocall Stockholders. The Metrocall board of directors has determined that the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Metrocall stockholders and unanimously recommends that the Metrocall stockholders vote FOR the adoption of the merger agreement.
Arch Stockholders. The Arch board of directors has determined that the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Arch stockholders and, by the unanimous vote of the independent directors of the Board, recommends that the Arch stockholders vote FOR the adoption of the merger agreement.
Opinion of Metrocalls Financial Advisor. In deciding to approve the merger, the Metrocall board of directors considered the opinion of its financial advisor, Lazard Freres & Co. LLC, that, as of the date of its opinion, and based on and subject to the matters described in its opinion, the merger consideration was fair, from a financial point of view, to the holders of Metrocall common stock other than excluded shares, such as treasury shares and shares entitled to receive appraisal under Delaware law. The full text of this opinion is attached as Annex E to this joint proxy statement/ prospectus. Metrocall urges its stockholders to read the opinion of Lazard in its entirety.
Opinion of Archs Financial Advisor. In deciding to approve the merger, the Arch board of directors considered the opinion of its financial advisor, Bear, Stearns & Co. Inc., that, as of the date of its opinion, and based upon and subject to the matters described in its opinion, the merger consideration was fair, from a financial point of view, to the public common stockholders of Arch. The full text of this opinion is attached
8
Appraisal Rights (see page 73)
Under Delaware law, Arch stockholders are not entitled to appraisal rights in connection with the merger. However, holders of Metrocall common stock who submit a written demand for appraisal of their shares and who comply with the other applicable statutory procedures under Delaware law, including not voting in favor of adoption of the merger agreement, will be entitled to appraisal rights and to receive payment in cash for the fair value of their shares as determined by the Delaware Chancery Court. For a more complete description of these appraisal rights, see The Merger Appraisal Rights, beginning on page 73.
The Special Meetings (see page 31)
Special Meeting of Metrocalls Stockholders. The Metrocall special meeting will be held at the [ ] on [ ], 2004, starting at [10:00] a.m., local time. At the Metrocall special meeting, Metrocall will ask its stockholders to vote upon a proposal to adopt the merger agreement and to consider any other matters that may properly come before the special meeting.
You may vote at the Metrocall special meeting if you owned Metrocall common stock at the close of business on [ ], 2004. On that date there were [ ] shares of Metrocall common stock outstanding and entitled to vote. You may cast one vote for each share of Metrocall common stock that you owned on that date. In order for holders of Metrocall common stock to adopt the merger agreement, holders of a majority of the outstanding shares of Metrocall common stock entitled to vote as of [ ], 2004 must vote in favor of adopting the merger agreement.
Approximately [ ]% of the outstanding shares of Metrocall common stock entitled to vote to adopt the merger agreement were held by Metrocall directors and executive officers and their affiliates as of [ ], 2004. We currently expect that Metrocalls directors and executive officers will vote their shares in favor of the merger, although none of them has entered into any agreements obligating them to do so.
Special Meeting of Archs Stockholders. The Arch special meeting will be held at Hale and Dorr LLP, 60 State Street, Boston, Massachusetts, on [ ], 2004, starting at [10:00] a.m., local time. At the Arch special meeting, Arch will ask its stockholders to vote upon a proposal to adopt the merger agreement and to consider any other matters that may properly come before the special meeting.
You may vote at the Arch special meeting if you owned Arch common stock at the close of business on [ ], 2004. On that date there were [ ] shares of Arch common stock outstanding and entitled to vote. You may cast one vote for each share of Arch common stock that you owned on that date. In order for holders of Arch common stock to adopt the merger agreement, holders of a majority of the outstanding shares of Arch common stock entitled to vote as of [ ], 2004 must vote in favor of adopting the merger agreement.
Approximately [ ]% of the outstanding shares of Arch common stock entitled to vote to adopt the merger agreement were held by Arch directors and executive officers and their affiliates as of [ ], 2004. We currently expect that Archs directors and executive officers will vote their shares in favor of the merger, although none of them has entered into any agreements obligating them to do so.
Board of Directors and Management Following the Merger (see page 117)
Upon completion of the merger, the board of directors of Holding Company will consist of nine individuals, four of whom were designated by Metrocall, and four of whom were designated by Arch. The ninth director, David C. Abrams, a representative of Abrams Capital, a significant shareholder of Arch, was proposed by Arch and accepted by Metrocall.
9
Royce Yudkoff, Chairman of Metrocall, will become Chairman of the Board of Holding Company. Metrocalls additional board designees are Vincent D. Kelly, who will become Chief Executive Officer of Holding Company, [ ] and [ ]. Archs board designees are James V. Continenza, Matthew Oristano, William E. Redmond, Jr. and Richard A. Rubin, each of whom is currently a director of Arch.
Interests of Directors and Executive Officers in the Merger (see page 59)
Some of the directors and executive officers of Metrocall and Arch have interests in the merger that are different from, or are in addition to, the interests of their companys stockholders. These interests include the potential for positions as directors or executive officers of Holding Company, potential acceleration of vesting of options or restricted stock as a result of the merger and the right to continued indemnification and insurance coverage by Holding Company for acts or omissions occurring prior to the merger.
Treatment of Stock Options and Restricted Stock (see page 68)
Metrocall. At the time of the merger, each outstanding option and warrant to purchase common stock of Metrocall will be converted into an option or warrant, as the case may be, to purchase the number of shares of common stock of Holding Company determined by multiplying the number of shares subject to the original option or warrant by 1.876, the Metrocall exchange ratio, at an exercise price determined by dividing the exercise price of the original option or warrant by 1.876, and otherwise on the same terms and conditions as were applicable to such Metrocall stock options and warrants. Rights to receive unissued shares of Metrocall common stock pursuant to the Metrocall Plan of Reorganization will become rights to receive, for each share of Metrocall common stock subject to those rights, 1.876 shares of Holding Company common stock, subject to the terms and conditions of the Metrocall Plan of Reorganization.
Arch. At the time of the merger, outstanding options to purchase common stock of Arch will be converted into options to purchase the same number of shares of common stock of Holding Company on the same terms and conditions as were applicable to such Arch stock options. Rights to receive any unissued shares (or issued but restricted shares) of Arch common stock pursuant to the Arch Plan of Reorganization will become rights to receive shares of the same number of shares of common stock of Holding Company, subject to the terms and conditions of the Arch Plan of Reorganization and/or the applicable restricted stock agreement.
Tax Consequences (see page 69)
Neither Metrocall nor Arch will be required to complete the merger unless they each receive a legal opinion to the effect that the merger will qualify as a nontaxable transaction for United States federal income tax purposes, except with respect to the receipt of cash by Metrocall stockholders in the Metrocall merger. Assuming the merger so qualifies, no gain or loss will be recognized by Metrocall, Arch or the Arch stockholders solely as a result of the merger. The tax consequences to a Metrocall stockholder in such case depend upon the consideration received by the stockholder:
| Holders of Metrocall common stock who receive solely shares of Holding Company common stock pursuant to the Metrocall merger will not recognize any gain or loss. | |
| Holders of Metrocall common stock who receive solely cash for their Metrocall common stock will generally recognize gain or loss equal to the difference between the amount of cash received for their Metrocall common stock and their tax basis in their shares of Metrocall common stock. | |
| Holders of Metrocall common stock who receive a combination of (1) Holding Company common stock and (2) cash, either pursuant to the cash election or in lieu of a fractional share of Holding Company, for their Metrocall common stock will not recognize any loss they may realize. Such holders will generally recognize gain equal to the lesser of (1) the amount of cash received and (2) the aggregate gain realized in the transaction (i.e., the excess of the fair market value of the Holding |
10
Company common stock at the effective time of the merger plus the amount of cash received over their tax basis in their Metrocall common stock). | ||
| All or a portion of any gain recognized by a Metrocall stockholder may be treated as ordinary income rather than capital gain. |
Tax matters relating to the merger are very complicated and the tax consequences of the merger to you will depend on the facts of your own situation. You are urged to consult your own tax advisors for a full understanding of the tax consequences of the merger to you.
Restrictions on Transfer of Holding Company Common Stock (see page 96)
To increase the likelihood of preserving Archs tax attributes for the benefit of Holding Company described in the Description of Holding Company Capital Stock Restrictions on Transfers of Common Stock; Anti-Takeover Consideration, beginning on page 96, Holding Companys amended and restated certificate of incorporation provides for restrictions on transfer of Holding Company common stock intended to prevent Arch from experiencing an indirect ownership change, as such term is defined in section 382 of the Internal Revenue Code. Generally, transfers of Holding Company stock expected to result in an indirect ownership change of greater than 45% of Arch will be subject to the prior approval of the Holding Company board of directors. Transfers of Holding Company stock expected to result in an indirect ownership change of greater than 47% of Arch will be prohibited.
Arch believes that, since its emergence from bankruptcy proceedings, Arch has undergone a cumulative change in ownership of approximately 17.0%, as of March 31, 2004. Assuming consummation of the merger as of that date, Arch believes the resulting cumulative change in ownership would be approximately 39.0%. The determination of this percentage ownership change is dependent on provisions of the tax law that are subject to varying legal and factual interpretations and on facts that are not precisely determinable at this time. Therefore, the cumulative change in ownership, assuming consummation of the merger, may be more or less than 39.0% and, in any event, may increase by reason of transactions in Archs common stock subsequent to March 31, 2004 by Archs 5% shareholders.
Overview of the Merger Agreement (see page 74)
Conditions to the Completion of the Merger. Each of Metrocalls and Archs obligation to complete the merger is subject to the satisfaction or, where permitted, waiver of specified conditions, including those listed below:
| the merger agreement must be adopted by the stockholders of both Metrocall and Arch; | |
| no law, injunction or order preventing the completion of the merger may be in effect; | |
| the registration statement of which this joint proxy statement/prospectus is a part must be declared effective by the Securities and Exchange Commission and not be subject to a stop order or proceedings seeking a stop order; | |
| the applicable waiting period under U.S. antitrust laws, as may be extended, must expire or be terminated; | |
| the final approval of the Federal Communications Commission must be obtained; | |
| the shares of Holding Company common stock to be issued in the merger must be approved for listing on the NASDAQ National Market; | |
| appraisal rights may not be perfected with respect to more than eight percent of the fully diluted shares of Metrocall common stock, including the shares of Metrocall common stock that are outstanding or issuable upon exercise of options or warrants, or under the Metrocall Plan of Reorganization; |
11
| material compliance by each of Metrocall and Arch with respect to our respective covenants in the merger agreement; | |
| our respective representations and warranties in the merger agreement must be true and correct, except as would not reasonably be expected to have a material adverse effect; and | |
| we must each receive an opinion of our respective tax counsel to the effect that the merger will qualify as an exchange to which Section 351 of the Internal Revenue Code applies in the case of Metrocall stockholders and to which Section 351 or Section 368(a)(2)(E) of the Internal Revenue Code applies in the case of Arch stockholders. |
In addition, although not an express condition to completion of the Merger Agreement, Holding Company will have to obtain financing prior to the merger in order to pay the cash consideration of $150 million to the Metrocall shareholders. The amount of financing is undetermined at this time, but may be up to as much as $150 million depending on the available cash on hand of each of Metrocall and Arch when the other conditions to the merger have been satisfied.
Termination of the Merger Agreement. Metrocall and Arch can jointly agree to terminate the merger agreement at any time. Either company may also terminate the merger agreement if:
| the merger is not completed on or before December 31, 2004, as extended by either party for no more than 60 days in the event that all conditions to closing are satisfied, but the financing necessary to fund the cash consideration to be paid to Metrocall stockholders has not been obtained; | |
| any injunction, order or decree of any governmental entity does not permit the completion of the merger; | |
| either companys stockholders do not vote to adopt the merger agreement at a duly held meeting of that companys stockholders; | |
| the other companys board of directors changes its recommendation in respect of the merger consistent with the merger agreement or recommends a competing transaction; | |
| the other company breaches its representations, warranties or covenants in the merger agreement in a way that is sufficiently material as to result in the applicable condition to closing not being satisfied, and such breach is incurable or has not been cured within 30 days; or | |
| that company exercises its fiduciary out to terminate the merger agreement, pays a termination fee to the other company and enters into a competing transaction. |
Termination Fees. The merger agreement provides that Metrocall or Arch may be required to pay a $12 million termination fee to the other party in the event that the merger agreement is terminated under specified circumstances.
No Solicitation Provisions. The merger agreement contains detailed provisions prohibiting Metrocall and Arch from seeking an alternative transaction. These no solicitation provisions prohibit Metrocall and Arch, as well as their officers, directors, subsidiaries and representatives, from taking any action to solicit an acquisition proposal as described on page 76. The merger agreement does not, however, prohibit either party or its respective board of directors from considering, and potentially recommending, an unsolicited bona fide written superior proposal from a third party as described on pages 76 through 77.
Regulatory Matters. Under U.S. antitrust laws, we may not complete the merger until we have notified the Antitrust Division of the Department of Justice and the Federal Trade Commission of the merger and until a statutory required waiting period has ended. We have filed the required information and materials to notify the Department of Justice and the Federal Trade Commission of the merger, and as a result of interagency agreements between them, the Department of Justice will be reviewing our filings. On May 5, 2004, the Department of Justice made a request for additional information and documentary material, thereby extending the statutory pre-merger waiting period until 30 days after Metrocall and Arch substantially comply with this request, unless the waiting period is terminated earlier or extended with the consent of
12
To complete the merger, we must also obtain the approval of the Federal Communications Commission. We have filed the necessary applications with the FCC, and the FCC is reviewing those applications.
We cannot assure you that we will obtain all regulatory approvals to complete the merger or that the granting of these approvals will not involve the imposition of conditions on the completion of the merger or require changes to the terms of the merger. These conditions or changes could result in the conditions to the merger not being satisfied.
Accounting Treatment. We intend to account for the merger under the purchase method of accounting for business combinations.
Completion and Effectiveness of the Merger. We will complete the merger as soon as reasonably practicable after all of the conditions to completion of the merger are satisfied or waived in accordance with the merger agreement. The merger will become effective when we file certificates of merger with the State of Delaware. We currently plan to complete the merger during the second half of 2004.
Risk Factors (see page 23)
In considering whether to adopt the merger agreement, you should consider certain risks of the merger. We urge you to read carefully all of the factors described in Risk Factors before voting.
13
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
The following tables present (1) selected historical financial data of Metrocall, (2) selected historical financial data of Arch and (3) selected unaudited pro forma consolidated financial data of Holding Company, which reflect the merger.
METROCALL
Selected Historical Financial Data
The following tables set forth selected financial data of Metrocall. The historical financial data have been derived from the audited consolidated financial statements for each of the years in the three-year period ended December 31, 2001, for the period January 1, 2002 to October 7, 2002, for the period October 8, 2002 to December 31, 2002, for the year ended December 31, 2003, and the unaudited financial statements for the three-month periods ended March 31, 2003 and March 31, 2004. As a result of Metrocalls filing a voluntary petition to reorganize under chapter 11 of the U.S. Bankruptcy Code on June 3, 2002 and operating as a debtor-in-possession until October 8, 2002, the selected financial data for periods prior to October 8, 2002 are not comparable to periods subsequent to such date. The financial statements of the Reorganized Company reflect the impact of adjustments to reflect the fair value of assets and liabilities under fresh start reporting. As a result, the financial statements of the Reorganized Company are presented on a different basis than those of the Predecessor Company and, therefore, are not comparable in all respects. The historical data are only a summary, and you should read it in conjunction with the historical consolidated financial statements and the related notes contained in the annual reports of Metrocall which have been incorporated by reference into this joint proxy statement/ prospectus.
On November 18, 2003, Metrocall acquired the majority of the operating assets and assumed certain liabilities of Weblink Wireless, Inc. and certain of its subsidiaries. Metrocall has accounted for the asset acquisition under the purchase method of accounting for financial reporting purposes pursuant to SFAS No. 141, Business Combinations , and accordingly the operating results of the acquired assets have been included in the consolidated statement of operations for 2003 from their date of acquisition. Units in service at December 31, 2003 include approximately 634,000 units acquired in the acquisition.
14
(dollars in thousands, except per share data)
Predecessor Company
Reorganized Company
Year Ended December 31,
January 1 to
October 8 to
Year Ended
October 7,
December 31,
December 31,
1999
2000
2001
2002
2002
2003(d)
$
548,700
$
504,800
$
460,448
$
296,813
$
81,325
$
318,926
61,487
57,183
43,225
24,056
4,078
17,933
610,187
561,983
503,673
320,869
85,403
336,859
39,071
37,509
26,176
13,085
1,081
4,804
154,398
133,667
139,326
89,250
23,004
94,098
97,051
103,413
92,481
50,952
11,359
40,026
174,592
172,017
161,161
106,674
27,735
95,388
15,017
19,007
6,842
295,906
286,963
185,893
50,386
12,875
37,913
387,934
(150,831
)
(171,586
)
(504,315
)
(8,485
)
9,349
57,788
(85,115
)
(84,169
)
(100,672
)
(39,280
)
(2,580
)
(7,099
)
(12,428
)
407
(2,450
)
(7,822
)
(822
)
1,047
463
22,876
749,821
575,491
(235,539
)
(235,329
)
(612,809
)
1,276,725
7,816
38,724
63,055
20,775
(3,000
)
(21,754
)
(172,484
)
(214,554
)
(612,809
)
1,276,725
4,816
16,970
(16,462
)
(9,816
)
(10,391
)
(4,855
)
(2,679
)
(6,084
)
80,346
(4,715
)
(6,308
)
2,208
$
(186,738
)
$
(230,678
)
$
(623,200
)
$
1,347,501
$
2,137
$
10,886
$
(4.47
)
$
(3.00
)
$
(6.93
)
$
14.98
$
0.43
$
2.17
$
(4.47
)
$
(3.00
)
$
(6.93
)
$
14.98
$
0.43
$
2.11
[Additional columns below]
[Continued from above table, first column(s) repeated]
Reorganized Company
Three
Three
Months
Months
Ended
Ended
March 31,
March 31,
2003
2004
$
82,848
$
86,810
4,541
3,903
87,389
90,713
979
940
23,474
28,827
11,982
9,283
26,768
26,826
5,726
11,668
8,419
6,792
16,418
(2,149
)
(137
)
(3,214
)
231
(58
)
4,874
13,009
(1,912
)
(5,475
)
2,962
7,534
(2,985
)
$
(23
)
$
7,534
$
(0.00
)
$
1.38
$
(0.00
)
$
1.31
a) | 2001 and 2002 amounts include costs for legal, financial and investment banking services received in connection with Metrocalls former merger agreement with Weblink, which was terminated on May 14, 2001 and other costs incurred by the Predecessor Company and its debt holders in connection with debt restructuring efforts in 2001 and 2002. |
b) | In 2001, the Predecessor Company wrote down the carrying value of its long-lived assets by approximately $388.0 million to their estimated fair value as a result of their impairment. |
c) | Effective July 1, 2003, we adopted SFAS 150 which requires dividends and interest in redeemable preferred stock to be classified as interest expense prospectively. |
d) | 2003 amounts include the operations of Weblink beginning November 18, 2003. |
15
(dollars in thousands)
Predecessor Company
Reorganized Company
December 31
December 31,
March 31,
1999
2000
2001
2002
2003
2004
$
(36,908
)
$
(764,532
)
$
(833,484
)
$
(15,334
)
$
(3,162
)
$
(7,784
)
$
2,787
$
26,597
$
24,135
$
47,530
$
35,602
$
14,697
$
1,025,547
$
757,145
$
203,470
$
189,747
$
195,761
$
161,503
$
776,984
$
301
$
220
$
20,762
$
41
$
17
$
(152,134
)
$
(166,352
)
$
(789,237
)
$
715
$
93,281
$
101,895
(a) | At December 31, 2000 and 2001 working capital deficit included current debt balance of approximately $760.0 million which largely constituted debt with scheduled non-current maturities; but which had been classified as current debt due to the default of certain debt covenants that accelerated the scheduled maturities of debt. |
16
ARCH
Selected Historical Financial Data
The following tables set forth selected financial data of Arch. The selected historical financial data of Arch have been derived from the audited historical consolidated financial statements and related notes of Arch for each of the years in the three years ended December 31, 2001, for the period January 1, 2002 to May 31, 2002, for the period June 1, 2002 to December 31, 2002, and for the year ended December 31, 2003, and the unaudited consolidated financial statements for the three months ended March 31, 2003 and March 31, 2004. As a result of Archs filing a voluntary petition to reorganize under chapter 11 of the U.S. Bankruptcy Code on December 6, 2001, and operating as a debtor-in-possession through May 31, 2002, the selected financial data for periods prior to May 31, 2002 are not comparable to periods subsequent to such date. The financial statements of the Reorganized Company reflect the impact of adjustments to reflect the fair value of assets and liabilities under fresh start reporting. As a result, the financial statements of the Reorganized Company are presented on a different basis than those of the Predecessor Company and, therefore, are not comparable in all respects.
The historical data should be read in conjunction with the historical consolidated financial statements and related notes contained in the annual and quarterly reports of Arch which are incorporated by reference into this joint proxy statement/prospectus.
17
Predecessor Company
Five
Months
(dollars in thousands, except
Year Ended December 31,
Ended
per share data)
May 31,
1999
2000
2001
2002
$
641,824
$
851,082
$
1,163,514
$
365,360
34,954
35,861
42,301
10,426
132,400
182,993
306,256
105,990
84,249
107,208
138,341
35,313
180,726
263,901
388,979
116,668
309,434
500,831
1,584,482
82,720
154,927
(2,200
)
5,425
7,890
(97,739
)
(245,137
)
(1,459,662
)
14,243
(188,249
)
(169,252
)
(258,870
)
(2,068
)
6,963
58,603
34,229
1,621,355
(3,200
)
(282,225
)
(355,786
)
(1,684,303
)
1,633,530
(22,503
)
47,895
(282,225
)
(355,786
)
(1,684,303
)
1,658,922
46,006
121,994
$
(282,225
)
$
(309,780
)
$
(1,569,103
)
$
1,658,922
$
(8.99
)
$
(4.10
)
$
(8.79
)
$
9.09
$
(8.99
)
$
(4.10
)
$
(8.79
)
$
9.09
$
113,651
$
140,285
$
109,485
$
44,474
[Additional columns below]
[Continued from above table, first column(s) repeated]
Reorganized Company
Seven
Three
Three
Months
Year
Months
Months
(dollars in thousands, except
Ended
Ended
Ended
Ended
per share data)
December 31,
December 31,
March 31,
March 31,
2002
2003
2003
2004
$
453,369
$
597,478
$
164,753
$
123,659
7,740
5,580
1,658
938
135,295
192,159
50,135
38,988
37,897
45,639
12,494
9,068
136,257
166,167
49,092
31,117
103,875
118,917
33,223
26,309
6,979
11,420
2,195
2,938
11,481
3,018
25,326
46,115
15,956
11,283
(19,469
)
(19,237
)
(5,646
)
(3,329
)
516
10
168
5,857
27,394
10,320
8,122
(2,765
)
(425
)
3,092
26,969
10,320
8,122
(2,265
)
(10,841
)
(4,249
)
(3,265
)
$
827
$
16,128
$
6,071
$
4,857
$
0.04
$
0.81
$
0.30
$
0.24
$
0.04
$
0.81
$
0.30
$
0.24
$
39,935
$
25,446
$
3,416
$
5,701
18
Predecessor Company
Reorganized Company
(dollars in thousands)
As of December 31
As of December 31,
March 31,
1999
2000
2001
2002
2003
2004
$
85,303
$
211,443
$
244,453
$
115,231
$
105,511
$
101,464
$
1,353,045
$
2,309,609
$
651,633
$
437,924
$
509,872
$
484,654
$
1,322,508
$
1,679,219
$
$
162,185
$
40,000
$
$
$
$
2,096,280
$
$
$
$
28,176
$
30,505
$
$
$
$
$
(245,735
)
$
(94,264
)
$
(1,656,911
)
$
118,393
$
354,623
$
360,168
(1) | In accordance with AICPA Statement of Position 90-7, Financial Reporting by Entities in Reorganization under the Bankruptcy Code , known as SOP 90-7, at December 2001, we classified substantially all of our pre-petition liabilities and redeemable preferred stock as Liabilities Subject to Compromise. |
19
HOLDING COMPANY
Selected Unaudited Pro Forma Condensed Consolidated Financial Data
The selected unaudited pro forma condensed consolidated
financial data of Holding Company have been derived from the
unaudited pro forma condensed consolidated financial statements
included elsewhere in this joint proxy statement/prospectus.
Three Months
Year Ended
Ended
(dollars in thousands, except per share data)
December 31,
March 31,
2003
2004
$
1,015,418
$
214,372
15,045
1,878
324,201
67,815
91,592
18,351
278,303
55,585
247,676
58,499
13,145
4,146
19,388
3,018
989,350
209,292
26,068
5,080
(13,461
)
(3,137
)
1,353
110
13,960
2,053
(425
)
13,535
2,053
(5,441
)
(825
)
$
8,094
$
1,228
$
0.31
$
0.05
$
0.30
$
0.04
March 31,
2004
$
(37,517
)
$
3,342
$
924,322
$
150,017
$
574,102
20
COMPARATIVE PER SHARE FINANCIAL INFORMATION
We present below per common share data regarding the income,
cash dividends declared and book value of Metrocall and Arch on
a historical basis, Metrocall on an unaudited pro forma basis
per Metrocall equivalent common share and Arch on an unaudited
pro forma basis per Arch common share. We have derived the
unaudited pro forma consolidated per share information from the
unaudited pro forma condensed consolidated financial statements
presented elsewhere in this joint proxy statement/prospectus
which give effect to the exchange of Metrocall and Arch capital
stock, including the cash consideration to be received by
Metrocall shareholders, and account for the merger using the
purchase method of accounting. You should read the information
below in conjunction with the financial statements and
accompanying notes of Metrocall and Arch that are incorporated
by reference in this joint proxy statement/prospectus and with
the unaudited pro forma consolidated information included under
Unaudited Pro Forma Condensed Consolidated Financial
Statements.
As of and for the
Year Ended
As of and for the
December 31,
Three Months Ended
2003
March 31, 2004
$
2.17
$
1.38
$
2.11
$
1.31
$
$
$
18.59
$
18.66
$
0.81
$
0.24
$
0.81
$
0.24
$
$
$
17.73
$
18.01
$
0.58
$
0.09
$
0.56
$
0.08
$
$
$
$
40.93
$
0.31
$
0.05
$
0.30
$
0.04
$
$
$
$
21.82
The Metrocall per share equivalent pro forma data are calculated by multiplying Holding Company per share amounts by 1.876, the exchange ratio for converting one share of Metrocall common stock into shares of Holding Company common stock. The Arch per share equivalents remain unchanged, as the exchange ratio for converting shares of Arch common stock to Holding Company common stock is one for one.
21
COMPARATIVE PER SHARE MARKET INFORMATION
Holding Companys stock has no trading history and will likely reflect the business prospects and financial results of the combined enterprise, including future realization of synergies, tax attributes, and financial performance. Accordingly, we do not believe that a pro forma calculation of implied consideration using each of the stock prices of Metrocall and Arch is meaningful as to the future stock price performance of Holding Companys stock.
The following table sets forth the closing prices of Metrocall
and Arch common stock as reported on the NASDAQ Small Cap and
the NASDAQ National Market, respectively on the trading day
immediately preceding the announcement of the merger.
Metrocall
Arch
Common Stock
Common Stock
$
74.94
$
23.96
We urge you to obtain current market quotations before voting your shares. Because the exchange ratios are fixed in the merger agreement, subject to adjustment for unanticipated changes in the number of fully-diluted shares of common stock of Metrocall and/or Arch prior to the completion of the merger, any decrease in the value of shares of Metrocall or Arch common stock prior to the completion of the merger will likely reduce the value of Holding Company common stock to be received by stockholders of Metrocall and Arch.
22
RISK FACTORS
In addition to the other information contained in or incorporated by reference into this joint proxy statement/ prospectus (including the matters addressed in Statements Regarding Forward-Looking Information beginning on page 122), you should carefully consider the following risk factors in deciding whether to vote for adoption of the merger agreement.
For a discussion of Metrocalls and Archs respective businesses and other factors to consider in connection with those businesses, please see Metrocalls and Archs Annual Reports on Form 10-K for the fiscal year ended December 31, 2003, which are incorporated by reference in this joint proxy statement/ prospectus. See Where You Can Find More Information beginning on page 123.
Risks related to the wireless messaging industry |
The continued decline in the number of one and two-way messaging units in service may adversely impact Holding Companys cash flows, business and operations.
Between 1999 and 2003, industry publications reported a decrease in the number of one-way messaging units in service from over 40 million in 1999 to approximately 12 million in 2003. In 2002, Metrocall and Arch together experienced declines in one-way messaging of approximately 4.6 million units or 34.3%. Metrocall and Arch together experienced further declines in one-way messaging of approximately 1.6 million units or 17.6% in 2003. Although not as dramatic as the decrease in one-way messaging, in 2002 Metrocall and Arch together experienced declines in two-way messaging of approximately 8,300 units or 1.5%. In 2003 Metrocall and Arch together experienced further declines in two-way messaging of approximately 91,300 units or 16.4%, excluding units Metrocall acquired from Weblink in 2003. In the three months ended March 31, 2004, Metrocall and Arch experienced declines in one and two-way messaging units in service of approximately 468,000 or 6.4% and 31,000 or 4.7%, respectively from December 31, 2003.
As a result of the decline in the number of units in service, Metrocall and Arch together experienced a reduction in annual revenues from approximately $1.3 billion in 1999 to approximately $934 million in 2003, a decline of 25.4% over that period. In the three months ended March 31, 2004, Metrocall, excluding revenues associated with certain assets acquired from WebLink in 2003, and Arch together experienced declines in revenues of approximately $56.4 million or 22.3%, respectively, when compared with their collective revenues of approximately $252.5 million for the three months ended March 31, 2003.
Although it is hard to predict the rate of decline for Holding Company, Holding Company will likely experience similar or greater rates of decline in the number of one and two-way messaging units in service. Because there are recurring fixed costs necessary to operate one and two-way messaging networks, in the event there is only one such network in a particular market, subscriber cancellations would not be fully offset by expense reductions and, in such case, would adversely impact Holding Companys cash flows. While we expect that Holding Company will make efforts to replace lost subscribers, marketing and other expenses associated with adding subscriptions are high and would adversely affect Holding Companys cash flow in the short-term if the replacement efforts are successful and its business and operations in the longer term if they are not successful.
Holding Companys wireless service competitors have competitive service offerings and advantages in financial resources and brand recognition, and may target Holding Companys subscribers, which could reduce its market share and revenues and increase its expenses.
Holding Company will face intense competition for subscribers not only from other providers of one and two-way messaging services such as Skytel, Inc. and Verizon Wireless Messaging LLC, but also from larger mobile telephone carriers such as AT&T Wireless, Cingular Wireless, Nextel, Sprint PCS, T-Mobile, Verizon Wireless and others who have or are developing messaging services that perform comparable functions to services that will be offered by Holding Company. For example, cellular carriers and traditional telephone companies have developed and commenced the installation of micro-cells and wireless networks in hospitals, resulting in a substantial decrease in the number of Metrocall and Arch units in service in that market segment. In addition, providers of e-mail and wireless data services available through personal digital
23
Many of our competitors have longer operating histories and better brand recognition than Holding Company, Metrocall or Arch. Several of these competitors are large, diversified telecommunications companies that serve several markets and possess financial, technical and other resources significantly greater than those that Holding Company will have. Further advances in technology financed in part by these competitors could lower the prices of their services or products to levels at which Holding Companys pricing for its services and products would cease to be attractive. These competitors may use their competitive advantages to target Holding Companys subscribers which could result in Holding Companys loss of existing or future subscribers, loss of revenues and increased expenses to stay competitive. Holding Companys loss of revenues and increased expenses would materially adversely affect the value of Holding Company common stock.
Risks relating to the merger |
The exchange ratios for converting Metrocall and Arch common shares into Holding Company common shares have been fixed, and neither Metrocall nor Arch may resolicit stockholder approval or walk away from the merger if there are decreases in the market price of Metrocall or Arch common shares.
The exchange ratios for the conversion of shares of Metrocall common stock and Arch common stock into shares of Holding Companys common stock were determined in negotiations between Metrocall and Arch and have been fixed but may not reflect the actual relative market values of the common stock of Metrocall and Arch. Any decrease in the market value of shares of Metrocall or Arch common stock prior to the completion of the merger will likely reduce the value of Holding Company common stock to be received by stockholders of Metrocall and Arch. Neither Metrocall nor Arch is permitted to walk away from the merger or resolicit the vote of its stockholders solely because of changes in the market price of either partys common stock.
There has not previously been a trading market for Holding Company common stock.
Holding Company was recently formed by Metrocall to effect the merger of Metrocall and Arch and will serve as the publicly traded parent company of Metrocall and Arch following consummation of the merger. As a consequence, there has not previously been a trading market for Holding Company common stock. We cannot predict the extent to which a trading market for Holding Company common stock will develop, if at all, or how liquid any such trading market might become.
Metrocall stockholders electing to receive Holding Company common stock in the merger may be required to receive cash for a portion of their shares of Metrocall common stock which may result in a taxable gain to such stockholders.
Under the merger agreement, holders of a total of two million shares of Metrocall common stock will receive cash consideration in the amount of $75.00 per share of Metrocall common stock in lieu of receiving Holding Company common stock. In the event Metrocall stockholders elect to exchange less than a total of two million shares of their shares for cash, all Metrocall stockholders electing to receive Holding Company common stock will be required, on a pro rata basis, to receive cash instead of Holding Company common stock for a portion of their shares of Metrocall common stock. As a consequence, notwithstanding the choice made by some holders of Metrocall common stock to not elect to receive the cash consideration, effectively choosing to receive only Holding Company common stock in exchange for Metrocall common stock in what is expected to be a tax-free transaction, such holders may be required to accept cash consideration for some of their shares and in that event may recognize taxable gain upon the receipt of such cash. See The Merger Metrocall Stockholders Cash Election beginning on page 66.
24
Government agencies could refuse to grant required consents to the proposed merger, or could delay or impose adverse conditions on those consents.
The proposed merger is subject to review by the Federal Communications Commission, also referred to as the FCC, and by the Antitrust Division of the Department of Justice, also referred to as the DOJ. The Communications Act and the FCCs rules require that the FCC consent to the merger before we complete it. We have applied to receive the necessary consents, but the FCC may not grant our applications, or it may impose adverse conditions on its consent. Similarly, the merger is subject to pre-merger notification and challenge on antitrust grounds by the DOJ. Based upon its review, the DOJ could oppose the merger or it could condition its not opposing the merger on divestitures of certain assets or lines of business of the combined company. Metrocall and Arch filed the required pre-merger notification on April 5, 2004. On May 5, 2004, the DOJ submitted to each of Metrocall and Arch a Request for Additional Information and Documentary Material, also referred to as a second request, thereby extending the pre-merger statutory waiting period until thirty days after Metrocall and Arch substantially comply with the DOJs request, unless the waiting period is terminated earlier or extended with the consent of Metrocall and Arch. Metrocall and Arch are continuing to cooperate with the DOJ as it reviews the merger.
The process of obtaining FCC or DOJ consent could result in material delays. Third parties, including our customers and competitors, will have an opportunity to oppose our applications and to ask the FCC to deny approval of the merger. If third parties oppose the merger, additional delays could result. If there is any material delay in obtaining any governmental approval, there could be a delay in completing the merger. If completion of the merger is delayed, Holding Companys ability to achieve anticipated cost-savings and synergies would be also delayed and the ultimate value of shares of Holding Company common stock could be materially adversely affected. Moreover, the value of the Holding Company could be materially diminished if the FCC or the DOJ impose adverse conditions, such as divestiture requirements, on their consent.
Additionally, the merger agreement provides that neither Metrocall nor Arch is required to accept or agree to the divestiture of any of their businesses or assets as a condition to receiving any approval or waiver from any governmental authority or the imposition of any conditions by, or payment of any material amounts to, any governmental authority or third party in order to obtain any other necessary consents or approvals. In the event that any such divestitures, conditions or payments are required to obtain such consent and approvals, each of Metrocall and Arch could abandon the proposed merger instead of agreeing to take such actions.
If Metrocall, Arch and Holding Company are unable to obtain sufficient third party financing to pay the cash consideration to Metrocall stockholders in the merger, the merger may be abandoned or renegotiated on terms you may find less favorable.
The merger of Metrocall and Arch will not be consummated without obtaining third party financing that, together with cash balances of Metrocall and Arch anticipated to be available at the time of the merger, will provide sufficient funds for the payment of the $150 million in cash merger consideration to Metrocall stockholders and the approximately $33 million in transaction fees and expenses and other direct costs associated with the merger. Based on current estimates of management of Metrocall and Arch, it is expected that third party financing of up to $150 million, depending on the available cash on hand of Metrocall and Arch at the time of the closing of the merger, will be required for these purposes. These estimates and the estimate of the transaction expenses do not include any cash payments that would be required to be made to Metrocall stockholders perfecting appraisal rights upon final disposition of the related appraisal proceedings or expenses relating to obtaining the financing. Although Metrocall and Arch believe at this time that third party financing can be obtained on commercially reasonable terms, Metrocall and Arch have jointly determined not to incur the fees and costs associated with obtaining financing commitments before further progress is made in obtaining required regulatory and stockholder approvals for the merger. The merger agreement requires that the terms of any such financing be reasonably acceptable to both Metrocall and Arch. Events or circumstances causing harm to the businesses and results of operations of Metrocall or Arch, the wireless messaging industry generally, the debt finance markets and other unanticipated conditions may result in the failure to obtain financing sufficient to complete the transaction on terms acceptable to us or at all.
25
If sufficient financing on terms reasonably acceptable to Metrocall and Arch is not available, then either Metrocall or Arch may abandon the merger. Alternatively, Metrocall and Arch may renegotiate the merger agreement to reduce or eliminate the cash consideration to Metrocall stockholders or agree to other terms less favorable to stockholders of Metrocall or Arch or holders of Holding Company common stock. Metrocall stockholders receiving a larger percentage of Holding Company common stock could itself, or together with other transfers, place significant limitations on Holding Companys use of existing tax attributes, derived primarily from Arch, that were anticipated to be available as the merger is currently structured. This could materially adversely affect the cash flows of the Holding Company, as described more fully in the risk factors regarding certain consolidated tax attributes, beginning on page 29.
Some Metrocall stockholders have expressed dissatisfaction with the terms of the merger. Failure of Metrocall or Arch stockholders to approve the merger could result in an abandonment of the merger.
On the day the merger was publicly announced, the trading price of Metrocall common stock dropped by more than 7.7%, which may evidence dissatisfaction on the part of Metrocalls common stockholders with the relative consideration to be paid to Metrocall and Arch stockholders in the merger. In addition, some Metrocall stockholders have publicly expressed dissatisfaction with certain terms of the merger. Two of Metrocalls stockholders, PPM America, Inc. and Scion Capital, LLC, have made Schedule 13D filings, including correspondence expressing their opposition to the merger. PPM America, Inc. and its affiliates own approximately 3.3% of the outstanding shares of Metrocall common stock as set forth in its Schedule 13D filed with the SEC on April 6, 2004, and Scion Capital, LLC and its affiliates own approximately 5.2% of the outstanding shares of Metrocall common stock as set forth in its Schedule 13D filed with the SEC on May 3, 2004. Although Metrocall and Arch have agreed to use reasonable best efforts to obtain the required approval of our respective stockholders, there can be no assurance that our respective stockholders will approve the merger. Neither Metrocall nor Arch has any obligation to resolicit approval of their respective stockholders if the merger is not approved or to renegotiate the terms of the merger. If either Metrocall stockholders or Arch stockholders do not approve the merger, the merger could be abandoned.
If holders of more than 8% of Metrocall common shares perfect their appraisal rights, Holding Company may be required to pay cash for their shares, which could adversely affect its cash flows and operations, or Metrocall or Arch may abandon the merger.
If holders of more than approximately 482,400 shares of Metrocall common stock (or approximately 8% of the shares of Metrocalls common stock on a fully-diluted basis) seek and perfect appraisal rights with respect to their shares under Section 262 of the Delaware General Corporation Law, either Metrocall or Arch could abandon the merger. Even if Metrocall and Arch jointly agree to waive this condition and complete the merger, the holders of shares of Metrocall common stock seeking appraisal rights would be entitled to be paid in cash for the fair value of their shares, as determined by a court proceeding in the Delaware Chancery Court. Although the fair value attributed to Metrocall common stock in such a proceeding could be more or less than the value of the cash and Holding Company common stock consideration offered in exchange for Metrocall common stock, Metrocall, as a subsidiary of Holding Company after the merger, would be obligated to pay the entire appraised value for such shares in cash. Holding Company may not have sufficient available funds and may need to obtain additional financing to pay such amounts, which financing may not be available on commercially reasonable terms or at all. The payment of such amounts in cash and any requirement for Holding Company to obtain additional financing could materially adversely affect the cash flows and results of operations of Holding Company and the value of Holding Company common stock. See The Merger Appraisal Rights beginning on page 73.
Directors of Metrocall and Arch have potential conflicts of interest in approving the merger agreement and recommending that stockholders of Metrocall and Arch vote in favor of adoption of the merger agreement.
A number of directors of Metrocall and Arch who have approved the merger agreement and recommend that stockholders of Metrocall and Arch vote in favor of the adoption of the merger agreement have employment agreements or severance arrangements or other benefit arrangements that provide them with interests in the merger that differ from yours. Following completion of the merger, Vincent D. Kelly,
26
The completion of the merger may accelerate payment obligations for Arch under its long-term incentive plan, which would materially increase the costs and expenses associated with the merger.
Under documents governing Archs long-term incentive plan, a change in control of Arch would accelerate payment obligations for Arch to its employees participating in such plan. If the merger were to constitute a change in control, the total payment obligations triggered under the terms of documents governing such plan would be approximately $14.4 million in the aggregate as of May 12, 2004, based on an average closing price of $32.98 for Arch common stock over the preceding ten trading days. For each dollar that the ten-day trailing average price of shares of Arch common stock increases or decreases, the amount of these payment obligations would increase or decrease, respectively, by approximately $437,000. The total amount of these payment obligations of Arch would, if the merger were to constitute a change in control, be payable in full within thirty days of the closing of the merger. Arch stockholders will, as a group, have a controlling interest in Arch through ownership of a majority interest of Holding Company, and because the directors of Holding Company, once in office, will have been either nominated, recommended or endorsed by a majority of Arch directors. The boards of directors of both Metrocall and Arch believe that the merger will not constitute a change in control, as such term is defined in the documents governing Archs long-term incentive plan.
However, one or more employees of Arch may assert that the merger constitutes a change in control under Archs long-term incentive plan for these purposes. If any employee takes such legal action and is successful, Holding Company would be required to make additional payments under Archs long-term incentive plan and any applicable rulings or settlements. Such additional payments could materially increase the costs and expenses associated with the merger.
If the 184,230 restricted shares of Arch common stock held by the three most senior Arch executives are not repurchased prior to the merger, the exchange ratio would be adjusted from 1.876 to 1.894, diluting Arch stockholders other than these three executives.
The Metrocall exchange ratio was determined without taking into account restricted shares of Arch common stock, including 184,230 restricted shares held by the three most senior Arch executives. However, the merger agreement provides that, to the extent that any of the 184,230 restricted shares owned by these three executives have not been repurchased prior to the merger, the Metrocall exchange ratio will be increased so that former holders of shares and options and warrants for shares of Metrocall common stock will receive approximately the same percentage of Holding Company common stock, on a pro forma basis, as they would have had such 184,230 shares been repurchased and not exchanged in the merger for shares of Holding Company common stock. If all of these 184,230 restricted shares remain outstanding immediately prior to the merger, the Metrocall exchange ratio would be increased from 1.876 to 1.894, resulting in dilution to Arch stockholders other than with respect to the restricted shares held by the three most senior Arch executives.
Arch anticipates that all of these 184,230 restricted shares will be repurchased by Arch at a nominal cost upon these three executives leaving the employment of Arch immediately prior to the merger, in which case no adjustment to the Metrocall exchange ratio will be required. However, it is possible that Arch may not be able to complete its intended repurchase of these shares prior to the merger, including as a result of one or
27
Risks relating to Holding Company |
Holding Company may fail to successfully integrate the operations of Metrocall and Arch. As a result, Holding Company may not achieve the anticipated benefits of the proposed merger, and the value of its common stock may be materially adversely affected.
Holding Company will face significant challenges in consolidating operations, integrating the two organizations and services in a timely and efficient manner and retaining key Metrocall and Arch executives and other personnel. Some of the key issues will be managing the combined companys networks, maintaining adequate focus on existing business and operations while working to integrate the two companies, managing the marketing and sales efforts of the combined companies and selecting and implementing a single billing system and other key systems for the combined operations. In addition, Metrocall is continuing to integrate certain assets of Weblink which it acquired in November 2003, other than certain spectrum usage rights granted under FCC licenses which will be transferred to Metrocall upon the FCCs approval of such transfer becoming final.
The integration of Metrocall and Arch will require substantial attention from management, particularly in light of the geographically dispersed operations and different business cultures and compensation structures at the two companies. The diversion of management attention and any difficulties associated with integrating Metrocall and Arch operations, particularly given the ongoing integration of Weblink assets, could have a material adverse effect on the revenues, the level of expenses and the results of operations of Holding Company. Ultimately, the value of Holding Company common stock might be materially adversely affected.
Holding Company will incur significant direct costs, severance expenses and costs of integrating the operations of Metrocall and Arch associated with the merger.
Holding Company will incur significant direct costs associated with the merger which are currently estimated to be $33 million. Some of these costs, such as legal and accounting fees and expenses of Metrocall and Arch, some of the fees and expenses of financial advisors of Metrocall and Arch and regulatory filing fees, have already been paid or must be paid even if the merger is not completed. In connection with the closing of the merger and following the closing, Metrocall, Arch and Holding Company will incur significant severance expenses in connection with the termination of the employment of certain officers and employees of Metrocall and Arch. Further, following the merger, there may be significant costs to Holding Company associated with integrating the operations of Metrocall and Arch. Holding Company will likely incur such costs associated with the merger reflected as additional material expenses in subsequent quarters that could have a material adverse effect on its cash flows and results of operations.
Because the estimates of cost savings on and after completion of the merger are inherently uncertain, these cost savings may not be realized, which could materially adversely affect the cash flows, operations and value of Holding Company.
The anticipated cost savings resulting from the combination of the businesses of Metrocall and Arch are based on a number of assumptions, including that the combined company will be able to implement necessary cost saving programs such as headcount reductions, consolidation of geographically dispersed operations and elimination of duplicative administrative systems and programs within a defined period. In addition, the cost savings estimates assume that Holding Company will be able to realize merger efficiencies such as leverage in procuring messaging devices and other goods and services resulting from the increased size of the combined company. Failure to successfully implement cost saving programs or otherwise realize
28
If Holding Company is unable to utilize certain of its consolidated tax attributes to offset future taxable income, the cash flows and results of operations of Holding Company would likely be materially adversely affected.
Assuming that the merger is completed as contemplated, certain consolidated existing tax attributes are anticipated to result in deductions available to offset future taxable income and certain of those tax attributes are reflected as net deferred tax assets in the aggregate amount of $219.6 million in Archs audited consolidated financial statements for the fiscal year ended December 31, 2003, and in its unaudited consolidated financial statements for the fiscal quarter ended March 31, 2004, each of which is incorporated herein by reference. For further information regarding these tax attributes, see the related subsection under Factors Affecting Operating Results in Archs Annual Report on Form 10-K for the fiscal year ended December 31, 2003, which has been incorporated herein by reference. For a description of Archs net deferred tax asset, please refer to note 7, Income Taxes, in the notes to Archs audited consolidated financial statements for the fiscal year ended December 31, 2003.
If Arch were to experience an ownership change as defined in Section 382 of the Internal Revenue Code of 1986, as amended, also referred to as the Internal Revenue Code or simply the Code, whether or not the ownership change is a result of the merger, significant limitations would be imposed on the use of a portion of Archs tax attributes to offset future consolidated taxable income of the combined company. Generally, an ownership change occurs if there is a cumulative change in ownership of the stock of an entity of more than 50% during any testing period, which in this case is the shorter of the past three years or the period since Arch emerged from bankruptcy on May 29, 2002. More specifically, an ownership change will occur if the percentage of stock of an entity owned by one or more 5% shareholders, as defined in Section 382 of the Code, increases by more than 50% over the lowest percentage of such stock owned by such shareholders during the testing period. The extent to which these tax attributes will be available to offset future taxable income also depends on factual and legal matters that are subject to varying interpretations. Accordingly, even in the absence of the occurrence of an ownership change, a portion of the tax attributes may not be available to offset future taxable income. If Holding Companys ability to use its consolidated tax attributes to offset its consolidated taxable income is limited, Holding Company may have an increased future U.S. federal income tax liability as a result. The payment of such tax liability could materially adversely affect Holding Companys future cash flows and its results of operations.
Arch believes that, since its emergence from bankruptcy proceedings, Arch has undergone a cumulative change in ownership of approximately 17.0%, as of March 31, 2004. Assuming consummation of the merger as of that date, Arch believes the resulting cumulative change in ownership would be approximately 39.0%. The determination of this percentage ownership change is dependent on provisions of the tax law that are subject to varying legal and factual interpretations and on facts that are not precisely determinable at this time. Therefore, the cumulative change in ownership, assuming consummation of the merger, may be more or less than 39.0% and, in any event, may increase by reason of transactions in Archs common stock subsequent to March 31, 2004 by Archs 5% shareholders.
Throughout this joint proxy statement/ prospectus, references to 5% shareholders of Holding Company common stock are intended to refer to the meaning of such term as defined in Treasury Regulation Section 1.382-2T(g). The determination of whether a party is a 5% shareholder for this purpose is subject to various interpretations, and we urge you to consult your tax advisor about the application of this definition to your factual situation. |
Holding Companys ability to utilize its consolidated tax attributes will be limited by Holding Companys future taxable income. In addition, the extent to which Holding Company will be required to record a valuation allowance against its deferred tax assets depends on forecasts and estimates that it will be required to review on an ongoing basis.
After completion of the merger, Holding Company would need to generate at least $539 million in cumulative future taxable income to fully realize the deferred tax assets that are recorded on Archs books.
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Transfer restrictions on Holding Company common stock could affect liquidity of Holding Company common stock and could interfere with Holding Companys efforts to raise equity capital or with a change of control or acquisition transaction that Holding Company stockholders may favor.
To help preserve Archs tax attributes, upon completion of the merger, Holding Companys Certificate of Incorporation will contain substantial restrictions on the transfer of Holding Company common stock. Any transfer by or to a 5% shareholder of Holding Company common stock or any transfer that would cause a person or group of persons to become a 5% shareholder of Holding Company common stock will require provision of a notice to Holding Company. Prior to a cumulative indirect ownership change of Arch of more than 45% (as determined by taking into account all relevant transfers of the stock of Arch prior to the merger, including transfers pursuant to the merger) through a transfer of Holding Company common stock, a transfer of Holding Company common stock will generally not be prohibited except to the extent that it results in a cumulative indirect ownership change of Arch of more than 47%. After a cumulative indirect ownership change of Arch of more than 45%, any transfer of Holding Company common stock by or to a 5% shareholder of Holding Company common stock or any transfer that would cause a person or group of persons to become a 5% shareholder of Holding Company common stock will be prohibited unless Holding Companys board of directors determines in good faith that the transfer (1) would not result in a cumulative indirect ownership change of Arch of more than 47% or (2) would not increase the cumulative indirect ownership change of Arch. Similar restrictions apply to the issuance or transfer of warrants or options to purchase Holding Company common stock if the exercise of such warrants or options would result in a transfer that would be prohibited pursuant to the restrictions on Holding Company common stock. Additionally, Holding Companys Certificate of Incorporation gives its board of directors wide discretion to adopt measures to prevent such transfers from occurring. See Description of Holding Company Capital Stock Restriction on Transfers of Common Stock; Anti-Takeover Considerations beginning on page 96.
These transfer restrictions on Holding Company common stock may not have the desired effect of preserving the use of certain of its consolidated tax attributes. However, the transfer restrictions may restrict the ability of Holding Company to raise equity capital or discourage, delay or prevent a merger, acquisition transaction or other change of control transaction that Holding Company stockholders may consider favorable.
Holding Companys board of directors is authorized to issue preferred stock in one or more series, which could decrease the amount of earnings and assets available for distribution to its common stockholders and adversely affect their voting rights.
Holding Companys Certificate of Incorporation authorizes its board of directors to issue from time to time and without stockholder action, one or more series of preferred stock, and to fix the relative rights and preferences of such preferred stock. The terms of any preferred stock Holding Company issues such as dividend rights or the right to appoint one or more directors could reduce the amount of earnings and assets available for distribution to Holding Companys common stockholders or otherwise adversely affect their other rights and powers, including voting rights. Moreover, any such issuance of preferred stock may make it more difficult or may discourage another party from acquiring voting control of Holding Company, even if such an acquisition would be beneficial to Holding Companys common stockholders.
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THE SPECIAL MEETINGS
Joint Proxy Statement/Prospectus
This joint proxy statement/prospectus is being furnished to you in connection with the solicitation of proxies by each of Metrocalls and Archs board of directors in connection with the proposed merger.
This joint proxy statement/prospectus is first being furnished
to stockholders of Metrocall and Arch on or about
June [ ], 2004.
Date, Time and Place of the Special Meetings
The special meetings are scheduled to be held as follows:
For Metrocall stockholders:
For Arch stockholders:
[10:00] a.m.
[Address]
[Alexandria], Virginia
[ ],
2004
[10:00] a.m.
Hale and Dorr LLP
60 State Street
Boston, Massachusetts
Vote Required for Adoption of the Merger Agreement
Metrocall |
A majority of the votes entitled to be cast at the Metrocall special meeting must be represented, either in person or by proxy, to constitute a quorum at the Metrocall special meeting. The affirmative vote of the holders of a majority of the voting power of shares of Metrocall common stock is required to adopt the merger agreement. At the Metrocall special meeting each share of Metrocall common stock is entitled to one vote on all matters properly submitted to the Metrocall stockholders.
As of the record date, Metrocall directors and executive officers and their affiliates owned approximately [ %] of the outstanding shares of Metrocall common stock.
Arch |
A majority of the outstanding shares of Arch common stock must be represented, either in person or by proxy, to constitute a quorum at the Arch special meeting. The affirmative vote of the holders of a majority of the outstanding shares of Archs common stock outstanding as of the record date is required to adopt the merger agreement. At the Arch special meeting, each share of Arch common stock is entitled to one vote on all matters properly submitted to the Arch stockholders.
As of the record date, Arch directors and executive officers and their affiliates owned approximately [ %] of the outstanding shares of Arch common stock.
Proxies
All shares of Metrocall common stock represented by properly executed proxies or voting instructions received before or at the Metrocall special meeting and all shares of Arch common stock represented by properly executed proxies or voting instructions received before or at the Arch special meeting will, unless the proxies or voting instructions are revoked, be voted in accordance with the instructions indicated on those proxies or voting instructions. If no instructions are indicated on a properly executed proxy card or voting instruction, the shares will be voted FOR adoption of the merger agreement. You are urged to mark the box on the proxy card to indicate how to vote your shares.
If a properly executed proxy card or voting instruction is returned and the stockholder has abstained from voting on adoption of the merger agreement, the Metrocall common stock or Arch common stock represented by the proxy or voting instruction will be considered present at the special meeting for purposes
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Because adoption of the merger agreement requires the affirmative vote of at least a majority of the shares of Metrocalls common stock and Archs common stock outstanding on the record date, abstentions, failures to vote and broker non-votes will have the same effect as a vote against adoption of the merger agreement.
The Metrocall special meeting or the Arch special meeting may be adjourned or postponed, including by their respective chairmen, in order to permit further solicitation of proxies. No proxy voted against the proposal to adopt the merger agreement will be voted on any proposal to adjourn or postpone the special meeting that is submitted to the stockholders for a vote.
Neither Metrocall nor Arch expects that any matter other than adoption of the merger agreement will be brought before its special meeting. If, however, other matters are properly presented, the persons named as proxies will vote in accordance with their judgments with respect to those matters, unless authority to do so is withheld on the proxy card.
A stockholder may revoke his or her proxy at any time before it is voted by:
| notifying in writing the Secretary of Metrocall Holdings, Inc. at 6677 Richmond Highway, Alexandria, Virginia 22306, if you are a Metrocall stockholder, or the Corporate Secretary of Arch Wireless, Inc. at 1800 West Park Drive, Suite 250, Westborough, MA 01581, if you are an Arch stockholder; | |
| granting a subsequently dated proxy; or | |
| appearing in person and voting at the special meeting if you are a holder of record. |
Attendance at the special meeting will not in and of itself constitute revocation of a proxy.
Voting Electronically or by Telephone
Because Delaware, the state in which both Metrocall and Arch are incorporated, permits electronic submission of proxies through the Internet or by telephone, instead of submitting proxies by mail on the enclosed proxy card or voting instructions, many stockholders will have the option to submit their proxies or voting instructions electronically through the Internet or by telephone. Please note that there are separate arrangements for using the Internet and telephone depending on whether your shares are registered in your companys stock records in your name or in the name of a brokerage firm or bank. Stockholders should check their proxy card or voting instructions forwarded by their broker, bank, or other holder of record to see which options are available.
The Internet and telephone procedures described below for submitting your proxy or voting instructions are designed to authenticate stockholders identities, to allow stockholders to have their shares voted and to confirm that their instructions have been properly recorded. We have been advised by counsel that the procedures that have been put in place are consistent with the requirements of Delaware law. Stockholders submitting proxies or voting instructions via the Internet should understand that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies, that would be borne by the stockholder.
Metrocall holders of record may submit their proxies:
| through the Internet by visiting a website established for that purpose at [ ] and following the instructions; or |
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| by telephone by calling the toll-free number [ ] and following the recorded instructions. |
Arch holders of record may submit their proxies:
| through the Internet by visiting a website established for that purpose at [ ] and following the instructions; or | |
| by telephone by calling the toll-free number [ ] and following the recorded instructions. |
Solicitation of Proxies
Metrocall and Arch will equally share the expenses incurred in connection with the printing and mailing of this joint proxy statement/prospectus. Metrocall has retained [ , for a fee of $ ] to assist in the solicitation of proxies. Arch has retained [ , for a fee of $ ] to assist in the solicitation of proxies. Metrocall, Arch and their respective proxy solicitors will also request banks, brokers, and other intermediaries holding shares of Metrocall or Arch common stock beneficially owned by others to send this joint proxy statement/ prospectus to, and obtain proxies from, the beneficial owners and will reimburse the holders for their reasonable expenses in so doing. Solicitation of proxies by mail may be supplemented by telephone, telegram and other electronic means, advertisements and personal solicitation by the directors, officers or employees of Metrocall and Arch. No additional compensation will be paid to directors, officers, or employees for such solicitation.
You should not send in any stock certificates with your proxy card. Metrocall stockholders making a cash election should deliver their shares of Common Stock and surrender any related stock certificates in accordance with the cash election form. A transmittal letter with instructions for the surrender of stock certificates will be mailed to Metrocall and Arch stockholders as soon as practicable after effectiveness of the merger.
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THE MERGER
This section of the joint proxy statement/prospectus describes material aspects of the proposed merger. While we believe that the description covers the material terms of the merger, this summary may not contain all of the information that is important to you. You should read this entire joint proxy statement/prospectus and the other documents we refer to carefully for a more complete understanding of the merger. In addition, we incorporate by reference important business and financial information about each of us into this joint proxy statement/prospectus. You may obtain the information incorporated by reference into this joint proxy statement/prospectus without charge by following the instructions in the section entitled Where You Can Find More Information beginning on page 123.
Background of the Merger
Following their emergence from bankruptcy proceedings in 2002, each of Metrocall and Arch sought to cope with eroding subscriber bases and revenues by aggressively cutting costs as well as adopting other strategies. Metrocall and Arch had engaged in informal discussions in the past regarding the potential for a strategic combination of the two companies. On November 1, 2002, Arch retained Bear, Stearns & Co. Inc. as a financial advisor in connection with reviewing possible acquisitions in the wireless messaging industry. On February 13, 2003, Edward Baker, Chairman and Chief Executive Officer of Arch, and Roy Pottle, Executive Vice President and Chief Financial Officer of Arch, met with Vincent Kelly, President and Chief Executive Officer of Metrocall and Michael Bandzierz of TD Securities (USA), Inc., a significant Metrocall creditor and stockholder, to discuss a possible business combination of Metrocall and Arch. Following that meeting, on March 21, 2003, Arch sent a letter to Metrocall proposing a combination of the two companies in which Metrocalls then-outstanding debt would be repaid and preferred stock would be redeemed by Arch for cash and Metrocall stockholders would receive 5% of the equity of the combined company. In the view of Metrocalls management, that proposal effectively attributed a common equity value of approximately $110 million to Metrocall. Individual Metrocall board members and Mr. Kelly discussed the Arch proposal with selected Metrocall creditors and preferred stockholders who encouraged the Metrocall board not to accept Archs proposal because it was financially inadequate and to refrain from any substantive discussions with Arch regarding a possible business combination until the Fall of 2003, when it was anticipated that Metrocalls outstanding debt would be fully repaid and Metrocall would begin redeeming its outstanding preferred stock. The Metrocall board rejected the Arch proposal on March 24, 2003, conveying the sentiments of such creditors and preferred stockholders.
After Metrocalls rejection of Archs proposal, representatives of Metrocall and Arch continued to communicate on an intermittent basis regarding a possible transaction. In June 2003, Eugene Davis, a Metrocall director, suggested to Richard A. Rubin, an Arch director, that Metrocall and Arch each form a board subcommittee to begin a dialogue regarding a potential business combination. In response to this suggestion, Messrs. Davis, Kelly, Yudkoff, Rubin and Baker met in New York along with Steven D. Scheiwe, also a Metrocall director, and Caroll McHenry, Vice Chairman of the Arch board, on September 16, 2003, to discuss a possible transaction.
On September 25, 2003, Metrocall retained Lazard Freres & Co. LLC as its financial advisor with respect to a potential Metrocall/Arch business combination. Metrocall and Arch entered into a mutual non-disclosure or confidentiality agreement on October 3, 2003 to commence diligence in contemplation of negotiating the terms of a proposed merger. The discussions and several related correspondences between Metrocall and Arch that followed over the next several weeks focused on the appropriate allocation of equity interests in the successor company as between the stockholders of the two companies in a stock-for-stock merger.
In early October 2003, Metrocall proposed that a third party independently value the two companies to arrive at an objective equity allocation. Arch rejected this approach and offered to enter into a stock-for-stock merger based on a 67% and 33% split of the successor companys equity between Arch and Metrocall stockholders, respectively. On November 19, 2003, shortly after Metrocalls announcement of its acquisition of substantially all of the assets and some of the liabilities of Weblink Wireless, Metrocall made a
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On December 1, 2003, representatives of Abrams Capital, a major Arch stockholder, approached Mr. Kelly and Metrocall to discuss the lack of progress on merger discussions. Representatives of Metrocall, Abrams Capital, Schulte Roth & Zabel LLP, Metrocalls outside legal counsel, and Lazard Freres met on December 9, 2003. At that meeting, the participating representatives of Abrams Capital and Metrocall agreed to propose to the respective boards of directors of Metrocall and Arch a stock-for-stock merger based on a 62%/38% split of the successor companys equity for Arch and Metrocall stockholders, respectively, with the understanding that the successor company would be led by Metrocalls management and that a majority of the successor companys board of directors would consist of Mr. Kelly and other Metrocall independent directors with independent directors of Arch constituting the balance of the successor companys board of directors. By letter dated December 10, 2003, following a meeting of the Metrocall board, Metrocall made an offer to Arch reflecting the foregoing proposal which was subject to each partys completion of satisfactory due diligence as well as the negotiation of definitive agreements.
On December 11, 2003 representatives of each of Abrams Capital and two other Arch stockholders, Contrarian Capital Management LLC and Franklin Resources, Inc., which is also a Metrocall stockholder, contacted the Arch board of directors to express their endorsement of the financial terms of Metrocalls offer and neutrality regarding Metrocalls proposed governance terms. Archs Board of Directors held two telephonic meetings with Archs financial advisor and outside legal counsel present, one on December 11, 2003, and a second on December 12, 2003, to discuss Metrocalls offer and the proposed governance terms. After a preliminary review with Archs financial and legal advisors, Archs board informed Metrocall in a letter dated December 12, 2003, that Arch was amenable to the 62%/38% division of the successor companys equity as a starting point for negotiations and commencement of due diligence. However, Arch did not accept Metrocalls proposed arrangements with respect to the board of directors or management of the successor company as a premise for further negotiations. On December 17, 2003, Metrocall advised Arch by letter that it was suspending all discussions between the two companies of the proposed merger.
On December 18, 2003 each of Abrams Capital and Contrarian Capital entered into confidentiality agreements with Arch to facilitate their access to information underlying, and participation in, the merger negotiations.
During the weeks of December 21 and December 28, 2003, Messrs. Redmond and Rubin, members of Archs board, contacted Messrs. Kelly and Yudkoff, chairman of Metrocalls board, to express the view that the companies should continue negotiations with the view that, although the Arch board was not then prepared to agree on the Metrocall precondition for further negotiations regarding governance issues and board composition following the merger, the companies and their advisors should explore whether a deal could be reached. Mr. Kelly responded, suggesting that the process could be facilitated by his making a presentation to the Arch board of his views of the financial and operational synergies that could be achieved with a combination of the two companies.
On January 9, 2004, Mr. Kelly and the members of the special transaction committee of the Metrocall board met with six of Archs independent directors, representatives of Latham & Watkins LLP, Archs outside counsel, representatives from Lazard Freres and representatives of two major Arch stockholders, Abrams Capital and Contrarian Capital, to present Metrocalls preliminary views (without the benefit of due diligence) of the potential synergies and cost savings anticipated from a business combination of Metrocall and Arch. During that meeting, Metrocalls special transaction committee conveyed the view of the Metrocall board that its management team had made substantial strides in Metrocalls profitability by marketing new
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On January 14, 2004 the Arch board held a telephonic meeting during which it heard a presentation by Bear Stearns as to the financial aspects of the proposed transaction. Following the meeting, Mr. Redmond contacted Messrs. Kelly and Yudkoff to indicate that the Arch board desired to continue negotiations as to a possible transaction, but given the relative size of Metrocall and Arch, that Metrocalls current directors should not constitute a majority of the new board of any successor company.
By January 19, 2004, Metrocall and Arch agreed to commence exchanging confidential information and negotiating the terms of a merger agreement premised on:
| a 62%/38% split of the successor companys equity between Arch and Metrocall stockholders, respectively; | |
| the board of directors of the successor company being comprised of: |
| four Arch independent directors; | |
| four Metrocall directors, including Mr. Kelly; and | |
| a ninth director, an independent person to be selected by Archs board from a slate of nominees to be proposed by Metrocalls board; |
| Mr. Yudkoff becoming the chairman of the board of directors of the successor company; and | |
| Mr. Kelly becoming the chief executive officer of the successor company. |
Arch indicated that it wanted to explore the opportunity to retain potentially substantial and favorable tax attributes of Arch in the successor company. Subsequently, Metrocall and Arch, and their respective outside counsel and financial advisors, initiated their diligence process on January 24, 2004 and, shortly thereafter, commenced negotiation of a merger agreement.
On February 24, 2004, representatives of Metrocall and Arch, Schulte Roth, Latham & Watkins and the parties independent auditors and financial advisors met to discuss the parties pre-existing tax attributes. During that meeting, Arch proposed an alternative structure to the stock-for-stock exchange on which the negotiations had been premised. Under Archs proposal, Metrocall stockholders would receive a combination of cash and stock for their shares. Arch indicated that this structure, coupled with the implementation of transfer restrictions on Holding Company common stock comparable to the restrictions that Arch currently has in place, would make it more likely that Holding Company would be able to preserve Archs favorable tax attributes which, assuming the merger is completed as contemplated, are anticipated to be available to offset future consolidated taxable income of the combined company. In lieu of Metrocalls stockholders receiving 38% of Holding Company common stock for their Metrocall shares, Arch initially proposed that Metrocall stockholders receive $70 cash per share for up to an aggregate of $150 million in cash consideration and 25% of Holding Company common stock. Archs proposal provided that the cash consideration payable to Metrocall stockholders would be paid out of the proceeds of debt financing by Holding Company of up to $150 million. Metrocall indicated that it would not accept less than $150 million in cash and 28% of Holding Company common stock. Given Archs analysis of the trading in its own common stock since its emergence from bankruptcy, both sides anticipated that by limiting Metrocalls stockholders ownership to 28% of Holding Company common stock, after giving effect to the merger, there would be at least an approximately 10 percent cushion against the occurrence of an ownership change for tax purposes. Furthermore, Metrocall and Arch believed that Holding Company should not incur indebtedness in excess of a reasonable amount consistent with its anticipated cash flows, particularly in light of the difficulties faced by the paging industry due to excessive leverage. Metrocall and Arch determined that the incurrence of $150 million in debt financing to consummate the merger would be appropriate.
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On February 27, 2004, Mr. Redmond met again with Mr. Kelly and members of Metrocalls management, representatives of Bear Stearns and Lazard, and representatives of Latham & Watkins and Schulte Roth at Bear Stearns offices in New York to hear a further presentation from Mr. Kelly regarding possible financial and operational synergies of a merger. Representatives of Archs management were also present. Following the presentation, on March 2, 2004, the Arch board met telephonically with its advisors to discuss the governance and management issues of the proposed merger.
On March 11, 2004, the Arch board met at Bear Stearns offices in New York to hear the views of Archs management as to potential synergies and other benefits of the proposed transaction between Metrocall and Arch, as well as a potential alternative transaction. Furthermore, the Arch board received a preliminary financial presentation by Bear Stearns concerning a combination of Metrocall and Arch and heard from Berenson & Co., which Arch had retained to evaluate both the proposed Metrocall merger and the potential alternative transaction. Representatives of Latham & Watkins also reported to the Arch board the progress that counsel had made toward a possible draft merger agreement. The Arch board had a further telephonic meeting on March 13, 2004 and authorized Mr. Redmond to proceed with further negotiations with Metrocall.
On March 16, 2004, in a meeting between Messrs. Redmond, Abrams, Kelly and Scheiwe at Mr. Abrams offices, Mr. Redmond advised Messrs. Kelly and Scheiwe that Arch was unwilling to support a payment of $150 million in lieu of the 10% of the common stock of Holding Company that would otherwise have been received by Metrocall stockholders in the original 62%/38% split of Holding Companys equity which had been the premise of the negotiations, indicating that Arch believed Metrocalls stock was overvalued at its then-current market prices. The Arch directors conferred further as to the proposed terms of the transaction during two telephonic meetings on March 18 and March 20, 2004 with representatives of Bear Stearns and Latham & Watkins in attendance. Following these meetings, Mr. Redmond proposed to Messrs. Kelly and Yudkoff, and Bear Stearns proposed to Lazard, that Metrocall stockholders receive $125 million in cash, 27.5% of the equity of the successor company and up to an additional $35 million in contingent value rights, the payment of which would depend on the market price at which Holding Company common stock traded within certain periods of time after the completion of the merger. In a letter dated March 22, 2004, Metrocall countered with a final proposal of $75 cash per share for two million shares of Metrocall common stock for a total of $150 million in cash and 27.5% of the equity of Holding Company for Metrocall stockholders, which offer was accepted by Arch following a further telephonic meeting of the Arch board on the same day, subject to completion of a definitive agreement.
After conferring with the Arch directors during their telephonic meeting on March 20, 2004, Mr. Redmond contacted Mr. Abrams of Abrams Capital to ask if he would be willing to serve as the ninth director on the Holding Companys Board of Directors. On March 21, 2004, Mr. Abrams advised Mr. Redmond of his willingness to do so, provided that the Arch directors first interview three possible candidates that Metrocall had proposed as the ninth director, and that they conclude none of them are acceptable. During their telephonic meeting on March 22, 2004, the Arch directors instructed Mr. Redmond to advise Messrs. Abrams and Kelly that the Arch board believed Mr. Abrams to be the best candidate that both companies could agree upon. On March 22, 2004, Mr. Abrams advised Mr. Redmond that he was willing to serve on the Holding Companys Board of directors for a one year term following the merger, and Mr. Redmond communicated this to the other Arch directors and to Mr. Kelly. Mr. Kelly indicated that he believed this would be acceptable to the Metrocall Board, and on March 26, 2004, the Metrocall board endorsed Mr. Abrams appointment.
On March 28, 2004, the board of directors of Metrocall convened a telephonic meeting to consider the proposed merger with representatives of Lazard Freres and Schulte Roth present. Prior to the March 28, 2004 meeting, Schulte Roth had furnished the Metrocall board with a copy of the draft merger agreement, a summary of its principal terms and a memorandum summarizing the responsibilities of the Metrocall board in considering the merger. Lazard Freres had distributed prior to the meeting, its written presentation of the financial aspects of the proposed merger that would be utilized in its presentation of the fairness, from a financial standpoint, of the merger to Metrocall stockholders. This Metrocall board meeting was the culmination of deliberations by the Metrocall board at approximately fifteen meetings at which the potential for, and the key terms of, a business combination of Metrocall and Arch had been a significant agenda item.
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At the March 28, 2004 meeting, Mr. Kelly reviewed the transaction with the board, including the strategic reasons for the proposed transaction and the principal terms of the proposed transaction. Representatives of Schulte Roth then discussed the Metrocall boards fiduciary duties in considering a strategic business combination and further summarized the terms of the merger agreement and related documents. Representatives of Lazard Freres presented to Metrocalls board of directors a summary of its analyses on the strategic rationale for, and financial analyses related to, the proposed transaction. In addition, Lazard Freres delivered its opinion that the merger consideration payable to holders of shares of Metrocall common stock is fair, from a financial viewpoint, to Metrocall stockholders. Upon completing its deliberations, the entire board of directors of Metrocall unanimously approved the merger agreement. Metrocalls board also approved the related schedules and agreements (with Mr. Kelly abstaining from the vote on his amended employment agreement). The Metrocall board resolved to recommend that Metrocall stockholders adopt the merger agreement.
Also on March 28, 2004, the board of directors of Arch convened a telephonic meeting to consider the proposed transaction. All members of the board were present, except for Ed Baker, the chairman and chief executive officer of Arch, who recused himself from the meeting. Prior to the meeting the directors had received a final copy of the merger agreement and related documents, a memorandum from Latham & Watkins summarizing their respective terms and a written presentation from Bear Stearns of the financial aspects of the proposed transaction that Bear Stearns representatives intended to review with the directors during their meeting. Bear Stearns had also provided the directors with a draft of its opinion as to the fairness of the proposed merger consideration from a financial point of view. Representatives of Latham & Watkins reviewed with the board their fiduciary duties in connection with their consideration of the proposed transaction, and the material terms of the merger agreement and related documents. Latham & Watkins noted that, in connection with determining the final exchange ratios based upon the 72.5%/27.5% split of the equity for the successor company that were included in the merger agreement the parties had agreed to exclude 316,007 shares of restricted stock held by members of Arch management that were not expected to vest prior to their termination of employment as a result of the merger, in determining the total number of Arch shares expected at the time of the merger on a fully diluted basis. Latham & Watkins also noted that if any of the 184,230 restricted shares held by three senior officers remained outstanding immediately prior to the merger, such shares would be added back to the total number of Arch shares and that the Metrocall exchange ratio would be adjusted accordingly. Representatives of Bear Stearns then presented their financial analysis of the proposed transaction, and following discussions with the Arch directors, opined that the proposed merger consideration as set forth in the merger agreement was fair, from a financial point of view, to the public common stockholders of Arch. The directors then deliberated and discussed the proposed merger and, as to the directors in attendance, unanimously approved the merger agreement and recommended that the merger agreement be submitted to the Arch shareholders for their approval.
At the conclusion of the respective board meetings, representatives of Metrocall and Arch relayed to each other the outcome of their respective board meetings.
After agreement on the final terms of the merger agreement and related schedules and agreements, on the morning of March 29, 2004, authorized representatives of Metrocall and Arch entered into the merger agreement. On March 29, 2004, Metrocall and Arch issued a joint press release announcing the proposed merger of Metrocall and Arch and held an investors conference call that morning to briefly discuss the proposed merger.
Potential Merger Synergies
After the commencement of mutual due diligence in February 2004, management teams from each of Metrocall and Arch performed separate analyses to assess the potential cost savings that would result from the merger. The cost savings or synergies were defined to be costs that are to be saved as a direct result of the merger over and above the cost reduction expectations built into the stand-alone plans already in place at each company. Metrocalls management anticipates that the combination of the two companies will permit some of the stand-alone projected cost savings to be realized more quickly than in the stand-alone plans. This may not result in additional net savings through the end of 2008 and were not considered to be potential
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At its March 28, 2004 Board meeting, based on an assumed closing of the merger at the end of the second fiscal quarter of 2004, Metrocall management presented its estimate that the combination with Arch would generate cost savings and operational synergies totaling approximately $247 million through December 31, 2008, net of approximately $35 million of estimated transaction and integration implementation costs over the same period. These transaction and implementation costs consist of deal fees associated with the merger, severance payments associated with headcount reductions and certain other costs associated with deconstruction of redundant facilities (i.e. lease buy-outs and transmitter deconstruction costs). Metrocall management concentrated its analysis on the combined companies four major cost areas:
Service, Rent and Maintenance, also referred to as SR&M includes the costs to operate the companies one and two-way network infrastructure; inventory and fulfillment functions and pager device repairs and maintenance. Management assessed potential synergies that may exist from redundancies in headcount within the engineering and inventory functions (compensation and benefit savings); duplicate or redundant transmitter and terminal site rents and related costs from both one and two-way networks (rents, utilities and similar expenses); and telecommunications expense savings. | |
Selling and Marketing, also referred to as S&M includes the costs to sell the combined companys products and services. Management assessed potential synergies that may exist mainly from redundancies in headcount (compensation, allowances and benefits); and overlap of office facilities locations (facility rent and utility costs). | |
General and Administrative, also referred to as G&A includes the expenses incurred to operate national call centers and customer service, management information systems, accounting, human resources, executive management and other back office support functions. Management assessed the elimination of several redundancies such as cost savings related to the duplication of headcount functions (compensation and benefit savings); integration of billing systems to one system, and the elimination of redundant MIS systems (software license and hardware savings). | |
Capital Expenditures includes costs that are required to acquire paging devices and to upgrade network infrastructure. Management assessed potential savings from volume purchasing discounts; elimination of duplicative expenditures and increased utilization of the combined companys inventory. |
Subsequent to the execution of the merger agreement, Mr. Kelly, who will be president and chief executive officer of Holding Company, and other members of Metrocall management, in consultation with certain Arch employees, started to develop a detailed integration plan to realize potential synergies of the two businesses. Metrocall management further reviewed the companies overlapping operations, focusing on various functional areas and further refined its estimates of the future financial benefits within the categories stated above.
Based upon this additional refinement, and subject to a variety of assumptions that refined the earlier estimates, including an expectation that the merger would more likely be completed at the end of the third fiscal quarter of 2004 rather than the end of the second fiscal quarter, the pace of implementation of the integration plan, which was further synchronized with additional information concerning lease expirations, two-way network capabilities and other information and an update of the employee headcount assumptions based on more current data, Metrocall management currently estimates that the net potential merger synergies and additional cost reductions realized from the integration of the operations of Metrocall and Arch will be approximately $200 million in the aggregate through December 31, 2008, net of estimated costs of approximately $33 million during that period to realize such merger-related cost savings and operational synergies.
The above referenced synergies do not consider the estimated amount of income taxes that Metrocall would have paid for the period October 1, 2004 to December 31, 2008 related to the taxable income that its stand-alone business plan projected during this period. Based on its projections for Holding Company, Metrocall management anticipates that Holding Company may be able to offset a significant portion of its
39
Based on the revised synergy estimates, the table below summarizes estimates prepared by Metrocall management, in consultation with Arch, of the net cost reductions and merger synergies in 2005, the first full fiscal year after completion of the merger. As indicated below, Metrocall management currently estimates merger-related cost savings of approximately $58 million for fiscal year 2005, net of estimated costs of integration of approximately $6 million during fiscal year 2005, reflecting estimated non-recurring expenditures to realize such merger-related cost savings.
Estimated Merger Related Cost Savings for 12 Month Period ending December 31, 2005
Service, Rent and Maintenance
|
$ | 10.5 | ||
Selling and Marketing
|
25.9 | |||
General Administrative
|
25.3 | |||
Capital Expenditures
|
2.0 | |||
|
||||
Gross Cost Savings
|
$ | 63.7 | ||
Integration Costs
|
6.1 | |||
|
||||
Net Cost Savings
|
$ | 57.6 |
These estimates of future cost savings and synergy benefits are inherently uncertain and subject to further refinement as the integration team continues its efforts to understand potential synergies and to develop its integration plans to capture these synergies. The synergies analysis is based upon numerous assumptions, which, by their very nature, are subject to change, including factors which are often times out of the control of management such as the actual timing of when the merger closes. See the subsection of Risk Factors relating to the uncertainties of realizing these cost savings, beginning on page 28.
Metrocalls Reasons for the Merger
The Metrocall board of directors believes that the complementary strategies of Metrocall and Arch, in combination with their management, personnel, and technical expertise will create a company with capabilities and resources better positioned to succeed in the extremely competitive wireless messaging and information services marketplace. The merger will create the largest paging company in the United States with roughly 7.9 million units in service as of December 31, 2003, and a larger platform from which to realize further cost savings which are critical in a declining paging industry. Additional reasons for the merger are:
Substantial Operating Synergies. The board of directors of Metrocall believes that the combined company will benefit from substantial operating synergies. These synergies are in addition to the cost reductions each company had separately projected for itself on a stand-alone basis. The Metrocall board believes that Metrocalls track record under Mr. Kellys leadership in reducing operating expenses while maintaining customer-oriented service and efficient operations will be critical to the achievement of these estimated synergies. Assuming the merger is completed at the end of the third quarter of 2004, Metrocalls management estimates that these incremental cost savings resulting from the merger will approximate $200 million through 2008, cumulatively, net of merger-related costs. Potential cost synergies and revenue growth opportunities from the combination would come from:
| Eliminating redundant systems, facilities and operations at relatively minimal costs; | |
| Achieving purchasing savings from volume discounts (particularly on messaging devices and accessories) and providing equipment manufacturers with the incentive to produce steady, uniform and low-cost supplies of messaging devices and accessories; |
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| Offering a broader array of services to Archs customers through existing Metrocall distribution agreements; | |
| Combining certain overlapping or redundant networks into one national footprint, thereby reducing costs while also extending coverage into previously limited coverage areas; | |
| Combining satellite licenses and other resources into one common transmission platform; and | |
| Combining customer service efforts to yield lower costs of service and expanded service offerings. |
Changes in the Wireless Messaging Industry. The following changes in the wireless messaging and paging industry make it, in the opinion of the Metrocall board, compelling for Metrocall and Arch to consolidate:
| Since 1999, the number of one-way messaging units in service has fallen from over 40 million to approximately 12 million as of the end of 2003; | |
| Each major independent paging company has been forced to restructure its balance sheet through bankruptcy proceedings; | |
| Prices for one and two-way messaging services for both Metrocall and Arch continue to decline in the face of competitive text messaging products from larger, better capitalized competitors such as cellular, PCS and Blackberry TM service providers (i.e., Cingular, Nextel, Sprint PCS, T-Mobile and Verizon); | |
| Technology advances and price competition have led to ongoing reduction in subscriber paging usage and the increased use of other mobile data services, such as SMS, Wi-Fi and PDAs/ Blackberries; | |
| The abandonment of the paging sector by major messaging and information device manufacturers and network hardware manufacturers such as Motorola, Glenayre, Philips, and NEC, has threatened Metrocalls ability on a stand-alone basis to secure network equipment, messaging devices and related parts and services at reasonable costs; and | |
| Projected continued revenue erosion for both Metrocall and Arch. Archs revenues declined more than 25% from 2002 to 2003; and Metrocalls revenues declined more than 17% from 2002 to 2003. |
Significant Cash Payment. The Metrocall Board believes that the merger consideration, which provides the combination of a substantial up front, cash payment to its stockholders desiring to reduce their holdings of Metrocall common stock, while allowing Metrocall stockholders the opportunity to retain a 27.5% equity stake in the new Holding Company at a time of significant uncertainty as to future revenue retention rates and the long term viability of the paging industry, is a substantial benefit of the merger to Metrocalls stockholders. The merger agreement provides that two million of Metrocalls approximately six million outstanding shares will be exchanged for cash at $75 per share, close to Metrocalls historical high market price. On a stand-alone basis, Metrocalls business plan projects it would take until the end of 2006 before it would be able to generate sufficient after-tax cash flow from operations to produce that amount of cash, assuming Metrocall met its long-term operating projections.
Limited Ability to Realize Additional Cost Savings on a Stand-Alone Basis. The Metrocall Board believes that Metrocalls practical potential to extract additional cost savings on a stand-alone basis is limited, as Metrocall has already captured significant cost savings and efficiencies in rationalizing and right sizing its business since its emergence from bankruptcy. As a consequence, Metrocalls ability to continue to generate substantial after-tax cash flow from operations for distribution to its stockholders would be adversely affected if the rate of revenue erosion that it experienced between 2002 and 2003 were to continue. In contrast, the ability to extract additional synergies from the merger provide Holding Company a substantial opportunity to generate incremental after-tax cash flows from operations, even if faced with continued or accelerated revenue erosion, that would not be available to either company on a stand alone basis.
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Additional savings would be limited on a stand-alone basis because:
| There are high recurring fixed expenses that are required to operate and maintain Metrocalls wireless networks (particularly its two-way network) regardless of the number of subscribers using these networks; and | |
| Metrocalls corporate overhead has already been aggressively reduced and will not be easy to reduce going forward without adversely affecting Metrocalls operations. |
Improved Business Practices. The merger will create a stronger company with enhanced ability to:
| Create opportunity by combining creativity and best practices of both companies; | |
| Select the best of the best components from their respective network operations, thereby improving overall quality of service (signal coverage, penetration, capacity, etc.) to subscribers; and | |
| Ensure that Metrocall will continue to be of sufficient scale to operate efficiently in the intensely competitive and consolidating messaging industry. |
In approving the merger agreement and making its determinations and resolving to make its recommendations, the Metrocall board of directors consulted with Metrocall management as well as its outside legal counsel and financial advisor, and considered the factors listed above as well as the following positive factors relating to the merger:
| Greater cash flow per share for each companys stockholders on a combined basis when compared with each companys respective stand alone plans; | |
| Offer improved liquidity for holders Metrocalls pre-merger relatively thinly traded stock for stockholders and decreased expected volatility in its stock price as a result; | |
| The opportunity to potentially achieve additional cost savings and operational synergies in excess of those projected by management for Metrocall on a stand-alone basis; | |
| The Metrocall boards belief that no company in the wireless and paging industry other than Arch could or would provide better value for Metrocall stockholders; | |
| The terms and conditions of the merger agreement, one of which provides the Metrocall board of directors the right to terminate the merger agreement prior to its approval by Metrocall stockholders in the exercise of its fiduciary duty in connection with a superior proposal; | |
| The fact that Vincent D. Kelly, President, Chief Executive Officer and a director of Metrocall, would be the Chief Executive Officer of Holding Company, and that the remaining members of management of Holding Company would be selected from the best of the best of the management of Metrocall and Arch; | |
| The proposed composition of Holding Company board of directors and its committees, including that Royce Yudkoff, Chairman of Metrocall, would be the Chairman of Holding Companys board of directors; | |
| The analysis and presentation of Lazard Freres & Co. and opinion of Lazard delivered orally on March 28, 2004, and subsequently confirmed in writing, to the effect that, as of the date of such opinion, and subject to and based on the considerations set forth in such opinion, the merger consideration applicable to Metrocall stockholders in the merger is fair from a financial point of view to the holders of Metrocall common stock (the written opinion of Lazard is attached as Annex E to this joint proxy statement/prospectus); and | |
| The expected qualification of the merger as a Section 351 transaction under the Internal Revenue Code as to Metrocall stockholders and as a Section 351 transaction or a reorganization pursuant to Section 368 under the Internal Revenue Code as to Arch stockholders. |
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The Metrocall board of directors considered the following negative factors relating to the merger:
| The problems inherent in merging the operations of two large companies, including (1) the possibility that management may be distracted from regular business concerns and strategic opportunities by unforeseen difficulties in integrating operations and systems, (2) likely uncertainty for employees and resulting attrition in the face of potential workforce reductions and difficulties in assimilating employees, and (3) potential adverse short-term effects on operating results of Metrocall during the period prior to closing and the operating results of the combined company following the merger; | |
| The timing of receipt and the terms and conditions of approvals from appropriate government entities, including the possibility of significant delay in obtaining requisite approvals or the imposition of unfavorable conditions upon the grant of the approvals; and | |
| The risk that customers and suppliers of Metrocall and Arch might not do business with the combined entities or Holding Company; | |
| The risk that Holding Company will be unable to list its common stock for quotation on the NASDAQ National Market or other national securities exchange; | |
| The risk of potential adverse effects of one-time and/or recurring charges expected to be incurred in connection with the costs of the merger and the subsequent integration of the companies; and | |
| The other risks described under Risk Factors beginning on page 23 of this joint proxy statement/prospectus. |
The Metrocall board of directors also considered the following factors relating to the merger:
| The review and analysis of each of Metrocalls and Archs business, financial condition, earnings, risks and prospects; | |
| The historical market prices and trading information with respect to the shares of Metrocall common stock and Arch common stock, including the fact that Metrocall common stock prior to the merger announcement had recently traded at a significantly higher multiple to EBITDA (earnings before interest, tax, depreciation and amortization) than Arch common stock; | |
| The likelihood that the significant premium at which Metrocalls stock was trading compared to Archs stock was, in part, based on an expectation by the marketplace that a combination with Arch was forthcoming and the possibility that the premium might not sustain itself over the long term absent a merger transaction; | |
| The comparisons of historical financial measures for Metrocall and Arch, including earnings, return on capital and cash flow, and comparisons of relative historical operational measures for Metrocall and Arch; | |
| Current industry, economic and market conditions, and the prospects of further competition in data and SMS services from large mobile phone providers in the wireless messaging and information services industry; | |
| The interests that certain Metrocall executive officers and directors may have with respect to the merger in addition to their interests as Metrocall stockholders. See Interests of Certain Metrocall Directors and Executive Officers in the Merger beginning on page 59; | |
| The anticipated financial condition of the combined company, given the pro forma market capitalization of Holding Company immediately after the merger and its projected revenues and earnings, the plans to retire outstanding debt of Arch and redeem preferred stock of Metrocall prior to the merger, and the need to obtain additional financing in order to pay $150 million in cash as part of the merger consideration to Metrocalls stockholders; |
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| The fact that Metrocalls stand-alone plan would take until the end of 2006 to generate $150 million of available cash and that the stand-alone plan contained risks, including the risk that the future rate of revenue erosion in 2004, 2005 and 2006 could be greater than the projected rate; | |
| The impact of the merger on customers, suppliers, and employees of Metrocall and Arch; and | |
| The likelihood that the merger will be completed. |
In view of the competitive trend in the wireless messaging and information services industry, and as part of its on-going review of strategies for long term survival, the Metrocall board of directors considered the fact that Arch is the largest wireless paging company and concluded that a combination with Arch offered the best opportunity for achieving synergies, cost reductions and cash flow accretion. From time to time the Metrocall board had reviewed and discussed a variety of possible transactions, including acquisitions and combinations with wireless paging divisions of larger telecommunications companies. The Metrocall board of directors considered that another large acquisition or a series of small acquisitions would not result in as significant economies of scale or synergies as a combination with Arch. Ultimately, based on the anticipated synergies and the complementary asset bases and values, among other considerations, the Metrocall board of directors determined that a merger with Arch presented the best possibility currently available for increased long-term stockholder value for Metrocall stockholders. In addition, the Metrocall board examined existing favorable Arch tax attributes as part of its consideration of the merger. The Metrocall board concluded that it would recommend the merger to the Metrocall shareholders even if these Arch tax attributes were not preserved for the benefit of Holding Company. In sum, the Metrocall board of directors believed that, when viewed as a whole, the potential benefits of the merger of Metrocall and Arch to Metrocall and Metrocall stockholders outweighed the prospective risks and alternatives.
This discussion of the information and factors considered by the Metrocall board of directors is not intended to be exhaustive, but includes the material factors considered in evaluating the transaction. The Metrocall board of directors did not assign particular weight or rank to the factors it considered in approving the merger. In considering the factors described above, individual members of the Metrocall board of directors may have given different weight to the various factors. The Metrocall board considered all these factors as a whole in making their determination, and overall considered these factors to be favorable in supporting their unanimous determination to recommend the merger to the Metrocall shareholders.
Archs Reasons for the Merger
Archs board of directors believes that the merger of Metrocall and Arch will produce a single company that is better-equipped for the many challenges facing the narrowband messaging industry in the future. We anticipate that Holding Company should be more efficient than either Metrocall or Arch is today, capable of improved long term financial performance through elimination of redundant overhead and duplicative network structures.
Since 1999, the number of messaging units in service in the United States has fallen from over 40 million to approximately 12 million as of the end of 2003. During the same period, usage of alternative technologies capable of providing similar services, such as mobile phones (including short message services, or SMS), wireless internet connectivity, and hand-held devices such as PDAs and Blackberry TM devices, has increased dramatically. Many of these products are provided by large telecommunications companies that can offer multiple services on a combined basis, including paging and text messaging, at relatively low prices. The variety and affordability of these and similar wireless telecommunications services place significant pressure on Archs revenue base. These developments have led to substantial restructuring and consolidation among independent paging companies.
Following Archs emergence from bankruptcy in 2002, the company has successfully sustained positive cash flows by continuing to serve our one and two-way messaging customers while carefully managing expenses in light of a declining share of the wireless market. By merging with Metrocall, we believe significant synergies are possible that would not be possible to either company on a stand-alone basis.
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Before reaching its decision, the Arch board of directors consulted with Archs management and its financial and legal advisors, and considered a variety of factors in addition to those discussed above. Among factors considered were positive and negative aspects related to the following:
| the potential of the combined company to realize operational efficiencies, cost reductions, and synergies in comparison to Metrocall and Arch separately, including opportunities for: |
| consolidation of network operations, management systems, customer service, sales, and research and development; | |
| elimination of duplicative transmission facilities and related network elements; | |
| reduced requirements for personnel, space, advertising, travel, and related expense items; and | |
| increased purchase volumes by the combined company and the ability to take advantage of volume discounts, particularly from telephone companies; |
| the extent to which the combined company would be able to utilize the parties pre-existing tax attributes following the merger; | |
| the anticipated financial condition of the combined company, given the pro forma market capitalization of Holding Company immediately after the merger and its projected revenues and earnings, the plans to retire outstanding debt of Metrocall and Arch prior to the merger, and the need to obtain additional financing in order to pay $150 million in cash as part of the merger consideration to Metrocalls stockholders; | |
| the corporate governance arrangements established for the merger, including the composition of the Holding Company board and its committees and employment of Vincent D. Kelly as Chief Executive Officer of Holding Company; | |
| the trend of further consolidation in the narrowband messaging industry and the decreasing number of available strategic partners and opportunities for Arch; | |
| the business, operations, financial condition, earnings, and prospects of each of Metrocall and Arch, taking into account the results of Archs due diligence review of Metrocall; | |
| the opinion of Archs financial advisor, Bear, Stearns & Co. Inc., that, as of the date of its opinion, the merger consideration as provided in the merger agreement was fair, from a financial point of view, to the public common stockholders of Arch. See Opinion of Archs Financial Advisor beginning on page 52; | |
| the possibility of strategic alternatives to the merger for enhancing long-term stockholder value, including analyzing the potential acquisition of another paging company and the views of Berenson & Company with respect to this alternative; | |
| the projected impact of the merger on Archs current equity value and potential performance of the combined companys stock after the merger; | |
| the terms and conditions of the merger agreement, the agreements contemplated by the merger agreement, and the closing conditions; | |
| the ability of Metrocall or Arch under certain conditions to consider unsolicited alternative proposals, their ability to terminate the merger agreement under certain conditions, and the termination fees payable on certain termination events; | |
| the expected qualification of the merger as a Section 351 transaction under the Internal Revenue Code or as a reorganization pursuant to Section 368 of the Internal Revenue Code; | |
| the impact of the merger on customers, suppliers, and employees of Metrocall and Arch; and | |
| the likelihood that the merger will be completed. |
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Arch also identified and considered a number of potentially negative factors in its deliberations concerning the merger, including:
| the challenges of combining the businesses, assets, and workforces of the two companies, changes in executive management and the risks of not achieving the expected synergies, operating efficiencies, and other benefits of the merger; | |
| the risk that Metrocall and Arch may be unable to obtain regulatory approvals required to complete the merger, including approvals of the Department of Justice, Federal Trade Commission, and Federal Communications Commission, or that obtaining such approvals may require changes that materially and adversely affect the value of the merger to Archs stockholders; | |
| the risk that customers and suppliers of Metrocall and Arch might not do business with Holding Company; | |
| the risk that Holding Company will be unable to list its common stock for quotation on the NASDAQ National Market System or other national securities exchange; | |
| the risk of potential adverse effects of one-time and/or recurring charges expected to be incurred in connection with the costs of the merger and the subsequent integration of the companies; | |
| the risk of diverting management focus and resources from other strategic opportunities and from operational matters while working to implement the merger; | |
| as described on pages 61-64 of this joint proxy statement/prospectus, and by virtue of certain change in control arrangements and accelerated vesting of stock options and restricted shares, the fact that certain members of Archs board of directors and management might have interests in the merger that are different than those of other Arch stockholders; and | |
| the other risks described under Risk Factors beginning on page 23 of this joint proxy statement/prospectus. |
Archs board of directors believes that these and other risks can be avoided or mitigated, and that, overall, they are outweighed by the potential benefits of the merger.
The foregoing discussion of the information and factors considered by the Arch board of directors is not exhaustive, but does include material factors considered by the Arch board of directors. The Arch board of directors did not quantify or assign any relative or specific weights to the various factors that it considered. Rather, the Arch board of directors based its recommendation on the totality of the information presented to and considered by it. In addition, individual members of the Arch board of directors may have given differing weights to different factors.
Recommendation of Metrocalls Board of Directors
At its meeting on March 28, 2004, following the unanimous recommendation of the merger by its Special Transaction Committee, after due consideration, the entire Metrocall board of directors unanimously:
| determined that it was advisable for Metrocall to enter into the merger agreement and that the merger agreement and the transactions contemplated by the merger agreement are advisable, fair to and in the best interests of Metrocall stockholders; | |
| approved the merger agreement; and | |
| resolved to recommend that Metrocall stockholders vote for the adoption of the merger agreement. |
THE METROCALL BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT HOLDERS OF METROCALL COMMON STOCK VOTE FOR THE ADOPTION OF THE MERGER AGREEMENT.
Certain directors of Metrocall will receive substantial financial and other benefits in connection with the merger. For a discussion of these benefits and the other interests of Metrocall directors and officers that are
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Opinion of Metrocalls Financial Advisor
Lazard was retained to act as investment banker to Metrocall in connection with exploring a possible business combination with Arch, including by merger with Arch, acquisition of equity interests in Arch or purchase of substantially all or a portion of the assets of Arch. In connection with Lazards engagement, Metrocall requested Lazards opinion as to the fairness, from a financial point of view, to the holders of Metrocall common stock (other than holders of shares with respect to which appraisal rights are perfected and, accordingly, are not exchanged in the merger, also referred to as excluded shares) of the merger consideration. On March 28, 2004, at a meeting of the Metrocall board of directors held to evaluate the merger, Lazard rendered to Metrocalls board of directors an oral opinion, which opinion was confirmed by delivery of a written opinion dated as of March 28, 2004, to the effect that, as of that date and based on and subject to the matters described in its opinion, the merger consideration was fair, from a financial point of view, to the holders of Metrocall common stock (other than holders of excluded shares).
In connection with its opinion, Lazard:
(i) reviewed the financial terms and conditions of a draft of the merger agreement, dated March 28, 2004; | |
(ii) analyzed certain historical business and financial information relating to Metrocall and Arch; | |
(iii) reviewed various financial forecasts and other data provided to Lazard by Metrocall and Arch relating to their respective businesses and relating to Holding Company after the merger; | |
(iv) held discussions with members of the senior managements of Metrocall and Arch with respect to the businesses and prospects of Metrocall and Arch, respectively, as well as the strategic objectives of each and the possible benefits which might be realized following the merger; | |
(v) reviewed the historical stock prices and trading volumes of the Metrocall common stock and Arch common stock; and | |
(viii) conducted such other financial studies, analyses and investigations as Lazard deemed appropriate. |
Lazard relied upon the accuracy and completeness of the foregoing information, and did not assume any responsibility for any independent verification of such information or any independent valuation or appraisal of any of the assets or liabilities of Metrocall or Arch or concerning the solvency or fair value of Metrocall, Arch or Holding Company. With respect to financial forecasts, Lazard assumed that they have been reasonably prepared on bases reflecting the best estimates then available and judgments of the management of each of Metrocall and Arch as to the future financial performance of Metrocall and Arch, respectively, and, at Metrocalls direction, that the Metrocall forecasts (rather than the Arch forecasts) of the potential strategic implications, operational benefits and synergies anticipated to result from the merger reflect the best estimates then available and judgments as to such matters. Lazard also assumed, with Metrocalls consent, that the financial results (including, with respect to the Metrocall forecasts, the potential strategic implications, operational benefits and synergies anticipated to result from the merger) reflected therein will be realized in the amounts and at the times projected. Lazard assumed no responsibility for and expressed no view as to such forecasts or the assumptions on which they are based.
Further, Lazards opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Lazard as of, the date of its opinion.
In rendering its opinion, Lazard assumed that the merger will be consummated on the terms described in the draft of the merger agreement reviewed by it, without any waiver of any material terms or conditions by Metrocall, and that obtaining the necessary regulatory approvals for the merger will not have an adverse
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Lazards opinion is directed to Metrocalls board of directors and relates only to the fairness to the holders of Metrocall common stock of the merger consideration from a financial point of view and does not address the merits of the underlying decision by Metrocall to engage in the merger or the relative merits of the merger as compared to other business strategies or transactions that might be available to Metrocall. In that regard, Lazard was not authorized to solicit, and did not solicit, third party indications of interest in acquiring all or a part of Metrocall or engaging in a business combination or any other strategic transaction with Metrocall. Lazard did not express any opinion as to the price at which shares of Metrocall common stock or Arch common stock may trade subsequent to the announcement of the merger or the price at which shares of Holding Company common stock may trade subsequent to the consummation of the merger.
In its analyses, Lazard considered industry performance, regulatory, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Metrocall and Arch. An evaluation of the results of those analyses is not entirely mathematical. Rather, the analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the merger or public trading or other values of the companies.
The estimates contained in Lazards analyses and the ranges of valuations resulting from any particular analysis are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, analyses relating to the value of businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold. Accordingly, Lazards analyses and estimates are inherently subject to substantial uncertainty.
Lazards opinion and financial analyses were only one of many factors considered by the Metrocall board of directors in its evaluation of the proposed merger and should not be viewed as determinative of the views of the Metrocall board of directors or management with respect to the merger or the merger consideration.
The following is a summary of the material financial analyses underlying Lazards opinion dated March 28, 2004, delivered to the Metrocall board of directors in connection with the merger. In preparing its opinion to the Metrocall board of directors, Lazard performed a variety of financial and comparative analyses, including those described below. The summary of Lazards analyses described below is not a complete description of the analyses underlying Lazards opinion. The preparation of a fairness opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analyses and the application of those methods to the particular circumstances, and, therefore, is not readily susceptible to summary description. In arriving at its opinion, Lazard considered the results of all of the analyses and, except as specifically indicated herein, did not attribute any particular weight to any factor or analysis considered by it; rather, Lazard made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of the analyses. The financial analyses summarized below include information presented in tabular format. In order to fully understand Lazards financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Lazards financial analyses.
In its presentation, Lazard noted that in conducting its analysis it was unable to perform a comparable companies analysis because Metrocall and Arch represent the only two independent, publicly-traded paging companies and, in Lazards determination, there were no relevant comparable companies outside of the paging industry. Lazard also noted that it was not able to perform a precedent transaction analysis because the only comparable transactions involving independent companies in the paging industry occurred in an earlier period of the industrys life cycle which, in Lazards determination, made such transactions incomparable to the merger.
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Relative Contribution Analysis. Lazard analyzed the relative contributions of Metrocall and Arch to Holding Company with respect to certain financial, operating and share price statistics, including:
| net revenue for the year ended December 31, 2003; | |
| earnings before interest expense, taxes, depreciation and amortization (EBITDA) for the year ended December 31, 2003; | |
| EBITDA less capital expenditures (CAPEX) for the year ended December 31, 2003; | |
| operating free cash flow (FCF) for the year ended December 31, 2003; | |
| the closing price per common share of each company on March 26, 2004; and | |
| the closing price per common share of each company 90-days prior to March 26, 2004. |
In performing this analysis, Lazard did not take into account
any anticipated cost savings, revenues enhancements or other
similar potential effects of the merger. Historical financial
data for Metrocall and Arch were based on data provided by the
managements of Metrocall and Arch, respectively. In its
analysis, Lazard more heavily weighed the relative contributions
of each of the two companies based on their respective operating
statistics, as opposed to the relative contributions of each of
the two companies based on their respective share prices, due to
the historical volatility in the relative share values of
Metrocall and Arch, the concentrated institutional ownership of
each of Metrocall and Arch, the recent emergence of each of
Metrocall and Arch from bankruptcy, the lack of forward
performance guidance about Metrocall and Arch available to the
public and public uncertainty about valuing companies with
complex tax attributes. The following table sets forth the
results of Lazards analysis.
Metrocall
Arch
36
%
64
%
37
%
63
%
38
%
62
%
38
%
62
%
39
%
61
%
48
%
52
%
Lazard noted that Metrocalls implied contribution based on this analysis was consistent with the value allocation in the merger.
Discounted Cash Flow Premium Analysis. Lazard compared the implied value of a share of Metrocall after giving effect to the merger (based on the discounted cash flows of Holding Company and taking into account the cash payment to the Metrocall shareholders in the cash election) with the implied value of a share of Metrocall common stock based on the discounted cash flows of Metrocall on a stand-alone basis, in each case using financial projections provided by the management of Metrocall. In performing this analysis, Lazard calculated the present value of the estimated unlevered after-tax free cash flows of both Metrocall and Holding Company for the years 2004 through 2008. Lazard then added to these present values an estimated terminal value following 2008 for each company. For purposes of this analysis, Lazard utilized discount rates ranging from 10% to 16% and terminal growth rates ranging from 5% to 15% based upon the growth rates implied by the forecasts of Metrocall management for the period from 2004 to 2008. Lazard assumed that $116 million of synergies will be achieved (at a cost of $35 million) in the first six quarters following the merger. After the first six quarters, the synergies were assumed to decline 20% per annum through 2008. Lazard performed this analysis under two different scenarios; the first assuming that Archs tax attributes were available to Holding Company to offset future consolidated taxable income and the second assuming that Archs tax attributes were not available to Holding Company to offset future consolidated taxable income.
49
Based on this analysis, Lazard calculated the implied value of a share of Metrocall common stock after giving effect to the merger as (A) the sum of (i) the cash payment to the Metrocall shareholders in the cash election and (ii) a portion (based on Metrocalls shareholders pro forma ownership of Holding Company immediately following the merger) of the discounted cash flows of Holding Company divided by (B) the total number of shares of Metrocall common stock (other than excluded shares) outstanding as of March 26, 2004. Lazard calculated the value of a share of Metrocall common stock implied by the discounted cash flows of Metrocall on a stand-alone basis by dividing these discounted cash flows by the total number of shares of Metrocall common stock (other than excluded shares) outstanding as of March 26, 2004. Lazard then calculated the implied premium to be received by holders of Metrocall common stock in the merger by dividing the implied value of a share of Metrocall common stock after giving effect to the merger by the value of a share of Metrocall common stock implied by the discounted cash flows of Metrocall on a stand-alone basis. The following table sets forth the results of Lazards analysis.
Implied Premium (assuming Arch tax attributes are not
available to Holding Company)
Implied Premium (assuming Arch tax attributes are available
to Holding Company)
2008 Terminal Growth Rate
Discount Rate
(5.0)%
(7.5)%
(10.0)%
(12.5)%
(15.0)%
8.9%
10.8%
12.4%
13.8%
15.1%
11.6%
13.4%
14.9%
16.2%
17.3%
14.3%
15.9%
17.3%
18.5%
19.6%
16.9%
18.3%
19.6%
20.7%
21.7%
2008 Terminal Growth Rate
Discount Rate
(5.0)%
(7.5)%
(10.0)%
(12.5)%
(15.0)%
13.2%
15.5%
17.4%
19.1%
20.6%
16.4%
18.4%
20.2%
21.8%
23.1%
19.4%
21.3%
22.9%
24.3%
25.6%
22.3%
24.0%
25.5%
26.8%
28.0%
Lazard noted that, in each case, the implied value of a share of Metrocall common stock after giving effect to the merger exceeded the value of a share of Metrocall common stock implied by the discounted cash flows of Metrocall on a stand-alone basis.
Volume Weighted Average Share Price Premium Analysis. In performing this analysis, Lazard first calculated the terminal growth rate implied by the volume weighted average share price for Metrocall common stock for the 30 day, 60 day, and 90 day periods immediately preceding March 26, 2004 based upon Metrocalls managements forecast of unlevered after-tax free cash flow for the years 2004 through 2008. For purposes of this analysis, Lazard utilized a discount rate of 12%. The following table sets forth the results of Lazards analysis.
Volume Weighted Average Share | ||||||||
Price | ||||||||
|
Implied Terminal | |||||||
Period | Price | Growth Rate | ||||||
|
|
|
||||||
30-days
|
$ | 75.51 | (0.3 | )% | ||||
60-days
|
$ | 69.61 | (2.3 | )% | ||||
90-days
|
$ | 66.34 | (3.7 | )% |
Lazard then performed a discounted cash flow analysis of Holding Company, based on financial projections provided by the management of Metrocall for the years 2004 through 2008. In performing this analysis, Lazard calculated the present value of the estimated unlevered after-tax free cash flows of Holding Company for the years 2004 through 2008. Lazard then added to this present value an estimated terminal value following 2008, utilizing the implied terminal growth rates calculated above and a discount rate of 12%.
50
Based on this analysis, Lazard calculated the implied value of a
share of Metrocall common stock after giving effect to the
merger as (A) the sum of (i) the cash payment to the
Metrocall shareholders in connection with the merger and
(ii) a portion (based on Metrocalls
shareholders pro forma ownership of Holding Company
immediately following the merger) of the discounted cash flows
of Holding Company divided by (B) the total number of
shares of Metrocall common stock (other than excluded shares)
outstanding as of March 26, 2004. Lazard then calculated
the implied premium to be received by holders of Metrocall
common stock in the merger by dividing the implied value of a
Metrocall common share after giving effect to the merger by the
volume weighted average price per share for the applicable
period. The following table sets forth the results of
Lazards analysis.
Premium
Volume Weighted
Average
Tax Attributes
Tax Attributes
Share Price Period
Available
Not Available
30-days
11.4
%
7.4
%
60-days
13.5
%
9.2
%
90-days
14.3
%
10.2
%
Lazard noted that, in each case, the implied value of a share of Metrocall common stock after giving effect to the merger exceeded the volume weighted share price for the applicable period.
Metrocall and Lazard entered into a letter agreement, dated as of September 25, 2003, under which Metrocall has agreed to pay Lazard: (i) an initial fee of $300,000 and (ii) a success fee of $3,000,000 payable upon the consummation of the proposed merger, less credit for payment of the initial fee of $300,000. Metrocall also agreed to reimburse Lazard for certain out-of-pocket expenses incurred in connection with the engagement. In addition, Metrocall separately agreed to indemnify Lazard against certain liabilities, including liabilities under the federal securities law, relating to or arising out of its engagement. Lazard has from time to time in the past provided investment banking services to Metrocall and its affiliates, for which Lazard received fees. Lazard provides a full range of investment banking and other services and, in the course of its business, may from time to time effect transactions and hold securities, including derivative securities, of Metrocall and Arch for its own account and the accounts of its clients and customers, and, accordingly, may hold a long or short position in such securities and may provide investment banking and other services in the future.
The full text of Lazards written opinion, dated March 28, 2004, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Lazard in connection with the opinion is attached to this document as Annex E and is incorporated into this document by reference. Metrocalls shareholders are urged to, and should, read Lazards opinion in its entirety. Lazard provided its opinion for the information and assistance of the Metrocall board of directors in connection with its consideration of the merger. Lazards opinion is not a recommendation as to how the shareholders of Metrocall should vote at any stockholders meeting to be held in connection with the merger or any other matter, or as to the election available to holders of Metrocall common stock with respect to the merger consideration. Lazards opinion will not reflect any developments that may occur or may have occurred after the date of its opinion and prior to the completion of the merger. Lazard has no obligation to update, revise or reaffirm its opinion.
Recommendation of Archs Board of Directors
The Arch board of directors believes that the terms of the merger are fair to and in the best interests of Arch and its stockholders. Accordingly, the Arch board, other than C. Edward Baker, who recused himself from the boards deliberations and vote, has unanimously approved the merger agreement and the transactions contemplated thereby and recommends adoption of the merger agreement by Archs stockholders.
51
Certain directors of Arch will receive substantial financial and other benefits in connection with the merger. For a discussion of these benefits and the other interests of Arch directors and officers that are different from or in addition to the interests of other Arch stockholders, see Interests of Certain Arch Directors and Executive Officers in the Merger beginning on page 61.
Opinion of Archs Financial Advisor
At a meeting of Archs board of directors held on March 28, 2004, at which the Arch board of directors considered and approved the merger agreement and the merger, Bear Stearns rendered its oral opinion (which was subsequently confirmed in a written opinion, dated March 29, 2004) that, as of such date and based upon and subject to the matters reviewed with Archs board of directors and the assumptions and limitations contained in the Bear Stearns opinion, the merger consideration is fair, from a financial point of view, to the public common stockholders of Arch.
The full text of the Bear Stearns opinion is attached hereto as Annex F. The description of the Bear Stearns opinion set forth herein is qualified in its entirety by reference to the full text of the Bear Stearns opinion set forth in Annex F. Arch stockholders are urged to read the Bear Stearns opinion in its entirety for a description of the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Bear Stearns in connection therewith. The Bear Stearns opinion is subject to the assumptions and conditions contained therein and is necessarily based on economic, market and other conditions and the information made available to Bear Stearns as of the date of the Bear Stearns opinion. Bear Stearns assumes no responsibility for updating or revising its opinion based on circumstances or events occurring after the date of the Bear Stearns opinion. The Bear Stearns opinion is intended for the benefit and use of the board of directors of Arch in connection with its consideration of the merger and does not constitute a recommendation to the board of directors of Arch or any holders of Arch common stock as to how to vote in connection with the merger. The Bear Stearns opinion did not address Archs underlying decision to pursue the merger, the relative merits of the merger as compared to any alternative business strategies that might have existed for Arch or the effects of any other transaction in which Arch might have engaged.
In the course of performing its review and analyses for rendering its opinion, Bear Stearns:
| reviewed the Agreement and Plan of Merger dated March 29, 2004 by and among Holding Company, Wizards Acquiring Sub, Inc., Metrocall, Patriots Acquiring Sub, Inc. and Arch; | |
| reviewed Archs Annual Reports to Stockholders and Annual Reports on Form 10-K for the years ended December 31, 2002 and December 31, 2003, its Plan of Reorganization dated January 15, 2002 and its Reports on Form 8-K for the three years ended March 29, 2004; | |
| reviewed certain operating and financial information relating to Archs business and prospects, including projections for the five years ended December 31, 2008, all as prepared and provided to Bear Stearns by Archs management, also referred to as the Arch Projections; | |
| reviewed Metrocalls Annual Reports to Stockholders and Annual Reports on Form 10-K for the years ended December 31, 2002 and December 31, 2003, its Plan of Reorganization dated June 3, 2002 and its Reports on Form 8-K for the three years ended March 29, 2004; | |
| reviewed certain operating and financial information relating to Metrocalls business and prospects, including projections for the five years ended December 31, 2008, all as prepared and provided to Bear Stearns by Metrocalls management, also referred to as the Metrocall Projections; | |
| reviewed certain operating and financial information relating to Metrocalls business and prospects, including projections for the five years ended December 31, 2008, all as prepared and provided to Bear Stearns by Archs management, also referred to as the Adjusted Metrocall Projections and, together with the Arch Projections and the Metrocall Projections, referred to as the Projections; |
52
| reviewed certain estimates of cost savings and other combination benefits expected to result from the merger, prepared and provided to Bear Stearns by Archs management, also referred to as the Arch Synergies; | |
| reviewed certain estimates of cost savings and other combination benefits expected to result from the merger, prepared and provided to Bear Stearns by Metrocalls management, also referred to as the Metrocall Synergies and, together with the Arch Synergies, referred to as the Synergies; | |
| reviewed certain estimates of accrued tax liabilities and assets, as well as projected cash tax estimates, for Metrocall, Arch and Holding Company prepared and provided to Bear Stearns by Archs tax advisors, also referred to as the Tax Estimates; | |
| met with certain members of Archs senior management to discuss Archs and Metrocalls respective businesses, operations, historical and projected financial results and future prospects as well as the future prospects of Holding Company, and to discuss the Arch Projections, the Adjusted Metrocall Projections, the Arch Synergies and the Metrocall Synergies; | |
| met with certain members of Metrocalls senior management to discuss Archs and Metrocalls respective business, operations, historical and projected financial results and future prospects as well as the future prospects of Holding Company, and to discuss the Metrocall Projections and the Metrocall Synergies; | |
| reviewed the historical prices, trading multiples and trading volume of the common shares of Arch and Metrocall; | |
| performed discounted cash flow analyses based on (i) the Arch Projections, the Adjusted Metrocall Projections and the Arch Synergies and (ii) the Arch Projections, the Metrocall Projections and the Metrocall Synergies; | |
| reviewed the pro forma financial results, financial condition and capitalization of Holding Company furnished to Bear Stearns by Archs management giving effect to the merger; and | |
| conducted such other studies, analyses, inquiries and investigations as Bear Stearns deemed appropriate. |
Bear Stearns relied upon and assumed, without independent verification, the accuracy and completeness of the financial and other information provided by Arch and Metrocall, including, without limitation, the Arch Projections, the Metrocall Projections, the Adjusted Metrocall Projections, the Arch Synergies and the Metrocall Synergies. With respect to the Arch Projections, the Adjusted Metrocall Projections, the Arch Synergies and the Tax Estimates, Bear Stearns relied on representations by the senior management of Arch that they have been reasonably prepared on bases reflecting the best estimates then available and judgments of the senior management of Arch as to the expected future performance of each of Arch and Metrocall on a standalone basis, the expected amount and timing of the Arch Synergies and the Tax Estimates, and Holding Company. With respect to the Metrocall Projections and the Metrocall Synergies, Bear Stearns relied on representations by the senior management of Metrocall that they have been reasonably prepared based on the best currently available estimates and judgments of the senior management of Metrocall as to the expected future performance of Metrocall on a standalone basis and the expected amount and timing of the Metrocall Synergies. Bear Stearns did not assume any responsibility for the independent verification of any such information or of the Projections, Tax Estimates and Synergies estimates provided to Bear Stearns, and Bear Stearns further relied upon the assurances of the senior management of Arch and Metrocall that they are unaware of any facts that would make the information, Projections, Tax Estimates and Synergies estimates provided to Bear Stearns incomplete or misleading.
In arriving at its opinion, Bear Stearns did not perform or obtain any independent appraisal of the assets or liabilities (contingent or otherwise) of Arch, Metrocall or Holding Company, nor was Bear Stearns furnished with any such appraisals. Bear Stearns analyzed the merger as a strategic business combination not involving the sale of control of Arch and Bear Stearns did not solicit, nor was it asked to solicit, third party acquisition interest in Arch. Bear Stearns assumed that the merger will qualify as a tax-free transaction under
53
Summary of Financial Analyses |
The following is a summary of the material financial analyses performed by Bear Stearns in connection with the rendering of its fairness opinion to the Arch board of directors. Some of the financial analyses summarized below include information presented in tabular format. In order to understand fully Bear Stearns financial analyses, the tables must be read together with the text of the summary. The tables alone are not a complete description of the financial analyses. Considering the tables alone could create a misleading or incomplete view of Bear Stearns financial analyses.
Some of the financial analyses summarized below were based on discounted cash flow analyses prepared by Bear Stearns. A discounted cash flow analysis is one measure used to determine the estimated value of a company. Bear Stearns used the projected cash flows for both Arch and the Holding Company plus the respective terminal values, values for each of the companies at the end of the projection period, calculated as multiples of 2008 projected earnings before interest, income taxes, depreciation and amortization, also referred to as EBITDA, and discounted these cash flows to the present using a range of rates that corresponds to the respective companys estimated cost of capital during that period. Cash flows for the projection period beginning October 1, 2004 and ending December 31, 2008 were calculated as EBITDA plus synergies, as applicable, less changes in working capital, capital expenditures and cash taxes.
Valuation Analyses Based on Projections Provided by Arch Management |
The following financial analyses were prepared by Bear Stearns using the Arch Projections, the Adjusted Metrocall Projections and the Arch Synergies. The presumed level of synergies included the net impact of tax attributes.
Arch Enterprise Value Contribution. Bear Stearns analyzed how much of the enterprise value for the Holding Company will consist of the value of the interests to be held by Archs stakeholders, on the one hand, and how much will be held by Metrocalls stakeholders, on the other. Bear Stearns calculated the enterprise value of the Holding Company based on the discounted cash flow of the Holding Company which was calculated using a weighted average cost of capital, also referred to as WACC, of 14% and a terminal multiple of EBITDA of 2.75x. The Holding Company equity value was then calculated based on Holding Companys enterprise value less Holding Companys estimated net debt at closing including $150 million of new acquisition debt and financing costs. The resulting equity value was then allocated to the common stockholders of Arch and Metrocall based on the equity value splits (72.5% and 27.5%, respectively). Archs share of the enterprise value was calculated based on Archs allocated equity value plus Archs projected net debt at September 30, 2004 (the anticipated time of the closing of the merger). Metrocalls share of Holding Companys enterprise value was calculated based on Metrocalls allocated equity value plus the $150 million in cash to be received by the Metrocall stockholders plus the projected net debt for Metrocall at September 30, 2004 (the anticipated time of the closing of the merger). This analysis indicated that the interests of Archs stakeholders will represent 60% of the enterprise value for the Holding Company.
Relative Contribution Analysis.
Bear Stearns performed a
contribution analysis showing the contribution of total revenue,
EBITDA and free cash flow (EBITDA less capital expenditures) by
Arch, Metrocall and net synergies to the pro forma Holding
Company for 2004 through 2008. The following tables set forth
the results of such analysis:
Total Revenues Contribution
2004E
2005P
2006P
2007P
2008P
58%
58%
58%
58%
59%
42%
42%
42%
42%
41%
54
Free Cash Flow Contribution
EBITDA Contribution
2004E
2005P
2006P
2007P
2008P
62%
48%
49%
51%
53%
43%
32%
30%
29%
30%
(5)%
20%
21%
19%
17%
2004E
2005P
2006P
2007P
2008P
64%
47%
48%
50%
52%
42%
30%
28%
27%
28%
(6)%
23%
24%
22%
20%
The percentages of total revenues, EBITDA and free cash flow (EBITDA less capital expenditures) set forth in the above tables that will be contributed to the Holding Company by Arch were then compared to the 60% interest that Archs common stockholders will have in the Holding Companys enterprise value (as determined above).
Relative Discounted Cash Flow Enterprise Value Analysis. Bear Stearns examined the relative discounted cash flow enterprise value contribution of Arch and Metrocall to the Holding Company (assuming a WACC of 12% to 15% and an EBITDA terminal multiple range of 2.25x to 3.25x). In this analysis, Bear Stearns used estimates of net synergies (including the net impact of tax attributes) provided by Archs management. Bear Stearns made two separate assumptions with respect to synergies: (i) no synergies and (ii) an allocation of 50% of the net synergies referred to above to each of Arch and Metrocall. This analysis indicated that Archs implied enterprise value contribution to the Holding Company will be (i) 65.6% to 65.8% assuming no synergies and (ii) 62.6% to 62.7% assuming a 50% allocation of net synergies. Bear Stearns compared these percentages to the 60% interest that Arch common stockholders will have in the enterprise value for the Holding Company (as determined above).
Pro Forma Combined Discounted Cash Flow Equity Value Accretion Analysis. Using a WACC range of 12% to 15% and an EBITDA terminal multiple range of 2.25x to 3.25x, Bear Stearns performed discounted cash flow analyses to calculate (i) the stand alone enterprise value for Arch and (ii) the enterprise value for the Holding Company. Archs stand alone equity value was calculated based on Archs stand alone enterprise value less Archs estimated net debt at closing. The Holding Companys equity value was calculated based on Holding Companys enterprise value less Holding Companys estimated net debt at closing including the $150 million of new acquisition debt and financing costs. Archs stockholders share of Holding Companys equity value was calculated based on Holding Companys equity value times Archs shareholders equity split in Holding Company of 72.5%. Bear Stearns then compared these values to determine whether the proposed merger will result in an increase or decrease in equity value per share for Archs common stockholders. The comparative results indicated that the proposed merger will result in an increase in equity value per share for Archs common stockholders.
The following table sets forth the results of Bear Stearns
calculation of the equity values of Arch on a stand alone basis:
Arch Stand-Alone Discounted Cash Flow Equity Values ($ in
millions)
EBITDA Terminal Multiple
WACC
2.25x
2.50x
2.75x
3.00x
3.25x
$
428
$
440
$
452
$
464
$
477
420
431
443
455
466
412
423
434
445
457
404
415
426
436
447
55
As indicated in the above table, the range of equity values for Arch on a stand-alone basis was $404 to $477 million. Based on Archs gross diluted share count of 19.934 million, the corresponding range of discounted cash flow equity values per share is $20.27 to $23.91.
The following table sets forth the results of Bear Stearns
calculation of Arch shareholders share of the equity
values for the Holding Company:
Arch Shareholders Share of the Discounted Cash Flow
Equity Values
EBITDA Terminal Multiple
WACC
2.25x
2.50x
2.75x
3.00x
3.25x
$
475
$
491
$
507
$
523
$
540
463
479
494
510
526
452
467
482
497
512
441
456
470
485
499
As indicated in the above table, the range of Arch shareholders share of the equity values for the Holding Company was $441 to $540 million, which corresponded to a per share range of $22.14 to $27.07. This represented a premium of 9.2% to 13.2% to the Arch stand-alone per share equity values of $20.27 to $23.91.
Valuation Analyses Based on Projections Provided by Metrocall Management (Metrocall Projections and Metrocall Synergies) and Arch Management (Arch Projections) |
The following financial analyses were prepared by Bear Stearns using the Arch Projections, the Metrocall Projections and the Metrocall Synergies. The presumed level of synergies included the net impact of tax attributes.
Arch Enterprise Value Contribution. Bear Stearns analyzed how much of the enterprise value for the Holding Company will consist of the value of the interests to be held by Archs stakeholders, on the one hand, and how much will be held by Metrocalls stakeholders, on the other. Bear Stearns calculated the enterprise value of the Holding Company based on the discounted cash flow of the Holding Company which was calculated using a WACC of 14% and a terminal multiple of EBITDA of 2.75x. The Holding Company equity value was then calculated based on Holding Companys enterprise value less Holding Companys estimated net debt at closing including $150 million of new acquisition debt and financing costs. The resulting equity value was then allocated to the common stockholders of Arch and Metrocall based on the equity value splits (72.5% and 27.5%, respectively). Archs share of the enterprise value was calculated based on Archs allocated equity value plus Archs projected net debt at September 30, 2004 (the anticipated time of the closing of the merger). Metrocalls share of Holding Companys enterprise value was calculated based on Metrocalls allocated equity value plus the $150 million in cash to be received by the Metrocall stockholders plus the projected net debt for Metrocall at September 30, 2004 (the anticipated time of the closing of the merger). This analysis indicated that the interests of Archs stakeholders will represent 63% of the enterprise value for the Holding Company.
Relative Contribution Analysis.
Bear Stearns performed a
contribution analysis showing the contribution of total
revenues, EBITDA and free cash flow (EBITDA less capital
expenditures) by Arch, Metrocall and net synergies to the pro
forma Holding Company for 2004 through 2008. The following
tables set forth the results of such analysis:
Total Revenues Contribution
2004E
2005P
2006P
2007P
2008P
57
%
56
%
55
%
54
%
54
%
43
%
44
%
45
%
46
%
46
%
56
EBITDA Contribution
2004E
2005P
2006P
2007P
2008P
55
%
39
%
38
%
39
%
42
%
40
%
31
%
31
%
33
%
38
%
5
%
30
%
31
%
28
%
20
%
Free Cash Flow Contribution
2004E
2005P
2006P
2007P
2008P
55
%
37
%
36
%
37
%
40
%
39
%
29
%
29
%
32
%
36
%
7
%
34
%
34
%
31
%
23
%
The percentages of total revenues, EBITDA and free cash flow (EBITDA less capital expenditures) set forth in the above tables that will be contributed to the Holding Company by Arch were then compared to the 63% interest that Archs common stockholders will have in the Holding Companys enterprise value (as determined above).
Relative Discounted Cash Flow Enterprise Value Analysis. Bear Stearns examined the relative discounted cash flow enterprise value contribution of Arch and Metrocall to the Holding Company (assuming a WACC of 12% to 15% and an EBITDA terminal multiple range of 2.25x to 3.25x). In this analysis, Bear Stearns used estimates of net synergies (including the net impact of tax attributes) provided by Metrocalls management. Bear Stearns made two separate assumptions with respect to synergies: (i) no synergies and (ii) an allocation of 50% of the net synergies referred to above to each of Arch and Metrocall. This analysis indicated that Archs implied enterprise value contribution to the Holding Company will be (i) 57.4% to 58.3% assuming no synergies and (ii) 55.3% to 55.8% assuming a 50% allocation of net synergies. Bear Stearns compared these percentages to the 63% interest that Arch common stockholders will have in the enterprise value for the Holding Company (as determined above).
Pro Forma Combined Discounted Cash Flow Equity Value Accretion Analysis. Using a WACC range of 12% to 15% and an EBITDA terminal multiple range of 2.25x to 3.25x, Bear Stearns performed discounted cash flow analyses to calculate (i) the stand-alone enterprise value for Arch and (ii) the enterprise value for the Holding Company. Archs stand-alone equity value was calculated based on Archs stand-alone enterprise value less Archs estimated net debt at closing. The pro forma Holding Companys equity value was calculated based on Holding Companys enterprise value less Holding Companys estimated net debt at closing including the $150 million of new acquisition debt and financing costs. Archs stockholders share of Holding Companys equity value was calculated based on Holding Companys equity value times Archs shareholders equity split in Holding Company of 72.5%. Bear Stearns then compared these values to determine whether the proposed merger will result in an increase or decrease in equity value per share for Archs common stockholders. The comparative results indicated that the proposed merger will result in an increase in equity value per share for Archs common stockholders.
The following table sets forth the results of Bear Stearns
calculation of the equity values of Arch on a stand-alone basis:
Arch Stand-Alone Discounted Cash Flow Equity Values ($ in
millions)
EBITDA Terminal Multiple
WACC
2.25x
2.50x
2.75x
3.00x
3.25x
$
428
$
440
$
452
$
464
$
477
420
431
443
455
466
412
423
434
445
457
404
415
426
436
447
57
As indicated in the above table, the range of discounted cash flow equity values for Arch on a stand-alone basis was $404 to $477 million. Based on Archs gross diluted share count of 19.934 million, the corresponding range of discounted cash flow equity values per share is $20.27 to $23.91.
The following table sets forth the results of Bear Stearns
calculation of Arch shareholders share of the equity
values for the Holding Company:
Arch Shareholders Share of the Discounted Cash Flow
Equity Values
EBITDA Terminal Multiple
WACC
2.25x
2.50x
2.75x
3.00x
3.25x
$
639
$
659
$
680
$
700
$
720
624
644
663
683
703
610
629
648
667
686
596
614
633
651
669
As indicated in the above table, the range of Arch shareholders share of the equity values for the Holding Company was $596 to $720 million, which corresponded to a per share range of $29.91 to $36.14. This represented a premium of 47.6% to 51.2% to the Arch stand-alone per share equity values of $20.27 to $23.91.
Miscellaneous |
In connection with rendering its opinion, Bear Stearns performed a variety of financial analyses. The preparation of a fairness opinion involves various determinations as to the most appropriate and relevant methods of financial analysis and the application of these methods to the particular circumstances and, therefore, such an opinion is not readily susceptible to a partial analysis or summary description. Bear Stearns arrived at its ultimate opinion based on the results of all analyses undertaken by it and assessed as a whole and believes that the totality of the factors considered and analyses performed by Bear Stearns in connection with its opinion operated collectively to support its determination as to the fairness of the merger consideration to the holders of Arch common stock. Accordingly, notwithstanding the analyses summarized above, Bear Stearns believes that its analyses must be considered as a whole and that selecting portions of the analyses and factors considered by them, without considering all such analyses and factors, or attempting to ascribe relative weights to some or all such analyses and factors, could create an incomplete view of the evaluation process underlying the Bear Stearns opinion.
In performing its analyses, Bear Stearns considered industry performance, general business and economic conditions and other matters, many of which are beyond the control of Arch. The analyses performed by Bear Stearns are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than suggested by such analyses. Bear Stearns did not assign any specific weight to any of the analyses described above and did not draw any specific conclusions from or with regard to any one method of analysis.
The type and amount of consideration payable in the merger were determined through negotiations between Arch and Metrocall and approved by the Arch board of directors. Bear Stearns did not express any opinion as to the price or range of prices at which the shares of common stock of Arch and Metrocall may trade subsequent to the announcement of the merger or as to the price or range of prices at which the shares of Holding Company common stock may trade subsequent to the consummation of the merger. The decision to enter into the merger agreement was solely that of the Arch board of directors. The analyses do not purport to be appraisals or to reflect the prices at which any securities may trade at the present time or at any time in the future. In addition, the Bear Stearns opinion was just one of the many factors taken into consideration by Archs board of directors. Consequently, Bear Stearns analysis should not be viewed as determinative of the decision of Archs board of directors or Archs management with respect to the fairness of the merger consideration.
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Bear Stearns is an internationally recognized investment banking firm and is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, leveraged buyouts and valuations for estate, corporate and other purposes.
Bear Stearns was selected by the Arch board of directors to act as Archs financial advisor and render a fairness opinion because of its expertise and reputation in investment banking and mergers and acquisitions and its familiarity with Arch, Metrocall and the one and two-way wireless messaging and information services industry. Arch and Bear Stearns have entered into a letter agreement, dated as of November 1, 2002 and amended as of December 1, 2003, under which Arch has agreed to pay Bear Stearns (i) retainer and interim fees together equal to $600,000 (of which $350,000 will be credited against the payments for the transaction fee described in clause (ii)) and (ii) an aggregate $1.5 million transaction fee, including a contingent transaction fee, upon the consummation of the proposed merger. Arch also agreed to reimburse Bear Stearns for certain out-of-pocket expenses incurred in connection with the engagement. In addition, Arch agreed to indemnify Bear Stearns against certain liabilities, including liabilities under the federal securities law, relating to or arising out of its engagement. Bear Stearns had been previously engaged by Arch to provide certain investment banking and financial advisory services for which it received customary fees. In the ordinary course of business, Bear Stearns and its affiliates may actively trade the equity and debt securities and/or bank debt of Arch and/or Metrocall for its own account and for the account of its customers and, accordingly, may at any time hold a long or short position in such securities or bank debt.
Interests of Certain Metrocall Directors and Executive Officers in the Merger
In considering the recommendation of the board of directors of Metrocall to vote for the proposal to adopt the merger agreement, stockholders of Metrocall should be aware that members of the Metrocall board of directors and members of Metrocalls management team have agreements or arrangements that provide them with interests in the merger that are in addition to the interests of Metrocall stockholders directly. The Metrocall board of directors was aware of these agreements and arrangements during its deliberations of the merits of the merger and in determining to recommend to the stockholders of Metrocall that they vote for the proposal to adopt the merger agreement.
Vincent D. Kellys Employment Arrangements. Metrocalls board of directors has amended the employment agreement of Vincent D. Kelly, Metrocalls President and Chief Executive Officer, to provide that upon the closing of the merger, Mr. Kelly will execute a new employment agreement with Holding Company for an initial term of three years. Such employment agreement would provide, among other things:
| an annual base salary of $600,000; | |
| a bonus of $530,000 for the remainder of calendar year 2004 if performance targets previously set by the compensation committee of the Metrocall Board are met; | |
| bonuses of up to 200% of his base salary for each of the 2005 and 2006 fiscal years, subject to meeting performance targets to be set by Holding Companys board of directors; | |
| severance payments equal to: |
| his base salary for the longer of two years and the remainder of the three-year term of his employment agreement; and | |
| reimbursement of the cost of continuation of group health coverage for the same period; and | |
| an amount equal to his annual bonus with respect to the prior annual period; and |
| if Mr. Kelly is removed without cause or leaves with good reason, the automatic vesting of Mr. Kellys unvested options which will not be subject to repurchase by Holding Company. |
In addition, the amendment to Mr. Kellys employment agreement with Metrocall provides for a cash bonus of one million dollars, upon the completion of the merger with Arch, in lieu of any other payments from Metrocall with respect to the merger. For a more detailed description of Mr. Kellys employment
59
Metrocall Stock Options.
The directors of Metrocall
listed below hold options to purchase shares of Metrocall common
stock. All unvested options granted to Metrocall non-employee
directors, whether or not then vested shall become vested and
exercisable immediately prior to the time of the merger. These
vested options, like all outstanding vested Metrocall options,
will at the time of the merger be converted pursuant to the
merger agreement into vested options to purchase shares of
common stock of Holding Company unless a holder chooses to
exercise his options at the time of the merger and elects to
receive cash for the shares of Metrocall common stock issuable
thereupon.
Number of Options
10,000
10,000
10,000
10,000
10,000
10,000
60,000
The executive officers of Metrocall listed below hold options to
purchase shares of Metrocall common stock. 50% of such options
vested on May 7, 2004, the remaining 50% of such options
vest on May 7, 2005.
Number of Options
60,000
30,000
30,000
120,000
Pursuant to the terms of the merger agreement, each Metrocall stock option granted pursuant to the Metrocall Holdings, Inc. 2003 Stock Option Plan outstanding immediately prior to the completion of the merger will be converted, upon completion of the merger, into an option to acquire, on the same terms and conditions, the number of shares of such stock option multiplied by 1.876, the exchange ratio for Metrocall common stock, of Holding Company common stock at the per share exercise price of such stock option divided by 1.876, subject to adjustment for unanticipated changes in the number of fully diluted shares of common stock of Metrocall and/or Arch prior to completion of the merger.
Equity Incentive Plan. According to the terms of the merger agreement, at the time of the merger or promptly thereafter, Holding Company will establish an equity incentive plan for members of the Holding Company board of directors and officers and employees of Holding Company and its subsidiaries. Holding Company will reserve a number of shares of Holding Company common stock, for issuance in respect of the plan, not to exceed seven percent of the issued and outstanding shares of Holding Company common stock as of the time of the merger (not counting Metrocall options, stock rights, and warrants, and Arch options and stock rights that are exchanged in the merger for corresponding rights with respect to Holding Company common stock). The interests granted under the equity incentive plan may be in the form of stock options, restricted stock grants, or otherwise, and the terms, conditions, eligibility, and allocations to eligible participants with respect to the plan will be as determined by Holding Companys board or its compensation committee.
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Governance Structure and Management Positions. Pursuant to the terms of the merger agreement, upon completion of the merger:
| the board of directors of Holding Company will be initially comprised of nine directors including the following four members of Metrocalls current board of directors, Vincent D. Kelly, Royce Yudkoff, [ ] and [ ]; | |
| Mr. Yudkoff will become the Chairman of Holding Companys board of directors; | |
| The Audit Committee of the board of directors of Holding Company will be initially comprised of one director designated by Metrocall, one director designated by Arch and David C. Abrams; | |
| The Compensation Committee of the board of directors of Holding Company will be initially comprised of one director designated by Metrocall and two directors designated by Arch; and | |
| The Nominating and Governance Committee of the board of directors of Holding Company will be initially comprised of two directors designated by Metrocall and two directors designated by Arch. |
The merger agreement also provides that, upon completion of the merger:
| Mr. Kelly, President and Chief Executive Officer of Metrocall, will serve as Chief Executive Officer of Holding Company with an employment agreement with Holding Company for a term of three years from the date of the closing of the transaction. See Management of Holding Company After the Merger Compensation of Directors and Compensation of Executive Officers beginning on page 119. |
Indemnification and Insurance. The merger agreement provides that Holding Company and Metrocall will, jointly and severally, honor existing indemnification agreements of current and former directors and officers of Metrocall and its subsidiaries and, for six years following the merger, indemnify all current and former officers and directors of Metrocall and its subsidiaries in accordance with indemnification provisions of the Holding Company or Metrocall certificate of incorporation, and that the terms of the indemnification provisions of the certificates of incorporation will not be amended, repealed, or otherwise modified during the six-year period after the merger. In addition, for six years after the merger, Holding Company will cause to be maintained liability insurance coverage with respect to matters arising at or prior to the merger for each current or former officer or director of Metrocall or any of its subsidiaries, in amounts and on terms not materially less advantageous than the coverage provided prior to the merger. Holding Company or Metrocall will also pay all reasonable expenses incurred by any individual in enforcing his or her rights to indemnification and insurance coverage under the terms of the merger agreement.
Interests of Certain Arch Directors and Executive Officers in the Merger
Some members of the Arch board of directors and some executive officers of Arch have interests in the merger that are in addition to the interests of Arch shareholders directly. In considering the fairness of the merger to the stockholders of Arch, the Arch board took these interests into account. You should be aware of these interests, which are summarized below. In addition, certain other interests that officers and directors of Arch may have in relation to a change in control of Arch are discussed in Risk Factors beginning on page 27.
Options. The directors of Arch listed below hold options to purchase shares of Arch common stock at an exercise price of $.001 per share. Under the merger agreement, all outstanding options of Arch will, at the time of the merger be converted into options to purchase the same number of shares of common stock of Holding Company, on the same terms and conditions. As of May 29, 2004, all of these options will be
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Number of | |||||
Options | |||||
|
|||||
James V. Continenza
|
41,666 | ||||
Eric Gold
|
41,666 | ||||
Carroll D. McHenry
|
41,666 | ||||
Matthew Oristano
|
41,666 | ||||
William E. Redmond, Jr.
|
41,666 | ||||
Samme L. Thompson
|
41,666 | ||||
|
|||||
Total
|
249,996 | ||||
|
Restricted Stock.
The senior members of Arch management
listed below hold restricted shares of Arch common stock
indicated, issued pursuant to Archs 2002 Stock Incentive
Plan and a Restricted Stock Agreement between Arch and the
respective officer. Under the merger agreement, issued but
restricted shares of Arch common stock will become rights to
receive shares of the same number of shares of common stock of
Holding Company, subject to the terms and conditions of the
applicable restricted stock agreement, including Archs
right, upon termination of the employment of a holder of
restricted shares, to repurchase such shares for a price of
$.001 per share. Currently, Arch anticipates repurchasing
the restricted shares of Messrs. Baker, Daniels and Pottle
because they will be leaving the employment of Arch immediately
prior to the merger. Arch further intends to repurchase
restricted shares held by other employees and executive officers
whose employment is terminated prior to the effective time of
the merger. For more information on Archs repurchase
option and the risks of vesting the restricted shares held by
Messrs. Baker, Daniels and Pottle if the merger is
determined to be a change in control, see the risk factors
beginning on page 27 and Description of Holding
Company Capital Stock Repurchase of Shares of
Holding Company Common Stock upon Certain Events beginning
on page 97. Restricted shares held by Arch officers other
than Messrs. Baker, Daniels and Pottle do not vest upon a
change in control.
Number of
Restricted Shares
89,430
52,456
42,344
10,428
26,228
10,428
231,314
84,688
316,002
Certain Arch directors and members of management have indicated an interest in disposing of all or part of their holdings in unrestricted shares of Arch common stock in accordance with trading plans to diversify their investment portfolios.
Long-Term Incentive Plan. Arch currently maintains a long-term incentive plan for certain employees, including the officers set forth below. Pursuant to the terms of the incentive plan, these officers receive annual grants of units, intended to be economically equivalent to shares of Arch common stock, which ordinarily vest on the second anniversary of the bonus payment date. The number of units awarded to a participant is calculated by dividing such participants annual bonus payment by the average closing price of Arch common stock for the ten trading days immediately preceding the date of such bonus payment. However, if an officers employment is terminated by Arch without cause, such officers units will vest one-third on the bonus payment date if the termination occurs prior to the first anniversary of the bonus payment date, two-thirds if the termination occurs after the first anniversary but prior to the second anniversary of the bonus
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In addition, if a change in control is determined to result in connection with the merger, all units immediately vest. See the risk factor beginning on page 27 for more information regarding the risk that the merger will be determined to be a change in control of Arch. If there is no change in control as a result of the consummation of the merger, the number of these units will remain the same and the value of these units will be based on the price of Holding Company common stock.
The amounts set forth below in the first column below indicate
for each officer below the payment obligations with respect to
units that would be accelerated if the employment of the officer
was terminated without cause as a result of the merger. If the
merger was determined to result in a change in control, all
restricted units of the officers would immediately vest, which
would entitle these officers to the payments indicated in the
first and second columns below, regardless of any termination of
their employment. The value of vested units is determined on the
date that the units become fully vested, based on the average of
the closing price of Arch common stock for the ten trading days
prior to vesting. The amounts below assume vesting as of
May 12, 2004, based on a ten-day trailing average price of
$32.98 for Arch common stock. Payment obligations under the
long-term incentive plan are payable within 30 days of
vesting.
Accelerated Payments under the Management Long-Term Incentive
Plan
Amount upon
Additional Amount if
Termination
Change in Control
$
1,002,440
$
2,004,981
506,434
1,013,133
433,054
866,108
198,706
397,412
256,179
512,358
151,480
302,960
Severance. Arch currently has an employment agreement with each of Messrs. Baker, Daniels and Pottle and also maintains a severance benefits plan for employees, including the officers set forth below. Pursuant to this severance plan and the employment agreements, if applicable, each of these officers is entitled to receive a severance payment in the event that his or her employment is terminated by Arch without cause. While the full composition of Holding Company management has not yet been determined, Metrocall and Arch anticipate that the employment of some or all of these officers, including Messrs. Baker, Daniels and Pottle, may be terminated without cause in connection with the merger. In the event of a termination of employment without cause and assuming that the termination of each of their employment is effective as of
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Severance Amount | ||||
|
||||
C. Edward Baker, Jr.*
|
$ | 1,387,500 | ||
Lyndon Daniels*
|
833,800 | |||
J. Roy Pottle*
|
567,000 | |||
Patricia A. Gray
|
247,000 | |||
Paul H. Kuzia
|
316,300 | |||
Christopher J. Madden
|
175,200 |
* | A portion of the payment of the severance amount may be reduced based on income received from the executives future employment, and any severance payment to such executive is conditioned on his executing a separation agreement and release. |
Equity Incentive Plan. According to the terms of the merger agreement, at the time of the merger or promptly thereafter, Holding Company will establish an equity incentive plan for members of the Holding Company board of directors and officers and employees of Holding Company and its subsidiaries. Holding Company will reserve a number of shares of Holding Company common stock, for issuance in respect of the plan, not to exceed seven percent of the issued and outstanding shares of Holding Company common stock as of the time of the merger (not counting Metrocall options, stock rights, and warrants, and Arch options and stock rights that are exchanged in the merger for corresponding rights with respect to Holding Company common stock). The interests granted under the equity incentive plan may be in the form of stock options, restricted stock grants, or otherwise, and the terms, conditions, eligibility, and allocations to eligible participants with respect to the plan will be as determined by Holding Companys board or its compensation committee.
Governance Structure. Pursuant to the terms of the merger agreement, immediately following the merger:
| the board of directors of Holding Company will be initially comprised of nine directors including the following four members of Archs current board of directors: James V. Continenza, Matthew Oristano, William E. Redmond, Jr., and Richard A. Rubin; | |
| The Audit Committee of the board of directors of Holding Company will be initially comprised of one director designated by Metrocall, one director designated by Arch and David C. Abrams; | |
| The Compensation Committee of the board of directors of Holding Company will be initially comprised of one director designated by Metrocall and two directors designated by Arch; and | |
| The Nominating and Governance Committee of the board of directors of Holding Company will be initially comprised of two directors designated by Metrocall and two directors designated by Arch. |
Indemnification. The merger agreement provides that Holding Company and Arch will, jointly and severally, honor existing indemnification agreements of current and former directors and officers of Arch and its subsidiaries and, for six years following the merger, indemnify all current and former officers and directors of Arch and its subsidiaries in accordance with indemnification provisions of the Holding Company or Arch certificate of incorporation, and that the terms of the indemnification provisions of the certificates of incorporation will not be amended, repealed, or otherwise modified during the six-year period after the merger. In addition, for six years after the merger, Holding Company will cause to be maintained liability insurance coverage with respect to matters arising at or prior to the merger for each current or former officer or director of Arch or any of its subsidiaries, in amounts and on terms not materially less advantageous than the coverage provided prior to the merger. Holding Company or Arch will also pay all reasonable expenses incurred by any individual in enforcing his or her rights to indemnification and insurance coverage under the terms of the merger agreement.
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Completion and Effectiveness of the Merger
We will complete the merger when all of the conditions to completion of the merger contained in the merger agreement are satisfied or waived, including the adoption of the merger agreement by the stockholders of Metrocall and Arch. The merger will become effective upon the filing of certificates of merger with the Secretary of State of the State of Delaware.
We are working to complete the merger as quickly as possible. We currently plan to complete the merger during the second half of 2004. Because completion of the merger is subject to governmental and regulatory approvals and other conditions, however, we cannot predict the exact timing.
Structure of the Merger and Conversion of Metrocall and Arch Stock
Structure |
To accomplish the merger, Metrocall formed Holding Company as a new subsidiary, which in turn formed two subsidiaries, Patriots Acquiring Sub, Inc. and Wizards Acquiring Sub, Inc. At the time the merger is completed:
| Wizards Acquiring Sub will be merged into Metrocall, and Metrocall will be the surviving corporation; and | |
| Patriots Acquiring Sub will be merged into Arch, and Arch will be the surviving corporation. |
As a result, Metrocall and Arch will each become a wholly-owned subsidiary of Holding Company.
Conversion of Metrocall and Arch Stock |
Upon completion of the merger:
| each share of Metrocall common stock outstanding immediately prior to the merger for which a cash election has been made will be canceled and extinguished and automatically converted into the right to receive $75.00 in cash upon surrender of the certificate representing such share of Metrocall common stock, subject to an adjustment to the number of shares as described below in the section entitled Metrocall Stockholders Cash Election; | |
| each share of Metrocall common stock outstanding immediately prior to the merger for which no cash election has been made will be canceled and extinguished and automatically converted into the right to receive 1.876 shares of Holding Company common stock upon surrender of the certificate representing such share of Metrocall common stock, subject to adjustment for unanticipated changes in the number of fully diluted shares of common stock of Metrocall and/or Arch prior to completion of the merger and subject to an adjustment to the number of shares as described below in the section entitled Metrocall Stockholders Cash Election; and | |
| each share of Arch common stock outstanding immediately prior to the merger will be canceled and extinguished and automatically converted into the right to receive one share of Holding Company common stock upon surrender of the certificate representing such share of Arch common stock. |
All shares of Metrocall and Arch common stock exchanged in the merger will be canceled and will no longer be outstanding, and Metrocall and Arch will each become a wholly-owned subsidiary of Holding Company. All shares of Metrocall common stock owned by Metrocall as treasury stock or owned by Arch or any subsidiary of Arch immediately prior to the merger will be canceled and cease to exist. All shares of Arch common stock owned by Arch as treasury stock or owned by Metrocall or any subsidiary of Metrocall immediately prior to the merger will be canceled and cease to exist. The shares of capital stock of Holding Company owned by Metrocall immediately prior to the merger will also be canceled upon completion of the merger.
The number of shares of Holding Company common stock to be issued in the merger and the price to be paid per share in the case of a cash election will be proportionately adjusted for any stock split, reverse
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Metrocall Stockholders Cash Election
Each common stockholder of Metrocall or holder of vested options to acquire Metrocall common stock will have the right to elect to receive cash in exchange for all or any portion of the shares of Metrocall common stock held by him or her or to be held by him or her upon exercise of such options. This includes holders of fully vested options to purchase common stock of Metrocall who exercise their options prior to the merger and also holders of options that vest in connection with the consummation of the merger who have unconditionally and irrevocably committed to exercise such options, subject only to the completion of the merger. Metrocall and Arch have established [ ], 2004 as the deadline by which the exchange agent, [ ], must receive duly executed and completed cash election forms from Metrocall stockholders, although that deadline may be extended by Metrocall, in consultation with Arch, to a later date prior to consummation of the merger. In addition, Metrocall stockholders may revoke their cash election at any time prior to [ ], 2004, or such later date to which the deadline for making the cash election may be extended.
Holders of Metrocall common stock may also be entitled to demand appraisal of their shares prior to the merger, pursuant to the Delaware General Corporation Law, and to be paid the fair value of the shares, as more fully discussed in the section entitled Appraisal Rights beginning on page 73.
Upon completion of the merger, subject to the adjustments in the numbers of shares that are described below:
| each share of Metrocall common stock for which a cash election was submitted by the designated date will be converted into the right to receive $75.00 in cash; and | |
| each remaining share of Metrocall common stock, for which appraisal rights under Delaware law have not been exercised, will be converted into the right to receive 1.876 shares of Holding Company common stock, subject to unanticipated changes in the number of fully diluted shares of common stock of Arch and/or Metrocall prior to completion of the merger. |
A total of two million shares of Metrocall common stock will be exchanged for cash in the merger. If the total number of shares of Metrocall common stock for which a cash election is submitted and not revoked prior to the deadline is greater than two million, then each of the other shares of Metrocall common stock that is not subject to an exercise of appraisal rights under Delaware law will be converted into 1.876 shares of Holding Company common stock. The total number of shares to be exchanged for cash will be reduced to two million by a pro-rata reduction in the number of shares covered by each individual cash election. Each of the two million shares that remain will be converted into the right to receive $75.00 per share in cash, and each of the shares in excess of the two million total, and for which appraisal rights under Delaware law have not been exercised, will be converted into 1.876 shares of Holding Company common stock, subject to unanticipated changes in the number of fully diluted shares of common stock of Metrocall and/or Arch prior to completion of the merger.
If the total number of shares of Metrocall common stock for which cash elections are submitted and not revoked prior to the deadline is less than or equal to two million, then each of those shares will be converted into the right to receive $75.00 in cash. In addition, if there are less than two million of those shares, then a number of shares of Metrocall common stock for which no cash election was submitted will be added to bring the total to two million, by a pro-rata reduction in the number of those shares held by each holder. Each of the shares added to bring the cash election total to two million will also be converted into the right to receive $75.00, and each remaining share of Metrocall common stock will be converted into 1.876 shares of Holding Company common stock, subject to unanticipated changes in the number of fully diluted shares of common stock of Metrocall and/or Arch prior to completion of the merger.
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Exchange of Stock Certificates for Holding Company Stock Certificates
Holding Company has appointed to serve as the exchange and paying agent in connection with the merger. At or prior to the date of the merger, Holding Company will deposit with the exchange agent sufficient cash and certificates representing common stock of Holding Company to make all payment and deliveries required under the merger agreement.
If you are a holder of Metrocall common stock or of vested options to purchase Metrocall common stock, in order to select the form of consideration you will receive in the merger, you must complete and return the enclosed election form to on or before 5:00 p.m., eastern standard time, on the date specified in the election form, as such date may be extended as described above in the section entitled Metrocall Stockholder Cash Election. This date, as may be extended, is referred to as the election deadline. You may indicate that you wish to receive cash in exchange for all or any portion of your shares of Metrocall common stock. Shares as to which no valid or effective form of cash election is received, or shares as to which no cash election is indicated in a form received from the holder, will be deemed not to be subject to a cash election.
You may revoke your election by sending written notice to on or before 5:00 p.m., eastern standard time, on the election deadline. The exchange agent may decide whether forms of election have been properly completed, signed and submitted or revoked and may disregard immaterial defects in forms of election.
Following the election deadline, we will determine the number of shares of Metrocall common stock covered by the properly completed notices that were received. Based on that number, we will calculate the number of shares that were subject to cash election notices that will not be exchanged for cash, or the number of shares not subject to cash election notices that will be exchanged for cash, as the case may be, using procedures described in the section above entitled Metrocall Stockholder Cash Election.
Following the merger, we will instruct the exchange agent to mail, as soon as practicable after the merger, to each holder of record of shares of Metrocall common stock and Arch common stock immediately prior to the merger a letter of transmittal and instructions for use in effecting the surrender of share certificates. Each holder of certificate(s) representing shares of Metrocall common stock or Arch common stock may thereafter surrender those certificate(s) to the exchange agent for a period ending one year after the merger. Upon the valid surrender of certificate(s) representing shares of Metrocall common stock accompanied by a duly executed and completed letter of transmittal and any other documents as may reasonably be required by the exchange agent, the holder of those certificate(s) will be entitled to receive (i) certificate(s) representing 1.876 shares of Holding Company common stock, subject to adjustment for unanticipated changes in the number of fully diluted shares of common stock of Metrocall and/or Arch prior to the completion of the merger, for each share of Metrocall common stock held by the surrendering holder that is not being exchanged for cash; (ii) a check in the amount equal to $75.00 for each share of Metrocall common stock held by the surrendering holder that is being exchanged for cash; and (iii) a check representing the value of any fraction of a single share of Holding Company common stock that results from the conversion of the holders shares of Metrocall common stock after all whole shares have been converted, equal to $75.00 multiplied by such fraction. Upon the valid surrender of certificate(s) representing shares of Arch common stock accompanied by a duly executed and completed letter of transmittal and any other documents as may reasonably be required by the exchange agent, the holder of those certificate(s) will be entitled to receive certificate(s) representing one share of Holding Company common stock for each share of Arch common stock held by the surrendering holder. Until properly tendered, each certificate of Metrocall or Arch common stock represents only a right to receive the applicable merger consideration.
If payment of the merger consideration is to be made to a person other than the person in whose name a surrendered certificate(s) is registered, the surrendered certificate(s) must be properly endorsed or otherwise in proper form for transfer, and all transfer and other taxes due upon transfer must have been paid and such payment must be evidenced to the satisfaction of Holding Company or the exchange agent. The aggregate cash amount received by a holder of Metrocall common stock will be net to the holder, without interest, and will be subject to reduction only for any applicable U.S. federal or other back-up withholding or stock
67
In the event any certificate(s) representing shares of Metrocall or Arch common stock have been lost, stolen, or destroyed, the exchange agent will deliver the merger consideration in exchange for such lost, stolen, or destroyed certificate(s) upon the making of an affidavit of this fact by the holder. In addition, the exchange agent may require the holder to deliver a bond to protect Holding Company in the event that a claim is made against Holding Company with respect to the exchanged certificate(s).
Treatment of Stock Options and Other Equity Based Awards
Treatment of Metrocall Stock Options, Warrants, and Stock Rights |
At the time of the merger, each outstanding option and warrant to purchase common stock of Metrocall will be converted into an option or warrant, as the case may be, to purchase the number of shares of common stock of Holding Company determined by multiplying the number of shares subject to the original option or warrant by 1.876, at an exercise price determined by dividing the exercise price of the original option or warrant by 1.876, and otherwise on the same terms and conditions as were applicable to such Metrocall stock options and warrants. Rights to receive unissued shares of Metrocall common stock pursuant to the Metrocall Plan of Reorganization will become rights to receive, for each share of Metrocall common stock subject to those rights, 1.876 shares of Holding Company common stock, subject to the terms and conditions of the Metrocall Plan of Reorganization. In each case the 1.876 exchange ratio is subject to adjustment for unanticipated changes in the number of fully diluted shares of common stock of Metrocall and/or Arch prior to the merger.
Treatment of Arch Stock Options and Stock Rights |
At the time of the merger, outstanding options to purchase common stock of Arch will be converted into options to purchase the same number of shares of common stock of Holding Company on the same terms and conditions as were applicable to such Arch stock options. Rights to receive any unissued shares (or issued but restricted shares) of Arch common stock pursuant to the Arch Plan of Reorganization will become rights to receive shares of the same number of shares of common stock of Holding Company, subject to the terms and conditions of the Arch Plan of Reorganization or the applicable restricted stock agreement.
Registration Statement |
As soon as reasonably practicable after the merger, Holding Company will file with the SEC a registration statement with respect to the shares of Holding Company common stock subject to options granted in the merger, to the extent required in order for those shares to be sold without restriction. Holding Company will also use its best efforts to maintain the effectiveness of the registration statement for so long as the applicable benefits and grants remain payable and the options remain outstanding.
Redemption of Metrocall Preferred Stock
The merger agreement provides that by the earlier of the record date for the meeting of Metrocall stockholders described in the section entitled Special Meetings and June 30, 2004, Metrocall will:
| redeem, or cause the redemption of, all issued and outstanding shares of Metrocall Preferred Stock; and | |
| defease, or cause the defeasance of, all shares of Metrocall Preferred Stock reserved for issuance under the Metrocall Plan of Reorganization. |
All issued and outstanding Metrocall Preferred Stock were redeemed on May 17, 2004. The unissued shares of Metrocall Preferred Stock that were reserved for issuance under the Metrocall Plan of Reorganization were defeased as of May 17, 2004.
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Prepayment of Arch Subordinated Secured Debt
As of the date of the merger agreement, Arch Wireless Holdings, Inc., a subsidiary of Arch, had outstanding $50 million in aggregate principal amount of 12% Subordinated Secured Compounding Notes due 2009, subject to an indenture dated May 29, 2002, among Arch Wireless Holdings, the guarantors listed in the indenture and The Bank of New York, as trustee. Arch redeemed $10 million of the notes on March 31, 2004, $20 million of the notes on April 30, 2004, and has scheduled the redemption of the remaining outstanding notes for May 28, 2004.
Material United States Federal Income Tax Consequences of the Merger
The following summary discusses the material U.S. federal income tax consequences of the merger to U.S. Holders of Metrocall and Arch.
For purposes of this discussion, a U.S. Holder means:
| a citizen or resident of the United States; | |
| a corporation or other entity taxable as a corporation created or organized under the laws of the United States or any state thereof or in the District of Columbia; | |
| a trust, if (x) a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (y) it has made an election to be treated as a U.S. person; or | |
| an estate that is subject to U.S. federal income tax on its income regardless of its source. |
This discussion is based upon the Internal Revenue Code, Treasury regulations, administrative rulings and judicial decisions currently in effect, all of which are subject to change, possibly with retroactive effect. The discussion assumes that Metrocall stockholders hold their Metrocall common stock and will hold their Holding Company common stock, and that Arch stockholders hold their Arch common stock and will hold their Holding Company common stock, as a capital asset within the meaning of Section 1221 of the Code. Further, the discussion does not address all aspects of U.S. federal income taxation that may be relevant to a particular stockholder in light of his, her or its personal investment circumstances or to stockholders subject to special treatment under the U.S. federal income tax laws, including:
| insurance companies; | |
| tax-exempt organizations; | |
| dealers in securities or foreign currency; | |
| banks or trusts; | |
| stockholders who hold their Metrocall or Arch common stock as part of a straddle, hedge, constructive sale or conversion transaction; | |
| stockholders who have a functional currency other than the U.S. dollar; | |
| investors in pass-through entities; | |
| stockholders who acquired their Metrocall or Arch common stock through the exercise of options or otherwise as compensation or through a tax-qualified retirement plan; or | |
| holders of options granted under any Metrocall or Arch benefit plan. |
Furthermore, this discussion does not consider the potential effects of any state, local or foreign tax laws.
None of Metrocall, Arch or Holding Company has requested a ruling from the United States Internal Revenue Service, referred to also as the IRS, with respect to any of the U.S. federal income tax
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Based upon representation letters, which will be reconfirmed prior to the closing of the merger, (i) it is the opinion of Schulte Roth & Zabel LLP, counsel to Metrocall, that the merger of Metrocall Acquiring Sub into Metrocall will constitute an exchange to which Section 351 of the Code applies, and (ii) it is the opinion of Latham & Watkins LLP, counsel to Arch, that the merger of Arch Acquiring Sub into Arch will constitute an exchange to which Section 351 of the Code applies and/or a reorganization described in Section 368(a) of the Code. The opinions are based on current law and assume that the merger will be consummated as described in this joint proxy statement/prospectus and in accordance with the Merger Agreement and related agreements in their current form. It is a condition to the obligations of both Metrocall and Arch to consummate the merger that they shall have received confirmation, dated the closing date of the merger, of the respective opinions contained in this paragraph. Any change in currently applicable law, which may or may not be retroactive, or any failure of any factual representation or assumption upon which the opinions are based to be true, correct and complete in all material respects, could affect the validity of the tax opinions by Schulte Roth & Zabel LLP and Latham & Watkins LLP.
Treatment of Holding Company, Arch Acquiring Sub, Metrocall Acquiring Sub, Arch and Metrocall |
No gain or loss will be recognized by Holding Company, Arch Acquiring Sub, Metrocall Acquiring Sub, Arch or Metrocall as a result of the merger.
Treatment of the U.S. Holders of Arch Common Stock |
A U.S. Holder of Arch common stock who, pursuant to the merger, exchanges Arch common stock for Holding Company common stock, will not recognize gain or loss upon such exchange. The aggregate adjusted basis of Holding Company common stock received in the merger by a U.S. Holder of Arch common stock will be equal to the aggregate adjusted basis of the U.S. Holders Arch common stock exchanged for that Holding Company common stock. The holding period of Holding Company common stock received in the merger by a U.S. Holder of Arch common stock will include the holding period of the U.S. Holders Arch common stock exchanged for that Holding Company common stock.
Treatment of the U.S. Holders of Metrocall Common Stock |
A U.S. Holder of Metrocall common stock who, pursuant to the merger, exchanges Metrocall common stock for Holding Company common stock, will not recognize gain or loss upon such exchange, except (as described below) in cases in which such holder receives cash (i) pursuant to the exercise of their cash election rights, (ii) pursuant to their appraisal rights, or (iii) in lieu of fractional shares of Holding Company common stock. The aggregate adjusted basis of Holding Company common stock received in the merger by a U.S. Holder of Metrocall common stock will be equal to the aggregate adjusted basis of the U.S. Holders Metrocall common stock exchanged for that Holding Company common stock, reduced by any cash received as a consequence of the exercise of its cash election right and/or in lieu of a fractional share, increased by the amount of gain recognized by such U.S. Holder. The holding period of Holding Company common stock received in the merger by a U.S. Holder of Metrocall common stock will include the holding period of the U.S. Holders Metrocall common stock exchanged for that Holding Company common stock.
Cash Instead of Fractional Shares. The receipt of cash instead of a fractional share of Holding Company common stock by a U.S. Holder of Metrocall common stock will result in taxable gain to such U.S. Holder for U.S. federal income tax purposes to the extent of the lesser of the gain realized in the exchange and the amount of cash received. The gain will constitute capital gain and will constitute long-term capital gain if the U.S. Holders holding period is greater than 12 months as of the date of the merger, also referred to as the Requisite Holding Period. For non-corporate U.S. Holders, this long-term capital gain generally will be taxed at a maximum U.S. federal income tax rate of 15%.
Appraisal Rights. A U.S. Holder of Metrocall common stock who exercises appraisal rights generally will recognize taxable capital gain or loss based upon the difference between the amount of cash received by
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Electing Shares. The U.S. federal income tax consequences to a U.S. Holder of Metrocall common stock exercising such holders cash election right and receiving cash in exchange for any of their shares of Metrocall common stock will depend on whether the holder exchanges his, her or its Metrocall common stock for cash only or a combination of cash and Holding Company common stock. More specifically:
(i) A holder of Metrocall common stock who receives solely cash for all of his, her or its shares will recognize taxable capital gain or loss based upon the difference between the amount of cash received by such U.S. Holder and the U.S. Holders tax basis in the shares of Metrocall common stock exchanged. Such gain or loss will be long-term capital gain or loss if the stock exchanged was held by such U.S. Holder for the Requisite Holding Period. | |
(ii) A U.S. Holder of Metrocall common stock who receives both (x) cash pursuant to such holders cash election right and (y) Holding Company common stock will recognize gain (but no loss) to the extent of the lesser of the gain realized in the exchange and the amount of cash received. Such gain will be capital in nature and long-term capital gain if the stock exchanged was held by such U.S. Holder for the Requisite Holding Period. If the amount of cash received exceeds the amount of gain realized, the excess will reduce the U.S. holders basis in Holding Company common stock received in the merger. |
Backup Withholding. Certain non-corporate Metrocall stockholders may be subject to backup withholding at a 28% rate on cash payments received instead of fractional shares of Holding Company common stock or on cash payments received by shareholders electing to receive cash for their shares of Metrocall common stock. Backup withholding will not apply to a Metrocall stockholder who:
| furnishes a correct taxpayer identification number and certifies that he, she or it is not subject to backup withholding on the substitute Form W-9, or a successor form, included in the letter of transmittal to be delivered to Metrocall stockholders following the date of completion of the merger; | |
| provides a certification of foreign status on Form W-8 or successor form; or | |
| is otherwise exempt from backup withholding. |
Reporting Requirements |
Each U.S. Holder of Arch common stock or Metrocall common stock who receives Holding Company common stock in the merger will be required to retain records and file with such U.S. Holders federal income tax return a statement setting forth certain facts relating to the merger.
This summary does not address tax consequences that may vary with, or are contingent on, individual circumstances. Moreover, the summary does not address any non-income tax or any foreign, state or local tax consequences of the merger. The summary does not address the tax consequences of any transaction other than the merger.
ACCORDINGLY, EACH METROCALL AND ARCH STOCKHOLDER IS STRONGLY URGED TO CONSULT WITH A TAX ADVISOR TO DETERMINE THE PARTICULAR FEDERAL, STATE, LOCAL OR FOREIGN INCOME OR OTHER TAX CONSEQUENCES OF THE MERGER TO THE HOLDER.
Accounting Treatment of the Merger
The merger will be accounted for under the purchase method of accounting for business combinations. See Holding Company Unaudited Pro Forma Condensed Consolidated Financial Statements beginning on page 84.
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Regulatory Matters
Antitrust Authorities |
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, also referred to as the HSR Act, Metrocall and Arch may not merge without first providing notice to and filing certain reports with the federal government, and waiting for a period of time after making those initial filings. Metrocall and Arch filed the required pre-merger notification and reports with the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice on April 5, 2004. Pursuant to inter-agency agreements between FTC and DOJ, the review of telecommunications mergers, such as this one, is handled by DOJ. On May 5, 2004, the DOJ submitted to each of Metrocall and Arch a Request for Additional Information and Documentary Material, also referred to as a second request, thereby extending the statutory pre-merger waiting period until 30 days after Metrocall and Arch substantially comply with this second request, unless the waiting period is terminated earlier or extended with the consent of Metrocall and Arch. Metrocall and Arch are continuing to cooperate with the DOJ as it reviews the merger.
The DOJ could take action under the antitrust laws with respect to the merger, including seeking to enjoin the completion of the merger, seeking the divestiture by Metrocall or Arch of certain assets or lines of business, or seeking to subject the resulting entity to operating conditions. We cannot assure you that an antitrust challenge to the merger will not be made, and, if such a challenge is made, we cannot predict the result.
Federal Communications Commission |
Under the Communications Act of 1934, also referred to as the Act, and various rules and regulations of the Federal Communications Commission, also referred to as the FCC, Metrocall and Arch may not merge without first seeking and receiving the consent of the FCC. In order to obtain the required FCC consent, Metrocall and Arch and certain of their license-holding subsidiaries filed the required applications with the FCC on April 9, 2004 and April 12, 2004. After the merger is complete, Holding Company will file, or cause certain of its subsidiaries to file, additional notifications as required by the FCC.
The FCC must consider whether a proposed combination, such as the one proposed by Metrocall and Arch, would further the public interest before granting its consent to that combination. The FCC may consider various factors in this determination, including the competitive impact that the combination may have on consumers. Additionally, interested parties (which may include our customers and competitors) will have a period of thirty days from the date of an FCC public notice accepting our applications within which to file petitions to deny those applications. The FCC public notice was released on May 10, 2004, and the protest period expires on June 9, 2004. We cannot predict whether, or when, the FCC will grant its consent to the transaction.
One of the conditions to our obligation to complete the merger is that the requisite FCC consents have become final, meaning that no petition for reconsideration, appeal or the like is pending, and that the time for seeking such reconsideration or appeal (and for the FCC to reconsider its consent on its own motion) has expired. We cannot predict whether any parties will oppose our applications or seek reconsideration or appeal of any FCC consent, nor can we predict the outcome of such proceedings.
Restrictions on Sales of Shares by Affiliates of Metrocall and Arch
The shares of Holding Company common stock to be issued in connection with the merger will be registered under the Securities Act of 1933 and will be freely transferable under the Securities Act, except for shares issued to any person who is deemed to be an affiliate of Metrocall or Arch at the time of their respective special meetings. Persons who may be deemed to be affiliates include individuals or entities that control, are controlled by, or are under the common control of either Metrocall or Arch and may include our
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| an effective registration statement under the Securities Act covering the resale of those shares; | |
| an exemption under paragraph (d) of Rule 145 under the Securities Act; or | |
| any other applicable exemption under the Securities Act. |
Holding Companys registration statement on Form S-4, of which this joint proxy statement/ prospectus forms a part, does not cover the resale of shares of Holding Company common stock to be received by affiliates of Metrocall or Arch in the merger.
Metrocall and Arch have agreed to use reasonable best efforts to cause their respective affiliates to agree to comply with the restrictions described above and to take actions to allow such individuals to dispose of these shares pursuant to an exemption under the Securities Act.
NASDAQ National Market Listing of Holding Company Common Stock to be Issued in the Merger
Metrocall and Arch will each use reasonable best efforts to cause to be authorized for listing on the NASDAQ National Market, upon official notice of issuance, the shares of Holding Company common stock to be issued in connection with the merger or to be reserved for issuance in respect of rights existing prior to the merger, including Metrocall options and warrants, Arch options, and rights to receive common stock of Metrocall and Arch in connection with their respective plans of reorganization.
Neither Metrocall nor Arch need complete the merger if the shares of Holding Company common stock issuable in the merger, or those to be reserved for issuance upon exercise of stock options or warrants, have not been authorized for listing on the NASDAQ National Market, upon official notice of issuance.
Appraisal Rights
The following summary of the provisions of Section 262 of the Delaware General Corporation Law is not intended to be a complete statement of the provisions and is qualified in its entirety by reference to the full text of Section 262 of the Delaware General Corporation Law, a copy of which is attached to this joint proxy statement/ prospectus as Annex G and is incorporated into this summary by reference.
Under Delaware law, holders of Metrocall common stock are entitled to appraisal rights under Delaware law. However, Arch stockholders are not entitled to appraisal rights in connection with the merger.
If the Metrocall merger is completed, each holder of Metrocall common stock who (1) files written notice with Metrocall of an intention to exercise rights to appraisal of his, her or its shares prior to the Metrocall special meeting, (2) does not vote in favor of the merger and (3) follows the procedures set forth in Section 262, will be entitled to be paid for his or her Metrocall common stock by the surviving corporation the fair value in cash of the shares of Metrocall common stock. The fair value of shares of Metrocall common stock will be determined by the Delaware Court of Chancery, exclusive of any element of value arising from the merger. The shares of Metrocall common stock with respect to which holders have perfected their appraisal rights in accordance with Section 262 and have not effectively withdrawn or lost their appraisal rights are referred to in this joint proxy statement/prospectus as the dissenting shares.
Within ten days after the effective date of the merger, Metrocall, as the surviving corporation in the Metrocall merger, must mail a notice to all stockholders who have complied with (1) and (2) above notifying such stockholders of the effective date of the merger. Within 120 days after the effective date, holders of Metrocall common stock may file a petition in the Delaware Court of Chancery for the appraisal of their shares, although they may, within 60 days of the effective date, withdraw their demand for appraisal. Within 120 days of the effective date, the holders of dissenting shares may also, upon written request, receive from Metrocall a statement setting forth the aggregate number of shares with respect to which demands for appraisals have been received.
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Appraisal rights are available only to the record holder of shares. If you wish to exercise appraisal rights but have a beneficial interest in shares which are held of record by or in the name of another person, such as a broker or nominee, you should act promptly to cause the record holder to follow the procedures set forth in Section 262 to perfect your appraisal rights.
A demand for appraisal should be signed by or on behalf of the stockholder exactly as the stockholders name appears on the stockholders stock certificates. If the shares are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, the demand should be executed in that capacity, and if the shares are owned of record by more than one person, as in a joint tenancy or tenancy in common, the demand should be executed by or on behalf of all joint owners. An authorized agent, including one or more joint owners, may execute a demand for appraisal on behalf of a record holder; however, in the demand the agent must identify the record owner or owners and expressly disclose that the agent is executing the demand as an agent for the record owner or owners. A record holder such as a broker who holds shares as nominee for several beneficial owners may exercise appraisal rights for the shares held for one or more beneficial owners and not exercise rights for the shares held for other beneficial owners. In this case, the written demand should state the number of shares for which appraisal rights are being demanded. When no number of shares is stated, the demand will be presumed to cover all shares held of record by the broker or nominee.
If any holder of Metrocall common stock who demands appraisal of his or her shares under Section 262 fails to perfect, or effectively withdraws or loses the right to appraisal, his or her shares will be converted into a right to receive a number of shares of Holding Company common stock in accordance with the terms of the merger agreement. Dissenting shares lose their status as dissenting shares if:
| the merger is abandoned; | |
| the dissenting stockholder fails to make a timely written demand for appraisal; | |
| the dissenting shares are voted in favor of the merger; | |
| neither Metrocall nor the stockholder files a complaint or intervenes in a pending action within 120 days after the effective date of the merger; or | |
| the stockholder delivers to Metrocall, as the surviving corporation, within 60 days of the effective date of the merger, or thereafter with Metrocalls approval, a written withdrawal of the stockholders demand for appraisal of the dissenting shares, although no appraisal proceeding in the Delaware Court of Chancery may be dismissed as to any stockholder without the approval of the court. |
Failure to follow the steps required by Section 262 of the Delaware General Corporation Law for perfecting appraisal rights may result in the loss of appraisal rights, in which event a Metrocall stockholder will be entitled to receive the consideration with respect to the holders dissenting shares in accordance with the merger agreement. In view of the complexity of the provisions of Section 262 of the Delaware General Corporation Law, Metrocall stockholders who are considering objecting to the merger should consult their own legal advisors.
Delisting and Deregistration of Metrocall and Arch Common Stock after the Merger
When the merger is completed, Metrocall common stock will be delisted from the NASDAQ Small Cap Market and Arch common stock will be delisted from each of the Boston Stock Exchange and the NASDAQ National Market and each of Metrocall common stock and Arch common stock will be deregistered under the Securities Exchange Act of 1934, also referred to as the Exchange Act.
The Merger Agreement
The following summary of the merger agreement is qualified in its entirety by reference to the complete text of the merger agreement, which is incorporated by reference and attached as Annex A to this joint proxy statement/ prospectus. We urge you to read the full text of the merger agreement.
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Conditions to the Merger. Each of Metrocalls and Archs obligations to complete the merger are subject to the satisfaction or waiver of specified conditions before completion of the merger, including the following:
| the adoption of the merger agreement by an affirmative vote at the Metrocall special meeting of the holders of a majority of the voting power of shares of Metrocall common stock outstanding as of the record date; | |
| the adoption of the merger agreement by an affirmative vote at the Arch special meeting of the holders of a majority of the voting power of shares of Arch common stock outstanding as of the record date; | |
| the declaration of effectiveness of the registration statement on Form S-4, of which this joint proxy statement/ prospectus forms a part, by the Securities and Exchange Commission, and the absence of any stop order or threatened or pending proceedings seeking a stop order; | |
| the approval for listing, by the NASDAQ National Market, of the shares of Holding Company common stock to be issued, or to be reserved for issuance, in connection with the merger, subject to official notice of issuance; | |
| the absence of any statute, rule, regulation or injunction prohibiting completion of the merger; | |
| the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976; | |
| the final approval of the Federal Communications Commission; and | |
| the holders of not more than an aggregate of eight percent of the fully-diluted shares of Metrocall common stock having perfected appraisal rights under Section 262 of the Delaware General Corporation Law. Metrocalls fully diluted shares consists of issued and outstanding shares of Metrocall common stock, together with shares of Metrocall common stock issuable upon exercise of outstanding warrants or options or under Metrocalls plan of reorganization. |
Material Adverse Effect, when used in reference to any entity, means any event, change, circumstance or effect that:
| is or is reasonably likely to be materially adverse to the business, operations, condition (financial or otherwise), assets or liabilities of the entity and its subsidiaries, taken as a whole; or | |
| prevents the entity from complying with its obligations under the merger agreement or the ability of the entity to complete the merger. |
However, any change in the market price or trading volume of the entitys common stock or any failure by the entity to meet internal projections or forecasts or published revenue or earnings predictions shall not be taken into account in determining whether there has been or is a Material Adverse Effect with respect to the entity. In addition, there will be no Material Adverse Effect to the extent that any event, change, circumstance or effect relates:
| to the announcement or pendency of the merger; | |
| to the economy or financial markets in general; | |
| generally to the industries in which the entity operates; | |
| fees and expenses associated with the merger; | |
| payments to officers, employees and others disclosed to the other party on or prior to the date of the merger agreement; | |
| compliance with terms of the merger agreement; | |
| taking any action approved or authorized by the other party; |
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| any change in legal or accounting requirements; or | |
| actions required to be taken under generally applicable laws or agreements. |
Metrocalls obligations to complete the proposed merger are subject to the satisfaction or waiver of the following additional conditions before completion of the merger:
| Arch must have performed in all material respects obligations required to be performed by it under the merger agreement by the date of completion of the merger; | |
| Archs representations and warranties must be true and correct as of the date of the merger agreement and as of the date of completion of the merger, except as would not reasonably be expected to have a Material Adverse Effect; | |
| The absence of any Material Adverse Effect as to Arch between the signing of the merger agreement and the completion of the merger; and | |
| Metrocall must have received from Schulte Roth & Zabel LLP, a written opinion to the effect that for U.S. federal income tax purposes, the merger will constitute an exchange to which Section 351 of the Code applies. |
Archs obligations to complete the proposed merger are subject to the satisfaction or waiver of the following additional conditions before completion of the merger:
| Metrocall must have performed in all material respects obligations required to be performed by it under the merger agreement by the date of completion of the merger; | |
| Metrocalls representations and warranties must be true and correct as of the date of the merger agreement and as of the date of completion of the merger, except as would not reasonably be expected to have a Material Adverse Effect; | |
| The absence of any Material Adverse Effect as to Metrocall between the signing of the merger agreement and the completion of the merger; and | |
| Arch must have received from Latham & Watkins LLP, a written opinion to the effect that for U.S. federal income tax purposes, the merger will constitute an exchange to which Section 351 or Section 368 of the Code applies. |
No Solicitation by Metrocall or Arch; Window Shopping. The merger agreement contains detailed provisions prohibiting Metrocall and Arch from soliciting an alternative transaction, but permits consideration of unsolicited bids consistent with the fiduciary duties of the respective boards of Metrocall and Arch. Under these provisions, each of Metrocall and Arch has agreed that it will not directly or indirectly solicit, initiate, encourage or knowingly facilitate any inquires or the making of a competing transaction. A competing transaction with respect to any party is any of the following involving a business of Metrocall or Arch, as applicable, with net revenues, income or assets of 40% or more of the net revenues, income or assets of such party and its subsidiaries, taken as a whole: (i) any business combination, (ii) any sale or other disposition of 15% or more of its assets, (iii) any tender offer or exchange offer for 15% or more of the outstanding voting securities or (iv) any combination thereof.
In the event that an unsolicited bid is made by a third party to Metrocall or Arch prior to Metrocall or Arch receiving stockholder approval for the proposed merger, respectively, and the board of directors of the recipient of such offer determines that (i) it was not received as a result of violation of the no-solicitation provision, (ii) if completed, it would be a competing transaction, (iii) it is not conditioned on financing unless such financing is highly likely to be obtained in the opinion of the recipients board of directors and (iv) such competing offer would provide greater value to such companys stockholders than the proposed merger, taking the breakup fee payable to the other party under the merger agreement into consideration, then the board would be able to consider and negotiate such competing offer consistent with its fiduciary duties. This provision is subject to the recipient of the competing offers obligation to notify the other party of such competing offer and to wait at least five business days after the other partys receipt of such notice prior to
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Termination. The merger agreement may be terminated at any time prior to the completion of the merger, whether before or after the stockholder approvals have been obtained:
| by mutual written consent of Metrocall and Arch authorized by their respective boards of directors; | |
| by either Metrocall or Arch if the merger is not completed on or before December 31, 2004, also referred to as the drop-dead date, but if all conditions to closing are satisfied or waived and the financing necessary to pay the cash consideration to Metrocall stockholders has not been obtained on terms reasonably acceptable to Metrocall and Arch, then the drop-dead date may be extended for up to 60 days by either party by providing written notice to the other, except that this right to terminate the merger agreement will not be available to any party whose failure to fulfill any obligation under the merger agreement has been the cause of, or has resulted in, the failure of the merger to be completed by December 31, 2004; | |
| by either Metrocall or Arch if any injunction, order or decree of any governmental entity shall have been entered and have become final and nonappealable restraining, enjoining or otherwise prohibiting the merger, provided that the party seeking to terminate must have used its reasonable best efforts to prevent the entry of and to remove such injunction, order or decree; | |
| by Arch, if prior to Metrocall stockholders approval of the merger, the Metrocall board shall have changed its recommendation of the merger or shall have recommended a competing transaction; | |
| by Metrocall, if prior to Arch stockholders approval of the merger, the Arch board shall have changed its recommendation of the merger or shall have recommended a competing transaction; | |
| by either Metrocall or Arch if the merger shall fail to receive either Metrocall stockholders approval or Arch stockholders approval; | |
| by Arch, upon a breach of any representation, warranty, covenant or agreement on the part of Metrocall or if any representation or warranty of Metrocall shall have become untrue, and all such breaches would result, in the case of breaches of representations and warranties, in a Material Adverse Effect as to Metrocall and, in the case of a breach of a covenant or failure to comply with the covenants, a failure by Metrocall to perform in all material respects its obligations under the merger agreement, provided that Metrocall will have 30 days or, if earlier, until the drop-dead date, after receiving notice of such breach to cure; | |
| by Metrocall, upon a breach of any representation, warranty, covenant or agreement on the part of Arch or if any representation or warranty of Arch shall have become untrue, and all such breaches would result, in the case of breaches of representations and warranties, in a Material Adverse Effect with respect to Arch and, in the case of a breach of a covenant or failure to comply with the covenants, a failure by Arch to perform in all material respects its obligations under the merger agreement, provided that Arch will have 30 days or, if earlier, until the drop-dead date, after receiving notice of such breach to cure; | |
| by Metrocall, if prior to Metrocall stockholders approval of the merger, the Metrocall board shall have decided to approve a competing transaction, provided that Arch is given at least five business days notice of such decision and is provided an opportunity to negotiate a more favorable transaction and after such negotiations, if any, the Metrocall board determines that the competing transaction is more favorable, from a financial point of view, to Metrocall stockholders than the proposed merger with Arch; or | |
| by Arch, if prior to Arch stockholders approval of the merger, the Arch board shall have decided to approve a competing transaction, provided that Metrocall is given at least five business days notice of |
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such decision and is provided an opportunity to negotiate a more favorable transaction and after such negotiations, if any, the Arch board determines that the competing transaction is more favorable, from a financial point of view, to Arch stockholders than the proposed merger with Metrocall. |
Termination Fee. The merger agreement requires Metrocall to pay a breakup fee of $12 million in cash to Arch (i) if the merger agreement is terminated by either party because of Metrocalls failure to get the Metrocall stockholders approval and there is a competing Metrocall transaction at the time of such termination that is consummated, or with respect to which there is a definitive agreement, within a year of termination, (ii) if Arch terminates the merger agreement after the Metrocall board changes its recommendation of the merger to Metrocall stockholders or recommends a competing transaction to Metrocall stockholders or (iii) if the Metrocall board approves a competing transaction. The merger agreement requires Arch to pay a breakup fee of $12 million to Metrocall (i) if the merger agreement is terminated by either party because of Archs failure to get the Arch stockholders approval and there is a competing Arch transaction at the time of such termination that is consummated, or with respect to which there is a definitive agreement, within a year, (ii) if Metrocall terminates the merger agreement after the Arch board changes its recommendation of the merger to Arch stockholders or recommends a competing transaction to Arch stockholders or (iii) if the Arch board approves a competing transaction.
Conduct of Business Pending the Merger. Under the merger agreement, each of Metrocall and Arch has agreed that, during the period before completion of the merger, except as expressly contemplated or permitted by the merger agreement, or to the extent that the other party consents in writing, it will carry on its respective business in the ordinary and usual course of business consistent with past practice for the last fiscal year, and will use all reasonable efforts to preserve intact its business organization and goodwill, keep available the services of its present officers and employees and its relationships with third parties, maintain insurance consistent with past practice with financially responsible insurers and comply with all material FCC rules, regulations and requirements and the Exchange Act.
In addition to these agreements regarding the conduct of business generally, each of Metrocall and Arch has agreed to specific restrictions relating to the following:
| the amendment of its certificate of incorporation or by-laws; | |
| the alteration of its capital stock, including, among other things, stock splits, combinations or reclassifications; | |
| the declaration or payment of dividends; | |
| the issuance or sale of its capital stock, any options or warrants on its capital stock or other equity interests; | |
| the acceleration or amendment or change of the period of exercisability or vesting of options, restricted stock or similar awards under employee stock incentive plans or authorize cash payment in respect of such options, stock or award except as required by the terms of such plans; | |
| the incurrence of indebtedness for borrowed money; | |
| the repurchase or redemption of capital stock; | |
| the taking of actions that would prevent or impede the merger from qualifying as an exchange under Section 351 of the Internal Revenue Code; | |
| the acquisition of assets or other entities; | |
| the disposition of assets; | |
| entering into or amending any employment agreement or arrangement with directors, officers or key employees, other than a key employee retention program for Arch employees providing for cash payments not to exceed two million dollars; |
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| increasing the salary of highly paid directors, officers or employees, except as consistent with past practice, pursuant to pre-existing employment arrangements or in connection with new or added responsibilities; | |
| entering into or amending any collective bargaining agreement; | |
| adopting any pension or retirement plan other than in the ordinary course of business consistent with past practice; | |
| making or revoking any material tax elections or making a settlement with any taxing authority; | |
| entering into agreements that limits or otherwise restrict its ability to engage in or compete in any line of business or in any geographic area that would have a Material Adverse Effect; | |
| waiving, releasing, assigning or otherwise compromising any material claims, litigation or arbitration; or | |
| as to Arch, granting or crediting any units under Archs management long-term incentive plan. |
Additional Agreements. Each of Metrocall and Arch has agreed to cooperate with each other and to use its reasonable best efforts to take all actions and do all things necessary, including obtaining all necessary consents and required approvals, proper and advisable under the merger agreement and applicable laws to complete the merger. However, neither Metrocall nor Arch is required to agree to: divest or hold separate any business or assets, the imposition of any conditions, or the payment of material amounts to obtain any consents or approvals required to complete the merger from any governmental authority or third parties. Consistent with applicable legal and regulatory requirements, Metrocall and Arch have further agreed that neither of them shall control the operations of the other prior to completion of the merger.
The merger agreement provides that Vincent D. Kelly will serve as President and Chief Executive Officer of Holding Company. In the event that prior to closing of the merger Mr. Kelly is unable to serve in such capacity, the selection of Mr. Kellys replacement will require the approval of not less than six of the nine individuals selected to serve on the board of directors of Holding Company if the proposed replacement is a current director, officer or employee of Metrocall or Arch. If the proposed replacement is not a current director, officer or employee of Metrocall or Arch, then the selection of such person would be subject to the approval of a simple majority of the slated Holding Company board. Prior to the closing, the merger agreement also provides that Mr. Kelly may select additional individuals to serve as officers of Holding Company and make other decisions regarding the operations of Holding Company, but any such decisions are subject to approval by a majority of the individuals comprising Holding Company board.
Metrocall and Arch have agreed in the merger agreement to negotiate in good faith to restructure the merger to be tax-free in whole or in part under the Code if the merger does not qualify as an exchange to which Section 351 of the Code applies.
Arch has agreed in the merger agreement not to take any action or permit any action to be taken that would cause a change in control under Archs Management Long-Term Incentive Plan or 2002 Stock Incentive Plan, or any related restricted stock agreement or stock option agreement, or provide a basis for any participant in such plans or agreements to believe that a change in control has occurred.
Metrocall and Arch determined the exchange ratios in the merger agreement based on representations made by each of them at the time they executed the merger agreement regarding the then-current, and the anticipated capitalization of Metrocall and Arch at the time of the merger. In the event that there are otherwise more or less shares of Metrocall or Arch issued and outstanding or issuable upon exercise of options and warrants than was anticipated, the exchange ratios will be appropriately adjusted to give effect to such changes, so that Metrocall stockholders, after giving effect to the payment of the cash consideration, will receive 27.5% of Holding Company common stock and Arch stockholders will receive 72.5% of Holding Company common stock, all on a fully diluted basis, as calculated in the merger agreement.
The Metrocall exchange ratio was determined without taking into account 316,007 restricted shares of Arch common stock awarded to ten members of Archs senior management that would otherwise be included
79
We anticipate that Messrs. Baker, Daniels and Pottle will leave the employment of Arch in connection with the merger and that all 184,230 of their restricted shares will be repurchased by Arch at nominal cost immediately prior to closing of the merger. If any of these three executive officers do not resign or are not terminated prior to the earlier of closing of the merger or May 29, 2005, the date on which their restricted shares will no longer be subject to repurchase at nominal cost, or if their shares are not otherwise repurchased by Arch at nominal cost prior to the closing of the merger, the merger agreement provides that the Metrocall exchange ratio will be increased so that former holders of shares and options and warrants for shares of Metrocall common stock would maintain their agreed 27.5% ownership percentage of Holding Company common stock. Assuming all of the restricted shares of these three executive officers remain outstanding immediately prior to the closing, the Metrocall exchange ratio would increase from 1.876 to 1.894. As a result, former holders of shares and options for shares of Arch common stock, other than Messrs. Baker, Daniels and Pottle, would be diluted in their ownership percentage of Holding Company common stock, but together with these three executive officers, would hold their agreed 72.5% ownership percentage of Holding Company common stock.
Metrocall and Arch have agreed in the merger agreement that Metrocall will redeem or defease all of its remaining issued and outstanding shares and shares reserved for issuance of Series A preferred stock and Arch will redeem all of its subsidiarys 12% Subordinated Secured Compounding Notes.
In addition, each of Metrocall and Arch has agreed:
| to cooperate and coordinate with each other and use their reasonable best efforts in order to obtain financing to pay the cash consideration to Metrocall stockholders; | |
| to consult with each other in advance and afford, to the extent permitted by the relevant governmental entity, each other the opportunity to attend and participate in any meeting or discussions with such governmental entity; | |
| that if any litigation is commenced by either Metrocall or Arch, the other party will have the right, at its own expense, to participate and neither party will be permitted to settle any litigation without the consent of the other; | |
| to use reasonable best efforts to have the registration statement on Form S-4 that includes the form of the joint proxy statement/prospectus declared effective, consult with each other, review and comment on and consider the merits of amendments and supplements to such registration statement, obtain consents from auditors and other parties providing reports for inclusion in the registration statement, |
80
advise when such registration statement is declared effective and obtain any requisite blue sky permits and approvals; | ||
| to call and convene meetings of their respective shareholders; | |
| to consult with each other and not release public statements without prior written approval from the other party, except to the extent required by applicable law, and to make members of management available at presentations related to the merger as reasonably requested by the other party; | |
| to provide current and former directors and officers of Metrocall and Arch customary directors and officers indemnification and insurance for six years after closing, and to honor existing directors and officers indemnification agreements in accordance with their terms; | |
| to promptly notify the other in the case of any matter or event that would (i) cause any of its representation or warranties to be untrue at a level of materiality reasonably expected to result in a failure of the applicable closing condition to be satisfied, (ii) result in its failure to comply with any covenant, condition or agreement at a level of materiality reasonably expected to result in a failure of the applicable closing condition to be satisfied, or (iii) would otherwise materially impair the operation of its business; | |
| to use reasonable best efforts to cause shares of Holding Company common stock to be listed on the NASDAQ National Market; and | |
| that the parties shall be entitled to specific performance upon nonperformance of any of the provisions of the merger agreement. |
Amendment, Extension and Waiver. The merger agreement may be amended by the parties, by action taken or authorized by their respective boards of directors, at any time before or after approval of the merger by the stockholders of Metrocall and Arch has been obtained. However, after such approval has been obtained, no amendment may be made except such amendments that have received the requisite approval of the stockholders of Metrocall and Arch and such amendments that are permitted to be made without stockholder approval under the Delaware General Corporation Law. All amendments to the merger agreement must be in writing signed by each party.
At any time before the completion of the merger, the parties may, by action taken or authorized by their respective boards of directors, to the extent legally allowed:
| extend the time for the performance of any of the obligations or other acts of the other parties; | |
| waive any inaccuracies in the representations and warranties contained in the merger agreement or in any document delivered pursuant to the merger agreement; and | |
| waive compliance with any of the agreements or conditions to completion of the merger contained in the merger agreement. |
All extensions and waivers must be in writing and signed by the party against whom the waiver is to be effective.
Expenses. Whether or not the merger is completed, all expenses and fees incurred in connection with the merger agreement and the merger will be paid by the party incurring the expenses or fees, other than:
| the costs and expenses involved in obtaining regulatory approval including from the SEC, FCC and under the HSR Act, which costs and expenses will be shared equally by Metrocall and Arch; | |
| all expenses and fees incurred in connection with the filing, printing and mailing of this joint proxy statement/ prospectus and the registration statement of which it is a part will be shared equally by Metrocall and Arch; and | |
| expenses incurred by a party in successfully seeking a judgment requiring the other party to pay a termination fee will be paid by the party owing the termination fee, with interest. |
81
Representations and Warranties. The merger agreement contains customary representations and warranties that are substantially identical as to both Metrocall and Arch relating to, among other things:
| corporate organization and qualification; | |
| capital structure; | |
| subsidiaries; | |
| authorization, approvals and absence of conflicts; | |
| documents filed with the SEC and financial statements included in those documents; | |
| employee matters; | |
| tax matters; | |
| material contracts and indebtedness; | |
| litigation; | |
| insurance matters; | |
| intellectual property; | |
| interested party transactions; | |
| absence of undisclosed liabilities; | |
| absence of material changes since December 31, 2003; | |
| information supplied in connection with this joint proxy statement/prospectus and the registration statement of which it is a part; | |
| board approval for the merger agreement; | |
| brokers and finders; | |
| opinion of financial advisor; | |
| environmental compliance; | |
| compliance with applicable laws generally; | |
| permits and licenses; | |
| real property; and | |
| applicable state takeover statutes. |
Holding Company Charter and Bylaws
Upon completion of the merger, the amended and restated certificate of incorporation of Holding Company will be in substantially the form set forth in Annex B to this joint proxy statement/ prospectus and the amended and restated bylaws of Holding Company will be substantially in the form set forth in Annex C to this joint proxy statement/ prospectus. For a summary of the material provisions of the amended and restated certificate of incorporation and amended and restated bylaws of Holding Company, and the rights of stockholders of Holding Company under the amended and restated certificate of incorporation and amended and restated bylaws, see the section entitled Description of Holding Company Capital Stock, beginning on page 94.
Holding Company Equity Incentive Plan and Key Employee Retention Program
Key Employee Retention Plans. The merger agreement provides for Holding Company to establish a key employee retention plan to incentivize key employees to remain with Holding Company after completion
82
Holding Company will continue to maintain Metrocalls existing key employee retention plan, also referred to as the KERP, which was established by the Board of Directors of Metrocall in 2001. The KERP also provides for a severance benefit to each covered Metrocall employee in the event that the participants employment is involuntarily terminated by Metrocall, the employee leaves for good reason (generally if Metrocall makes adverse changes to the employees compensation, benefits, or duties or requests the employee to relocate) or dies or becomes disabled during the 36-consecutive months period immediately following a change in control of Metrocall, which occurred on October 8, 2002 in connection with Metrocalls emergence from bankruptcy.
Incentive Compensation Plan. The merger agreement provides for the Holding Company to establish an equity incentive compensation plan for selected directors, officers, and employees to motivate and retain these individuals responsible for the attainment of long-term performance goals for Holding Company. Pursuant to the equity incentive plan, Holding Company will award participants equity based incentives and equity ownership opportunities. Holding Company will also reserve an additional 7% of Holding Company common stock outstanding at the time of the merger for issuance upon completion of the Merger for grants under the equity incentive plan. Holding Company board of directors (or the compensation committee thereof) will determine allocations of equity and other terms and conditions of the equity incentive compensation plan upon or after completion of the merger.
Holding Company will continue to administer Metrocalls 2003 Stock Option Plan upon completion of the merger on its current terms and conditions, except that 1.876 shares of Holding Company common stock will be issued for each share of Metrocall common stock to be issued under such plan at the exercise prices provided under the 2003 Stock Option Plan divided by 1.876 per share for each Holding Company common stock received. In each case, the 1.876 exchange ratio is subject to adjustment for unanticipated changes in the number of fully diluted shares of common stock of Metrocall and/or Arch prior to the completion of the merger. Holding Company will continue to administer Archs 2002 Stock Incentive Plan and Management Long-Term Incentive Plan upon completion of the merger on its current terms and conditions, but no additional awards will be made under these plans.
83
HOLDING COMPANY UNAUDITED PRO FORMA
The following unaudited pro forma condensed consolidated financial statements have been prepared to give effect to the merger of Arch Wireless, Inc. and Metrocall Holdings, Inc. Pursuant to the terms of the merger agreement, Arch Acquisition Sub, Inc. and Metrocall Acquisition Sub, Inc, two wholly-owned subsidiaries of Wizards-Patriots Holdings, Inc. (Holding Company) will merge with and into Arch and Metrocall, respectively. Holding Company presently has no operations and was formed specifically to facilitate the merger transaction. Under the terms of the merger agreement, holders of Arch common stock will receive one share of Holding Company common stock for each common share held of Arch Wireless. Holders of Metrocall common stock will receive consideration totaling $150 million of cash and 7,560,515 shares of Holding Company common stock assuming 1.876 Holding Company shares will be exchanged for each Metrocall share not subject to the cash election. Upon consummation of the merger exchange, former Arch and Metrocall common shareholders will hold approximately 72.5% and 27.5%, respectively, of Holding Companys common stock on a fully diluted basis.
These pro forma financial statements do not purport to be indicative of the consolidated financial position or results of operations for future periods or the results that actually would have been realized had the merger occurred on the dates specified in these pro forma financial statements.
The merger will be accounted for under the purchase method of accounting pursuant to Statement of Financial Accounting Standard (SFAS) No. 141, Business Combinations. Arch Wireless, Inc. has been deemed the accounting acquirer as a result of its former shareholders holding a majority of the common stock of Holding Company following the merger. Accordingly, the basis of Archs assets and liabilities as of the acquisition date will be reflected on the balance sheet of Holding Company at their historical basis. Amounts allocated to Metrocalls assets and liabilities will be based upon the total purchase price and the estimated fair value of such assets and liabilities on the effective date of the merger. The purchase price allocations reflected in the accompanying pro forma condensed consolidated balance sheet were made based upon preliminary estimates and assumptions. The actual amount and allocation of purchase price may differ significantly from the pro forma amounts included herein.
The unaudited pro forma condensed consolidated financial statements, including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with the historical consolidated financial statements and the notes thereto of Arch and Metrocall either included elsewhere herein or incorporated by reference.
The unaudited pro forma condensed consolidated balance sheet was prepared as if the merger occurred on March 31, 2004. The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2003 and for the three months ended March 31, 2004 were prepared as if the merger occurred on January 1, 2003. To prepare the pro forma condensed consolidated statements of operations for the year ended December 31, 2003, Metrocalls historical statement of operations for the year ended December 31, 2003 was combined on a pro forma basis with the historical statement of operations of Weblink Wireless for the period January 1, 2003 to November 17, 2003, as if Metrocall had acquired Weblink on January 1, 2003. Metrocalls historical statement of operations includes the results of operations of Weblink for the period November 18 to December 31, 2003. Refer to Metrocall Holdings, Inc. Weblink Acquired Assets for further information on this pro forma financial information.
84
HOLDING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
85
HOLDING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
86
HOLDING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
87
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
The provisions of SFAS No. 141 require the purchase
price to be allocated to the tangible and intangible assets
acquired and liabilities assumed based upon their estimated fair
values as of the consummation date. The allocation below is
based on management estimates. The actual allocation may differ
significantly from the pro forma amounts included below. The
preliminary calculation of the purchase price, excess of
purchase price over the fair value of identifiable assets
acquired and the allocation of purchase price are as follows (in
thousands):
88
89
90
METROCALL HOLDINGS, INC. WEBLINK ACQUIRED
ASSETS
On November 18, 2003, Metrocall acquired certain assets and
assumed certain of the liabilities of Weblink
Wireless, Inc. and certain of its subsidiaries (the
Weblink Acquired Assets) pursuant to an Asset Purchase
Agreement. Metrocall and Weblink have also entered into a
Management and Spectrum Lease Agreement under which Weblink will
provide certain services and lease to Metrocall the spectrum
usage rights granted under FCC licenses pending the FCCs
approval of the transfer of such licenses to Metrocall. Please
refer to Metrocalls Annual Report on Form 10-K for
the year ended December 31, 2003 for additional
information, which is incorporated herein by reference.
The following unaudited pro forma condensed consolidated
statement of operations has been prepared to give effect to
Metrocalls acquisition of the Weblink Acquired Assets as
if the transaction occurred on January 1, 2003, the
beginning of Metrocalls fiscal year. These pro forma
financial statements do not purport to be indicative of the
consolidated results of operations for future periods or the
results that actually would have been realized had the acquired
assets been consolidated during the specified period. A pro
forma condensed consolidated balance sheet has not been
presented as the Weblink Acquired Assets were included in
Metrocalls historical consolidated balance sheet as of
March 31, 2004. Please refer to Metrocalls Quarterly
Report on Form 10-Q for the three months ended
March 31, 2004, which is incorporated herein by reference.
To prepare the pro forma statement of operations,
Metrocalls statement of operations for the year ended
December 31, 2003, which included the results of operations
of the Weblink Acquired Assets for the period November 18,
2003 to December 31, 2003, was combined with Weblinks
unaudited statements of operations for the period
January 1, 2003 to April 22, 2003 and for the period
April 23, 2003 to November 17, 2003.
The unaudited pro forma condensed consolidated statement of
operations including the notes thereto, are qualified in their
entirety by reference to, and should be read in conjunction with
the historical consolidated financial statements and the notes
thereto of Metrocall which were previously reported in
Metrocalls Annual Report on Form 10-K for the year
ended December 31, 2003, which is incorporated herein by
reference.
91
METROCALL HOLDINGS, INC. WEBLINK ACQUIRED
ASSETS
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
92
METROCALL HOLDINGS, INC. WEBLINK ACQUIRED
ASSETS
NOTES TO THE UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
93
Arch
Metrocall
Pro Forma
Holding Co.
(Historical)
(Historical)
Adjustments
Pro Forma
$
123,659
$
90,713
$
$
214,372
938
940
1,878
38,988
28,827
67,815
9,068
9,283
18,351
31,117
25,618
(1,150
)(11)
55,585
26,309
8,419
32,190
(7)
58,499
(8,419
)(7)
2,938
1,208
4,146
3,018
3,018
112,376
74,295
22,621
209,292
11,283
16,418
(22,621
)
5,080
(3,329
)
(137
)
(3,000
)(8)
(3,137
)
3,329
(8)
(3,214
)
3,214
(8)
168
(58
)
110
8,122
13,009
(19,078
)
2,053
(3,265
)
(5,475
)
7,915
(12)
(825
)
$
4,857
$
7,534
$
(11,163
)
$
1,228
$
0.24
$
0.05
$
0.24
$
0.04
20,000,000
6,495,247
26,311,017
(184,230
)(10)
20,078,213
7,560,515
27,454,498
(184,230
)(10)
Arch
Metrocall
Pro Forma
Holding Co.
(Historical)
(Pro Forma)
Adjustments
Pro Forma
$
597,478
$
417,940
$
$
1,015,418
5,580
9,465
15,045
192,159
132,042
324,201
45,639
45,953
91,592
166,167
112,736
(600
)(11)
278,303
118,917
41,188
128,759
(7)
247,676
(41,188
)(7)
11,420
1,725
13,145
11,481
7,907
19,388
551,363
351,016
86,971
989,350
46,115
66,924
(86,971
)
26,068
(19,788
)
(4,944
)
(12,000
)(8)
(13,461
)
23,271
(8)
(12,428
)
12,428
(8)
551
551
516
286
802
27,394
49,838
(63,272
)
13,960
(425
)
(425
)
26,969
49,838
(63,272
)
13,535
(10,841
)
(26,140
)
31,540
(12)
(5,441
)
$
16,128
$
23,698
$
(31,732
)
$
8,094
$
0.81
$
0.31
$
0.81
$
0.30
20,000,000
6,495,247
26,311,017
(184,230
)(10)
20,034,476
7,560,515
27,410,761
(184,230
)(10)
(1)
To record the issuance of 7,560,515 shares of
$0.0001 par value Holding Company common stock valued at
$28.68 per share and $150 million of debt in exchange
for all of the outstanding common stock and stock equivalents of
Metrocall Holdings, Inc. The per share price was calculated
by taking the average of the closing stock price of Arch common
stock for the seven day period beginning three days before and
ending three days after March 29, 2004, the date the merger
was publicly announced. The amount of debt that will be incurred
to finance the cash election is undetermined at this time, but
may be as much as $150 million depending on the available
cash on hand of Arch and Metrocall at the time of the closing of
the merger.
$
216,868
150,000
10,000
(a)
599
9,449
25,451
14,948
3,599
430,914
9,682
20,163
10,019
57,489
4,772
328,789
(b)
$
430,914
$
(a)
Primarily includes investment banking, legal, accounting and
other costs, which are currently known or have been incurred.
This amount may increase as additional legal, accounting,
printing, financing and other costs are incurred.
(b)
Intangible assets primarily consist of an asset related to
customer relationships, however upon the final purchase price
allocation other identifiable intangible assets may be recorded,
such as FCC licenses, trademarks and tradenames, etc. This
amount and its classification are based upon managements
preliminary estimate and assumptions. If it is later determined
that the fair value of the customer relationships is less than
included above or other intangible assets are identified, the
purchase price allocation could be significantly different than
stated above and any such difference may result in higher or
lower amortization expense than what is reflected on the pro
forma statements of operations. Further, if the purchase price
exceeds the fair value of the identifiable tangible and
intangible assets, any such excess will be classified as excess
of purchase price over the fair value of identifiable assets and
that balance would not be amortizable, which may result in less
amortization expense in future periods.
(2)
The merger agreement requires both Arch and Metrocall to have
fully redeemed their 12% Subordinated Secured Compounding
Notes and Series A Redeemable Preferred Stock,
respectively, prior to consummation of the merger. Arch has
announced the final redemption of its 12% notes will occur
on May 28, 2004 and Metrocall has announced that all
remaining issued and outstanding shares of series A preferred
will be redeemed on May 17, 2004. These balances will be
redeemed utilizing cash on hand and cash generated from the
operations of each company. Consequently, for purposes of these
pro forma financial statements the balances of the series A
preferred and the 12% notes have been reduced to zero and
the cash balance reduced accordingly. Additionally, the related
historical interest expenses have been eliminated.
(3)
To writeoff Metrocall intangible and deferred income tax
balances.
(4)
To eliminate the Metrocall equity balances.
(5)
To record the deferred tax liability and the associated
intangible asset resulting from the excess of purchase price
over tax bases of the net assets acquired. As discussed above,
the purchase price calculation and allocation are preliminary.
SFAS No. 109,
Accounting for Income Taxes
,
requires a deferred tax liability be recorded if the fair value
of the net assets acquired exceeds the tax bases of those assets
excluding any fair value allocated to goodwill (excess of
purchase price over the fair value of identified assets). The
amount recorded assumes the identifiable intangible assets
referred to in note 1 are not goodwill and are amortizable
for tax purposes. If it is later determined that the allocation
of purchase price results in less intangibles and the
recognition of goodwill or if the identified intangibles are not
amortizable for tax purposes, that balance of the assets would
be reduced or removed from the deferred tax assessment and would
likely result in the recording of a lower deferred tax liability.
(6)
To record a restructuring charge in accordance with
SFAS No. 146,
Accounting for Costs Associated with
Exit or Disposal Activities
, related to severance expense
for certain Arch management personnel.
(7)
To remove depreciation and amortization expense related to the
Metrocall tangible and intangible assets and to record
depreciation and amortization expense for the tangible and
intangible assets referred to above on a straight-line basis.
Depreciation and amortization expense was calculated assuming a
three-year average estimated useful life. The three year
estimated useful life assumed to calculate the amortization
expense reflected in the pro forma statements of operations for
the customer relationship asset is consistent with current
practices of both Arch and Metrocall, however, the underlying
characteristics of the customer relationship asset may differ
from past experience which may result in a longer or shorter
estimated useful life. As discussed above, the amount,
classification and estimated useful lives of the tangible and
intangible assets are preliminary and based on management
estimates. If any of these estimates change, the amount of
depreciation and amortization expense could change materially.
(8)
To remove the historical Arch and Metrocall interest expenses
associated with notes and preferred stock since the merger
agreement requires both companies to fully redeem all of their
debt prior to consummation of the merger and to record interest
expense associated with the borrowings to finance the Metrocall
cash election consideration. Interest expense was calculated
using an assumed 8% rate on $150 million of borrowings
resulting in $12 million and $3 million for the year
ended December 31, 2003 and the three months ended
March 31, 2004, respectively.
Interest expense on these borrowings would be as follows if
interest rates were to increase or decrease by 1/8 of a
percent (in thousands):
Three Months
Year Ended
Ended
December 31,
March 31,
Assumed Change In Rate
2003
2004
$
12,188
$
3,047
$
11,813
$
2,953
(9)
Arch has a long-term incentive plan for which compensation
expense is recognized ratably over a 38 month service
period which commenced on January 1, 2003. At
March 31, 2004, other long-term liabilities includes
$4.6 million related to this plan. If it is determined that
a change in control, as defined in the plan, has
occurred, this liability would increase by approximately
$7.1 million due to the vesting provisions of the plan. The
liability at March 31, 2004 was valued at $26.88 per
share, determined in accordance with the plan. The incentive
payable in accordance with this plan is directly attributable to
the performance of Archs common stock. An increase or
decrease of one dollar in the per share price of Archs
common stock will result in increases or decreases of up to
$437,000 for each dollar fluctuation in the total amount payable
in accordance with this plan.
(10)
The shares to be issued to Arch shareholders and the exchange
ratio assume among other things, that 184,230 shares of
Arch restricted stock held by three senior Arch executives will
be repurchased by Holding Company pursuant to the termination
provisions of the restricted stock agreements. If any of these
executives are not terminated prior to completion of the merger,
the number of shares issued to Arch shareholders would increase
which would result in a change in the exchange ratio for
Metrocall shareholders so that Arch and Metrocall shareholders
maintain their approximate 72.5% and 27.5% ownership percentages
of Holding Company, respectively.
(11)
To eliminate legal, accounting and other expenses directly
related to the merger incurred and expensed by Metrocall.
Metrocall expensed these costs since Arch has been deemed the
accounting acquirer.
(12)
To adjust income tax expense to the anticipated effective rate
of approximately 40%.
Weblink Acquired Assets
January 1
April 23 to
Metrocall
to April 22,
November 17,
Pro Forma
Metrocall
Historical
2003
2003
Total
Adjustments
Pro Forma
$
336,859
$
36,592
$
57,892
$
94,484
$
(13,403
)(1)
$
417,940
4,804
2,056
2,605
4,661
9,465
94,098
18,968
32,379
51,347
(13,403
)(1)
132,042
40,025
2,532
3,396
5,928
45,953
93,663
7,668
11,405
19,073
112,736
6,842
337
728
1,065
7,907
1,725
1,725
37,913
4,508
1,176
5,684
(2,409
)(2)
41,188
279,070
36,069
51,689
87,758
(15,812
)
351,016
57,789
523
6,203
6,726
2,409
66,924
(7,099
)
(865
)
(3,511
)
(4,376
)
2,155
(3)
(4,944
)
4,376
(12,428
)
(12,428
)
(8,214
)
(8,214
)
8,214
463
106
(283
)
(177
)
286
38,725
(236
)
(5,805
)
(6,041
)
12,844
49,838
(21,754
)
(4,386
)(4)
(26,140
)
$
16,971
$
(236
)
$
(5,805
)
$
(6,041
)
$
8,458
$
23,698
(1)
Represents the elimination of revenues recorded by Weblink and
expenses incurred by Metrocall for airtime services provided to
Metrocall by Weblink under various operating arrangements.
(2)
Represents the adjustment required to reduce Weblinks
historical depreciation and amortization expenses to the expense
that Metrocall would have recognized for the period had the
transaction occurred on January 1, 2003. Purchase
consideration allocated to fixed assets are being depreciated
over the average useful lives of the various fixed assets
acquired consistent with Metrocalls long-lived asset
accounting policies. Amounts allocated to intangible assets with
definite useful lives are being amortized over such useful lives
estimated to be a 3 year period for customer contracts and
a 5 year period for trademarks and names. Amounts allocated
to intangible assets with an indefinite life such as FCC
licenses are not amortized but tested for impairment on an
annual basis or more frequently if changes in circumstances
indicate that the asset might be impaired. Please refer to the
notes to the consolidated financial statements included in
Metrocalls Annual Report on Form 10-K for the year
ended December 31, 2003.
(3)
Represents the elimination of historical interest expenses of
Weblink as no long-term debt was acquired in the transaction and
the elimination of accretion related to accrued long-term
engineering charges that had been reflected on Metrocalls
balance sheet as of the acquisition date. This obligation was
eliminated as a result of the transaction.
(4)
Represents additional income tax expense based on the results of
the acquired assets for the period at Metrocalls statutory
tax rates.
DESCRIPTION OF HOLDING COMPANY CAPITAL STOCK
This section of the joint proxy statement/ prospectus describes the material terms of the capital stock of Holding Company under the amended and restated certificate of incorporation and amended and restated bylaws that will be in effect upon completion of the merger. This section also summarizes relevant provisions of the Delaware General Corporation Law, which we refer to as Delaware law. The terms of Holding Companys amended and restated certificate of incorporation and bylaws, as well as the terms of Delaware law, are more detailed than the general information provided below. Therefore, you should carefully consider the actual provisions of these documents. Holding Companys amended and restated certificate of incorporation is attached as Annex B to this joint proxy statement/ prospectus, and Holding Companys amended and restated bylaws are attached as Annex C to this joint proxy statement/ prospectus.
Authorized Capital Stock
Total Shares. Holding Company initially will have authority to issue a total of 100,000,000 shares of capital stock consisting of:
| 75,000,000 shares of common stock, par value $0.0001 per share; and | |
| 25,000,000 shares of preferred stock, par value $0.0001 per share. |
Common Stock. Following completion of the merger, we anticipate that approximately 29,600,000 shares of Holding Company common stock will be issued and outstanding or reserved for issuance to holders of outstanding options and warrants or under the equity incentive compensation plan. The board of directors of Holding Company is expressly authorized to provide for the classification and reclassification of any unissued shares of common stock and the issuance thereof in one or more classes or series without the approval of the stockholders of Holding Company.
Preferred Stock. Following completion of the merger, we anticipate that there will be no shares of Holding Company preferred stock outstanding. The board of directors of Holding Company is expressly authorized to provide for the classification and reclassification of any unissued shares of preferred stock and the issuance thereof in one or more classes or series without the approval of the stockholders of Holding Company.
Listing. Holding Company intends to apply to list its common stock on the NASDAQ National Market under the symbol [ ]. No other capital stock of Holding Company will be listed.
Preemptive Rights. The holders of Holding Company common stock or preferred stock will not have preemptive rights to purchase or subscribe for any stock or other securities of Holding Company.
Holding Company Common Stock
Voting Rights. Each outstanding share of Holding Company common stock will be entitled to one vote per share.
Dividends. The holders of record of Holding Company common stock will be entitled to receive dividends, when, as, and if declared by the board of directors of Holding Company, out of any assets legally available for the payment of dividends thereon.
Liquidation Rights. In the event of the dissolution, liquidation or winding up of Holding Company, subject to the rights, if any, of the holders of any outstanding shares of Holding Company preferred stock, holders of record of Holding Company common stock will be entitled to receive the assets of Holding Company available for distribution to its stockholders ratably in proportion to the number of shares held by them.
Regulatory Restrictions. Outstanding shares of Holding Company common stock may be redeemed by action of the board of directors to the extent necessary to prevent the loss of any governmental license or franchise, the holding of which is conditioned upon stockholders possessing prescribed qualifications.
94
Transfer Restrictions. Holding Company will have certain favorable consolidated tax attributes that may be available to offset consolidated taxable income of Holding Company. In order to reduce the possibility that certain changes in ownership could impose limitations on the use of these tax attributes, Holding Companys amended certificate of incorporation contains provisions which generally restrict transfers by or to any 5% shareholder of Holding Company common stock or any transfer that would cause a person or group of persons to become a 5% shareholder of Holding Company common stock. For a more full description of these provisions, see Restrictions on Transfers of Common Stock; Anti-Takeover Considerations Transfer Restrictions, on page 96. Holding Company stockholders are advised to carefully monitor their ownership of Holding Company common stock and consult their own legal advisors and/or Holding Company to determine whether their ownership of Holding Company common stock approaches the proscribed level. All certificates representing Holding Company common stock offered by this prospectus will bear a legend indicating that such shares are subject to such transfer restrictions.
Holding Company Preferred Stock
The board of directors of Holding Company expressly is authorized, subject to limitations prescribed by the Delaware General Corporation Law and the provisions of Holding Company amended and restated certificate of incorporation, to provide, by resolution and by filing a certificate of designations pursuant to the Delaware General Corporation Law, for the issuance from time to time of the shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and other rights of the shares of each such series and to fix the qualifications, limitations and restrictions thereon, including, but without limiting the generality of the foregoing, the following:
| the number of shares constituting that series and the distinctive designation of that series; | |
| the dividend rate on the shares of that series, whether dividends shall be cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of that series; | |
| whether or not that series shall have voting rights, in addition to the voting rights provided by law, and the terms of such voting rights; | |
| whether that series shall have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the board of directors of Holding Company shall determine; | |
| whether or not the shares of that series shall be redeemable, and, if so, the terms and conditions of such redemption, including the dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; | |
| whether that series shall have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund; | |
| the rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of Holding Company, and the relative rights of priority, if any, of payment of shares of that series; and | |
| any other relative powers, preferences, and rights of that series, and qualifications, limitations or restrictions on that series. |
Transfer Agent
The transfer agent and registrar for the capital stock of Metrocall is Equiserve. The transfer agent and registrar for the capital stock of Arch is Equiserve. The transfer agent and registrar for Holding Company capital stock is [ ].
95
Restrictions on Transfers of Common Stock; Anti-Takeover Considerations
Transfer Restrictions
As described in greater detail in Archs Annual Report on Form 10-K for the fiscal year ended December 31, 2003, as of December 31, 2003, Arch had recorded net deferred tax assets of $219.6 million. These tax assets reflect the existence of certain favorable attributes that produce deductions available to offset future taxable income, resulting in higher after-tax cash flow of Arch, which leaves more cash available for dividends, stock repurchase, and other corporate activities. To help preserve its consolidated tax attributes, Holding Companys amended and restated certificate of incorporation provides for restrictions on transfer of Holding Company stock intended to prevent Arch from indirectly experiencing an ownership change, as such term is as defined in section 382 of the Code. After a cumulative indirect ownership change of Arch of more than 45% (as determined by taking into account all relevant transfers of the stock of Arch prior to the merger, including transfers pursuant to the merger) through a transfer of Holding Company common stock, any transfer of Holding Company common stock by or to a 5% shareholder of Holding Company common stock or any transfer that would cause a person or group of persons to become a 5% shareholder of Holding Company common stock, will be prohibited unless the transferee or transferor provides notice of the transfer to Holding Company and the Holding Company board of directors determines in good faith that the transfer (1) would not result in a cumulative indirect ownership change of Arch of more than 47% or (2) would not increase the cumulative indirect ownership change of Arch. Prior to a cumulative indirect ownership change of Arch of more than 45%, transfers of Holding Company common stock will not be prohibited except to the extent that they result in a cumulative indirect ownership change of Arch of more than 47%, but any transfer by or to a 5% shareholder of Holding Company common stock or any transfer that would cause a person or group of persons to become a 5% shareholder of Holding Company common stock requires a notice to Holding Company. Similar restrictions apply to the issuance or transfer of an option to purchase Holding Company common stock if the exercise of the option would result in a transfer that would be prohibited pursuant to the restrictions described above. These restrictions will remain in effect until the earliest of (a) the repeal of Section 382 of the Code (or any comparable successor provision) and (b) the date on which the limitation amount imposed by Section 382 of the Code in the event of an ownership change of Arch would not be less than Archs net operating loss carry forward and net unrealized built-in loss. Transfers by or to Holding Company and any transfer pursuant to a merger approved by the Holding Company board of directors or any tender offer to acquire all of our outstanding stock where a majority of the shares have been tendered will be exempt from these restrictions.
Arch believes that, since its emergence from bankruptcy proceedings, Arch has undergone a cumulative change in ownership of approximately 17.0%, as of March 31, 2004. Assuming consummation of the merger as of that date, Arch believes the resulting cumulative change in ownership would be approximately 39.0%. The determination of this percentage ownership change in dependent on provisions of the tax law that are subject to varying legal and factual interpretations and on facts that are not precisely determinable at this time. Therefore, the cumulative change in ownership, assuming consummation of the merger, may be more or less than 39.0% and, in any event, may increase by reason of transactions in Archs common stock subsequent to March 31, 2004 by Archs 5% shareholders.
Anti-Takeover Considerations
Holding Companys amended and restated certificate of incorporation and amended and restated by-laws will contain a number of provisions which may have the effect of discouraging transactions that involve an actual or threatened change of control of us. For a description of the provisions, see Transfer Restrictions and Comparison of Rights of Holding Company Stockholders, Metrocall Stockholders and Arch Stockholders State Anti-takeover Statutes.
Under the Delaware business combination statute, a corporation is prohibited from engaging in any business combination with an interested stockholder who, together with its affiliates or associates, owns, or who is an affiliate or associate of the corporation and within a three-year period did own, 15% or more of the
96
| prior to the time the stockholder became an interested stockholder, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; | |
| the interested stockholder owned at least 85% of the voting stock of the corporation, excluding specified shares, upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder; or | |
| at or subsequent to the time the stockholder became an interested stockholder, the business combination is approved by the board of directors of the corporation and authorized by the affirmative vote, at an annual or special meeting and not by written consent, of at least 66 2/3% of the outstanding voting shares of the corporation, excluding shares held by that interested stockholder. |
A business combination generally includes:
| mergers, consolidations and sales or other dispositions of 10% or more of the assets of a corporation to or with an interested stockholder; | |
| specified transactions resulting in the issuance or transfer to an interested stockholder of any capital stock of the corporation or its subsidiaries; and | |
| other transactions resulting in a disproportionate financial benefit to an interested stockholder. |
The provisions of the Delaware business combination statute do not apply to a corporation if, subject to requirements set forth in the statute, the certificate of incorporation or by-laws of the corporation contain a provision expressly electing not to be governed by the provisions of the statute or the corporation does not have voting stock listed on a national securities exchange, authorized for quotation on an inter-dealer quotation system of a registered national securities association or held of record by more than 2,000 stockholders.
Neither Metrocall nor Arch has adopted any provision in its certificate of incorporation or by-laws to opt out of the Delaware business combination statute and the statute is applicable to business combinations involving Metrocall or Arch. At the effective time of the merger, Holding Company will not have adopted any provision in its amended and restated certificate of incorporation or by-laws to opt-out of the Delaware business combination statute and the statue will be applicable to business combinations involving Holding Company.
Repurchase of Shares of Holding Company Common Stock upon Certain Events
Under its 2002 Stock Incentive Plan, Arch has issued 950,000 shares to certain members of Arch management. On May 29, 2003, 316,999 shares vested and 316,999 and 316,002 shares will vest on May 29, 2004 and May 29, 2005, respectively, subject to adjustment. Any unvested shares granted under the 2002 Stock Incentive Plan are subject to repurchase by Arch under the applicable restricted stock agreement at the issue price of $0.001 per share if the employment of an employee entitled to such grant is terminated for any reason. In the case of Archs three most senior executives, Archs right to repurchase these executives restricted stock expires upon a change in control as defined in the restricted stock agreements between Arch and each of these officers. Generally, Archs repurchase option expires 45 days after termination of the applicable employees employment. See the discussion of change in control under Risk Factors, beginning on page 27. At the effective time, the shares issued under the 2002 Stock Incentive Plan will be converted into shares of Holding Company common stock subject to the restrictions, including possible repurchase by Holding Company at a nominal price, that were applicable to them prior to the merger.
97
Indemnification of Current and Former Officers and Directors of Metrocall and Arch
Limitations of Personal Liability of Directors and Officers |
General. Delaware law provides that a corporation may include in its certificate of incorporation a provision limiting or eliminating the liability of its directors to the corporation and its stockholders for monetary damages arising from a breach of fiduciary duty, except for:
| a breach of the duty of loyalty to the corporation or its stockholders; | |
| acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; | |
| payment of a dividend or the repurchase or redemption of stock in violation of Delaware law; or | |
| any transaction from which the director derived an improper personal benefit. |
Metrocall. The Metrocall amended and restated certificate of incorporation provides that no director of Metrocall will be liable to Metrocall or its stockholders for monetary damages for breach of fiduciary duty as a director, except in the circumstances described in the first paragraph of this Limitation of Personal Liability of Directors and Officers.
Arch. The Arch restated certificate of incorporation provides that, to the fullest extent Delaware law permits the limitation or elimination of the liability of directors, no director of Arch will be liable to Arch or its stockholders for monetary damages for breach of fiduciary duty as a director.
Holding Company. The Holding Company amended and restated certificate of incorporation will provide that, to the fullest extent Delaware law permits the limitation or elimination of the liability of directors, no director of Holding Company will be liable to Holding Company or its stockholders for monetary damages for breach of fiduciary duty as a director.
Indemnification of Directors and Officers |
General. Under Delaware law, a corporation generally may indemnify directors and officers:
| for actions taken in good faith and in a manner they reasonably believed to be in, or not opposed to, the best interests of the corporation; and | |
| with respect to any criminal proceeding, they had no reasonable cause to believe that their conduct was unlawful. |
In addition, Delaware law provides that a corporation may advance to a director or officer expenses incurred in defending any action upon receipt of an undertaking by the director or officer to repay the amount advanced if it is ultimately determined that he or she is not entitled to indemnification.
A corporation subject to Delaware law may also purchase and maintain insurance on behalf of directors, officers, employees, and agents, even if that corporation would not have the power under Delaware law to indemnify such persons under the particular liability insured against.
Metrocall. The Metrocall amended and restated certificate of incorporation and amended and restated by-laws provide that any person who was or is a party or is threatened to be a party to, or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, because that person is or was a director or officer, or is or was serving at the request of Metrocall as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, will be indemnified and held harmless by Metrocall to the fullest extent permitted by Delaware law. The indemnification rights conferred by Metrocall are not exclusive of any other right to which persons seeking indemnification may be entitled under any statute, Metrocalls amended and restated certificate of incorporation or amended and restated by-laws, any agreement, vote of stockholders or disinterested directors or otherwise. Metrocall is authorized to purchase and maintain insurance on behalf of its directors and officers.
98
In addition, Metrocall may pay expenses incurred by its directors and officers in defending a civil or criminal action, suit or proceeding because they are directors or officers in advance of the final disposition of the action, suit or proceeding. The payment of expenses will be made only if Metrocall receives an undertaking by or on behalf of a director or officer to repay all amounts advanced if it is ultimately determined that the director or officer is not entitled to be indemnified by Metrocall, as authorized by Metrocalls amended and restated certificate of incorporation and amended and restated by-laws.
Arch. The Arch restated certificate of incorporation provides that any person who was or is a party or is threatened to be a party to, or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, because that person is or was a director or officer, or is or was serving at the request of Arch as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, will be indemnified and held harmless by Arch to the fullest extent permitted by Delaware law. The indemnification rights conferred by Arch are not exclusive of any other right to which persons seeking indemnification may be entitled under any statute, Archs amended and restated by-laws, any agreement, vote of stockholders or disinterested directors or otherwise. Arch is authorized to purchase and maintain insurance on behalf of its directors and officers.
In addition, Arch may advance expenses incurred by its directors and officers in defending a civil or criminal action, suit or proceeding because they are directors or officers in advance of the final disposition of the action, suit or proceeding. The payment of expenses will be made only if Arch receives an undertaking by or on behalf of a director or officer to repay all amounts advanced if it is ultimately determined that the director or officer is not entitled to be indemnified by Arch, as authorized by Archs restated certificate of incorporation.
Holding Company. The Holding Company amended and restated certificate of incorporation and amended and restated by-laws will provide that any person who was or is a party or is threatened to be a party to, or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, because that person is or was a director or officer, or is or was serving at the request of Holding Company as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, will be indemnified and held harmless by Holding Company to the fullest extent permitted by Delaware law. The indemnification rights conferred by Holding Company are not exclusive of any other right to which persons seeking indemnification may be entitled under any statute, Holding Companys amended and restated certificate of incorporation or amended and restated by-laws, any agreement, vote of stockholders or disinterested directors or otherwise. Holding Company is authorized to purchase and maintain insurance on behalf of its directors and officers.
In addition, Holding Company may advance expenses incurred by its directors and officers in defending a civil or criminal action, suit or proceeding because they are directors or officers in advance of the final disposition of the action, suit or proceeding. The payment of expenses will be made only if Holding Company receives an undertaking by or on behalf of a director or officer to repay all amounts advanced if it is ultimately determined that the director or officer is not entitled to be indemnified by Holding Company, as authorized by Holding Companys amended and restated certificate of incorporation and amended and restated by-laws. Holding Companys amended and restated by-laws will provide for indemnification of current and former directors and officers of Metrocall and Arch, and their respective subsidiaries, as described in The Merger Interests of Certain Metrocall Directors and Executive Officers in the Merger and Interests of Certain Arch Directors and Executive Officers in the Merger.
99
FINANCING FOR CASH ELECTION
Metrocall and Arch expect to obtain financing of up to $150 million prior to consummation of the merger, depending on the available cash on hand of Metrocall and Arch at the time of the consummation of the merger, in order to fund the payment of the cash election consideration to Metrocall stockholders. Metrocall and Arch believe at this time that such financing can be obtained on commercially reasonable terms, and have jointly determined not to incur the fees and costs associated with obtaining financing commitments before further progress is made in obtaining required regulatory and stockholder approvals for the merger. However, events or circumstances causing harm to the businesses and results of operations of Metrocall or Arch, the messaging industry generally, the debt capital markets or other unanticipated conditions may result in our failure to obtain financing sufficient to complete the transaction on terms acceptable to us or at all.
100
COMPARISON OF RIGHTS OF HOLDING COMPANY STOCKHOLDERS,
Holding Company, Metrocall and Arch are all organized under the laws of the State of Delaware. Any differences, therefore, in the rights of holders of Holding Company capital stock, Metrocall capital stock, and Arch capital stock arise primarily from differences in their respective restated certificates of incorporation, restated by-laws, and rights agreements. Upon completion of the merger, holders of Metrocall capital stock and holders of Arch capital stock will become holders of Holding Company capital stock and their rights will be governed by Delaware law, the Holding Company amended and restated certificate of incorporation, also referred to as the certificate of incorporation, and the Holding Company amended and restated by-laws, also referred to as the by-laws.
This section of the joint proxy statement/prospectus describes the material differences between the rights of Metrocall stockholders and Arch stockholders. This section also includes a description of the material rights that Holding Company stockholders are expected to have following completion of the merger, although in some cases the board of directors of Holding Company retains the discretion to alter those rights without stockholder consent. This section does not include a complete description of all differences among the rights of these stockholders, nor does it include a complete description of the specific rights of these stockholders. In addition, the identification of some of the differences in the rights of these stockholders as material is not intended to indicate that other differences that are equally important do not exist. All Metrocall stockholders and Arch stockholders are urged to read carefully the relevant provisions of Delaware law, as well as the amended and restated certificate of incorporation of Metrocall, the restated certificate of incorporation of Arch and the amended and restated certificate of incorporation of Holding Company and amended and restated by-laws of each of Metrocall, Arch, and Holding Company, also referred to as the by-laws.
Copies of the forms of the certificate of incorporation and the by-laws for Holding Company are attached to this joint proxy statement/ prospectus as Annexes B and C, respectively. Copies of the amended and restated certificate of incorporation of Metrocall and the restated certificate of incorporation of Arch and amended and restated by-laws of Metrocall and Arch will be sent to Metrocall stockholders and Arch stockholders, as applicable, upon request. See Where You Can Find More Information beginning on page 123.
101
Capitalization
Voting Rights
102
Number and Election of Directors
103
Vacancies on the Board of Directors and Removal of
Directors
Delaware law provides that if, at the time of the filling of any
vacancy or newly created directorship, the directors then in
office constitute less than a majority of the authorized number
of directors, the Delaware Court of Chancery may, upon
application of any stockholder or stockholders holding at least
10% of the outstanding stock of the corporation having the right
to vote for such directors, order an election to be held to fill
the vacancy or replace the directors selected by the directors
then in office.
Delaware law also provides that, except in the case of a
classified board of directors or where cumulative voting
applies, a director, or the entire board of directors, of a
corporation may be removed, with or without cause, by the
affirmative vote of a majority of the shares of the corporation
entitled to vote at an election of directors.
104
Amendments to the Certificate of Incorporation
Under Delaware law, an amendment to the certificate of
incorporation of a corporation requires the approval of the
corporations board of directors and the approval of
holders of a majority of the outstanding stock entitled to vote
upon the proposed amendment, unless a higher vote is required by
the corporations certificate of incorporation.
105
Amendments to By-laws
Under Delaware law, stockholders entitled to vote have the power
to adopt, amend, or repeal by-laws. In addition, a corporation
may, in its certificate of incorporation, confer this power on
the board of directors. The stockholders always have the power
to adopt, amend, or repeal the by-laws, even though the board
may also be delegated the power.
106
Action by Written Consent
Delaware law provides that, unless otherwise stated in the
certificate of incorporation, any action which may be taken at
an annual meeting or special meeting of stockholders may be
taken without a meeting, if a consent in writing is signed by
the holders of the outstanding stock having the minimum number
of votes necessary to authorize the action at a meeting of
stockholders.
Ability to Call Special Meetings
Notice of Stockholder Action
107
108
109
110
111
Limitation of Personal Liability of Directors and Officers
Delaware law provides that a corporation may include in its
certificate of incorporation a provision limiting or eliminating
the liability of its directors to the corporation and its
stockholders for monetary damages arising from a breach of
fiduciary duty, except for:
Restrictions on Transfer of Stock
112
Indemnification of Directors and Officers
Under Delaware law, a corporation generally may indemnify
directors, officers, employees, and agents (including in respect
of expenses in any successful defense by an officer or director):
In addition, Delaware law provides that a corporation may
advance to a director or officer expenses incurred in defending
any action upon receipt of an undertaking by the director or
officer to repay the amount advanced if it is ultimately
determined that he or she is not entitled to indemnification.
A corporation subject to Delaware law may also purchase and
maintain insurance on behalf of directors, officers, employees,
and agents, even if the corporation would not have the power
under Delaware law to indemnify such persons under the
particular liability insured against.
113
114
115
State Anti-Takeover Statutes
Under the business combination statute of Delaware law, a
corporation is prohibited from engaging in any business
combination with an interested stockholder who, together with
its affiliates or associates, owns, or who is an affiliate or
associate of the corporation and within a three-year period did
own, 15% or more of the corporations voting stock for a
three-year period following the time the stockholder became an
interested stockholder, unless:
A business combination generally includes:
The provisions of the Delaware business combination statute do
not apply to a corporation if, subject to certain requirements,
the certificate of incorporation or by-laws of the corporation
contain a provision expressly electing not to be governed by the
provisions of the statute or the corporation does not have
voting stock listed on a national securities exchange,
authorized for quotation on an inter-dealer quotation system of
a registered national securities association or held of record
by more than 2,000 stockholders.
116
MANAGEMENT OF HOLDING COMPANY
Board of Directors of Holding Company
Members of Holding Company Board of Directors.
Upon
completion of the merger, the board of directors of Holding
Company will be comprised of nine individuals, four of whom were
designated by Metrocall, four of whom were designated by Arch
and the ninth director, David C. Abrams, a representative
of Abrams Capital, a significant shareholder of Arch, who was
proposed by Arch and endorsed by the Boards of Directors of both
Metrocall and Arch.
The affirmative vote of a majority of the members of the board
of directors of Holding Company will be required to change the
size of Holding Company board of directors.
To date, Metrocall and Arch have designated the individuals set
forth below to be directors of Holding Company upon completion
of the merger.
Royce Yudkoff.
Mr. Yudkoff has been a director of
Metrocall since April 1997 and has served as chairman since
February 2003. Mr. Yudkoff is the Managing Partner of ABRY
Partners, LLC, a private equity investment firm which focuses
exclusively on the media and communications sector. Prior to
co-founding ABRY in 1989, Mr. Yudkoff was a partner at
Bain & Company, an international management consultancy
firm where he shared responsibility for Bains media
practice. Mr. Yudkoff serves on the board of directors of
Muzak, LLC and Nexstar Broadcasting Group. Mr. Yudkoff was
a director of Metrocall at the time of its filing of a petition
under Chapter 11 of the Bankruptcy Code.
David C. Abrams.
Mr. Abrams is a managing member of
Abrams Capital, LLC, an investment firm whose affiliates are
stockholders of Arch, a position he has held since November
1998. Mr. Abrams has also been a director of Global
Signal, Inc. since October 2002. Affiliates of Abrams
Capital, LLC are stockholders of Global Signal. Because Global
Signal is a major supplier of both Metrocall and Arch,
Mr. Abrams will recuse himself from any discussion or
decision by the Holding Company board on matters relating to
Global Signal.
James V. Continenza.
Mr. Continenza has been a
director of Arch since 2002. Mr. Continenza has been the
president and chief executive officer since September 2002 of
Teligent, Inc., a provider of fixed-wireless broadband
services that filed for bankruptcy protection in May 2001.
Mr. Continenza also currently serves as a director of
Teligent, Inc. Mr. Continenza was the chief operating
officer of Teligent, Inc. from May 2001 to September 2002
and its senior vice president of strategic operations from
September 2000 to May 2001. Prior to his tenure with
Teligent, Inc., Mr. Continenza was the chief executive
officer of Lucent Technologies Product Finance, which was a
division of The CIT Group, Inc., a financial services
company, from April 1999 to September 2000 and was senior vice
president worldwide sales and marketing of Lucent
Technologies Product Finance from September 1997 to April 1999.
Vincent D. Kelly.
Mr. Kelly was appointed President
and CEO of Metrocall on February 5, 2003. Prior to assuming
this role, Mr. Kelly was the Chief Operating Officer, Chief
Financial Officer, and Executive Vice
117
Matthew Oristano.
Mr. Oristano has been a director
of Arch since 2002. Mr. Oristano has been the president and
chief executive officer of Alda Inc., an investment management
company, since 1995. Since 2004, Mr. Oristano has also
served as chairman of the board of Reaction Biology Corp., a
private biotech firm. Mr. Oristano was the chairman of the
board and chief executive officer of Peoples Choice TV
Corp., a wireless communications company, from April 1993 to
September 1999.
William E. Redmond, Jr.
Mr. Redmond has been a
director of Arch since 2002. Mr. Redmond served as
president and chief executive officer from December 1996 to
February 2003 and as chairman of the board from January 1999 to
February 2003 of Gardenway, Inc., a manufacturer of outdoor
garden and power equipment that filed for bankruptcy protection
in July 2001 in order to facilitate a sale of substantially all
of its assets in August 2001. Mr. Redmond has also been a
director of Gentek, Inc. since October 2003.
Richard A. Rubin.
Mr. Rubin has been a director of
Arch since 2002. Mr. Rubin has been the president of
Hawkeye Capital Management LLC, a provider of investment
management services, since November 1999. Mr. Rubin was
engaged in organizing Hawkeye Capital Management LLC between
July 1998 and November 1999 and was a principal at MHR Advisors
LLC from January 1997 to July 1998.
[ ]
[ ]
Committees of Holding Company Board of Directors
Upon completion of the merger, the board of directors of Holding
Company initially will have three committees:
The Audit Committee of the board of directors of Holding Company
will be initially comprised of one director designated by
Metrocall, one director designated by Arch and David C. Abrams.
The Compensation Committee of the board of directors of Holding
Company will be initially comprised of one director designated
by Metrocall and two directors designated by Arch. The
Nominating and Governance Committee of the board of directors of
Holding Company will be initially comprised of two directors
designated by Metrocall and two directors designated by Arch.
Each of such committees will prepare and present its charter for
the approval of the board of directors of Holding Company. The
affirmative vote of a majority of the members of the board of
directors of Holding Company will be required to modify the
powers and authority of any committee of Holding Companys
board of directors. In addition, Holding Companys board of
directors may remove a director from any committee, change the
size of any committee or terminate any committee or change the
chair of a committee only with the affirmative vote of not less
than a majority of the members of Holding Companys board
of directors.
118
Metrocall
Arch
Holding Company
The authorized capital stock of Metrocall
consists of:
7,500,000 shares of Metrocall common stock;
8,500,000 shares of Metrocall preferred stock,
originally designated as Series A preferred stock, of which
all issued outstanding shares and shares reserved for issuance
were redeemed or defeased, as applicable, on May 17, 2004.
The authorized capital stock of Arch consists
of:
50,000,000 shares of Arch common stock; and
50,000,000 shares of Arch Class A common
stock.
For a description of the authorized capital stock
of Holding Company, see
Description of Holding Company
Capital Stock Authorized Capital Stock.
Metrocall
Arch
Holding Company
Holders of Metrocall common stock are entitled to
cast votes equal in the aggregate to 100% of all votes.
Each holder of Arch common stock and Arch
Class A common stock has the right to cast one vote for
each share of Arch stock held of record on all matters submitted
to a vote of stockholders of Arch, including the election of
directors.
Holders of Holding Company common stock will have
the right to cast votes that in the aggregate constitute 100% of
all votes that would be cast if all holders entitled to vote
attended the meeting in question and voted. The percentage of
the total votes to be cast by holders of Holding Company common
stock is subject to change by the board of directors upon
issuance of any series of preferred stock, in which case each
holder of common stock will have the right to cast the number of
votes equal to his or her pro rata portion of the percentage of
votes to be cast by holders of common stock in the aggregate.
Metrocall
Arch
Holding Company
The board of directors of Metrocall consists of
seven members. The number of directors is to be fixed from time
to time by the board.
Nomination of directors and their terms are as follows:
the secured lenders that were party to
Metrocalls predecessors secured credit facility
prior to its reorganization under Chapter 11 of the
Bankruptcy Code were entitled to nominate four of the seven
directors, the Senior Lenders Directors, all of whom serve
one-year terms;
the ad hoc committee formed by certain holders of
senior subordinated notes issued by Metrocalls predecessor
prior to its reorganization was entitled to nominate one of the
seven directors, the Noteholders Director, who serves a
three-year term ending at the time of Metrocalls annual
meeting in 2005;
the secured lenders and the ad hoc committee were
entitled to collectively, by mutual consent, nominate one of the
seven directors, the Independent Director, who also serves a
three- year term ending at the time of Metrocalls annual
meeting in 2005; and
the seventh director nominee is Metrocalls
Chief Executive Officer.
Regular elections of directors are held at each annual meeting
of the corporation.
The board of directors of Arch currently has
eight members.
The Arch board of directors consists of a number of directors to
be fixed from time to time by the Arch board of directors, but
in no event will it consist of fewer than three directors.
Directors are elected at each annual meeting for one-year terms.
If a quorum exists, directors are elected by a plurality of
votes cast.
Archs restated certificate of incorporation does not
provide for cumulative voting.
The board of directors of Holding Company
initially will consist of nine members, four of whom will be
designated by Arch, four of whom will be designated by Metrocall
and one of whom was proposed by Arch and endorsed by the boards
of directors of both Metrocall and Arch. The Holding Company
amended and restated by-laws provide that the Holding Company
board of directors will consist of a number of directors to be
fixed from time to time by the Holding Company board of
directors, but will not be less than three in any event.
All directors hold office until the next annual meeting of the
corporations stockholders.
All directors are elected at each annual meeting by such
stockholders by a plurality of the votes cast by Holding Company
stockholders entitled to vote in the election of directors at a
meeting at which a quorum is present.
Holding Companys amended and restated certificate of
incorporation will not provide for cumulative voting.
Metrocall
Arch
Holding Company
According to Metrocalls certificate of
incorporation, any vacancy in the board resulting from any
above-discussed removal or otherwise will be filled for the
unexpired term only by vote of a majority of the directors then
in office, even though less than a quorum. According to the
by-laws, vacancies and newly created directorships will be
filled for the remainder of the term as follows:
if the vacancy is for the
Noteholders Director, it will be filled by majority of the
noteholders or their successors;
if the vacancy is for a Senior
Lenders Director, it will be filled by majority of the remaining
Senior Lenders Directors; and
if the vacancy is for the
Independent Director, it will be filled by mutual consent of the
senior lenders and the noteholders committee.
Any director may be removed from office at any time, but
only:
for cause, which is defined as:
conduct as a director of Metrocall or any subsidiary
involving dishonesty of a material nature;
non-minor criminal conduct
that relates to the performance of the directors duties; or
Vacancies and newly created directorships
resulting from an increase in the authorized number of directors
are to be filled by a vote of the majority of remaining
directors then in office, and the new directors shall serve
until the next annual meeting.
Any director may be removed from office, with or without cause,
by the affirmative vote of the holders of a majority of the
then- outstanding shares of stock entitled to vote generally in
the election of directors, except that directors elected by the
holders of a majority of the outstanding shares of a particular
class or series of stock may be removed without cause only by a
majority of the holders of that class or series.
Any vacancy in the board of directors, however
occurring, including a vacancy resulting from an enlargement of
the board, will be filled only by vote of a majority of the
directors then in office, although less than a quorum, or by a
sole remaining director. A director elected to fill a vacancy is
elected for the unexpired term of the directors
predecessor in office, and a director chosen to fill a position
resulting from an increase in the number of directors holds
office until the next annual meeting of stockholders and until a
successor is elected and qualified, or until the directors
earlier death, resignation or removal.
Any or all of the directors may be removed, with or without
cause, by the holders of a majority of the shares then entitled
to vote at an election of directors, except that the directors
elected by the holders of a particular class or series of stock
may be removed without cause only by vote of the holders of a
majority of the outstanding shares of such class or series.
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Arch
Holding Company
only by the affirmative vote, at a
special meeting of the stockholders called for such a purpose,
of not less than 66 2/3% of the total number of outstanding
shares entitled to vote generally in the election of directors,
voting together as a single class, but only if notice of such a
proposal was contained in the notice of the meeting.
Metrocall
Arch
Holding Company
Metrocalls certificate of incorporation
provides that the affirmative vote of the holders of
66 2/3% or more of the combined voting power of the then
outstanding shares of Metrocall voting stock, voting together as
a single class, is required to amend or repeal, or adopt a
provision inconsistent with, the provisions of Metrocalls
restated certificate of incorporation relating to:
the board of directors, including
election, removal, and limitation of liability;
the manner in which stockholder
action may be effected;
restrictions on transfers of stock
that may affect treatment under Section 382 of the Internal
Revenue Code;
compromises or arrangements with
creditors or stockholders;
Archs certificate of incorporation provides
that the affirmative vote of the holders of at least a majority
of the votes which all the stockholders would be entitled to
cast in any annual election of directors or class of directors
are required to amend or repeal, or to adopt any provision
inconsistent with the existing provisions regarding:
amendments to the by-laws and
special meetings of the stockholders.
Holding Companys certificate of
incorporation provides that the affirmative vote of the holders
of at least a majority of the votes which all the stockholders
would be entitled to cast in any annual election of directors or
class of directors are required to amend or repeal, or to adopt
any provision inconsistent with the existing provisions
regarding:
amendments to the by-laws and
special meetings of the stockholders.
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Arch
Holding Company
amendments to the by-laws.
Metrocall
Arch
Holding Company
Metrocalls stockholders may adopt, amend,
or repeal the by-laws through the affirmative vote of the
majority of the shares present or represented by proxy and
entitled to vote, voting together as a single class.
Metrocalls board of directors is authorized to adopt,
amend, and repeal the by-laws, provided that by-laws adopted by
the board may be amended or repealed by stockholders. A majority
of the directors is required to take such action, except that
five of the seven directors must affirmatively vote for the
following special amendments:
any change to the size or
composition of the board;
any change to the provisions
requiring that the initial Noteholders Director and the initial
Independent Director serve a three-year initial term;
any change to the provisions
requiring five of the seven members to vote to give effect to
certain transactions;
any change to the by-law amendment
provisions; and
any amendment or change to the stock
transfer restrictions with respect to the common stock effective
during the two-
The Arch board of directors may adopt, amend,
alter, or repeal any provision of Archs by-laws by the
affirmative vote of a majority of the total number of authorized
directors present at any meeting where there is a quorum.
The Holding Company board of directors has the
power to amend or repeal any by-law adopted by the stockholders,
and any by-law adopted by the board of directors may be amended
or repealed by the stockholders as well as by the directors,
either by stockholders at any meeting, by vote of a majority of
the shares present, or by the board of directors by a vote of a
majority of the directors; except that:
amendment of the provision of the
by-laws regarding authority and selection of the chief executive
officer of Holding Company can be amended only by the
affirmative vote of two- thirds of the directors; and
the provision of the by-laws
regarding indemnification of officers, directors, employees, and
agents may not be amended within six years of the merger.
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Arch
Holding Company
Metrocall
Arch
Holding Company
The Metrocall certificate of incorporation and
by-laws require that any stockholder action by written consent
be unanimous, and the writings reflecting the consent are
included in the corporations minute book.
The Arch certificate of incorporation contains no
restriction on stockholders rights under Delaware law. The
by-laws provide that if action by written consent is to elect
directors, and the consent is not unanimous, then the action is
effective only if all board seats that could be filled by a vote
of stockholders at an annual meeting are then vacant, and all
the seats are filled by the stockholder action by consent.
The Holding Company certificate of incorporation
contains no restriction on stockholders rights under
Delaware law. The by-laws provide that if action by written
consent is to elect directors, and the consent is not unanimous,
then the action is effective only if all board seats that could
be filled by a vote of stockholders at an annual meeting are
then vacant, and all the seats are filled by the stockholder
action by consent.
Metrocall
Arch
Holding Company
Special meetings of the stockholders may be
called by the chairman, a majority of the directors (whether or
not a quorum), or the holders of not less than thirty-five
percent of the total number of votes of outstanding shares of
stock entitled to vote generally in the election of directors,
voting together as a single class. Business that may be
transacted at a special meeting of stockholders is limited to
the purposes stated in the notice.
Special meetings of Arch stockholders may be
called by Archs board of directors, the chairman of the
board, the vice chairman, the chief executive officer or
president of the corporation, or by holders of twenty-five
percent of the outstanding stock of the corporation.
The Holding Company restated by-laws provide that
special meetings of stockholders may be called at any time by
the holders of twenty-five percent of the outstanding stock of
the corporation, by a majority of the members of the board of
directors (whether or not constituting a quorum), by the
chairman of the board of directors, or by the chief executive
officer. Business transacted at any special meeting of
stockholders is limited to matters relating to the purposes
stated in the notice of the meeting.
Metrocall
Arch
Holding Company
Under the Metrocall by-laws, at any annual
meeting of stockholders, stockholders
Under the Arch by-laws, notices of nominations
for directors may be made by stockholders as
Under the Holding Company by- laws, notices of
nominations for directors may be made by
Metrocall
Arch
Holding Company
The stockholders notice must also contain the following
information
a brief description of the business desired to be
brought before the annual meeting and the reason for conducting
such business at the annual meeting,
the name and address of the stockholder,
the class and number of shares of Metrocall that he
or she beneficially owns,
any material interest of the stockholder in the
business proposed to be conducted at the annual meeting; and
the same information for any stockholder that, to
the proposing stockholders knowledge, supports the
proposal.
follows: to be timely, a stockholders
notice must be received by the secretary at the principal
executive offices of the corporation as follows:
in the case of an election of directors at an annual
meeting of stockholders, not less than sixty days nor more than
ninety days prior to the first anniversary of the preceding
years annual meeting; provided, however, that
in the case of the annual meeting of stockholders of
the corporation to be held in 2003 or in the event that the date
of the annual meeting in any other year is advanced by more than
twenty days, or delayed by more than sixty days, from the first
anniversary of the preceding years annual meeting, a
stockholders notice must be received not earlier than the
ninetieth day prior to such annual meeting and not later than
the close of business on the later of (i) the sixtieth day
prior to such annual meeting and (ii) the tenth day
following the day on which notice of the date of such annual
meeting was mailed or public disclosure of the date of such
annual meeting was made, whichever occurs first; or
in the case of an election of directors at a special
meeting of stockholders, not earlier than the ninetieth day
prior to such special meeting and not later than the close of
business on the later of (i) the sixtieth day prior to such
special meeting and (ii) the tenth day following the day on
which notice of the date of such special meeting was mailed or
public disclosure of the date of such special meeting was made,
whichever occurs
stockholders as follows: to be timely, a
stockholders notice must be received by the secretary at
the principal executive offices of the corporation as
follows:
in the case of an election of directors at an annual
meeting of stockholders, not less than sixty days nor more than
ninety days prior to the first anniversary of the preceding
years annual meeting; provided, however, that
in the case of the annual meeting of stockholders of
the corporation to be held in 2005 or in the event that the date
of the annual meeting in any other year is advanced by more than
twenty days, or delayed by more than sixty days, from the first
anniversary of the preceding years annual meeting, a
stockholders notice must be received not earlier than the
ninetieth day prior to such annual meeting and not later than
the close of business on the later of (i) the sixtieth day
prior to such annual meeting and (ii) the tenth day
following the day on which notice of the date of such annual
meeting was mailed or public disclosure of the date of such
annual meeting was made, whichever occurs first; or
in the case of an election of directors at a special
meeting of stockholders, not earlier than the ninetieth day
prior to such special meeting and not later than the close of
business on the later of (i) the sixtieth day prior to such
special meeting and (ii) the tenth day following the day on
which notice of the date of such special meeting was mailed or
public disclosure of the date of such special meeting was made,
whichever occurs
Metrocall
Arch
Holding Company
first.
The proposal must contain the following information for each
nominee:
age, name, business and residence address;
principal occupation or employment;
class and numbers of shares of stock of the
corporation beneficially owned by the nominee; and
any other information that would be required to be
disclosed regarding nominees in proxy solicitations under
Regulation 14A of the Securities Exchange Act of 1934, or
that is requested by the corporation and reasonably needed to
determine the nominees eligibility.
The proposal also must contain the following information
regarding the stockholder submitting the nominations:
name and address as they appear on the
corporations books;
class and numbers of shares of stock of the
corporation beneficially and of record by the nominating
stockholder;
a description of any arrangements or understandings
between the nominating stockholder and any nominees or any other
person on whose behalf the nomination is made; and
a representation that the nominating stockholder
intends to appear in person or by proxy at a meeting to nominate
the person named.
The proposal also must contain the following information
regarding any beneficial owner on whose behalf the nomination is
made:
first.
The proposal must contain the following information for each
nominee:
age, name, business and residence address;
principal occupation or employment;
class and numbers of shares of stock of the
corporation beneficially owned by the nominee; and
any other information that would be required to be
disclosed regarding nominees in proxy solicitations under
Regulation 14A of the Securities Exchange Act of 1934, or
that is requested by the corporation and reasonably needed to
determine the nominees eligibility.
The proposal also must contain the following information
regarding the stockholder submitting the nominations:
name and address as they appear on the
corporations books;
class and numbers of shares of stock of the
corporation beneficially and of record by the nominating
stockholder;
a description of any arrangements or understandings
between the nominating stockholder and any nominees or any other
person on whose behalf the nomination is made; and
a representation that the nominating stockholder
intends to appear in person or by proxy at a meeting to nominate
the person named.
The proposal also must contain the following information
regarding any beneficial owner on whose behalf the nomination is
made:
Metrocall
Arch
Holding Company
name and address;
class and numbers of shares of stock of the
corporation beneficially owned; and
a description of any arrangements or understandings
between the beneficial owner and any nominees or any other
person on whose behalf the nomination is made.
The nomination must also be accompanied by the written consent
of the person being nominated.
Proposals of other business to be conducted at annual meetings
may be made by stockholders as follows: To be timely, a
stockholders notice must be received by the Secretary at
the principal executive offices of the corporation not less than
60 days nor more than 90 days prior to the first
anniversary of the preceding years annual meeting;
provided, however, that (i) in the case of the annual
meeting of stockholders of the corporation to be held in 2003 or
(ii) in the event that the date of the annual meeting in
any other year is advanced by more than 20 days, or delayed
by more than 60 days, from the first anniversary of the
preceding years annual meeting, a stockholders
notice must be so received not earlier than the ninetieth day
prior to such annual meeting and not later than the close of
business on the later of (A) the sixtieth day prior to such
annual meeting and (B) the tenth day following the day on
which notice of the date of such annual meeting was mailed or
public disclosure of the date of such annual meeting was made,
whichever occurs first.
The notice to the secretary must
name and address;
class and numbers of shares of stock of the
corporation beneficially owned; and
a description of any arrangements or understandings
between the beneficial owner and any nominees or any other
person on whose behalf the nomination is made.
The nomination must also be accompanied by the written consent
of the person being nominated.
Proposals of other business to be conducted at annual meetings
may be made by stockholders as follows: To be timely, a
stockholders notice must be received by the Secretary at
the principal executive offices of the corporation not less than
sixty days nor more than ninety days prior to the first
anniversary of the preceding years annual meeting;
provided, however, that (i) in the case of the annual
meeting of stockholders of the corporation to be held in 2005 or
(ii) in the event that the date of the annual meeting in
any other year is advanced by more than twenty days, or delayed
by more than sixty days, from the first anniversary of the
preceding years annual meeting, a stockholders
notice must be so received not earlier than the ninetieth day
prior to such annual meeting and not later than the close of
business on the later of (A) the sixtieth day prior to such
annual meeting and (B) the tenth day following the day on
which notice of the date of such annual meeting was mailed or
public disclosure of the date of such annual meeting was made,
whichever occurs first.
Metrocall
Arch
Holding Company
contain the following for each matter to be
brought before the meeting:
a brief description of the business to be brought
before the annual meeting and the reasons for doing so;
the name and address of the proposing stockholder as
they appear on the corporations books and of the
beneficial owner, if any, on whose behalf the proposal is
made;
the classes and numbers of shares of Arch stock
owned by the foregoing;
a description of any arrangements or understandings
between the stockholder or beneficial owner and any other person
in connection with the proposal and any interest of the
proposing stockholder or beneficial owner in the business
proposed; and
a representation that the stockholder intends to
appear in person or by proxy at the annual meeting to propose
the business.
Any stockholder proposal that complies with the requirements of
Rule 14a-8 of the proxy rules under the Securities Exchange
Act of 1934 is deemed to comply with the corporations
requirements.
The notice to the secretary must contain the
following for each matter to be brought before the meeting:
a brief description of the business to be brought
before the annual meeting and the reasons for doing so;
the name and address of the proposing stockholder as
they appear on the corporations books and of the
beneficial owner, if any, on whose behalf the proposal is
made;
the classes and numbers of shares of Holding Company
stock owned by the foregoing;
a description of any arrangements or understandings
between the stockholder or beneficial owner and any other person
in connection with the proposal and any interest of the
proposing stockholder or beneficial owner in the business
proposed; and
a representation that the stockholder intends to
appear in person or by proxy at the annual meeting to propose
the business.
Any stockholder proposal that complies with the requirements of
Rule 14a-8 of the proxy rules under the Securities Exchange
Act of 1934 is deemed to comply with the corporations
requirements.
a breach of the duty of loyalty to the corporation or its
stockholders;
acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
payment of a dividend or the repurchase or redemption of stock
in violation of Delaware law; or
any transaction from which the director derived an improper
personal benefit.
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Arch
Holding Company
The Metrocall certificate of incorporation
provides for limitation in accordance with the relevant
provision of Delaware law, by restating the substance of the
provisions.
The Arch certificate of incorporation provides
that, except to the extent that Delaware law prohibits the
limitation or elimination of the liability of directors for
breach of fiduciary duty, no director of Arch will be liable to
Arch or its stockholders for monetary damages for breach of
fiduciary duty as a director.
The Holding Company certificate of incorporation
provides that, except to the extent that Delaware law prohibits
the limitation or elimination of the liability of directors for
breach of fiduciary duty, no director of Holding Company will be
liable to Holding Company or its stockholders for monetary
damages for breach of fiduciary duty as a director.
Metrocall
Arch
Holding Company
The restrictions contained in Metrocalls
certificate of incorporation have lapsed as of January 1,
2004.
In order to avoid an ownership change
as such term is defined in Section 382 of the Code and
preserve certain tax attributes, the certificate of
incorporation provides for certain restrictions on the transfer
of the corporations Class A common stock, based on
the total cumulative percentage ownership change of Arch
securities, including shares exchanged in the merger and shares
transferred to or from all 5% shareholders prior to or after any
such transfer, since Arch emerged from bankruptcy.
Such restrictions may be waived by Holding Companys board
of directors with respect to a particular transfer if it
determines in good faith that such transfer would not result in
a 42% ownership change, as such term is defined in
Section 382 of the Code (but substituting 42% for 50%), or
a greater change in ownership than existed prior to such
transfer.
In order to avoid an ownership change
as such term is defined in Section 382 of the Code and
preserve certain of its consolidated tax attributes, the
certificate of incorporation provides for certain restrictions
on the transfer of the corporations common stock, based on
the total cumulative percentage ownership change of Arch
securities prior to the merger, including shares exchanged in
the merger and shares transferred to or from all 5% shareholders
prior to or after any such transfer, since Arch emerged from
bankruptcy, plus any transfers of Holding Company common stock
following the merger.
Such restrictions may be waived by Holding Companys board
of directors with respect to a particular transfer if it
determines in good faith that such transfer would not result in
a 47% ownership change, as such term is defined in
Section 382 of the Code (but substituting 47% for
Metrocall
Arch
Holding Company
50%), or a greater change in ownership than
existed prior to such transfer.
for actions taken in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interests of the
corporation; and
with respect to any criminal proceeding where they had no
reasonable cause to believe that their conduct was unlawful.
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Arch
Holding Company
Metrocalls certificate of incorporation
provides for indemnification, to the extent permitted by law, of
any person who is or is threatened to be made a party to
litigation by reason of being a director, officer, employee, or
agent of Metrocall (or at Metrocalls request of another
entity).
The indemnification rights conferred by Metrocall are not
exclusive of any other right which persons seeking
indemnification may be entitled under any statute,
Metrocalls amended and restated certificate of
incorporation or amended and restated by-laws, any agreement,
vote of stockholders or disinterested directors or otherwise.
Metrocall is authorized to purchase and maintain insurance on
behalf of its directors and officers.
Metrocall may also advance expenses:
incurred by a director or officer in defending a
civil or criminal action for which he or she may
Archs restated certificate of incorporation
expressly provides for indemnification that is identical in
terms of the persons covered and the types of liability
indemnified against that are provided for under Delaware law.
The indemnification rights conferred by Arch are not exclusive
of any other right which persons seeking indemnification may be
entitled under any statute, Archs amended and restated by-
laws, any agreement, vote of stockholders or disinterested
directors or otherwise. Arch is authorized to purchase and
maintain insurance on behalf of its directors and officers.
The corporation also indemnifies the indemnitees against
expenses occurred in successfully defending an action or
appealing an adverse decision. A successful defense or appeal
includes one in which there has not been:
an adjudication that the indemnitee was liable to
the Corporation,
Holding Companys certificate of
incorporation expressly provides for indemnification that is
identical in terms of the persons covered and the types of
liability indemnified against that are provided for under
Delaware law.
The indemnification rights conferred by Holding Company are not
exclusive of any other right which persons seeking
indemnification may be entitled under any statute, Holding
Companys amended and restated certificate of incorporation
or amended and restated by-laws, any agreement, vote of
stockholders or disinterested directors or otherwise. Holding
Company is authorized to purchase and maintain insurance on
behalf of its directors and officers.
The corporation also indemnifies the indemnitees against
expenses occurred in successfully defending an action or
appealing an adverse decision. A successful defense or appeal
includes one in which there has not been:
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Arch
Holding Company
incurred by an employee or agent of Metrocall upon
such terms and conditions as the board deems appropriate.
a plea of guilty or nolo contendere
by the indemnitee,
an adjudication that the indemnitee did not act in
good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation;
or
with respect to any criminal proceeding, an
adjudication that the indemnitee had reasonable cause to believe
his conduct was unlawful.
Arch also will advance to a director or officer expenses
incurred in defending any action upon receipt of an undertaking
by the director or officer to repay the amount advanced if it is
ultimately determined that he or she is not entitled to
indemnification. In order to obtain an advance, the party
seeking indemnity must submit a request accompanied by available
information that can be used to determine whether the party is
entitled to indemnity by Arch. Expenses will not be advanced if
Arch determines that (i) the party seeking indemnification
did not act in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of
Arch, or (ii) with respect to any criminal action or
proceeding, the party had reasonable cause to believe his
conduct was unlawful. The determination will be made
by a majority vote of the directors of Arch
consisting of persons who are not at that time parties to the
action, suit, or proceeding in question, whether or not a
quorum,
by a majority vote of a committee of such directors
designated by a majority vote of such directors, whether or not
a quorum,
an adjudication that the indemnitee
was liable to the Corporation,
a plea of guilty or nolo contendere by the
indemnitee,
an adjudication that the indemnitee did not act in
good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation;
or
with respect to any criminal proceeding, an
adjudication that the indemnitee had reasonable cause to believe
his conduct was unlawful.
Holding Company also will advance to a director or officer
expenses incurred in defending any action upon receipt of an
undertaking by the director or officer to repay the amount
advanced if it is ultimately determined that he or she is not
entitled to indemnification. In order to obtain an advance, the
party seeking indemnity must submit a request accompanied by
available information that can be used to determine whether the
party is entitled to indemnity by Holding Company. Expenses will
not be advanced if Holding Company determines that (i) the
party seeking indemnification did not act in good faith and in a
manner he or she reasonably believed to be in, or not opposed
to, the best interests of Holding Company, or (ii) with
respect to any criminal action or proceeding, the party had
reasonable cause to believe his conduct was unlawful. The
determination will be made
by a majority vote of the directors of Holding
Company consisting of persons who are not at that time parties
to the action, suit, or proceeding in question, whether or not a
quorum,
Metrocall
Arch
Holding Company
if there are no directors who are not
parties to the proceeding in question, or if such directors so
direct, by independent legal counsel (who may, to the extent
permitted by law, be regular legal counsel to Arch) in a written
opinion, or
by the stockholders of Arch.
Arch will not indemnify any person otherwise entitled to
indemnification in connection with a proceeding initiated by
that person, unless it was approved by the Arch board of
directors. Also, Arch will not indemnify a person to the extent
reimbursed from the proceeds of insurance (and will be
reimbursed for indemnity for losses that are subsequently
covered).
Arch may purchase and maintain insurance to protect itself and
any director, officer, partner, employee, trustee or agent of
Arch or another entity losses or liabilities incurred in such
capacity or arising out of such status, whether or not Arch
would have the power to indemnify such person against such
liability or loss under Delaware law.
by a majority vote of a committee of
such directors designated by a majority vote of such directors,
whether or not a quorum,
if there are no directors who are not parties to the
proceeding in question, or if such directors so direct, by
independent legal counsel (who may, to the extent permitted by
law, be regular legal counsel to Holding Company) in a written
opinion, or by the stockholders of Holding Company.
Holding Company will not indemnify any person otherwise entitled
to indemnification in connection with a proceeding initiated by
that person unless it was approved by the Holding Company board
of directors. Also, Holding Company will not indemnify a person
to the extent reimbursed from the proceeds of insurance (and
will be reimbursed for indemnity for losses that are
subsequently covered).
Holding Company may purchase and maintain insurance
to protect itself and any director, officer, partner, employee,
trustee or agent of Holding Company or another entity losses or
liabilities incurred in such capacity or arising out of such
status, whether or not Holding Company would have the power to
indemnify such person against such liability or loss under
Delaware law.
prior to the time the stockholder became an interested
stockholder, the board of directors of the corporation approved
either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder;
the interested stockholder owned at least 85% of the voting
stock of the corporation, excluding specified shares, upon
consummation of the transaction which resulted in the
stockholder becoming an interested stockholder; or
at or subsequent to the time the stockholder became an
interested stockholder, the business combination is approved by
the board of directors of the corporation and authorized by the
affirmative vote, at an annual or special meeting and not by
written consent, of at least 66 2/3% of the outstanding
voting shares of the corporation, excluding shares held by that
interested stockholder.
mergers, consolidations and sales or other dispositions of 10%
or more of the assets of a corporation to or with an interested
stockholder;
specified transactions resulting in the issuance or transfer to
an interested stockholder of any capital stock of the
corporation or its subsidiaries; and
other transactions resulting in a disproportionate financial
benefit to an interested stockholder.
Metrocall
Arch
Holding Company
Because Metrocall has not adopted any provision
in its restated certificate of incorporation to
opt-out of the Delaware business combination
statute, the statute is applicable to business combinations
involving Metrocall.
Because Arch has not adopted any provision in its
restated certificate of incorporation to opt-out of
the Delaware business combination statute, the statute is
applicable to business combinations involving Arch.
Because the Holding Company restated certificate
of incorporation will not include any provision to
opt-out of the Delaware business combination
statute, the statute will apply to business combinations
involving Holding Company.
Name
Age
48
43
41
44
48
44
40
[
]
[
]
an audit committee, the chairperson of which will initially be
designated by Holding Company board of directors;
a compensation committee, the chairperson of which will
initially be designated by Holding Company board of
directors; and
a nominating and governance committee, the chairperson of which
will initially be designated by Holding Company board of
directors.
Compensation of Directors
In accordance with existing practice of Metrocall and Arch, it
is expected that directors of Holding Company who are also
full-time employees of Holding Company will receive no
additional compensation for their services as directors. Each
non-employee director of Holding Company will receive
compensation for service on Holding Company board of directors
as determined by the board of directors of Holding Company upon
the recommendation of the compensation committee.
Executive Officers of Holding Company
The principal executive officers of Holding Company upon
completion of the merger will be as follows:
For information regarding Mr. Kelly, see
Board of Directors of Holding Company,
beginning on page 117.
Compensation of Executive Officers
Holding Company has not yet paid any compensation to its chief
executive officer or any other person expected to become an
executive officer of Holding Company. With the exception of
Mr. Kellys employment agreement with Holding Company,
which will be executed at the closing of the merger, the form
and amount of the compensation to be paid to each of Holding
Companys executive officers in any future period will be
determined by the compensation committee of Holding Company
board of directors.
Mr. Kelly is party to an employment agreement with
Metrocall and its subsidiary, Metrocall, Inc., dated as of
February 5, 2003, as amended.
On March 25, 2004, in connection with the proposed merger
of Metrocall and Arch Wireless, Inc., the Metrocall board
approved an amendment to Mr. Kellys February 5,
2003 employment agreement that:
The one million dollars cash bonus is in lieu of any other
payments with respect to the merger and was conceived by the
Metrocall board as a suitable replacement for the change of
control payment under Mr. Kellys employment
agreement. Because no new capital would be invested as a result
of Metrocalls merger with Arch as originally conceived,
the Metrocall Board had committed to considering a suitable
replacement for the change of control payment in
Mr. Kellys employment agreement at the time that the
Board had authorized Metrocalls efforts to pursue the
merger with Arch in September 2003.
Upon and subject to completion of the merger of Metrocall and
Arch, Mr. Kelly and Holding Company will enter into a new
employment agreement and Mr. Kellys existing
employment agreement with Metrocall will be terminated. The new
agreement will be for an initial term of three years commencing
on the date of consummation of the merger and provide for an
annual salary of $600,000 for Mr. Kelly. For the remainder
of calendar year 2004, Mr. Kelly will be entitled to a
minimum bonus of $530,000 payable in February 2005, provided
that certain performance targets previously set by the
compensation committee of the Metrocall Board are met. For
subsequent calendar years, Mr. Kelly will be eligible for
an annual bonus of up to 200% of his base salary based on
achievement of certain performance targets to be set by Holding
Companys board of directors or the compensation committee
thereof.
119
Mr. Kellys employment agreement with Holding Company
will also provide for certain payments upon termination of his
employment. If Mr. Kellys employment is terminated by
reason of death or disability, Holding Company will pay
Mr. Kelly (or his legal representatives), his base salary
through the remaining term of his employment agreement payable
in a lump sum. If Mr. Kelly is terminated without cause or
if Mr. Kelly terminates his employment for good reason
(generally if Holding Company makes adverse changes to
Mr. Kellys compensation, benefits, or duties or
requests that he relocate), Mr. Kelly would receive the
following:
If Mr. Kellys employment is terminated by Holding
Company without cause or by Mr. Kelly for good reason in
connection with a change of control, Mr. Kelly
will be entitled to reimbursement for any applicable excise
taxes paid.
For more information concerning the compensation paid to the
other two most highly compensated executive officers of
Metrocall for the 2003 fiscal year, see Amendment No. 1 to
Metrocalls Annual Report on Form 10-K for the fiscal
year ended December 31, 2003, filed April 29, 2004.
For more information concerning the compensation paid to, and
the employment agreements with, the chief executive officer and
the other four most highly compensated executive officers of
Arch for the 2003 fiscal year, see Amendment No. 1 to
Archs Annual Report on Form 10-K for the fiscal year
ended December 31, 2003, filed April 29, 2004.
Integration Working Group
An integration working group composed of Metrocall and Arch
personnel has been formed to work toward a smooth and rapid
combination of the two companies. The group will make its
recommendations to Mr. Kelly and Mr. Redmond. All such
recommendations shall be made solely in contemplation of the
completion of the merger, and any integration planning shall be
in compliance with all applicable laws and FCC and DOJ rules and
regulations.
120
Name
Age
Title
44
President and Chief Executive Officer
approved and ratified a bonus payment of $530,000 for meeting
performance targets previously set by the Board for fiscal year
2004 ahead of schedule in fiscal year 2003, which was paid in
January 2004;
provided for a guaranteed minimum bonus payment of $530,000,
payable in February 2005, provided that certain performance
targets established by Metrocalls board of directors for
the 2004 calendar year are met; and
provided for a cash bonus of one million dollars, upon the
completion of the merger with Arch.
an amount equal to his full base salary for the greater of two
years and the remaining term of his employment agreement;
an amount equal to the annual bonus paid or payable to
Mr. Kelly with respect to the prior annual period;
reimbursement of the cost of continuation of group health
coverage for the greater of two years and the remaining term of
his employment agreement; and
full vesting of any equity compensation and the lapse of all
restrictions with respect to any restricted stock granted to
Mr. Kelly.
LEGAL MATTERS
Certain legal matters in connection with this merger have been passed upon for Metrocall by Schulte Roth & Zabel LLP, New York, New York. Venable LLP, Washington, D.C. has advised Metrocall with respect to certain legal matters relating to telecommunications regulations. Certain legal matters in connection with this merger have been passed upon for Arch by Latham & Watkins LLP, Washington, D.C.
EXPERTS
The consolidated balance sheet of Metrocall at December 31, 2003 and December 31, 2002, and the related consolidated statements of operations, stockholders equity/ (deficit) and cash flows for the year ended December 31, 2003, the period from October 8, 2002 through December 31, 2002, and the period from January 1, 2002 through October 7, 2002 (Predecessor Company), and the financial statement schedule for the year ended December 31, 2003, the period from October 8, 2002 through December 31, 2002, and the period from January 1, 2002 through October 7, 2002 (Predecessor Company), appearing in Metrocalls Annual Report on Form 10-K for the year ended December 31, 2003, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon, included therein and incorporated herein by reference. Such consolidated financial statements and schedule are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
The consolidated statements of operations, stockholders equity/(deficit) and cash flows for the year ended December 31, 2001, appearing in Metrocalls Annual Report on Form 10-K for the year ended December 31, 2003 were previously audited by Arthur Andersen LLP and their report thereon has not been reissued by them.
Because Arthur Andersen LLP has not reissued their report and because we are unable to obtain a consent from Arthur Andersen LLP, you will be unable to sue Arthur Andersen LLP under the Securities Act for material misstatements or omissions, if any, in this joint proxy statement/ prospectus and incorporated herein by reference, including the financial statements covered by their previously issued report. We believe that it is unlikely that you would be able to recover damages from Arthur Andersen LLP for any claim against them.
The consolidated balance sheet of Weblink Wireless, Inc. as of December 31, 2002, and the related consolidated statements of operations, stockholders equity (deficit), and cash flows for the periods from January 1, 2002 through September 8, 2002 (Predecessor Company), and September 9, 2002 through December 31, 2002, appearing in an amendment filed on January 20, 2004 to Metrocalls Current Report on Form 8-K filed November 18, 2003, have been audited by KPMG LLP, independent auditors, as set forth in their report thereon, included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
The financial statements of Arch Wireless, Inc. as of December 31, 2003 and December 31, 2002, for the year ended December 31, 2003 and for the period from January 1, 2002 to May 31, 2002 and for the period from June 1, 2002 to December 31, 2002 incorporated in this prospectus by reference to the Annual Report on Form 10-K have been so incorporated in reliance on the report (which contains an explanatory paragraph relating to Arch Wireless, Inc.s adoption of fresh-start accounting as described in Note 3 to the financial statements) of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.
The financial statements of Arch Wireless, Inc. for the year ended December 31, 2001 prior to the revision discussed in Note 1 to the 2002 financial statements incorporated in this prospectus by reference to the Annual Report on Form 10-K of Arch Wireless, Inc. for the year ended December 31, 2003 were audited by Arthur Anderson LLP, independent accountants, who have ceased operations. Arthur Andersen LLP expressed an unqualified opinion on those financial statements in their report dated March 7, 2002 (except for the matters discussed in Note 15 to the 2001 financial statements as to which the date is May 29, 2002). The
121
The [audited] consolidated balance sheet of Wizards-Patriots Holdings, Inc. as of March 5, 2004, has been incorporated in this prospectus in reliance on the report of [ ], independent accountants, given on the authority of said firm as experts in auditing and accounting.
OTHER MATTERS
Neither Metrocall nor Arch presently intends to bring any matters other than those described in this joint proxy statement/ prospectus before its special meeting. Further, neither Metrocall nor Arch has any knowledge of any other matters that may be introduced by other persons. If any other matters do properly come before either companys special meeting, the person named in the enclosed proxy forms of Metrocall or Arch, as applicable, will vote the proxies in keeping with their judgments on such matters.
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present proper proposals for inclusion in a companys proxy statement and for consideration at the next annual meeting of its stockholders by submitting their proposals to the company in a timely manner.
Metrocall. Metrocall will hold an annual meeting in the year 2004 only if the merger has not already been completed. If the annual meeting is held, stockholder proposals will be eligible for inclusion in Metrocalls proxy statement relating to the 2004 annual meeting of stockholders if the stockholder proposals are received a reasonable amount of time before Metrocall begins to print and mail its proxy materials. To be considered for presentation at the Metrocall annual meeting, although not included in the proxy statement, proposals must be received a reasonable amount of time before the Metrocall annual meeting. All stockholder proposals should be sent to:
Metrocall Holdings, Inc. | |
Attn: Secretary | |
6677 Richmond Highway | |
Alexandria, Virginia 22306 |
Arch. Arch will hold an annual meeting in the year 2004 only if the merger has not already been completed. If the annual meeting is held, stockholder proposals will be eligible for inclusion in Archs proxy statement relating to the 2004 annual meeting of stockholders if the stockholder proposals are received a reasonable amount of time before Arch begins to print and mail its proxy materials. To be considered for presentation at the Arch annual meeting, although not included in the proxy statement, proposals must be received a reasonable amount of time before Arch begins to print and mail its proxy materials. All stockholder proposals should be sent to:
Arch Wireless, Inc. | |
Attn: Secretary | |
1800 West Park Drive, Suite 250 | |
Westborough, Massachusetts 01581 |
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
The SEC encourages companies to disclose forward-looking information so that investors can better understand a companys future prospects and make informed investment decisions. This joint proxy statement/ prospectus contains such forward-looking statements within the meaning of the Private Securities Litigation
122
| Risk Factors; and | |
| The Merger. |
These statements may include statements regarding the period following completion of the merger.
Words such as anticipate, estimate, expects, projects, intends, plans, believes and words and terms of similar substance used in connection with any discussion of future operating or financial performance, or the merger of Metrocall and Arch, identify forward-looking statements. All forward-looking statements are managements present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. In addition to the risks related to the businesses of Metrocall and Arch, the factors relating to the merger discussed under Risk Factors, among others, could cause actual results to differ materially from those described in the forward-looking statements. These factors include: the relative value of Holding Company stock and Metrocalls and Archs stocks, the failure to realize the anticipated benefits of the merger and adverse regulatory conditions. Stockholders are cautioned not to place undue reliance on the forward-looking statements, which speak only of the date of this joint proxy statement/ prospectus. None of Metrocall, Arch or Holding Company is under any obligation, and each expressly disclaims any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.
All subsequent forward-looking statements attributable to Metrocall, Arch or Holding Company or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.
WHERE YOU CAN FIND MORE INFORMATION
This joint proxy statement/prospectus incorporates documents by reference which are not presented in or delivered with this joint proxy statement/prospectus.
The SEC permits Metrocall and Arch to incorporate by reference information into this proxy statement/prospectus. This means that Metrocall and Arch can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this proxy statement/prospectus, except for any information superceded by information contained directly in this proxy statement/prospectus or by information contained in documents filed with or furnished to the SEC after the date of this proxy statement/prospectus that is incorporated by reference in this proxy statement/prospectus.
This joint proxy statement/prospectus also incorporates by reference all additional documents that may be filed by Metrocall and Arch with the Securities and Exchange Commission under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act between the date of this joint proxy statement/prospectus and the date of the Metrocall special meeting and the date of the Arch special meeting, as applicable. These include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as any other proxy statements.
You should rely only on the information contained in this joint proxy statement/prospectus or that which Metrocall and Arch have referred you to. Metrocall and Arch have not authorized anyone to provide you with any additional information.
The documents referred to in this joint proxy statement/prospectus are available from us upon request. We will provide a copy of any and all of the information that is referred to in this joint proxy statement/prospectus to any person, without charge, upon written or oral request. If exhibits to the documents referred to in this joint proxy statement/prospectus are not themselves specifically referred to in this joint proxy statement/prospectus, then the exhibits will not be provided. Any request for documents should be made by [ ], 2004 to ensure timely delivery of the documents.
123
The following documents, which have been filed by Metrocall with the Securities and Exchange Commission (SEC file number 0-21924), are incorporated by reference into this joint proxy statement/prospectus:
(1) Annual Report on Form 10-K, for the fiscal year ended December 31, 2003 filed March 25, 2004, and Amendment No. 1 on Form 10-K/A filed April 29, 2004; | |
(2) Quarterly Report on Form 10-Q, for the fiscal quarter ended March 31, 2004 filed May 10, 2004; | |
(3) Current Report on Form 8-K filed November 18, 2003 and an amendment thereto filed January 20, 2004; and | |
(4) Current Reports on Form 8-K filed March 16, 2004, March 31, 2004, May 6, 2004, May 10, 2004, May 14, 2004, and May 17, 2004. |
The following documents, which have been filed by Arch with the Securities and Exchange Commission (SEC file number 0-23232), are incorporated by reference into this joint proxy statement/prospectus:
(1) Annual Report on Form 10-K, for the fiscal year ended December 31, 2003 filed March 1, 2004, and Amendment No. 1 on Form 10-K/A filed April 29, 2004; | |
(2) Quarterly Report on Form 10-Q, for the fiscal quarter ended March 31, 2004 filed May 10, 2004; and |
(3) | Current Reports on Form 8-K filed March 1, 2004, March 31, 2004, and May 6, 2004. |
Requests for documents relating to Metrocall should be directed to:
Metrocall Holdings, Inc., 6677 Richmond Highway, Alexandria, Virginia 22306, Attention: Timothy J. Dietz, Investor Relations, telephone (703) 660-6677 (extension 6231). |
Requests for documents relating to Arch should be directed to:
Arch Wireless, Inc., 1800 West Park Drive, Suite 250, Westborough, Massachusetts 01581, Attention: Gerald J. Cimmino, Vice President and Treasurer, telephone (508) 870-6700. |
Metrocall and Arch file reports, proxy statements and other information with the SEC. Copies of those reports, proxy statements and other information may be inspected and copied at the public reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms.
Copies of these materials can also be obtained by mail at prescribed rates from the Public Reference Room of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549 or by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports, proxy statements and other information regarding each of us. The address of the SEC website is http://www.sec.gov.
Holding Company has filed a registration statement on Form S-4 under the Securities Act with the SEC with respect to Holding Companys stock to be issued in the merger. This joint proxy statement/prospectus constitutes the prospectus of Holding Company filed as part of the registration statement. This joint proxy statement/prospectus does not contain all of the information set forth in the registration statement because certain parts of the registration statement are omitted in accordance with the rules and regulations of the SEC. The registration statement and its exhibits are available for inspection and copying as set forth above.
If you have any questions about the merger, please call either Timothy J. Dietz, Director, Corporate Communications and Investor Relations of Metrocall, at (703) 660-6677 (extension 6231), or Gerald J. Cimmino, Vice President and Treasurer of Arch, at (508) 870-6700.
This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to purchase, the securities offered by this joint proxy statement/prospectus, or the solicitation of a proxy, in any jurisdiction to or from any person to whom or from whom it is unlawful to make such offer, solicitation of
124
Any statement contained in a document incorporated or deemed to be incorporated by reference into this joint proxy statement/prospectus will be deemed to be modified or superseded for purposes of this joint proxy statement/prospectus to the extent that a statement contained in this joint proxy statement/prospectus or any other subsequently filed document that is deemed to be incorporated by reference into this joint proxy statement/prospectus modifies or supersedes the statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this joint proxy statement/prospectus.
125
REPORT OF INDEPENDENT AUDITORS
[Auditors Report]
F-1
WIZARDS-PATRIOTS HOLDINGS, INC.
The accompanying notes are an integral part of this consolidated
balance sheet.
F-2
WIZARDS-PATRIOTS HOLDINGS, INC.
NOTES TO CONSOLIDATED BALANCE SHEET
The accompanying consolidated balance sheet includes the
accounts of Wizards-Patriots Holding, Inc. (the Company)
and its wholly-owned subsidiaries Wizards Acquiring
Sub, Inc. (WASI) and Patriots Acquiring Sub, Inc.
(PASI) and intercompany accounts have been eliminated. Other
than its formation, the Company and its subsidiaries have not
conducted any activities.
The Company and its subsidiaries were formed in connection with
the anticipated merger of Metrocall Holdings, Inc.
(Metrocall) and Arch Wireless, Inc. (Arch). The Company was
incorporated in the state of Delaware on March 5, 2004. The
Company has one stockholder, Metrocall Holdings, Inc.
(Metrocall), which holds all of the Companys common stock,
par value $0.0001.
On March 29, 2004, the Company, WASI, PASI, Metrocall and
Arch entered into an agreement and plan of merger. On the
effective date of the merger, WASI will merge with and into
Metrocall and PASI will merge with and into Arch, at which point
WASI and PASI would no longer exist as separate corporate
entities, and the Companys only two wholly-owned
subsidiaries would be Metrocall and Arch.
Upon completion of the merger, holders of Metrocalls
common stock will receive $150 million in cash pursuant to
a cash election and 27.5% of the Companys common stock.
Under the cash election, Metrocall shareholders will be entitled
to elect to receive cash in the amount of $75.00 per
Metrocall share for up to two million Metrocall shares. To the
extent that cash elections are made in respect of a number
greater than or less than two million shares, the merger
consideration will be adjusted on a pro rata basis so that two
million of Metrocalls outstanding shares are exchanged for
cash. The remaining approximately four million fully diluted
Metrocall shares will be converted into 27.5% of the new holding
companys outstanding common stock at an exchange ratio of
1.876 shares of the Companys common stock for each
Metrocall share. Each outstanding share of Arch common stock
would be exchanged for one share of the Companys common
stock.
The above actions will necessitate the borrowings of up to
$150.0 million of debt proceeds, depending on the available
cash on hand of Metrocall and Arch at the time of the closing of
the merger, to fund the cash election component of the merger
consideration and authorization of additional common shares of
the Company before the merger takes place.
F-3
ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
WIZARDS-PATRIOTS HOLDINGS, INC.
WIZARDS ACQUIRING SUB, INC.
METROCALL HOLDINGS, INC.,
PATRIOTS ACQUIRING SUB, INC.
AND
ARCH WIRELESS, INC.
DATED AS OF MARCH 29, 2004
TABLE OF CONTENTS
ARTICLE I
i
ii
iii
Index of Defined Terms
i
ii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 29, 2004
(this
Agreement
), by and among
Wizards-Patriots Holdings, Inc., a Delaware corporation
(Parent
), Wizards Acquiring Sub, Inc., a
Delaware corporation and a wholly-owned subsidiary of Parent
(Metrocall Acquiring Sub
), Metrocall
Holdings, Inc., a Delaware corporation
(Metrocall
), Patriots Acquiring
Sub, Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent
(Arch Acquiring Sub
),
and Arch Wireless, Inc., a Delaware corporation
(Arch
). Metrocall and Arch are sometimes
together referred to collectively as the
Companies
and, individually, as a
Company.
WITNESSETH:
WHEREAS, the respective Boards of Directors of Metrocall (the
Metrocall Board
) and Arch (the
Arch
Board
) have approved this Agreement and have deemed it
in the best interests of their respective stockholders that
Metrocall and Arch engage in a business combination under the
terms set forth herein;
WHEREAS, Metrocall owns all of the outstanding capital stock of
Parent and has caused Parent to form Metrocall Acquiring Sub and
Arch Acquiring Sub;
WHEREAS, the respective Boards of Directors of Parent, Metrocall
Acquiring Sub and Metrocall have approved the merger of
Metrocall Acquiring Sub with and into Metrocall (the
Metrocall Merger
) and deem it advisable and
in the best interests of their respective stockholders that the
Metrocall Merger be consummated, and the respective Boards of
Directors of Parent, Arch Acquiring Sub and Arch have approved
the merger of Arch Acquiring Sub with and into Arch (the
Arch Merger
, and together with the Metrocall
Merger, the
Merger
) and have deemed it
advisable and in the best interests of their respective
stockholders that the Arch Merger be consummated, in each case
upon the terms and subject to the conditions set forth herein;
WHEREAS, for federal income tax purposes, the parties intend
that the Merger shall be treated as a transfer by the holders of
Metrocall Common Stock (as defined in Section 2.1(a)) and
Arch Common Stock (as defined in Section 2.1(c)) of all
such shares of such stock (other than Appraisal Shares (as
defined in Section 2.1(a)) and shares of such stock held by
either Metrocall or Arch) to Parent in exchange for all the
issued and outstanding shares of Parent Common Stock (as defined
in Section 2.1(a)) and, in the case of certain holders of
Metrocall Common Stock, cash, all as described in
Section 351 of the Internal Revenue Code of 1986, as
amended (the
Code
), and the regulations
promulgated thereunder; and
WHEREAS, the parties hereto desire to make certain
representations, warranties, covenants and agreements in
connection with the transactions contemplated by this Agreement
(the
Transactions
).
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein, the parties hereto
agree as follows:
ARTICLE I
Note 1.
Basis of Presentation
Note 2.
Merger with Metrocall Holdings, Inc. and Arch
Wireless, Inc.
Page
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ARTICLE IV
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ARTICLE V
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ARTICLE VII
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ARTICLE VIII
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THE MERGER
Section 1.1 The Merger. (a) Charter and Bylaws of Parent; Conduct. The certificate of incorporation and bylaws of Parent (respectively, the Parent Certificate of Incorporation and Parent Bylaws ), and the initial organizational minutes of the board of directors of Parent, shall be in the form of Exhibit A-1 , Exhibit A-2 and Exhibit A-3 to this Agreement, respectively. From and after the Effective Time, each of the Parent Certificate of Incorporation and the Parent Bylaws may be amended in accordance with their respective terms and as provided in the DGCL, except that references to the name of Parent shall be amended to reflect a change in such name as determined by the Parent Board. From the date of this Agreement until the Effective Time, Metrocall shall (a) consult with Arch prior to causing or permitting, and shall not cause or permit, Parent, Metrocall Acquiring Sub or Arch Acquiring Sub to take any action inconsistent with the provisions of this Agreement without the written consent of Arch, (b) take all action necessary to cause
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(b) The Metrocall Merger. Upon the terms and subject to the conditions of this Agreement, at the Effective Time (as defined in Section 1.2) and in accordance with the Delaware General Corporation Law (the DGCL ), Metrocall Acquiring Sub shall be merged with and into Metrocall and the separate existence of Metrocall Acquiring Sub shall thereupon cease. Metrocall shall be the surviving corporation in such merger and a wholly-owned subsidiary of Parent and, after the Effective Time, is hereinafter sometimes referred to as the Surviving Metrocall Corporation.
(c) The Arch Merger. Upon the terms and subject to the conditions of this Agreement, at the Effective Time and in accordance with the DGCL, Arch Acquiring Sub shall be merged with and into Arch and the separate existence of Arch Acquiring Sub shall thereupon cease. Arch shall be the surviving corporation in such merger and a wholly-owned subsidiary of Parent and, after the Effective Time, is hereinafter sometimes referred to as the Surviving Arch Corporation and, together with the Surviving Metrocall Corporation, the Surviving Corporations.
Section 1.2 Effective Time of the Merger. The Merger shall become effective at such time and date (the Effective Time ) as shall be stated in appropriate certificates of merger with respect to the Metrocall Merger and the Arch Merger (which time and date shall be identical for each merger), respectively, in form mutually acceptable to Metrocall and Arch and executed in accordance with the relevant provisions of the DGCL, to be filed with the Secretary of State of the State of Delaware in accordance with the DGCL (the Merger Filing ), concurrently with the closing of the Transactions in accordance with Section 2.12.
Section 1.3 Certificates of Incorporation. (a) The certificate of incorporation of the Surviving Metrocall Corporation shall be amended as of the Effective Time such that it is identical to the certificate of incorporation of Metrocall Acquiring Sub as in effect immediately prior to the Effective Time, and thereafter may be amended in accordance with its terms and as provided in the DGCL, except that references to the name of the Surviving Metrocall Corporation shall be amended to reflect a change in such name as determined by the Parent Board.
(b) The certificate of incorporation of the Surviving Arch Corporation shall be amended as of the Effective Time such that it is identical to the certificate of incorporation of Arch Acquiring Sub as in effect immediately prior to the Effective Time, and thereafter may be amended in accordance with its terms and as provided in the DGCL, except that references to the name of the Surviving Arch Corporation shall be amended to reflect a change in such name as determined by the Parent Board.
Section 1.4 Bylaws. (a) The bylaws of the Surviving Metrocall Corporation shall be amended as of the Effective Time such that they are identical to the bylaws of Metrocall Acquiring Sub as in effect immediately prior to the Effective Time, and (subject to Section 6.9 hereof) thereafter may be amended in accordance with their terms and as provided by the certificate of incorporation of the Surviving Metrocall Corporation and the DGCL, except that references to the name of the Surviving Metrocall Corporation shall be amended to reflect a change in such name as determined by the Parent Board.
(b) The bylaws of the Surviving Arch Corporation shall be amended as of the Effective Time such that they are identical to the bylaws of Arch Acquiring Sub as in effect immediately prior to the Effective Time, and (subject to Section 6.9 hereof) thereafter may be amended in accordance with their terms and as provided by the certificate of incorporation of the Surviving Arch Corporation and the DGCL, except that references to the name of the Surviving Arch Corporation shall be amended to reflect a change in such name as determined by the Parent Board.
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Section 1.5 Officers. (a) The officers of the Surviving Metrocall Corporation after the Effective Time shall be the officers of Metrocall Acquiring Sub in office immediately prior to the Effective Time, until their successors are elected or appointed and qualified or until their resignation or removal.
(b) The officers of the Surviving Arch Corporation after the Effective Time shall be the officers of Arch Acquiring Sub in office immediately prior to the Effective Time, until their successors are elected or appointed and qualified or until their resignation or removal.
Section 1.6 Directors. (a) The directors of the Surviving Metrocall Corporation after the Effective Time shall be the directors of Acquiring Sub in office immediately prior to the Effective Time, until their successors are elected or appointed and qualified or until their resignation or removal.
(b) The directors of the Surviving Arch Corporation after the Effective Time shall be the directors of Arch Acquiring Sub in office immediately prior to the Effective Time, until their successors are elected or appointed and qualified or until their resignation or removal.
Section 1.7 Effect of Merger. At the Effective Time, the effect of the Merger shall be as provided in this Agreement and the applicable provisions of Delaware law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time:
(a) all of the property, rights, privileges, powers and franchises of Metrocall and Metrocall Acquiring Sub shall vest in the Surviving Metrocall Corporation, and all debts, liabilities and duties of Metrocall and Metrocall Acquiring Sub shall become the debts, liabilities and duties of the Surviving Metrocall Corporation; and
(b) all of the property, rights, privileges, powers and franchises of Arch and Arch Acquiring Sub shall vest in the Surviving Arch Corporation, and all debts, liabilities and duties of Arch and Arch Acquiring Sub shall become the debts, liabilities and duties of the Surviving Arch Corporation.
ARTICLE II
CONVERSION AND EXCHANGE OF SECURITIES
Section 2.1 Effect on Capital Stock. (a) Metrocall Common Stock. At the Effective Time, by virtue of the Metrocall Merger and without any action on the part of any holder of capital stock of Metrocall or any holder of capital stock of Metrocall Acquiring Sub:
(i) (A) Subject to Sections 2.1(a)(ii), 2.1(a)(v), 2.3, 2.4 and 2.10, each share of common stock, par value $0.01 per share, of Metrocall (Metrocall Common Stock ) issued and outstanding immediately prior to the Effective Time with respect to which an election has been effectively made and not revoked or lost pursuant to Section 2.3 or deemed made pursuant to Section 2.4 (collectively, the Electing Shares ) shall be converted into the right to receive an amount equal to $75.00 (the Cash Election Price ), in cash, without interest. (B) Subject to Sections 2.1(a)(ii), 2.1(a)(v), 2.3, 2.4 and 2.10, each share of Metrocall Common Stock (other than Electing Shares) issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive 1.876 shares (the Metrocall Exchange Ratio ) of common stock, par value $0.0001 per share, of Parent (Parent Common Stock ). The shares of Parent Common Stock to be issued and cash payable upon the conversion of shares of Metrocall Common Stock pursuant to this Section 2.1(a)(i) and cash in lieu of fractional shares of Parent Common Stock as contemplated by Section 2.10 are referred to collectively as Metrocall Merger Consideration. All shares of Parent Common Stock issued pursuant to this Section 2.1(a)(i) shall be duly authorized, validly issued and free of preemptive rights, with no personal liability attaching to the ownership of such shares. All shares of Metrocall Common Stock converted into shares of Parent Common Stock or cash pursuant to this Section 2.1(a)(i) shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of a certificate formerly representing any such shares shall cease to have any rights, except the right to receive cash, Parent Common Stock to be issued and cash in lieu of fractional shares of Parent Common Stock as contemplated by Section 2.10, in consideration for such shares upon the surrender of such certificate in accordance with this Article II, without interest.
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(ii) All shares of Metrocall Common Stock that are owned by Metrocall as treasury stock and any shares of Metrocall Common Stock owned by Arch or any Subsidiary of Arch immediately prior to the Effective Time, other than shares under any existing employee benefit plan which are held by either Company as trustee, shall be canceled and retired and shall cease to exist and no share capital of Parent or other consideration shall be delivered in exchange therefore.
(iii) Each share of common stock, par value $0.01 per share, of Metrocall Acquiring Sub issued and outstanding immediately before the Effective Time shall be converted into one share of common stock of the Surviving Metrocall Corporation.
(iv) If any shares of Metrocall Common Stock outstanding immediately prior to the Effective Time are unvested or are subject to a repurchase option, risk of forfeiture or other condition under any applicable restricted stock purchase agreement or other agreement with Metrocall, then any shares of Parent Common Stock issued in exchange for such shares of Metrocall Common Stock will also be unvested and subject to the same repurchase option, risk of forfeiture or other condition, and the certificates representing such shares of Parent Common Stock may accordingly be marked with appropriate legends, except that this Section 2.1(a)(iv) shall not apply to any such shares that, pursuant to the terms of the applicable agreement, certificate or other governing instrument, would otherwise be vested or freed of such repurchase option, risk of forfeiture or other condition as a result of the Transactions. Metrocall shall take all action that may be necessary to ensure that, from and after the Effective Time, Parent is entitled to exercise any such repurchase option or other right set forth in any such restricted stock purchase agreement or other agreement.
(v) Notwithstanding anything in this Agreement to the contrary, shares of Metrocall Common Stock that are outstanding immediately prior to the Effective Time and that are held by any Person who is entitled to demand and properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 (Section 262 ) of the DGCL (Appraisal Shares ) shall not be converted into Metrocall Merger Consideration as provided in Section 2.1(a)(i), but rather the holders of Appraisal Shares shall be entitled to payment of the fair value of such Appraisal Shares in accordance with Section 262; provided, however, that if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to appraisal under Section 262, then the right of such holder to be paid the fair value of such holders Appraisal Shares shall cease and such Appraisal Shares shall be deemed to no longer be Appraisal Shares and, instead, shall be deemed to be Non-Electing Shares, to have been converted as of the Effective Time into, and to have become exchangeable solely for the right to receive, Metrocall Merger Consideration as provided in Section 2.1(a)(i).
(b) Metrocall Stock Options, Warrants and Unissued Shares Under the Metrocall Plan of Reorganization.
(i) Metrocall Stock Options. At the Effective Time, all options to purchase shares of Metrocall Common Stock (each, a Metrocall Stock Option ) which are then outstanding and unexercised shall cease to represent a right to acquire shares of Metrocall Common Stock and shall be converted automatically into an option to acquire, on the same terms and conditions as were otherwise applicable under the Metrocall Stock Option, shares of Parent Common Stock as set forth below. From and after the Effective Time (i) the number of shares of Parent Common Stock purchasable upon exercise of each outstanding converted Metrocall Stock Option shall be equal to the product of (x) the number of shares of Metrocall Common Stock that were purchasable upon exercise of such converted Metrocall Stock Option immediately prior to the Effective Time and (y) the Metrocall Exchange Ratio, rounded up to the nearest whole share of Parent Common Stock, and (ii) the exercise price per share of Parent Common Stock under each converted Metrocall Stock Option shall be obtained by dividing (x) the exercise price per share of Metrocall Common Stock of such converted Metrocall Stock Option immediately prior to the Effective Time by (y) the Metrocall Exchange Ratio, rounded down to the nearest cent; provided, however, that in the case of any Metrocall Stock Option to which Section 421 of the Code, applies by reason of its qualification under Section 422 of the Code, the exercise price per share, the number of shares subject to such Metrocall Stock Option and the terms and conditions of exercise of such Metrocall Stock Option shall be determined in a manner consistent with the requirements of Section 424(a) of the Code. Unless otherwise elected by Metrocall prior to the Effective Time, Parent shall
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(ii) Metrocall Warrants. At the Effective Time, all warrants to purchase shares of Metrocall Common Stock (each, a Metrocall Warrant ) which are then outstanding and unexercised shall no longer be exercisable for Metrocall Common Stock and shall thereafter be exercisable for Parent Common Stock in accordance with the terms and conditions of the applicable Metrocall Warrants. From and after the Effective Time (i) the number of shares of Parent Common Stock purchasable upon exercise of each outstanding converted Metrocall Warrant shall be equal to the product of (x) the number of shares of Metrocall Common Stock that were purchasable upon exercise of such converted Metrocall Warrant immediately prior to the Effective Time and (y) the Metrocall Exchange Ratio, rounded up to the nearest whole share of Parent Common Stock, and (ii) the exercise price per share of Parent Common Stock under each converted Metrocall Warrant shall be obtained by dividing (x) the exercise price per share of Metrocall Common Stock of such converted Metrocall Warrant immediately prior to the Effective Time by (y) the Metrocall Exchange Ratio, rounded down to the nearest cent.
(iii) Unissued Shares Under the Metrocall Plan of Reorganization. At the Effective Time, all rights, contingent or otherwise, to receive shares of Metrocall Common Stock, which are not yet issued and outstanding, pursuant to a distribution under the Metrocall Plan of Reorganization (each, a Metrocall Stock Right ), shall no longer be rights with respect to Metrocall Common Stock and shall thereafter be rights to receive a number of shares of Parent Common Stock equal to the number of shares of Metrocall Common Stock such Metrocall Stock Right would be entitled to receive multiplied by the Metrocall Exchange Ratio, rounded up to the nearest whole share of Parent Common Stock, subject to the same terms and conditions of the Metrocall Plan of Reorganization as were otherwise applicable to the Metrocall Stock Rights. Prior to the Effective Time, the Metrocall Board shall take, or shall cause its committees to take, all action necessary to effectuate the foregoing.
(c) Arch Common Stock. At the Effective Time, by virtue of the Arch Merger and without any action on the part of any holder of capital stock of Arch or any holder of capital stock of Arch Acquiring Sub:
(i) Subject to Sections 2.1(c)(ii) and 2.10, each share of Class A common stock, par value $0.0001 per share, of Arch (Arch Common Stock ) shall be converted into the right to receive one share (the Arch Exchange Ratio and, together with the Metrocall Exchange Ratio, the Exchange Ratios ) of Parent Common Stock. The shares of Parent Common Stock to be issued pursuant to this Section 2.1(c)(i) are referred to collectively as Arch Merger Consideration and, together with the Metrocall Merger Consideration, the Merger Consideration. All shares of Parent Common Stock issued pursuant to this Section 2.1(c)(i) shall be duly authorized, validly issued and free of preemptive rights, with no personal liability attaching to the ownership of such shares. All shares of Arch Common Stock converted into shares of Parent Common Stock pursuant to this Section 2.1(c)(i) shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of a certificate formerly representing any such shares shall cease to have any rights, except the right to receive Parent Common Stock
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(ii) All shares of Arch Common Stock that are owned by Arch as treasury stock and any shares of Arch Common Stock owned by Metrocall or any Subsidiary of Metrocall immediately prior to the Effective Time, other than shares under any existing employee benefit plan which are held by either Company as trustee, shall be canceled and retired and shall cease to exist and no share capital of Parent or other consideration shall be delivered in exchange therefore.
(iii) Each share of common stock, par value $0.01 per share, of Arch Acquiring Sub issued and outstanding immediately before the Effective Time shall be converted into one share of common stock of the Surviving Arch Corporation.
(iv) If any shares of Arch Common Stock outstanding immediately prior to the Effective Time are unvested or are subject to a repurchase option, risk of forfeiture or other condition under any applicable restricted stock purchase agreement or other agreement with Arch, then the shares of Parent Common Stock issued in exchange for such shares of Arch Common Stock will also be unvested and subject to the same repurchase option, risk of forfeiture or other condition, and the certificates representing such shares of Parent Common Stock may accordingly be marked with appropriate legends, except that this Section 2.1(c)(iv) shall not apply to any such shares that, pursuant to the terms of the applicable agreement, certificate or other governing instrument, would otherwise be vested or freed of such repurchase option, risk of forfeiture or other condition as a result of the Transactions. Arch shall take all action that may be necessary to ensure that, from and after the Effective Time, Parent is entitled to exercise any such repurchase option or other right set forth in any such restricted stock purchase agreement or other agreement.
(d) Arch Stock Options and Unissued Shares Under the Arch Plan of Reorganization. (i) Arch Stock Options. At the Effective Time, all options to purchase shares of Arch Common Stock (each, an Arch Stock Option ) which are then outstanding and unexercised shall cease to represent a right to acquire shares of Arch Common Stock and shall be converted automatically into an option to acquire, on the same terms and conditions as were otherwise applicable under the Arch Stock Option, the number of shares of Parent Common Stock equal to the number of shares of Arch Common Stock subject to such Arch Stock Option immediately prior to the Effective Time, at a price per share equal to the per share exercise price specified in such Arch Stock Option immediately prior to the Effective Time; provided, however, that in the case of any Arch Stock Option to which Section 421 of the Code, applies by reason of its qualification under Section 422 of the Code, the exercise price per share, the number of shares subject to such Arch Stock Option and the terms and conditions of exercise of such Arch Stock Option shall be determined in a manner consistent with the requirements of Section 424(a) of the Code. Unless otherwise elected by Arch prior to the Effective Time, Parent shall assume Archs obligations with respect to each outstanding Arch Stock Option in such manner that Parent (i) is a corporation assuming a stock option in a transaction to which Section 424(a) applies within the meaning of Section 424 of the Code or (ii) to the extent that Section 424 of the Code does not apply to such Arch Stock Option, would be such a corporation were Section 424 of the Code applicable to such Arch Stock Option; and, if not so otherwise elected, after the Effective Time, all references to Arch in the Arch Stock Plan and the applicable Arch Stock Option agreements shall be deemed to refer to Parent, which shall have assumed the Arch Stock Plan as of the Effective Time by virtue of this Agreement and without any further action on the part of Parent or Arch. Each Arch Stock Option so assumed by Parent under this Agreement shall continue to have, and be subject to, the same terms and conditions set forth in the Arch Stock Plan and the applicable Arch Stock Option as in effect immediately prior to the Effective Time. Metrocall and Arch shall use, and shall cause Parent to use, all reasonable efforts to ensure that Arch Stock Options intended to qualify as incentive stock options under Section 422 of the Code prior to the Effective Time continue to so qualify after the Effective Time. Prior to the Effective Time, the Arch Board shall take, or shall cause its committees to take, all action necessary to effectuate the foregoing.
(ii) Unissued Shares Under the Arch Plan of Reorganization. At the Effective Time, all rights, contingent or otherwise, to receive shares of Arch Common Stock, which are not yet issued and outstanding, pursuant to a distribution under the Arch Plan of Reorganization (each, an Arch Stock Right ), including
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(e) Parent Actions with Respect to Stock Options, Stock Rights and Warrants. (i) Prior to the Effective Time, Parent shall reserve for issuance and shall make available for issuance in accordance with Sections 2.1(b) and 2.1(d) the number of shares of Parent Common Stock necessary to satisfy Parents obligations under Sections 2.1(b) and 2.1(d). With respect to the Arch Stock Plan and Metrocall Option Plan to be assumed by Parent, Parent shall take all corporate action necessary or appropriate to, as soon as reasonably practicable after the Effective Time, file with the SEC a registration statement on Form S-8 (or any successor or other appropriate form) with respect to the shares of Parent Common Stock subject to options granted under such plans to the extent required under applicable law in order for such shares to be sold without restriction, and Parent shall use its best efforts to maintain the effectiveness of such registration statement (and maintain the current status of the prospectuses contained therein), as well as comply with any applicable state securities or blue sky laws, for so long as such benefits and grants remain payable and such options under such plans remain outstanding.
(ii) As soon as practicable after the Effective Time, Parent shall cause to be delivered to all holders of Metrocall Stock Options, to the extent the holder thereof possesses such Metrocall Stock Options pursuant to the Metrocall Option Plan, appropriate notices setting forth such holders rights pursuant to the Metrocall Option Plan (as defined in Section 4.2(a)) and agreements evidencing the grants of such Metrocall Stock Options. To the extent permitted by law, Parent shall comply with the terms of the Metrocall Option Plan and shall take such reasonable steps as are necessary or required by, and subject to the provisions of, the Metrocall Option Plan, to have the Metrocall Stock Options which qualified as incentive stock options prior to the Effective Time continue to qualify as incentive stock options of Parent after the Effective Time.
(iii) As soon as practicable after the Effective Time, Parent shall cause to be delivered to all holders of Arch Stock Rights, to the extent the holder thereof possesses such Arch Stock Rights pursuant to the Arch Stock Plan, and Arch Stock Options, as the case may be, appropriate notices setting forth such holders rights pursuant to the Arch Stock Plan and agreements evidencing the grants of such and Arch Stock Rights and Arch Stock Options, as applicable. To the extent permitted by law, Parent shall comply with the terms of the Arch Stock Plan and shall take such reasonable steps as are necessary or required by, and subject to the provisions of, the Arch Stock Plan, to have the Arch Stock Options which qualified as incentive stock options prior to the Effective Time continue to qualify as incentive stock options of Parent after the Effective Time.
(iv) As soon as practicable after the Effective Time, Parent shall cause to be delivered to all holders of Metrocall Warrants appropriate notices setting forth such holders rights pursuant thereto.
(f) Cancellation of Parent Stock. The shares of capital stock of Parent owned by Metrocall and Arch immediately prior to the Effective Time will be canceled at the Effective Time.
Section 2.2 Exchange Fund . Concurrently with or prior to the Effective Time, Metrocall and Arch shall jointly designate a duly qualified bank or trust company to act as agent (the Exchange Agent ) for purposes of exchanging certificates which immediately prior to the Effective Time represented shares of Arch Common Stock or shares of Metrocall Common Stock ( Certificates ) for the applicable Merger Consideration. At or prior to the Effective Time, Parent shall deposit with the Exchange Agent, in trust for the benefit of holders of Certificates, certificates representing the Parent Common Stock issuable pursuant to Sections 2.1(a) and 2.1(c) upon conversion of outstanding shares of Arch Common Stock and Metrocall Common Stock, cash for payment of the Cash Election Price with respect to the Electing Shares and cash for payment of any fractional shares referred to in Section 2.10. Parent agrees to make available to the Exchange Agent from time to time as needed, cash sufficient to pay any dividends and other distributions pursuant to Section 2.9. Any cash and certificates representing Parent Common Stock deposited with the Exchange Agent shall hereinafter be referred to as the Exchange Fund .
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Section 2.3 Elections. (a) Each Person who, immediately prior to the Effective Time, is (i) a record holder of shares of Metrocall Common Stock shall be entitled, with respect to all or any portion of such shares, to make an unconditional election to receive cash in exchange for such shares or (ii) a holder of vested Metrocall Stock Options giving an irrevocable notice of exercise of such Metrocall Stock Options prior to the Effective Time, subject only to the Closing, shall be entitled to make an election to receive cash in exchange for the shares of Metrocall Common Stock issuable upon exercise of such Metrocall Stock Options.
(b) Parent shall, or shall cause the Exchange Agent to, prepare and mail a form of election (the Form of Election ) with the Joint Proxy Statement/ Prospectus (as defined in Section 3.16) to holders of Metrocall Common Stock of record (other than shares of Metrocall Common Stock to be cancelled pursuant to Section 2.1(a)(ii)) and holders of vested Metrocall Stock Options as of the record date for the meeting of stockholders of Metrocall (the Metrocall Stockholders Meeting ) to obtain the Metrocall Stockholders Approval (as defined in Section 4.4(d)), which shall be used by each such holder who wishes to elect to receive the Cash Election Price for any or all shares of Metrocall Common Stock held by such holder as of immediately prior to the Effective Time. Prior to the record date of the Metrocall Stockholders Meeting, the Metrocall Board or a committee thereof shall establish procedures for holders of vested Metrocall Stock Options to give an irrevocable notice of exercise of such Metrocall Stock Options, to deposit funds for the exercise thereof, to make the cash election and to provide for netting of funds to be received pursuant to the cash election against funds to be deposited for the exercise of such Metrocall Stock Options. In addition, Parent shall use its reasonable best efforts to make the Form of Election and the Joint Proxy Statement/ Prospectus available to all Persons who become holders of Metrocall Common Stock or Metrocall Stock Options during the period between such record date and the Election Date. Any such election to receive the Cash Election Price will be properly made only if (i) the Exchange Agent has received a Form of Election at its designated office, by 5:00 p.m., New York City time, on (A) the Business Day immediately preceding the date of the Metrocall Stockholders Meeting or (B) any later date as to which Metrocall may provide, in consultation with Arch (the Election Date ) (which date Parent shall publicly announce as soon as practicable but in no event less than five Business Days prior to the Election Date), provided that the Companies shall agree to any Election Date, and notice thereof, required to comply with any legal requirements with respect thereto, and (ii) such Form of Election is properly completed and signed and, in the case of holders of Metrocall Common Stock, accompanied by certificates for the shares of Metrocall Common Stock to which such Form of Election relates, duly endorsed in blank or otherwise in form acceptable for transfer on the books of Metrocall (or by an appropriate guarantee of delivery of such certificates as set forth in such Form of Election from a firm which is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States, provided such certificates are in fact delivered to the Exchange Agent within three Business Days after the date of execution of such guarantee of delivery). A record holder acting in different capacities or acting on behalf of other Persons in any way will be entitled to submit an Election Form for each capacity in which such record holder so acts with respect to each Person for which it so acts.
(c) Any Form of Election may be revoked by the holder of Metrocall Common Stock submitting such Form of Election to the Exchange Agent only by written notice received by the Exchange Agent prior to 5:00 p.m., New York City time, on the Election Date. In addition, all Forms of Election shall automatically be revoked if the Exchange Agent is notified in writing by Metrocall and Arch that the Merger has been abandoned. If a Form of Election is so revoked, in the case of a holder of Metrocall Common Stock submitting such Form of Election to the Exchange Agent, the certificate or certificates (or guarantee of delivery, as appropriate) for the shares of Metrocall Common Stock to which such Form of Election relates shall be promptly returned to such holder.
(d) The Exchange Agent may, with the agreement of Metrocall, in consultation with Arch, make such rules as are consistent with this Section 2.3 for the implementation of the elections provided for in this Section 2.3 and in Section 2.4 as shall be necessary or desirable to fully effect such elections with respect to Metrocall Common Stock and Metrocall Stock Options.
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(e) The Exchange Agent shall have discretion to determine whether or not an election to receive the Cash Election Price has been properly made or revoked pursuant to this Section 2.3 with respect to shares of Metrocall Common Stock and when elections and revocations were received by it. If the Exchange Agent determines that any election to receive the Cash Election Price was not properly made with respect to shares of Metrocall Common Stock, such shares shall be treated by the Exchange Agent as shares that were not Electing Shares at the Effective Time, and subject to the provisions of Sections 2.1(a)(v), 2.4 and 2.10, such shares shall be exchanged in the Merger for shares of Parent Common Stock pursuant to Section 2.1(a)(i)(B). If the Exchange Agent determines that any contingent election to receive the Cash Election Price was not properly made with respect to Metrocall Stock Options, such contingent election shall be deemed as not made and such Metrocall Stock Options shall be exchanged in the Merger for options to purchase Parent Common Stock pursuant to Section 2.1(b). The Exchange Agent shall also make all computations as to the allocation and the pro-ration, including the determination of the deemed elections contemplated by Section 2.4 and any such computation and deemed elections shall be conclusive and binding on the holders of Metrocall Common Stock and Metrocall Stock Options.
Section 2.4 Allocation of Cash and Parent Common Stock. (a) Election Number . Two million (2,000,000) (the Election Number ) shares of Metrocall Common Stock, including shares of Metrocall Common Stock issuable upon exercise of Metrocall Stock Options as provided in Section 2.3(a), shall be converted into the right to receive the Cash Election Price at the Effective Time.
(b) Excess Electing Shares . If the number of Electing Shares exceeds the Election Number, then shares of Metrocall Common Stock other than the Electing Shares and Appraisal Shares (collectively, the Non-Electing Shares ) shall be converted into shares of Parent Common Stock in accordance with Section 2.1(a)(i)(B) and Electing Shares shall be converted into the right to receive the Cash Election Price or shares of Parent Common Stock in accordance with Sections 2.1(a)(i)(A) and 2.1(a)(i)(B) in the following manner:
(i) A proration factor (the Excess Proration Factor ) shall be determined by dividing the Election Number by the total number of Electing Shares.
(ii) The number of Electing Shares covered by an Election to be converted into the right to receive the Cash Election Price shall be determined by multiplying the Excess Proration Factor by the total number of Electing Shares covered by such Election.
(iii) All Electing Shares other than those shares converted into the right to receive the Cash Election Price in accordance with Section 2.4(b)(ii) shall be converted into shares of Parent Common Stock in accordance with Section 2.1(a)(i)(B), subject to Section 2.10.
(c) Deemed Elections . If the number of Electing Shares is less than or equal to the Election Number, then all Electing Shares shall be converted into the right to receive the Cash Election Price in accordance with Section 2.1(a)(1)(A) and the Non-Electing Shares shall be converted into the right to receive either the (i) Cash Election Price and the holders thereof shall be deemed to have properly made an election with respect to such shares or (ii) shares of Parent Common Stock in accordance with Sections 2.1(a)(1)(A) and 2.1(a)(1)(B) in the following manner:
(i) A proration factor (the Deemed Election Proration Factor ) shall be determined by dividing (A) the Election Number minus the total number of Electing Shares by (B) the total number of Non-Electing Shares.
(ii) The number of Non-Electing Shares of each stockholder to be converted into the right to receive the Cash Election Price and deemed to have properly made an election with respect to such shares shall be determined by multiplying the Deemed Election Proration Factor by the total number of Non-Electing Shares held by such stockholder.
(iii) All Non-Electing Shares other than those shares converted into the right to receive the Cash Election Price in accordance with Sections 2.4(c)(ii) shall be converted into shares of Parent Common Stock in accordance with Section 2.1(a)(1)(B), subject to Section 2.10.
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Section 2.5 Exchange Procedures . As soon as practicable after the Effective Time, Parent shall cause the Exchange Agent to mail or make available to Cede & Co. and, as appropriate, each holder of record of a Certificate or Certificates which immediately prior to the Effective Time represented outstanding shares of Arch Common Stock whose shares were converted into the right to receive the Arch Merger Consideration and each holder of record of a Certificate or Certificates which immediately prior to the Effective Time represented outstanding shares of Metrocall Common Stock whose shares were converted into the right to receive the Metrocall Merger Consideration, a notice and letter of transmittal advising such holder of the effectiveness of the Merger and the procedure for surrendering to the Exchange Agent such Certificate or Certificates in exchange for cash or shares of Parent Common Stock deliverable in respect thereof pursuant to this Article II. The Exchange Agent shall not be entitled to vote or exercise any rights of ownership with respect to the shares of Metrocall Common Stock and Arch Common Stock surrendered to it and held by it from time to time hereunder, except that it shall receive and hold all dividends or other distributions paid or distributed with respect to such Metrocall Common Stock and Arch Common Stock for the account of the Persons entitled thereto.
Section 2.6 Right to Receive Merger Consideration. (a) Each holder of shares of Arch Common Stock or Metrocall Common Stock that have been converted into a right to receive Merger Consideration, upon surrender to the Exchange Agent of a Certificate or Certificates, together with a properly completed letter of transmittal covering such shares of Arch Common Stock or Metrocall Common Stock, will be entitled to receive the applicable Merger Consideration as set forth in Section 2.1(a) or Section 2.1(c), as applicable. Until so surrendered, each share of Arch Common Stock or Metrocall Common Stock shall, after the Effective Time, represent for all purposes, only the right to receive the applicable Merger Consideration and any other amounts payable pursuant to Section 2.9. If any Merger Consideration is to be issued to a Person other than the registered holder of the Arch Common Stock or Metrocall Common Stock represented by the Certificate or Certificates surrendered with respect thereto, it shall be a condition to such issuance that the Certificate or Certificates so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the Person requesting such issuance shall pay to the Exchange Agent any transfer or other taxes required as a result of such issuance to a Person other than the registered holder of such Arch Common Stock or Metrocall Common Stock or establish to the reasonable satisfaction of the Exchange Agent that such tax has been paid or is not payable.
(b) Notwithstanding anything to the contrary contained in this Article II, Certificates surrendered for exchange by any affiliate (as defined in Section 6.5) of Arch or Metrocall shall not be exchanged until the later of (a) the date Parent has received an Affiliate Agreement (as defined in Section 6.5) from such affiliate, or (b) the date shares of Parent Common Stock issuable to such affiliate are transferable pursuant to the Affiliate Agreement regardless of whether such agreement was executed by the affiliate.
Section 2.7 Stock Transfer Books . As of the Effective Time, there shall be no further registration of transfers of shares of Arch Common Stock or Metrocall Common Stock that were outstanding prior to the Effective Time. After the Effective Time, Certificates presented to either Surviving Arch Corporation or Surviving Metrocall Corporation for transfer shall be canceled and exchanged for the consideration provided for, and in accordance with the procedures set forth, in this Article II. At the close of business on the Closing Date, the stock ledger of Arch with respect to the issuance of Arch Common Stock and the stock ledger of Metrocall with respect to the issuance of Metrocall Common Stock shall be closed.
Section 2.8 Release of Exchange Fund . From and after the first anniversary of the Effective Time, any portion of the Exchange Fund that remains unclaimed by the holders of shares of Arch Common Stock and Metrocall Common Stock shall be returned to Parent upon demand. Any such holder who has not delivered his shares of Arch Common Stock or Metrocall Common Stock to the Exchange Agent in accordance with this Article II prior to that time shall thereafter look only to Parent for issuance of shares of Parent Common Stock in respect of shares of Arch Common Stock or Metrocall Common Stock, respectively. Notwithstanding the foregoing, neither Parent nor Surviving Arch Corporation nor Surviving Metrocall Corporation shall be liable to any holder of shares of Arch Common Stock or Metrocall Common Stock for any securities delivered or any amount paid to a public official pursuant to applicable abandoned property laws.
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Section 2.9 Distributions with Respect to Unexchanged Shares . No dividends, interest or other distributions with respect to shares of Parent Common Stock issuable with respect to Arch Common Stock or Metrocall Common Stock shall be paid to the holder of any unsurrendered Certificates until such Certificates are surrendered as provided in this Article II. Upon such surrender, there shall be paid, without interest, to the Person in whose name the shares of Parent Common Stock are registered, all dividends and other distributions payable in respect of such securities on a date subsequent to, and in respect of a record date after, the Effective Time.
Section 2.10 No Fractional Securities . Notwithstanding any other provision of this Agreement, no certificates or scrip representing less than one share of Parent Common Stock shall be issued in the Merger, and no Parent Common Stock dividend, stock split or interest shall relate to any fractional security, and such fractional interests shall not entitle the owner thereof to vote or to any other rights of a security holder. In lieu of any such fractional shares, each holder of shares of Metrocall Common Stock who would otherwise have been entitled to receive a fraction of a share of Parent Common Stock upon surrender of Certificates for exchange pursuant to this Article II shall be entitled to receive from the Exchange Agent a cash payment equal to such fraction multiplied by the Cash Election Price, without interest.
Section 2.11 Adjustments To Exchange Ratios and Cash Election Price . (a) The Exchange Ratios were reached upon the basis that, after giving effect to the exchange of the Election Number of shares of Metrocall Common Stock, including shares of Metrocall Common Stock issuable upon exercise of Metrocall Warrants, Metrocall Stock Rights and Metrocall Stock Options, for the Cash Election Price, the Metrocall Fully Diluted Shares would be exchanged for 27.5% of the Parent Fully Diluted Shares and the Arch Fully Diluted Shares would be exchanged for 72.5% of the Parent Fully Diluted Shares. To the extent that (i) any inaccuracy of a representation or warranty in Section 3.2 or 4.2 and/or (ii) an increase in the Arch Fully Diluted Shares in accordance with Schedule 3.2 is determined to have resulted in a failure of the Exchange Ratios to result in the percentage stockholding described in the preceding sentence, then the Metrocall Exchange Ratio shall be adjusted accordingly. To the extent any such change in the Metrocall Exchange Ratio results from an inaccuracy of a representation or warranty in Section 4.2, the Cash Election Price shall be adjusted in proportion to the adjustment to the Metrocall Exchange Ratio. Parent Fully Diluted Shares shall mean the outstanding equity of Parent to be exchanged for the outstanding equity of Metrocall and Arch as of the Effective Time, comprised of all issued and outstanding shares of Parent Common Stock, whether restricted or unrestricted, shares of Parent Common Stock reserved for issuance upon exercise of issued and outstanding options and warrants, whether vested or unvested, and shares of Parent Common Stock reserved for issuance in exchange for shares of Metrocall Common Stock and Arch Common Stock contemplated to be issued under the Metrocall Plan of Reorganization and the Arch Plan of Reorganization, respectively, but not including the shares of Parent Common Stock reserved for issuance under the equity incentive plan to be established by the Parent Board as contemplated in Section 6.11(f).
(b) The Metrocall Exchange Ratio and the Cash Election Price shall be adjusted to reflect appropriately the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Metrocall Common Stock or Arch Common Stock), extraordinary cash dividends, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to Metrocall Common Stock or Arch Common Stock occurring on or after the date hereof and prior to the Effective Time.
Section 2.12 Closing . The closing (the Closing ) of the Transactions shall take place simultaneously at the offices of Schulte Roth & Zabel LLP, located at 919 Third Avenue, New York, New York 10022, as promptly as practicable (but in any event within five Business Days) following the date on which the last of the conditions set forth in Article VII is fulfilled (other than conditions contemplated to be fulfilled on the Closing Date) or waived or at such other time and place as Metrocall and Arch shall agree. The date on which the Closing occurs is referred to in this Agreement as the Closing Date .
Section 2.13 Lost, Stolen, Destroyed Certificates . In the event that any Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof, certificates representing the
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Section 2.14 Taking of Necessary Action; Further Action . (a) If any further action is necessary or desirable to carry out the purposes of this Agreement and to vest Parent, the Surviving Metrocall Corporation or the Surviving Arch Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of Parent, Metrocall, Metrocall Acquiring Sub, Arch and Arch Acquiring Sub to the extent contemplated by this Agreement, the officers and directors of Parent, Metrocall, Metrocall Acquiring Sub, Arch and Arch Acquiring Sub immediately prior to the Effective Time will take all such lawful and necessary action.
(b) If, at any time after the Effective Time, Parent shall
consider or be advised that any further assignments or
assurances in law or any other acts are necessary or desirable
to (i) vest, perfect, or confirm, of record or otherwise,
in the Surviving Metrocall Corporation or the Surviving Arch
Corporation its right, title or interest in or under any of the
rights, properties, or assets of Metrocall or Arch acquired or
to be acquired by the Surviving Metrocall Corporation or the
Surviving Arch Corporation, respectively, as a result of, or in
connection with, the Transactions, or (ii) otherwise carry
out the purposes of this Agreement, Metrocall or Arch and its
proper officers and directors shall be deemed to have granted to
the Surviving Metrocall Corporation or the Surviving Arch
Corporation, respectively, an irrevocable power of attorney to
execute and deliver all such proper deeds, assignments, and
assurances in law and to do all acts necessary to proper to
vest, perfect, or confirm title to and possession of such
rights, properties, or assets in the Surviving Metrocall
Corporation or the Surviving Arch Corporation, respectively, and
otherwise to carry out the purposes of this Agreement; and the
proper officers and directors of Parent, the Surviving Metrocall
Corporation or the Surviving Arch Corporation are fully
authorized in the name of Metrocall, Arch or otherwise to take
any and all such action.
Section 2.15
Required
Withholding
. Each of the Exchange Agent and Parent shall be
entitled to deduct and withhold from any consideration payable
or otherwise deliverable pursuant to this Agreement to any
holder or former holder of Arch Common Stock or Metrocall Common
Stock such amounts as may be required to be deducted or withheld
therefrom under the Code or under any provision of state, local
or foreign Tax law or under any other applicable laws. To the
extent such amounts are so deducted or withheld, the amount of
such consideration shall be treated for all purposes under this
Agreement as having been paid to the Person to whom such
consideration would otherwise have been paid.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ARCH
Except as disclosed in the Arch SEC Reports (as defined in
Section 3.5) or as set forth in the disclosure schedule
delivered by Arch to Metrocall prior to the execution of this
Agreement (the
Arch Disclosure Schedule
),
Arch represents and warrants to Metrocall that:
Section 3.1
Organization
and Qualification
. Arch is a corporation duly organized,
validly existing and in good standing under the laws of the
state of Delaware and has the requisite corporate power and
authority to own, lease and operate its assets and properties
and to carry on its business as it is now being conducted. Arch
is qualified to do business and is in good standing in each
jurisdiction in which the properties owned, leased or operated
by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so
qualified and in good standing would not, when taken together
with all
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Section 3.2
Capitalization
.
(a) The authorized capital stock of Arch consists of
50,000,000 shares of Arch Common Stock, and 50,000,000 shares of
common stock, par value $0.001 per share (
Arch
Unclassified Common Stock
). As of the date hereof,
(i) 19,480,974 shares of Arch Common Stock were issued and
outstanding, all of which were validly issued and fully paid,
nonassessable and free of preemptive rights, (ii) no shares
of Arch Unclassified Common Stock were issued and outstanding,
(iii) 249,996 shares of Arch Common Stock were reserved for
issuance upon exercise of options issued pursuant to the
Archs 2002 Stock Incentive Plan, as amended (the
Arch Stock Plan
), (iv) no shares of Arch
Common Stock were reserved for issuance upon exercise of
outstanding warrants and options issued other than under the
Arch Stock Plan, and (v) 519,026 shares of Arch Common
Stock were reserved for issuance under Archs First Amended
Joint Plan of Reorganization under Chapter 11 of the
Bankruptcy Code, dated March 13, 2002, as modified and
approved by order of the United States Bankruptcy Court for the
District of Massachusetts, dated May 4, 2002 (the
Arch Plan of Reorganization
), including
certain shares the issuance of which is to be made through the
Arch Stock Plan (the Shares of Arch Common Stock referred to in
the foregoing clauses (i) (v), collectively, subject
to adjustment as set forth in
Schedule 3.2
, the
Arch Fully Diluted Shares
). Arch has filed
with the SEC or previously made available to Metrocall
(i) a complete and correct copy of the Arch Stock Plan,
(ii) the weighted average exercise price for all options
outstanding as of the date hereof, and (iii) complete and
correct copies of the relevant written agreements, including
amendments thereto, evidencing the grant of such options.
(b) Except as set forth in subsection (a) above or as
otherwise contemplated by this Agreement, there are no
outstanding subscriptions, options, calls, contracts,
commitments, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any
outstanding security, instrument or other agreement, and also
including any rights plan or other anti-takeover agreement,
obligating Arch or any of its Subsidiaries to issue, deliver,
sell, transfer, redeem, repurchase or otherwise acquire or cause
to be issued, delivered, sold, transferred, redeemed,
repurchased, or otherwise acquired, any shares of the capital
stock of
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Section 3.3
Subsidiaries
.
Identified in Section 3.3 of the Arch Disclosure Schedule
is each direct and indirect Subsidiary of Arch. Other than such
Subsidiaries, Arch does not, directly or indirectly, own any
equity or similar interest in or any interest convertible,
exchangeable or exercisable for, any equity or similar interest
in, any corporation, partnership, limited liability company,
joint venture or other entity. Each such Subsidiary (i) is
duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization and
has the requisite power and authority to own, lease and operate
its assets and properties and to carry on its business as it is
now being conducted; and (ii) is qualified to do business,
and is in good standing, in each jurisdiction in which the
properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary,
except in all cases where the failure to be so qualified and in
good standing would not, when taken together with all such other
failures, result in an Arch Material Adverse Effect. All of the
outstanding shares of capital stock or other equity interests of
each Subsidiary of Arch are validly issued, fully paid,
nonassessable and free of preemptive rights, and are owned
directly or indirectly by Arch, free and clear of any liens,
claims or encumbrances. There are no subscriptions, options,
warrants, rights, calls, contracts, voting trusts, proxies or
other commitments, understandings, restrictions or arrangements
relating to the issuance, sale, voting, transfer, ownership or
other rights with respect to any shares of capital stock or
other equity interests of any Subsidiary of Arch, including any
right of conversion or exchange under any outstanding security,
instrument or agreement. Arch has neither agreed nor is
obligated to make nor be bound by any written, oral or other
agreement, contract, subcontract, lease, binding understanding,
instrument, note, option, warranty, purchase order, license,
sublicense, insurance policy, benefit plan, commitment or
understanding of any nature, as of the date hereof or as may
hereinafter be in effect (other than as set forth in this
Agreement) under which it may become obligated to make any
future investment in, or capital contribution to, any other
Person. As used in this Agreement, (i) the term
Subsidiary
means, when used with reference to
any Person, any corporation, partnership, limited liability
company, joint venture or other entity of which such Person
(either acting alone or together with its other Subsidiaries)
owns, directly or indirectly, 50% or more of the voting stock or
other voting interests, the holders of which are entitled to
vote for the election of a majority of the board of directors or
any similar governing body of such corporation, partnership,
limited liability company, joint venture or other entity; and
(ii) the term Person means an individual, a
corporation, a limited liability company, a partnership, an
association, a trust or any other entity or organization,
including a governmental or political subdivision or any agency
or instrumentality thereof.
Section 3.4
Authority;
Non-Contravention; Approvals
. (a) Arch has full
corporate power and authority to enter into this Agreement and
any other agreement executed and delivered in connection
herewith (collectively, the
Ancillary
Agreements
) to which Arch is or will be a party and,
subject to the Arch Stockholders Approval (as defined in
Section 3.4(d)) and the Arch Required Statutory Approvals
(as defined in Section 3.4(c)), to consummate the
Transactions. This Agreement and the Ancillary Agreements to
which Arch is or will be a party have been duly and validly
approved by the Arch Board, and no other corporate proceeding on
the part of Arch is necessary to authorize the execution and
delivery of this Agreement or such Ancillary Agreements, and,
except for the Arch Stockholders Approval, the
consummation by Arch of the Transactions. This Agreement and the
Ancillary Agreements to which Arch is or will be a party have
been duly executed and delivered by Arch and, assuming the due
authorization, execution and delivery by the other parties
hereto and thereto, constitute valid and legally binding
agreements of Arch, enforceable against it in accordance with
their terms, except as such enforceability may be subject to the
effects of bankruptcy,
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(b) The execution and delivery of this Agreement and the
Ancillary Agreements to which Arch is or will be a party by Arch
do not, and the consummation of the Transactions will not,
violate, conflict with or result in a breach of any provision
of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate obligations of Arch
under, or result in a right of any other Person to terminate or
to accelerate obligations of Arch under, or result in the
creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Arch or any of its
Subsidiaries under, or result in any penalty or modification or
otherwise affect, any of the terms, conditions or provisions of,
(i) the respective charters or by-laws of Arch or any of
its Subsidiaries, (ii) other than as provided in
Section 3.4(c), and subject to obtaining (prior to the
Effective Time) the Arch Stockholders Approval, any
statute, law, ordinance, rule, regulation, judgment, decree,
order, injunction, writ, permit or license of any court or
governmental authority applicable to Arch or any of its
Subsidiaries or any of their respective properties or assets or
(iii) any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which Arch or
any of its Subsidiaries is now a party or by which Arch or any
of its Subsidiaries or any of their respective properties or
assets may be bound or affected. Excluded from the foregoing
sentences of this paragraph (b), insofar as they apply to the
terms, conditions or provisions described in clauses
(ii) and (iii) of the first sentence of this paragraph
(b) (and whether resulting from such execution and delivery or
consummation), are such violations, conflicts, breaches,
defaults, terminations, accelerations or creations of liens,
security interests, charges or encumbrances that would not,
individually or in the aggregate, have an Arch Material Adverse
Effect.
(c) Except for (i) the filing of the Registration
Statement and Joint Proxy Statement/ Prospectus (as such terms
are defined in Section 3.16) with the Securities and
Exchange Commission (the
SEC
) pursuant to the
Securities Exchange Act of 1934, as amended (the
Exchange Act
), and the Securities Act of
1933, as amended (the
Securities Act
), and
the declaration of the effectiveness thereof by the SEC,
(ii) the making of the Merger Filing, (iii) any
required filings with or approvals from the Nasdaq National
Market (
Nasdaq
), (iv) all filings and
approvals required to be made with or received from a
governmental agency, and the termination or expiration of any
waiting periods imposed, pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the
HSR
Act
), the Sherman Act and the Clayton Act and any
other Federal, state or foreign statutes, rules, regulations,
orders or decrees that are designed to prohibit, restrict or
regulate actions having the purpose or effect of monopolization
or restraint of trade (collectively, the
Antitrust
Laws
), (v) all filings and approvals required to
be made with or received from the Federal Communications
Commission (the
FCC
) pursuant to the
Communications Act of 1934, as amended (the
Communications Act
), the rules, regulations
and policies of the FCC (the
FCC Regulations
)
or any other Federal, state or foreign statutes, rules,
regulations, orders or decrees regulating or relating to the
paging business or the telecommunications business (the
Telecommunications Laws
), (vi) all
filings and approvals required to be made or received in
connection with any state securities or blue sky
laws, and (vii) all other filings and approvals required to
be made with or received from any local, state or Federal
governmental authorities required for a change in ownership of
transmission sites (the filings and approvals referred to in
clauses (i) through (vii) are collectively referred to
as the
Arch Required Statutory Approvals
), no
declaration, filing or registration with, or notice to, or
authorization, consent, waiver or approval of, any governmental
or regulatory body or authority is necessary for the execution
and delivery of this Agreement by Arch or the consummation by
Arch of the Transactions, other than such declarations, filings,
registrations, notices, authorizations, consents, waivers or
approvals which, if not made or obtained, as the case may be,
would not, individually or in the aggregate, have an Arch
Material Adverse Effect.
(d) The only vote of the holders of any class or series of
capital stock of Arch that will be necessary to consummate the
Arch Merger and the other Transactions is the approval of this
Agreement by the holders of a majority of the voting power of
the outstanding shares of Arch Common Stock on the record date
(the
Arch Stockholders Approval
).
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Section 3.5
Reports and
Financial Statements
. Since May 29, 2002, Arch has
filed with the SEC all forms, statements, reports and documents
(including all exhibits, post-effective amendments and
supplements thereto) required to be filed by it under each of
the Securities Act, the Exchange Act and the respective rules
and regulations promulgated thereunder, each of which, as
amended if applicable, complied when filed in all material
respects with all applicable requirements of the Securities Act,
the Exchange Act and the rules and regulations promulgated
thereunder. Other than Parent, Arch Acquiring Sub and Metrocall
Acquiring Sub with respect to the Transactions, no Subsidiary of
Arch is required to file any form, report or other document with
the SEC. Arch has previously made available to Metrocall, via
its EDGAR filings where available, copies (including all
exhibits, post-effective amendments and supplements thereto) of
its (a) Annual Report on Form 10-K for the fiscal year
ended December 31, 2003 (the
Arch 10-K
), as filed with the SEC,
(b) proxy and information statements relating to
(i) all meetings of its stockholders (whether annual or
special) and (ii) actions by written consent in lieu of a
stockholders meeting, in each case from May 29, 2002
until the date hereof, and (c) all other reports, including
annual reports, quarterly reports, and registration statements
filed by Arch with the SEC since May 29, 2002 (the
documents referred to in clauses (a), (b) and (c) are
collectively referred to as the
Arch SEC
Reports
). As of their respective dates, the Arch SEC
Reports did not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The audited financial statements of Arch included in
the Arch 10-K (collectively, the
Arch Financial
Statements
), have been prepared from, and are in
accordance with, the books and records of Arch, comply in all
material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent
basis (
GAAP
) (except as may be indicated
therein or in the notes thereto) and fairly present, in
conformity with GAAP, the consolidated financial position of
Arch and its Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows and
changes in financial position, if any for the periods then ended.
Section 3.6
Employee
Benefit Plans; Labor Matters; No Parachute Payments
.
(a) Section 3.6(a) of the Arch Disclosure Schedule
lists all material employee benefit plans (as defined in
Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended (
ERISA
)) and all material
bonus, stock option, stock purchase, stock appreciation rights,
phantom stock, restricted stock, profit sharing, cash or stock
based incentive, deferred compensation, retiree medical or life
insurance, supplemental, retirement, severance, retention,
employment, change in control, vacation, unemployment
compensation, workers compensation or other benefit plans,
programs or arrangements, whether legally enforceable or not and
whether written or oral, to which Arch or any of its
Subsidiaries is a party, with respect to which Arch or any of
its Subsidiaries has any obligation or which are maintained,
contributed to or sponsored by Arch or any of its Subsidiaries
for the benefit of any current or former employee, officer or
director of Arch or any of its Subsidiaries (collectively, the
Arch Benefit Plans
). With respect to each
Arch Benefit Plan, Arch has delivered, or prior to Closing will
deliver, or make available to Metrocall a true, complete and
correct copy of (i) such Arch Benefit Plan and all
amendments thereto and the most recent summary plan description
related to such Arch Benefit Plan, if a summary plan description
is required therefor, (ii) each trust agreement or other
funding arrangement relating to such Arch Benefit Plan,
(iii) the most recent annual report (Form 5500) filed with
the Internal Revenue Service (
IRS
) with
respect to such Arch Benefit Plan, (iv) the most recent
actuarial report or financial statement relating to such Arch
Benefit Plan, (v) the most recent determination letter
issued by the IRS with respect to such Arch Benefit Plan, if it
is qualified under Section 401(a) of the Code, and
(vi) a description setting forth the amount of any material
liability of Arch or its Subsidiaries as of the Closing Date for
payments more than 30 days past due. Neither Arch nor any
of its Subsidiaries has any express or implied commitment,
whether legally enforceable or not, (i) to create, incur
liability with respect to or cause to exist any other employee
benefit plan, program or arrangement, (ii) to enter into
any contract or agreement to provide compensation or benefits to
any individual or (iii) to modify, change or terminate any
Arch Benefit Plan, other than with respect to a modification,
change or termination required by ERISA, the Code or other
applicable law.
(b) Neither Arch nor any ERISA Affiliate of Arch
contributes to, has contributed to or is required to contribute
to a multiemployer plan (within the meaning of
Section 3(37) or 4001(a)(3) of ERISA) (a
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(c) Except as would not, individually or in the aggregate,
have an Arch Material Adverse Effect, (i) Arch and its
Subsidiaries have complied, and are now in compliance, with all
provisions of all laws and regulations applicable to Arch
Benefit Plans and each Arch Benefit Plan has been administered
in all material respects in accordance with its terms,
(ii) all contributions required to be made under the terms
of any of the Arch Benefit Plans as of the date of this
Agreement have been timely made or have been reflected on the
most recent consolidated balance sheet filed or incorporated by
reference in the Arch SEC Reports prior to the date of this
Agreement, (iii) no event has occurred and, to the
knowledge of Arch, there exists no condition or set of
circumstances in connection with which Arch or any of its
Subsidiaries could be subject to any liability under the terms
of such Arch Benefit Plans, ERISA, the Code or any other
applicable law (other than a claim for benefits in the ordinary
course) and (iv) no legal action, proceeding, suit or claim
is pending or, to the knowledge of Arch, threatened with respect
to any Arch Benefit Plan or its assets (other than claims for
benefits in the ordinary course).
(d) Except as would not have, individually or in the
aggregate, an Arch Material Adverse Effect: (i) each Arch
Benefit Plan which is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the
Code has received a favorable determination letter from the IRS
through the Economic Growth and Tax Relief Reconciliation Act of
2001 that it is so qualified and each trust established in
connection with any Arch Benefit Plan which is intended to be
exempt from federal income taxation under Section 501(a) of
the Code is so exempt, and no fact or event has occurred since
the date of such determination letter from the IRS to adversely
affect the qualified status of any such Arch Benefit Plan or the
exempt status of any such trust; (ii) there has been no
prohibited transaction (within the meaning of Section 406
of ERISA or Section 4975 of the Code) with respect to any
Arch Benefit Plan; (iii) neither Arch nor any of its
Subsidiaries has incurred any liability for any penalty or tax
arising under Section 4972, 4980, 4980B or 6652 of the Code
or any liability under Section 502 of ERISA, and, to the
knowledge of Arch, no fact or event exists which could give rise
to any such liability; (iv) no complete or partial
termination has occurred within the five years preceding the
date hereof with respect to any Arch Benefit Plan, and
(v) no Arch Benefit Plan is subject to Title IV of ERISA.
(e) Neither Arch nor any of its Subsidiaries maintains or
is required to contribute to any plan, fund or similar program
established or maintained by Arch or any of its Subsidiaries
outside the United States of America primarily for the benefit
of employees of Arch or any of its Subsidiaries residing outside
the United States of America, which fund or similar program
provides, or results in, retirement income, a deferral of income
in contemplation of retirement or payments to be made upon
termination of employment, and which plan is not subject to
ERISA or the Code to which Arch or any of its Subsidiaries would
have any liability.
(f) Any terminated benefit plan maintained, contributed to
or sponsored by Arch or any of its Subsidiaries has been
terminated in accordance with applicable laws, including ERISA,
and all benefits under any such terminated benefit plan have
been made in accordance with the terms of such benefit plan.
(g) Neither Arch nor any of its Subsidiaries is a party to
or otherwise bound by any collective bargaining or other labor
union contract applicable to Persons employed by Arch or any of
its Subsidiaries and no collective bargaining agreement is being
negotiated by Arch or any of its Subsidiaries. As of the date of
this Agreement, there is no union currently certified and no
union representation question or any
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(h) Arch has delivered or made available to Metrocall true,
complete and correct copies of (i) all employment
agreements with officers and employees of Arch and each of its
Subsidiaries with annual compensation in excess of $100,000
(including written summaries of oral agreements with respect to
(x) increases in compensation, (y) severance or
(z) other restrictions on the at-will status of any
employment arrangement) and all consulting agreements of Arch
and each of its Subsidiaries providing for annual compensation
in excess of $100,000, (ii) all severance plans,
agreements, programs and policies of Arch and each of its
Subsidiaries with or relating to their respective employees or
consultants, and (iii) all plans, programs, agreements and
other arrangements of Arch and each of its Subsidiaries with or
relating to their respective employees or consultants which
contain change of control provisions.
(i) No current or former employee, officer or director of
Arch or its Subsidiaries will be entitled to any additional
benefits or any acceleration of the time of payment or vesting
of any benefits under any Arch Benefit Plan, policy,
arrangement, agreement, trust or loan as a result of the
Transactions. No amount payable, or economic benefit provided,
by Arch or its Subsidiaries (including any acceleration of the
time of payment or vesting of any benefit) could be considered
an excess parachute payment under Section 280G
of the Code. No Person is entitled to receive any additional
payment from Arch or its Subsidiaries or any other Person in the
event that the excise tax of Section 4999 of the Code is imposed
on such Person.
(j) Neither the Arch nor any of its Subsidiaries has
effectuated (i) a plant closing (as defined in
the Workers Adjustment Retraining Notification Act, 29 U.S.C.
§§ 2101,
et seq.
(the
WARN
Act
)) affecting any site of employment or one or more
facilities or operating units within any site of employment of
Arch or any of its Subsidiaries; or (ii) a mass
layoff (as defined in the WARN Act) affecting any site of
employment or facility of Arch or any of its Subsidiaries; nor
has Arch and/or any of its Subsidiaries been engaged in layoffs
or employment terminations sufficient in number to trigger
application of any similar state or local law; and none of the
affected employees has suffered an employment loss
(as defined in the WARN Act) since ninety days prior to the date
hereof. Neither Arch nor any of its Subsidiaries has incurred
any material liability under the WARN Act or similar state laws
which remains unpaid or unsatisfied.
(k) Except as would not have, individually or in the
aggregate, an Arch Material Adverse Effect, (i) Arch and
its Subsidiaries are in compliance with the terms and provisions
of the Immigration Reform and Control Act of 1986, as amended,
and all related regulations promulgated thereunder;
(ii) Arch and its Subsidiaries are in compliance with all
laws governing the employment of its employees, including, but
not limited to, all such federal, state, and local laws relating
to wages, hours, collective bargaining, discrimination,
retaliation, civil rights, safety and health, workers
compensation and the collection and payment of withholding
and/or Social Security taxes and similar taxes; (iii) no
employee or independent contractor has filed a complaint for
which Arch has received notice and Arch has not conducted any
internal investigation regarding conduct that may constitute a
violation of any federal, state or local law governing
employment; (iv) since December 31, 2003, to the
knowledge of Arch as of the date hereof, no officer, manager or
other key employee of Arch or any of its Subsidiaries has
received, and no officer has given, notice to terminate his
employment; (v) there are no officers or employees of Arch
or any of its Subsidiaries who are on secondment, maternity
leave or absent on grounds of disability, military or other
leave of absence
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(l) Neither Arch nor any of its Subsidiaries has extended a
loan to any employee for which amounts are outstanding, except
for advances in respect of travel and entertainment expenses in
the ordinary course of business. Since December 31, 2002,
no such loans have been forgiven.
(m) All salaries and wages and other benefits, bonuses and
commissions of all directors, officers or employees of Arch and
its Subsidiaries have, to the knowledge of Arch, to the extent
due, been paid or discharged in full, including, but not limited
to, all payments due for calendar year 2003 bonuses.
(n) No Arch Benefit Plan is, or within the last three
(3) years has been, the subject of examination or audit by
any governmental entity or agency.
(o) Arch does not believe that there has been, and does not
believe or intend that consummation of the Transactions would
constitute or be deemed to be, a Change in Control
with respect to Archs Management Long-Term Incentive Plan,
the Arch Stock Plan or any related Restricted Stock Agreement or
Nonstatutory Stock Option Agreement or under the respective
employment agreements of Messrs. Baker, Daniels and Pottle,
in each case as such term is defined therein. Arch and its
Subsidiaries do not believe that they have taken any action or
omitted to take any action which would or could reasonably be
expected to cause a Change in Control under any of
Archs Management Long-Term Incentive Plan, the Arch Stock
Plan or any related Restricted Stock Agreement or under the
respective employment agreements of Messrs. Baker, Daniels
and Pottle or otherwise provide a reasonable basis for any
participant therein or party thereto, as applicable, to believe
that a Change in Control has occurred or will occur
as a consequence of the consummation of the Transactions.
Section 3.7
Certain Tax
Matters.
Neither Arch nor, to the knowledge of Arch, any of
its affiliates has taken, agreed to take, or intends to take,
any action that would reasonably be expected to prevent the
Merger from qualifying as a transfer by the holders of Metrocall
Common Stock and Arch Common Stock of all such shares of such
stock (other than Appraisal Shares and shares of such stock held
by either Metrocall or Arch) to Parent in exchange for all the
issued and outstanding shares of Parent Common Stock and, in the
case of holders of Metrocall Common Stock, cash, which shares of
such stock shall be the only shares of such stock issued and
outstanding on the Closing Date, all in accordance with and
governed by Section 351 of the Code. Arch is not aware of
any agreement, plan or other circumstances that would reasonably
be expected to prevent the Merger from qualifying as an exchange
described in Section 351 of the Code.
Section 3.8
Contracts; Debt
Instruments.
There is no loan or credit agreement, note,
bond, mortgage, indenture or lease, or any other contract,
license or agreement to which either Arch or any of its
Subsidiaries is a party or by which any of them or any of their
respective properties or assets is bound that is material to the
business, financial condition or results of operations of Arch
and its Subsidiaries taken as a whole (collectively, the
Arch Material Contracts
) that has not been
disclosed in the Arch SEC Reports. All Arch Material Contracts
are in full force and effect and are the valid and legally
binding obligations of the parties thereto and are enforceable
in accordance with their respective terms. Neither Arch nor any
Subsidiary of Arch, nor, to the knowledge of Arch, any other
party to any Arch Material Contract, is in violation of or in
default under (nor does there exist any condition which with the
passage of time or the giving of notice would reasonably be
expected to cause such a violation of or default under) any Arch
Material Contract, except for violations or defaults that would
not have, individually or in the aggregate, an Arch Material
Adverse Effect. No party to any Arch Material Contract has given
notice of any action to terminate, cancel,
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Section 3.9
Litigation.
There is no suit, claim, charge, action, proceeding,
arbitration or investigation pending or, to the knowledge of
Arch, threatened against Arch or any Subsidiary of Arch or any
of their respective officers or directors in their capacity as
such before any governmental authority that
(i) individually (or together with any series of suits,
claims, charges, actions, proceedings, arbitrations or
investigations arising from substantially similar facts) would
reasonably be expected to result in liability to Arch and its
Subsidiaries, collectively, of more than $100,000 or materially
delay the Closing or (ii) would have, individually or in
the aggregate, an Arch Material Adverse Effect, and, to the
knowledge of Arch, there are no existing facts or circumstances
that would reasonably be expected to result in such a suit,
claim, charge, action, proceeding, arbitration or investigation.
Arch is not aware of any facts or circumstances which would
reasonably be expected to result in the denial of insurance
coverage under policies issued to Arch and its Subsidiaries in
respect of such suits, claims, charges, actions, proceedings,
arbitrations and investigations for which Arch has a reasonable
expectation of obtaining insurance coverage, except in any case
as would not have, individually or in the aggregate, an Arch
Material Adverse Effect. Neither Arch nor any Subsidiary of Arch
is subject to any outstanding order, writ, injunction or decree
which would have, individually or in the aggregate, an Arch
Material Adverse Effect.
Section 3.10
Insurance.
All material insurance policies of Arch and its
Subsidiaries, including those policies set forth in
Section 3.10 of the Arch Disclosure Schedule, are in full
force and effect. Neither Arch nor any of its Subsidiaries is in
breach or default thereunder (including with respect to the
payment of premiums or the giving of notices), and Arch does not
know of any occurrence or any event which (with notice or the
lapse of time or both) would constitute such a breach or default
or permit termination, modification or acceleration under the
policy, except for such breaches or defaults which, individually
or in the aggregate, would not have an Arch Material Adverse
Effect.
Section 3.11
Intellectual
Property.
Except as would not, individually or in the
aggregate, have an Arch Material Adverse Effect, (i) Arch
and its Subsidiaries own or possess adequate licenses or other
valid rights to use all patents, patent applications, patent
rights, trademarks, trademark registrations, trademark rights,
trade names, trade dress, trade name rights, copyrights and
copyright registrations and applications, copyright rights,
service marks, service mark registrations, trade secrets,
applications for trademarks and for service marks, know-how,
other intellectual property rights and other proprietary rights
and information used or held for use in connection with the
respective businesses of Arch and its Subsidiaries as currently
conducted (collectively, the
Arch IP
), free
and clear of all liens, and (ii) Arch is unaware of any
assertion or claim challenging the ownership, use or validity of
any of the foregoing. As of the date of this Agreement,
Section 3.11
of the Arch Disclosure Schedule
contains a complete list of all material Arch IP owned by Arch
and its Subsidiaries that has been registered or with respect to
which an application for registration or patent application has
been filed. The written agreements pursuant to which any Arch IP
has been licensed to Arch or any of its Subsidiaries, are valid
and binding obligations of Arch or such Subsidiary and, to the
knowledge of Arch, each other party thereto, enforceable in
accordance with their terms, and there are no material breaches
or defaults thereunder. To the knowledge of Arch, the conduct of
the respective businesses of Arch and its Subsidiaries as
currently conducted does not infringe upon any patents, patent
applications, patent rights, trademarks, trademark
registrations, trademark rights, trade names, trade dress, trade
name rights, copyrights and copyright registrations and
applications, copyright rights, service marks, service mark
registrations, trade secrets, applications for trademarks and
for service marks, know-how, other intellectual property rights
or other proprietary rights or information of any third party
that would have, individually or in the aggregate, an Arch
Material Adverse Effect. To the knowledge of Arch, there are no
infringements of any proprietary rights owned by or licensed by
or to Arch or any Subsidiary of Arch, except as would not have
an Arch Material Adverse Effect.
Section 3.12
Taxes.
Except for such matters that would not have, individually or
in the aggregate, an Arch Material Adverse Effect, (i) Arch
and each of its Subsidiaries has timely filed or shall timely
file all
A-20
Section 3.13
Interested
Party Transactions.
Since December 31, 2002, no
executive officer, director or stockholder of Arch or any of its
Subsidiaries has engaged in any business dealings with Arch or
any of its Subsidiaries (other than any such business dealings
that would not be required to be disclosed in a proxy statement
satisfying the requirements of Regulation 14A promulgated
under the Exchange Act if filed on the date hereof).
Section 3.14
Absence of
Undisclosed Liabilities.
Neither Arch nor any of its
Subsidiaries has as of the date hereof any liabilities or
obligations (whether absolute, accrued, contingent or otherwise)
of any nature, except liabilities, obligations or contingencies
(a) which are adequately accrued or reserved against in the
Arch Financial Statements or reflected in the notes thereto,
(b) which were incurred in the ordinary course of business
and consistent with past practices since December 31, 2003,
(c) which would not, individually or in the aggregate, have
an Arch Material Adverse Effect or (d) which are of a
nature not required to be reflected in the consolidated
financial statements of Arch and its Subsidiaries, including the
notes thereto, prepared in accordance with GAAP consistently
applied.
Section 3.15
Absence of
Certain Changes.
Except as contemplated by this Agreement,
since December 31, 2003, (a) Arch and each of its
Subsidiaries has conducted its business in all material respects
in the ordinary course consistent with past practices,
(b) there has not been any change or development, or
combination of changes or developments that, individually or in
the aggregate, would have an Arch Material Adverse Effect,
(c) there has not been any declaration, setting aside or
payment of any dividend or other distribution with respect to
any shares of capital stock of Arch or any of its Subsidiaries,
or any repurchase, redemption or other acquisition by Arch or
any of its Subsidiaries of any outstanding shares of capital
stock or other securities of, or other ownership interests in,
Arch or any such Subsidiary, (d) there has not been any
amendment of any term of any outstanding security of Arch or any
of its Subsidiaries, (e) there has not been any change in
any method of accounting or accounting practice by Arch or any
of its Subsidiaries, except for any such change required by
reason of a concurrent change in GAAP and (f) there has not
been any negotiation or agreement by Arch to do any of such
things (other than as relate to the Transactions).
Section 3.16
Registration
Statement and Proxy Statement.
None of the information to be
supplied by Arch for inclusion in (i) the Registration
Statement on Form S-4 to be filed under the Securities Act
with the SEC in connection with the Merger for the purpose of
registering the shares of Parent Common Stock to be issued in
the Merger (the
Registration Statement
) or
(ii) the proxy statement and prospectus conforming to the
prospectus forming part of the Registration Statement to be
distributed in connection with Archs and Metrocalls
meetings of their respective stockholders to vote upon this
Agreement and the Transactions and any amendments thereof or
supplements thereto (together, the
Joint Proxy
Statement/ Prospectus
), will, in the case of the Joint
Proxy Statement/ Prospectus, at the time of the mailing of the
Joint Proxy Statement/ Prospectus and at the time of the
meetings of stockholders of Metrocall and Arch to be held in
connection with the Transactions, or, in the case of the
Registration Statement, as amended or supplemented, at the time
it becomes effective and at the time of such meetings of the
stockholders of Metrocall and Arch, contain any untrue statement
of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under
which they are made, not misleading. The Joint Proxy Statement/
Prospectus will, as of its mailing date, comply as to form in
all material respects with all applicable laws, including the
provisions of the Securities Act and the Exchange Act and the
rules and regulations promulgated thereunder, except that no
representation is made by Arch with respect to information
supplied by Metrocall or the stockholders of Metrocall for
inclusion in the Joint Proxy Statement/ Prospectus.
A-21
Section 3.17
Reorganization.
None of Arch or its Subsidiaries has willfully taken or
agreed to take, nor does it intend to take, any action that
would prevent the Merger from qualifying as an exchange
described in Section 351 of the Code.
Section 3.18
Board
Approval.
The Arch Board has (a) declared the
advisability of and approved this Agreement and the Merger,
(b) determined that the Merger is in the best interests of
the stockholders of Arch and is on terms that are fair to such
stockholders and (c) recommended that the stockholders of
Arch adopt and approve this Agreement and the Merger.
Section 3.19
Brokers and
Finders.
Arch has not entered into any contract, arrangement
or understanding with any Person or firm which may result in the
obligation of Arch or Parent to pay any finders fees,
brokerage or agent commissions or other like payments in
connection with the Transactions, except Bear,
Stearns & Co. Inc. (
Arch Financial
Advisor
) and Berenson & Company, whose fees
and expenses will be paid by Arch in accordance with Archs
respective agreements with Arch Financial Advisor and Berenson
& Company, based upon arrangements made by or on behalf of
Arch and previously disclosed to Metrocall.
Section 3.20
Opinion of
Financial Advisor.
Arch Financial Advisor has rendered an
opinion to the Arch Board to the effect that, as of the date
hereof, the Merger Consideration is fair to the holders of Arch
Common Stock from a financial point of view; it being understood
and acknowledged by Arch that such opinion has been rendered for
the benefit of the Arch Board and is not intended to, and may
not, be relied upon by Metrocall, its affiliates or their
respective Subsidiaries. Arch Financial Advisor has authorized
the inclusion of its opinion in the Joint Proxy Statement/
Prospectus.
Section 3.21
Hazardous
Substances and Hazardous Waste
. To the knowledge of Arch:
(a) Except as would not have an Arch Material Adverse
Effect, (i) there is not now, nor has there ever been, any
disposal, Release (as defined below) or threatened Release of
Hazardous Material (as defined below) on, from or under
properties now or ever owned or leased by or to Arch or its
Subsidiaries (the
Arch Properties
);
(ii) there has not been generated by or on behalf of Arch
or its Subsidiaries any Hazardous Material; and (iii) no
material Hazardous Material has been disposed of or allowed to
be disposed of by Arch or its Subsidiaries, by any other party,
on or off any of the Arch Properties during the period that Arch
or its Subsidiaries owned or leased the property which may give
rise under applicable Environmental Law (as defined below) to a
clean-up responsibility, personal injury liability or property
damage claim against Arch or its Subsidiaries or Arch or its
Subsidiaries being named a responsible party for any such
clean-up costs, personal injuries or property damage or create
any cause of action by any third party against Arch.
(b) (i) None of Archs or its Subsidiaries
operations at the Arch Properties are (or, with respect to past
Arch Properties and Arch Properties of former Subsidiaries, were
at the time of disposition) in violation in any material respect
of any Environmental Law (with respect to past Arch Properties
and Arch Properties of former Subsidiaries, Environmental Laws
in effect at the time of disposition); (ii) Arch and its
Subsidiaries have obtained and are in all material respects in
compliance with all necessary permits or authorizations that are
required under Environmental Laws to operate their facilities,
assets and businesses; (iii) no Environmental Claims (as
defined below) have been asserted against Arch or its
Subsidiaries or any predecessor in interest, nor does Arch have
knowledge or notice of any threatened in writing or pending
Environmental Claim against Arch or any of its Subsidiaries or
any predecessor in interest which is reasonably likely to result
in Environmental Liabilities (as defined below) that,
individually or in the aggregate, would have an Arch Material
Adverse Effect; and (iv) no Environmental Claim has been
asserted against any facilities that may have received Hazardous
Materials generated by Arch or any of its Subsidiaries or any
predecessor in interest which is reasonably likely to result in
Environmental Liabilities that, individually or in the
aggregate, would have an Arch Material Adverse Effect.
(c) Arch has delivered to Metrocall true and complete
copies of all material environmental reports, studies,
investigations or correspondence regarding any Environmental
Liabilities of Arch or any environmental conditions at any of
the Arch Properties which are in possession of Arch or its
agents.
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(d) For purposes of this Agreement:
(i)
Environmental Claims
refers to any
complaint, summons, citation, directive, order, claim,
litigation, investigation, notice of violation, judicial or
administrative proceeding, judgment or written communication
from any governmental agency, department, bureau, office or
other authority, or any third party involving violations of
Environmental Laws or Releases of Hazardous Materials from or
onto (i) any assets, properties or businesses of a Company
or its Subsidiaries or any predecessor in interest or
(ii) any facilities which received Hazardous Materials
generated by a Company or its Subsidiaries or any predecessor in
interest.
(ii)
Environmental Laws
includes the
Comprehensive Environmental Response, Compensation and Liability
Act (
CERCLA
), 42 U.S.C. 9601
et seq.,
as amended; the Resource Conservation and Recovery Act
(
RCRA
), 42 U.S.C. 6901
et seq.,
as
amended; the Clean Air Act (
CAA
), 42 U.S.C.
7401 et seq., as amended; the Clean Water Act
(
CWA
), 33 U.S.C. 1251
et seq.,
as
amended; the Occupational Safety and Health Act
(
OSHA
), 29 U.S.C. 655
et seq.,
and any other federal, state, local or municipal laws,
statutes, regulations, rules or ordinances imposing liability or
establishing standards of conduct for protection of the
environment.
(iii)
Environmental Liabilities
means
any monetary obligations, losses, liabilities (including strict
liability), damages, punitive damages, consequential damages,
treble damages, costs and expenses (including all reasonable
out-of-pocket fees, disbursements and expenses of counsel,
out-of-pocket expert and consulting fees and out-of-pocket costs
for environmental site assessments, remedial investigation and
feasibility studies), fines, penalties, sanctions and interest
incurred as a result of any Environmental Claim filed by any
governmental authority or any third party which relate to any
violations of Environmental Laws, Remedial Actions, Releases or
threatened Releases of Hazardous Materials from or onto
(i) any property presently or formerly owned by a Company
or any of its Subsidiaries or a predecessor in interest, or
(ii) any facility which received Hazardous Materials
generated by a Company or any of its Subsidiaries or a
predecessor in interest.
Section 3.22
Compliance
with Laws.
Neither Arch nor any of its Subsidiaries is in
violation of, or has violated or, to the knowledge of Arch,
received written notice of any violation of, any applicable
provisions of any laws, statutes, ordinances, regulations,
judgments, injunctions, orders or consent decrees, except for
any such violations that, individually or in the aggregate,
would not have an Arch Material Adverse Effect. To the knowledge
of Arch, no investigation, proceeding, action or review relating
to Arch or any of its
A-23
Section 3.23
Permits and
Licenses
. (a) Arch or its appropriate Subsidiaries hold
all material approvals, licenses, permits, registrations and
similar type authorizations necessary for the lawful ownership,
lease, operation, use or maintenance of its properties and the
lawful conduct of its business as now conducted, including,
without limitation, those issued under or pursuant to the
Communications Act, the FCC Regulations and the
Telecommunications Laws (collectively, the
Arch
Permits
). All Arch Permits are validly issued and in
full force and effect, except as would not, individually or in
the aggregate, have an Arch Material Adverse Effect. Each of
Arch and its Subsidiaries is in compliance in all respects with
the terms and conditions of each Arch Permit, except where the
failure to be in compliance would not, individually or in the
aggregate, have an Arch Material Adverse Effect. There is not
pending, or to the knowledge of Arch, threatened, any action by
or before any governmental or regulatory authority to revoke,
suspend, cancel, rescind, or modify in any material respect any
of the Arch Permits. Arch has timely made all regulatory filings
required, and paid all fees, assessments and contribution
requirements imposed, by any governmental authority, and all
such filings and the calculation of such fees, are accurate in
all material respects, except where the failure to make such
filing or pay such fees or assessments would not, individually
or in the aggregate, have an Arch Material Adverse Effect.
(b)
Section 3.23(b)
of the Arch Disclosure
Schedule contains a true and complete list of all Arch Permits
issued to Arch or any of its Subsidiaries by the FCC (the
Arch FCC Licenses
) and all pending
applications for Arch Permits that would be Arch FCC Licenses,
if issued or granted. No such Arch FCC License is subject to any
restriction or condition which would limit in any material
respect the full operation of the business of Arch and its
Subsidiaries as now operated, other than those restrictions or
conditions routinely imposed in conjunction with such FCC
Licenses. The Arch FCC Licenses are in good standing, are in
full force and effect in all material respects and are not
materially impaired by any act or omission of Arch, its
Subsidiaries, or any of their respective officers, directors, or
employees.
Section 3.24
Real
Property
. (a)
Section 3.24(a)
of the Arch
Disclosure Schedule sets forth a list of the addresses of all
real property owned by Arch or any of its Subsidiaries (the
Arch Owned Real Property
). Either Arch or its
Subsidiaries, as applicable, has good and marketable fee title
to each of the Arch Owned Real Property, except for defects in
title, easements, restrictive covenants and similar encumbrances
or impediments that, in the aggregate, do not materially
interfere with the ability of Arch and its Subsidiaries to
conduct their business, taken as a whole, as currently
conducted. There is no pending or, to the knowledge of Arch,
threatened condemnation or eminent domain proceeding with
respect to any Arch Owned Real Property. All of the buildings,
fixtures and other improvements located on the Arch Owned Real
Property are in good operating condition and repair in all
material respects.
(b)
Section 3.24(b)
of the Arch Disclosure
Schedule sets forth a list of all leases and similar agreements
(the
Arch Leases
) for real property leased,
subleased or licensed by Arch or any of its Subsidiaries (the
Arch Leased Real Property
) and the location
of the premises subject to the Arch Leases, except such Arch
Leases the absence of which, individually or in the aggregate,
would not materially interfere with the ability of Arch and its
Subsidiaries to conduct their business, taken as a whole, as
currently conducted. Neither Arch nor any of its Subsidiaries
nor, to the knowledge of Arch, any other party to any Arch
Lease, is in material default under any Arch Lease. Each Arch
Lease is valid and binding against Arch or any of its
Subsidiaries party thereto and, to the knowledge of Arch, each
other party thereto, and in full force and effect, and all base
rent payable by Arch or any of its Subsidiaries, as tenant
thereunder, is current. Arch or one of its Subsidiaries has a
valid leasehold interest in and the right to use or occupy each
such parcel of real property leased by it, free and clear of all
liens, except for any of the following: (i) liens for
taxes, assessments or governmental charges or levies
(A) not yet due or (B) delinquent and being diligently
contested in good faith; (ii) statutory liens of carriers,
warehousemen, mechanics, materialmen and the like arising in the
ordinary course of business and for obligations not yet due and
payable; (iii) easements, restrictive covenants, rights of
way and other similar imperfections of title that do not
materially adversely affect the use of the property as presently
used; (iv) zoning, building and other similar restrictions
that do not materially adversely affect the use of the property
as presently used; (v) temporary security interests in
favor of suppliers of goods for which
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Section 3.25
State Takeover
Statutes.
The Arch Board has approved the execution of this
Agreement and the Ancillary Agreements to which Arch is or will
be a party and authorized and approved the Merger prior to the
execution by Arch of this Agreement and such Ancillary
Agreements and, to the knowledge of Arch, the restrictions on
business combinations contained in Section 203 of the DGCL
will not apply to this Agreement, the Ancillary Agreements, the
Transactions or the transactions contemplated by the Ancillary
Agreements. The Arch Board has taken all such action required to
be taken by it to provide that this Agreement, the Ancillary
Agreements, the Transactions and the transactions contemplated
by the Ancillary Agreements shall be exempt from the
restrictions on business combinations contained in any
moratorium, control share, fair
price or other anti-takeover laws or regulations of any
state (including Section 203 of the DGCL).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF METROCALL
Except as disclosed in the Metrocall SEC Reports (as defined in
Section 4.5) or as set forth in the disclosure schedule
delivered by Metrocall to Arch prior to the execution of this
Agreement (the
Metrocall Disclosure Schedule
and, together with the Metrocall Disclosure Schedule, the
Disclosure Schedules
), Metrocall represents
and warrants to Arch that:
Section 4.1
Organization
and Qualification.
Metrocall is a corporation duly
organized, validly existing and in good standing under the laws
of the state of Delaware and has the requisite corporate power
and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being
conducted. Metrocall is qualified to do business and is in good
standing in each jurisdiction in which the properties owned,
leased or operated by it or the nature of the business conducted
by it makes such qualification necessary, except where the
failure to be so qualified and in good standing would not, when
taken together with all other such failures, have a Metrocall
Material Adverse Effect (as defined below). True, accurate and
complete copies of Metrocalls certificate of
incorporation, as amended (the
Metrocall Certificate of
Incorporation
) and bylaws, as amended (the
Metrocall Bylaws
), in each case as in effect
the date hereof, including all amendments thereto, have been
delivered to Arch. Metrocall is not in default in any respect in
the performance, observation or fulfillment of any provision of
the Metrocall Certificate of Incorporation or Metrocall Bylaws.
For purposes of this Agreement,
Metrocall Material
Adverse Effect
means any event, development, change or
effect that, individually or when taken together with all other
such events, developments, changes or effects, (x) is or
would reasonably be expected to be materially adverse to the
business, operations, condition (financial or otherwise), assets
or liabilities of Metrocall and its Subsidiaries (as defined in
Section 3.3), taken as a whole or (y) prevents
Metrocall from complying with its obligations under this
Agreement;
provided
, that none of the following shall be
taken into account in determining whether there has been or is a
Metrocall Material Adverse Effect: (i) any change in the
market price or trading volume of Metrocall Common Stock;
(ii) any failure by Metrocall to meet internal projections
or forecasts or published revenue or earnings predictions; or
(iii) any adverse change or effect (including any
litigation, loss of employees, cancellation of or delay in
customer orders, reduction in revenues or income or disruption
of business relationships) arising from or attributable or
relating to (1) the announcement or pendency of the
Transactions, (2) conditions generally affecting the
industry or industry sector in which Metrocall or any of its
Subsidiaries participates, the U.S. economy as a whole or any
foreign economy in any location where Metrocall or any of its
Subsidiaries has material operations or sales (which changes in
each case do not disproportionately and adversely affect
Metrocall or its Subsidiaries in any material respect),
(3) legal, accounting, investment banking or other fees or
expenses incurred solely in connection with the Transactions,
(4) the payment of any amounts due to, or the provision of
any other benefits to, any officers or
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Section 4.2
Capitalization
.
(a) The authorized capital stock of Metrocall consists of
7,500,000 shares of Metrocall Common Stock, and 8,500,000 shares
of Series A Preferred Stock, par value $0.01 per share
(
Metrocall Preferred Stock
). As of the date
hereof, (i) 5,462,285 shares of Metrocall Common Stock were
issued and outstanding, all of which were validly issued and
fully paid, nonassessable and free of preemptive rights,
(ii) 2,402,776 shares of Metrocall Preferred Stock were
issued and outstanding, all of which were validly issued and
fully paid, nonassessable and free of preemptive rights,
(iii) 404,000 shares of Metrocall Common Stock were
reserved for issuance upon exercise of options issued and
outstanding pursuant to the Metrocall 2003 Stock Option Plan
(the
Metrocall Option Plan
),
(iv) 125,000 shares of Metrocall Common Stock were reserved
for issuance upon exercise of outstanding warrants and options
issued other than under the Metrocall Option Plan, and
(v) 38,840 shares of Metrocall Common Stock and 6,170
shares of Metrocall Preferred Stock were reserved for issuance
under the Second Amended Joint Plan of Reorganization under
Chapter 11 of the Bankruptcy Code, dated June 18, 2002
(the
Metrocall Plan of Reorganization
), to
satisfy certain unpaid claims in connection with
Metrocalls emergence from Chapter 11 bankruptcy
proceedings on October 8, 2002 (the shares of Metrocall
Common Stock referred to in the foregoing clauses (i)(v),
collectively, the
Metrocall Fully Diluted
Shares
). Metrocall has filed with the SEC or
previously made available to Arch (i) a complete and
correct copy of the Metrocall Option Plan, (ii) a complete
and correct list setting forth the weighted average exercise
price for all options outstanding as of the date hereof and
(iii) complete and correct copies of the relevant written
agreements, including amendments thereto, evidencing the grant
of such options.
(b) Except as set forth in subsection (a) above or as
otherwise contemplated by this Agreement, there are no
outstanding subscriptions, options, calls, contracts,
commitments, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any
outstanding security, instrument or other agreement and also
including any rights plan or other anti-takeover agreement,
obligating Metrocall or any of its Subsidiaries to issue,
deliver, sell, transfer, redeem, repurchase or otherwise acquire
or cause to be issued, delivered, sold, transferred, redeemed,
repurchased or otherwise acquired, any shares of the capital
stock of Metrocall or obligating Metrocall or any of its
Subsidiaries to grant, extend or enter into any such agreement
or commitment. There are no voting trusts, proxies or other
agreements or understandings to which Metrocall or any of its
Subsidiaries is a party or is bound with respect to the voting
of any shares of capital stock of Metrocall. The Metrocall
Option Plan does not (i) prohibit the assumption of such
Metrocall Option Plan (and the options granted thereunder) by
Parent and the substitution of Parent Common Stock as provided
in Section 2.1(b) of this Agreement and does not require
the consent or approval of the holders of the outstanding
options under the Metrocall Option Plan, the stockholders of
Metrocall, or any other Person in order to effect such
assumption and substitution or (ii) require the
acceleration of the exercise schedule or vesting provisions
currently in effect for such options.
Section 4.3
Subsidiaries
.
(a) Identified in
Section 4.3
of the Metrocall
Disclosure Schedule is each direct and indirect Subsidiary of
Metrocall. Other than such Subsidiaries, Metrocall does not,
directly or indirectly, own any equity or similar interest in or
any interest convertible, exchangeable or exercisable for, any
equity or similar interest in, any corporation, partnership,
limited liability company, joint venture or other entity. Each
such Subsidiary (i) is duly organized, validly existing and
in good standing under the laws of its jurisdiction of
incorporation or organization and has the requisite power and
authority to own, lease and operate its assets and properties
and to carry on its business as it is now being conducted; and
(ii) is qualified to do business, and is in good standing, in
each jurisdiction in which the properties owned, leased or
operated by it or the nature of the business conducted by it
makes such qualification necessary, except in all cases where
the failure to be so qualified and in good standing would not,
when taken together with all such other
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(b) The authorized capital stock of Parent consists of one
hundred shares of common stock, par value $.0001 per share, of
which 100 shares are issued and outstanding, all of which issued
and outstanding shares are held of record and beneficially by
Metrocall. The authorized capital stock of each of Arch
Acquiring Sub and Metrocall Acquiring Sub consists of one
hundred shares of common stock, par value $.01 per share, of
which 100 shares are issued and outstanding, all of which issued
and outstanding shares are held of record and beneficially by
Parent. None of Parent, Arch Acquiring Sub or Metrocall
Acquiring Sub has conducted any activities or incurred any
liabilities other than in connection with its organization and
the negotiation and execution of this Agreement and the
consummation of the transactions contemplated hereby. Parent has
no subsidiaries other than Arch Acquiring Sub and Metrocall
Acquiring Sub, and neither Arch Acquiring Sub nor Metrocall
Acquiring Sub has any subsidiaries.
Section 4.4
Authority;
Non-Contravention; Approvals
. (a) Metrocall has full
corporate power and authority to enter into this Agreement and
the Ancillary Agreements to which Metrocall is or will be a
party and, subject to the Metrocall Stockholders Approval
(as defined in Section 4.4(d)) and the Metrocall Required
Statutory Approvals (as defined in Section 4.4(c)), to
consummate the Transactions. This Agreement and the Ancillary
Agreements to which Metrocall is or will be a party have been
duly and validly approved by the Metrocall Board and no other
corporate proceeding on the part of Metrocall is necessary to
authorize the execution and delivery of this Agreement or such
Ancillary Agreements and, except for the Metrocall
Stockholders Approval, the consummation by Metrocall of
the Transactions. This Agreement and the Ancillary Agreements to
which Metrocall is or will be a party have been duly executed
and delivered by Metrocall and, assuming the due authorization,
execution and delivery by the other parties hereto and thereto,
constitute valid and legally binding agreements of Metrocall,
enforceable against it in accordance with their terms, except as
such enforceability may be subject to the effects of bankruptcy,
insolvency, reorganization, moratorium and other laws relating
to or affecting the rights of creditors and of general
principles of equity.
(b) The execution and delivery of this Agreement and the
Ancillary Agreements to which Metrocall is or will be a party by
Metrocall do not, and the consummation of the Transactions will
not, violate, conflict with or result in a breach of any
provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate
obligations of Metrocall under, or result in a right of any
other Person to terminate or to accelerate obligations of
Metrocall under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or
assets of Metrocall or any of its Subsidiaries under, or result
in any penalty or modification or otherwise affect, any of the
terms, conditions or provisions of, (i) the respective
charters or by-laws of Metrocall or any of its Subsidiaries,
(ii) other than as provided in Section 4.4(c), and
subject to obtaining (prior to the Effective Time) the Metrocall
Stockholders Approval, any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or
license of any court or governmental authority applicable to
Metrocall or any of its Subsidiaries or any of their respective
properties or assets or (iii) any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or
agreement of any kind to which Metrocall or any of its
Subsidiaries is now a party or by which Metrocall or any of its
Subsidiaries or any of their respective properties or assets may
be bound
A-27
(c) Except for (i) the filing of the Registration
Statement and Joint Proxy Statement/ Prospectus with the SEC
pursuant to the Exchange Act and the Securities Act, and the
declaration of the effectiveness thereof by the SEC,
(ii) the making of the Merger Filing, (iii) any
required filings with or approvals from The Nasdaq SmallCap
Market (
Nasdaq SmallCap
), (iv) all
filings and approvals required to be made with or received from
a governmental agency, and the termination or expiration of any
waiting periods imposed, pursuant to the Antitrust Laws,
(v) all filings and approvals required to be made with or
received from the FCC pursuant to the Communications Act, the
FCC Regulations or the Telecommunications Laws, (vi) all
filings and approvals required to be made or received in
connection with any state securities or blue sky
laws, and (vii) all other filings and approvals required to
be made with or received from any local, state or Federal
governmental authorities required for a change in ownership of
transmission sites (the filings and approvals referred to in
clauses (i) through (vii) are collectively referred to
as the
Metrocall Required Statutory
Approvals
), no declaration, filing or registration
with, or notice to, or authorization, consent, waiver or
approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by
Metrocall or the consummation by Metrocall of the Transactions,
other than such declarations, filings, registrations, notices,
authorizations, consents, waivers or approvals which, if not
made or obtained, as the case may be, would not, individually or
in the aggregate, have a Metrocall Material Adverse Effect.
(d) The only vote of the holders of any class or series of
capital stock of Metrocall that will be necessary to consummate
the Metrocall Merger and the other Transactions is the approval
of this Agreement by the holders of a majority of the voting
power of the outstanding shares of Metrocall Common Stock on the
record date (
Metrocall Stockholders
Approval
).
Section 4.5
Reports and
Financial Statements.
Since October 8, 2002, Metrocall
has filed with the SEC all forms, statements, reports and
documents (including all exhibits, post-effective amendments and
supplements thereto) required to be filed by it under each of
the Securities Act, the Exchange Act and the respective rules
and regulations promulgated thereunder, each of which, as
amended if applicable, complied when filed in all material
respects with all applicable requirements of the Securities Act,
the Exchange Act and the rules and regulations promulgated
thereunder. Other than Parent, Arch Acquiring Sub and Metrocall
Acquiring Sub with respect to the Transactions, no Subsidiary of
Metrocall is required to file any form, report or other document
with the SEC. Metrocall has previously made available to Arch,
via its EDGAR filings where available, copies (including all
exhibits, post-effective amendments and supplements thereto) of
its (a) Annual Report on Form 10-K for the fiscal year
ended December 31, 2003 (the
Metrocall
10-K
) as filed with the SEC, (b) proxy and
information statements relating to (i) all meetings of its
stockholders (whether annual or special) and (ii) actions
by written consent in lieu of a stockholders meeting, in
each case from October 8, 2002 until the date hereof, and
(c) all other reports, including annual reports, quarterly
reports, and registration statements filed by Metrocall with the
SEC since October 8, 2002 (the documents referred to in
clauses (a), (b) and (c) are collectively referred to
as the
Metrocall SEC Reports
). As of their
respective dates, the Metrocall SEC Reports did not contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The
audited financial statements of Metrocall included in the
Metrocall 10-K (collectively, the
Metrocall Financial
Statements
), have been prepared from, and are in
accordance with, the books and records of Metrocall and its
Subsidiaries, comply in all material respects with applicable
accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have been prepared
in accordance with GAAP (except as may be indicated therein or
in the notes thereto) and fairly present, in conformity with
GAAP, the consolidated financial position of Metrocall and its
Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows and changes in
financial position, if any for the periods then ended.
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Section 4.6
Employee
Benefit Plans; Labor Matters; No Parachute Payments
.
(a)
Section 4.6(a)
of the Metrocall Disclosure
Schedule lists all material employee benefit plans (as defined
in Section 3(3) of ERISA) and all material bonus, stock
option, stock purchase, stock appreciation rights, phantom
stock, restricted stock, profit sharing, cash or stock based
incentive, deferred compensation, retiree medical or life
insurance, supplemental, retirement, severance, retention,
employment, change in control, vacation, unemployment
compensation, workers compensation or other benefit plans,
programs or arrangements, whether legally enforceable or not and
whether written or oral, to which Metrocall or any of its
Subsidiaries is a party, with respect to which Metrocall or any
of its Subsidiaries has any obligation or which are maintained,
contributed to or sponsored by Metrocall or any of its
Subsidiaries for the benefit of any current or former employee,
officer or director of Metrocall or any of its Subsidiaries
(collectively, the
Metrocall Benefit Plans
).
With respect to each Metrocall Benefit Plan, Metrocall has
delivered, or prior to Closing will deliver, or make available
to Arch a true, complete and correct copy of (i) such
Metrocall Benefit Plan and all amendments thereto and the most
recent summary plan description related to such Metrocall
Benefit Plan, if a summary plan description is required
therefor, (ii) each trust agreement or other funding
arrangement relating to such Metrocall Benefit Plan,
(iii) the most recent annual report (Form 5500) filed
with the IRS with respect to such Metrocall Benefit Plan,
(iv) the most recent actuarial report or financial
statement relating to such Metrocall Benefit Plan, (v) the
most recent determination letter issued by the IRS with respect
to such Metrocall Benefit Plan, if it is qualified under
Section 401(a) of the Code, and (vi) a description
setting forth the amount of any material liability of Metrocall
or its Subsidiaries as of the Closing Date for payments more
than 30 days past due. Neither Metrocall nor any of its
Subsidiaries has any express or implied commitment, whether
legally enforceable or not, (i) to create, incur liability
with respect to or cause to exist any other employee benefit
plan, program or arrangement, (ii) to enter into any
contract or agreement to provide compensation or benefits to any
individual or (iii) to modify, change or terminate any
Metrocall Benefit Plan, other than with respect to a
modification, change or termination required by ERISA, the Code
or other applicable law.
(b) Neither Metrocall nor any ERISA Affiliate of Metrocall
contributes to, has contributed to or is required to contribute
to a Multiemployer Plan or a Multiple Employer Plan. Except
(i) as required by Section 4980B of the Code or
(ii) for benefits, the full cost of which is borne by the
employee, former employee, retired employee or beneficiary, none
of the Metrocall Benefit Plans provides for or promises retiree
medical, disability or life insurance benefits to any current or
former employee, officer or director of Metrocall or any of its
Subsidiaries. Neither Metrocall nor any ERISA Affiliate of
Metrocall has incurred any withdrawal liability with respect to
a Multiemployer Plan under Title IV of ERISA and no event or
condition has occurred which would be expected to cause
Metrocall or any ERISA Affiliate of Metrocall to incur any such
withdrawal liability.
(c) Except as would not, individually or in the aggregate,
have a Metrocall Material Adverse Effect, (i) Metrocall and
its Subsidiaries have complied, and are now in compliance, with
all provisions of all laws and regulations applicable to
Metrocall Benefit Plans and each Metrocall Benefit Plan has been
administered in all material respects in accordance with its
terms, (ii) all contributions required to be made under the
terms of any of the Metrocall Benefit Plans as of the date of
this Agreement have been timely made or have been reflected on
the most recent consolidated balance sheet filed or incorporated
by reference in the Metrocall SEC Reports prior to the date of
this Agreement, (iii) no event has occurred and, to the
knowledge of Metrocall, there exists no condition or set of
circumstances in connection with which Metrocall or any of its
Subsidiaries could be subject to any liability under the terms
of such Metrocall Benefit Plans, ERISA, the Code or any other
applicable law (other than a claim for benefits in the ordinary
course) and (iv) no legal action, proceeding, suit or claim
is pending or, to the knowledge of Metrocall, threatened with
respect to any Metrocall Benefit Plan or its assets (other than
claims for benefits in the ordinary course).
(d) Except as would not have, individually or in the
aggregate, a Metrocall Material Adverse Effect: (i) each
Metrocall Benefit Plan which is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the
Code has received a favorable determination letter from the IRS
through the Economic Growth and Tax Relief Reconciliation Act of
2001 that it is so qualified and each trust established in
connection with any Metrocall Benefit Plan which is intended to
be exempt from federal income taxation
A-29
(e) Neither Metrocall nor any of its Subsidiaries maintains
or is required to contribute to any plan, fund or similar
program established or maintained by Metrocall or any of its
Subsidiaries outside the United States of America primarily for
the benefit of employees of Metrocall or any of its Subsidiaries
residing outside the United States of America, which fund or
similar program provides, or results in, retirement income, a
deferral of income in contemplation of retirement or payments to
be made upon termination of employment, and which plan is not
subject to ERISA or the Code to which Metrocall or any of its
Subsidiaries would have any liability.
(f) Any terminated benefit plan maintained, contributed to
or sponsored by Metrocall or any of its Subsidiaries has been
terminated in accordance with applicable laws, including ERISA,
and all benefits under any such terminated benefit plan have
been made in accordance with the terms of such benefit plan.
(g) Neither Metrocall nor any of its Subsidiaries is a
party to or otherwise bound by any collective bargaining or
other labor union contract applicable to Persons employed by
Metrocall or any of its Subsidiaries and no collective
bargaining agreement is being negotiated by Metrocall or any of
its Subsidiaries. As of the date of this Agreement, there is no
union currently certified and no union representation question
or any organizational activity threatened with respect to
Metrocall or any of its Subsidiaries. As of the date of this
Agreement, there is no labor dispute, strike, walkout, lockout
or work stoppage or slowdown against Metrocall or any of its
Subsidiaries pending or, to the knowledge of Metrocall,
threatened which may interfere with the respective business
activities of Metrocall and its Subsidiaries, except where such
dispute, strike or work stoppage would not, individually or in
the aggregate, have a Metrocall Material Adverse Effect. As of
the date of this Agreement, to the knowledge of Metrocall, there
is no charge or complaint against Metrocall or any of its
Subsidiaries pending before the National Labor Relations Board
or any comparable governmental authority pending or threatened
in writing, except where such unfair labor practices, charges or
complaints would not, individually or in the aggregate, have a
Metrocall Material Adverse Effect. There is no suit, claim,
action, proceeding or, to the knowledge of Metrocall, threatened
against Metrocall, any of its Subsidiaries, any directors,
officers, fiduciaries or service providers of Metrocall or
between Metrocall or any of its Subsidiaries any employee,
former employee, or representative of current or former
employees, that would be expected to have a Metrocall Material
Adverse Effect.
(h) Metrocall has delivered or made available to Arch true,
complete and correct copies of (i) all employment
agreements with officers and employees of Metrocall and each of
its Subsidiaries with annual compensation in excess of $100,000
(including written summaries of oral agreements with respect to
(x) increases in compensation, (y) severance or
(z) other restrictions on the at-will status of any
employment arrangement) and all consulting agreements of
Metrocall and each of its Subsidiaries providing for annual
compensation in excess of $100,000, (ii) all severance
plans, agreements, programs and policies of Metrocall and each
of its Subsidiaries with or relating to their respective
employees or consultants, and (iii) all plans,
A-30
(i) No current or former employee, officer or director of
Metrocall or its Subsidiaries will be entitled to any additional
benefits or any acceleration of the time of payment or vesting
of any benefits under any Metrocall Benefit Plan, policy,
arrangement, agreement, trust or loan as a result of the
Transactions. No amount payable, or economic benefit provided,
by Metrocall or its Subsidiaries (including any acceleration of
the time of payment or vesting of any benefit) could be
considered an excess parachute payment under
Section 280G of the Code. No Person is entitled to receive
any additional payment from Metrocall or its Subsidiaries or any
other Person in the event that the excise tax of
Section 4999 of the Code is imposed on such Person.
(j) Neither the Metrocall nor any of its Subsidiaries has
effectuated (i) a plant closing (as defined in
the WARN Act) affecting any site of employment or one or more
facilities or operating units within any site of employment of
Metrocall or any of its Subsidiaries; or (ii) a mass
layoff (as defined in the WARN Act) affecting any site of
employment or facility of Metrocall or any of its Subsidiaries;
nor has Metrocall and/or any of its Subsidiaries been engaged in
layoffs or employment terminations sufficient in number to
trigger application of any similar state or local law; and none
of the affected employees has suffered an employment
loss (as defined in the WARN Act) since ninety days prior
to the date hereof. Neither Metrocall nor any of its
Subsidiaries has incurred any material liability under the WARN
Act or similar state laws which remains unpaid or unsatisfied.
(k) Except as would not have, individually or in the
aggregate, a Metrocall Material Adverse Effect,
(i) Metrocall and its Subsidiaries are in compliance with
the terms and provisions of the Immigration Reform and Control
Act of 1986, as amended, and all related regulations promulgated
thereunder; (ii) Metrocall and its Subsidiaries are in
compliance with all laws governing the employment of its
employees, including, but not limited to, all such federal,
state, and local laws relating to wages, hours, collective
bargaining, discrimination, retaliation, civil rights, safety
and health, workers compensation and the collection and
payment of withholding and/or Social Security taxes and similar
taxes; (iii) no employee or independent contractor has
filed a complaint for which Metrocall has received notice and
Metrocall has not conducted any internal investigation regarding
conduct that may constitute a violation of any federal, state or
local law governing employment; (iv) since
December 31, 2003, to the knowledge of Metrocall as of the
date hereof, no officer, manager or other key employee of
Metrocall or any of its Subsidiaries has received, and no
officer has given, notice to terminate his employment;
(v) there are no officers or employees of Metrocall or any
of its Subsidiaries who are on secondment, maternity leave or
absent on grounds of disability, military or other leave of
absence (other than normal holidays or absence due to illness);
(vi) Metrocall and its Subsidiaries have complied with
their obligations to inform and consult with trade unions and
other representatives of workers and to send notices to relevant
governmental officials; (vii) Metrocall and its Subsidiaries
have maintained adequate and suitable records regarding the
service of their directors, officers and employees and such
records comply with requirements of data protection legislation
regarding the processing and storage of personal data on
individuals; (viii) there are no occupational health and
safety claims against Metrocall or any of its Subsidiaries; and
(ix) there are no complaints, charges, or claims against
Metrocall or any of its Subsidiaries pending, or, to
Metrocalls knowledge, threatened in writing to be brought
or filed, and with any authority or arbitrator based on, arising
out of, in connection with, or otherwise relating to the
employment or termination of employment of any individual by
Metrocall or any of its Subsidiaries.
(l) All salaries and wages and other benefits, bonuses and
commissions of all directors, officers or employees of Metrocall
and its Subsidiaries have, to the knowledge of Metrocall, to the
extent due, been paid or discharged in full, including, but not
limited to, all payments due for calendar year 2003 bonuses.
(m) Neither Metrocall nor any of its Subsidiaries has
extended a loan to any employee for which amounts are
outstanding, except for advances in respect of travel and
entertainment expenses in the ordinary course of business. Since
December 31, 2002, no such loans have been forgiven.
(n) No Metrocall Benefit Plan is, or within the last three
(3) years has been, the subject of examination or audit by
any governmental entity or agency.
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Section 4.7
Certain Tax
Matters.
Neither Metrocall nor, to the knowledge of
Metrocall, any of its affiliates has taken, or agreed to take,
or intends to take, any action that would reasonably be expected
to prevent the Merger from qualifying as a transfer by the
holders of Metrocall Common Stock and Arch Common Stock of all
such shares of such stock (other than Appraisal Shares and
shares of such stock held by either Metrocall or Arch) to Parent
in exchange for all the issued and outstanding shares of Parent
Common Stock and, in the case of holders of Metrocall Common
Stock, cash, which shares of such stock shall be the only shares
of such stock issued and outstanding on the Closing Date, all in
accordance with and governed by Section 351 of the Code.
Metrocall is not aware of any agreement, plan or other
circumstances that would reasonably be expected to prevent the
Merger from qualifying as an exchange described in
Section 351 of the Code.
Section 4.8
Contracts; Debt
Instruments.
There is no loan or credit agreement, note,
bond, mortgage, indenture or lease, or any other contract,
license, or agreement to which either Metrocall or any of its
respective Subsidiaries is a party or by which any of them or
any of their respective properties or assets is bound that is
material to the business, financial condition or results of
operations of Metrocall and its Subsidiaries taken as a whole
(collectively, the
Metrocall Material
Contracts
) that has not been disclosed in the
Metrocall SEC Reports. All Metrocall Material Contracts are in
full force and effect and are the valid and legally binding
obligations of the parties thereto and are enforceable in
accordance with their respective terms. Neither Metrocall nor
any Subsidiary of Metrocall nor, to the knowledge of Metrocall,
any other party to any Metrocall Material Contract, is in
violation of or in default under (nor does there exist any
condition which with the passage of time or the giving of notice
would reasonably be expected to cause such a violation of or
default under) any Metrocall Material Contract, except for
violations or defaults that would not have, individually or in
the aggregate, a Metrocall Material Adverse Effect. No party to
any Metrocall Material Contract has given notice of any action
to terminate, cancel, rescind or procure a judicial reformation
thereof, other than notices of matters which have been resolved
in a manner not materially adverse to Metrocall. Set forth in
Section 4.8
of the Metrocall Disclosure Schedule is
a description of any material changes to the amount and terms of
the indebtedness of Metrocall and its Subsidiaries as described
in the notes to the Metrocall Financial Statements.
Section 4.9
Litigation.
There is no suit, claim, charge, action, proceeding, arbitration
or investigation pending or, to the knowledge of Metrocall,
threatened against Metrocall or any Subsidiary of Metrocall or
any of their respective officers or directors in their capacity
as such before any governmental authority that
(i) individually (or together with any series of suits,
claims, charges, actions, proceedings, arbitrations or
investigations arising from substantially similar facts) would
reasonably be expected to result in liability to Metrocall and
its Subsidiaries, collectively, of more than $100,000 or
materially delay the Closing or (ii) would have,
individually or in the aggregate, a Metrocall Material Adverse
Effect, and, to the knowledge of Metrocall, there are no
existing facts or circumstances that would reasonably be
expected to result in such a suit, claim, charge, action,
proceeding, arbitration or investigation. Metrocall is not aware
of any facts or circumstances which would reasonably be expected
to result in the denial of insurance coverage under policies
issued to Metrocall and its Subsidiaries in respect of such
suits, claims, charges, actions, proceedings, arbitrations and
investigations for which Metrocall has a reasonable expectation
of obtaining insurance coverage, except in any case as would not
have, individually or in the aggregate, a Metrocall Material
Adverse Effect. Neither Metrocall nor any Subsidiary of
Metrocall is subject to any outstanding order, writ, injunction
or decree which would have, individually or in the aggregate, a
Metrocall Material Adverse Effect.
Section 4.10
Insurance.
All material insurance policies of Metrocall and its
Subsidiaries, including those policies set forth in
Section 4.10
of the Metrocall Disclosure Schedule,
are in full force and effect. Neither Metrocall nor any of its
Subsidiaries is in breach or default thereunder (including with
respect to the payment of premiums or the giving of notices),
and Metrocall does not know of any occurrence or any event which
(with notice or the lapse of time or both) would constitute such
a breach or default or permit termination, modification or
acceleration under the policy, except for such breaches or
defaults which, individually or in the aggregate, would not have
a Metrocall Material Adverse Effect.
Section 4.11
Intellectual
Property.
Except as would not, individually or in the
aggregate have a Metrocall Material Adverse Effect
(i) Metrocall and its Subsidiaries own or possess adequate
licenses or other
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Section 4.12
Taxes.
Except for such matters that would not have, individually or in
the aggregate, a Metrocall Material Adverse Effect,
(i) Metrocall and each of its Subsidiaries has timely filed
or shall timely file all returns and reports required to be
filed by it with any taxing authority, taking into account any
extension of time to file granted to or obtained on behalf of
Metrocall and its Subsidiaries, (ii) all taxes shown to be
payable on such returns or reports have been or will be paid,
(iii) as of the date hereof, no deficiencies for any amount
of tax have been asserted or assessed by any taxing authority
against Metrocall or any Subsidiary of Metrocall that are not
adequately reserved for, and (iv) the Metrocall Financial
Statements reflect an adequate reserve in accordance with GAAP
for all accrued taxes not yet payable by Metrocall and its
Subsidiaries for all taxable periods and portions thereof
through the date of such financial statements.
Section 4.13
Interested
Party Transactions.
Since December 31, 2002, no
executive officer, director or stockholder of Metrocall or any
of its Subsidiaries has engaged in any business dealings with
Metrocall or any of its Subsidiaries (other than any such
business dealings that would not required to be disclosed in a
proxy statement satisfying the requirements of
Regulation 14A promulgated under the Exchange Act if filed
on the date hereof).
Section 4.14
Absence of
Undisclosed Liabilities.
Neither Metrocall nor any of its
Subsidiaries has as of the date hereof any liabilities or
obligations (whether absolute, accrued, contingent or otherwise)
of any nature, except liabilities, obligations or contingencies
(a) which are adequately accrued or reserved against in the
Metrocall Financial Statements or reflected in the notes
thereto, (b) which were incurred in the ordinary course of
business and consistent with past practices since
December 31, 2003, (c) which would not, individually
or in the aggregate, have a Metrocall Material Adverse Effect or
(d) which are of a nature not required to be reflected in
the consolidated financial statements of Metrocall and its
Subsidiaries, including the notes thereto, prepared in
accordance with GAAP consistently applied.
Section 4.15
Absence of
Certain Changes.
Except as contemplated in this Agreement,
since December 31, 2003, (a) Metrocall and each of its
Subsidiaries has conducted its business in all material respects
in the ordinary course consistent with past practices,
(b) there has not been any change or development, or
combination of changes or developments that, individually or in
the aggregate, would have a Metrocall Material Adverse Effect,
(c) there has not been any declaration, setting aside or
payment of any dividend or other distribution with respect to
any shares of capital stock of Metrocall or any of its
Subsidiaries, or any repurchase, redemption or other acquisition
by Metrocall or any of its Subsidiaries of any
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Section 4.16
Registration
Statement and Proxy Statement.
None of the information to be
supplied by Metrocall for inclusion in (i) the Registration
Statement or (ii) the Joint Proxy Statement/ Prospectus
will, in the case of the Joint Proxy Statement/ Prospectus at
the time of the mailing of the Joint Proxy Statement/
Prospectus, and at the time of the meetings of stockholders of
Metrocall and Arch to be held in connection with the
Transactions, or, in the case of the Registration Statement, as
amended or supplemented, at the time it becomes effective and at
the time of such meetings of the stockholders of Arch and
Metrocall, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light
of the circumstances under which they are made, not misleading.
The Joint Proxy Statement/ Prospectus will, as of its mailing
date, comply as to form in all material respects with all
applicable laws, including the provisions of the Securities Act
and the Exchange Act and the rules and regulations promulgated
thereunder, except that no representation is made by Metrocall
with respect to information supplied by Arch or the stockholders
of Arch for inclusion in the Joint Proxy Statement/ Prospectus.
Section 4.17
Reorganization.
None of Metrocall or its Subsidiaries has willfully taken or
agreed to take, nor does it intend to take, any action that
would prevent the Merger from qualifying as an exchange
described in Section 351 of the Code.
Section 4.18
Board
Approval.
Each of the Metrocall Board and the Special
Transactions Committee of the Metrocall Board has unanimously
(a) declared the advisability of and approved this
Agreement and the Merger, (b) determined that the Merger is
in the best interests of the stockholders of Metrocall and is on
terms that are fair to such stockholders and
(c) recommended that the stockholders of Metrocall adopt
and approve this Agreement and the Merger.
Section 4.19
Brokers and
Finders.
Metrocall has not entered into any contract,
arrangement or understanding with any Person or firm which may
result in the obligation of Metrocall or Parent to pay any
finders fees, brokerage or agent commissions or other like
payments in connection with the Transactions, except Lazard
Freres & Co. LLC (
Metrocall Financial
Advisor
), whose fees and expenses will be paid by
Metrocall in accordance with Metrocalls agreement with
Metrocall Financial Advisor, based upon arrangements made by or
on behalf of Metrocall and previously disclosed to Arch.
Section 4.20
Opinion of
Financial Advisor.
Metrocall Financial Advisor has rendered
an opinion to the Metrocall Board to the effect that, as of the
date hereof, the Metrocall Merger Consideration is fair to the
holders of Metrocall Common Stock from a financial point of
view; it being understood and acknowledged by Metrocall that
such opinion has been rendered for the benefit of the Metrocall
Board and is not intended to, and may not, be relied upon by
Arch, its affiliates or their respective Subsidiaries. Metrocall
Financial Advisor has authorized the inclusion of its opinion in
the Joint Proxy Statement/ Prospectus.
Section 4.21
Hazardous
Substances and Hazardous Waste.
To the knowledge of
Metrocall: (a) Except as would not have a Metrocall
Material Adverse Effect, (i) there is not now, nor has
there ever been, any disposal, Release or threatened Release of
Hazardous Material on, from or under properties now or ever
owned or leased by or to Metrocall or its Subsidiaries (the
Metrocall Properties
); (ii) there has
not been generated by or on behalf of Metrocall or its
Subsidiaries any Hazardous Material; and (iii) no material
Hazardous Material has been disposed of or allowed to be
disposed of by Metrocall or its Subsidiaries, by any other
party, on or off any of the Metrocall Properties during the
period that Metrocall or its Subsidiaries owned or leased the
property which may give rise under applicable Environmental Law
to a clean-up responsibility, personal injury liability or
property damage claim against Metrocall or its Subsidiaries or
Metrocall or its Subsidiaries being named a responsible party
for any such clean-up costs, personal injuries or property
damage or create any cause of action by any third party against
Metrocall.
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(b) (i) None of Metrocalls or its
Subsidiaries operations at the Metrocall Properties are
(or, with respect to past Metrocall Properties and Metrocall
Properties of former Subsidiaries, were at the time of
disposition) in violation in any material respect of any
Environmental Law (with respect to past Metrocall Properties and
Metrocall Properties of former Subsidiaries, Environmental Laws
in effect at the time of disposition); (ii) Metrocall and
its Subsidiaries have obtained and are in all material respects
in compliance with all necessary permits or authorizations that
are required under Environmental Laws to operate their
facilities, assets and businesses; (iii) no Environmental
Claims have been asserted against Metrocall or its Subsidiaries
or any predecessor in interest, nor does Metrocall have
knowledge of any threatened (in writing) or pending
Environmental Claim against Metrocall or any of its Subsidiaries
or any predecessor in interest which is reasonably likely to
result in Environmental Liabilities that, individually or in the
aggregate, would have a Metrocall Material Adverse Effect; and
(iv) no Environmental Claim has been asserted against any
facilities that may have received Hazardous Materials generated
by Metrocall or any of its Subsidiaries or any predecessor in
interest which is reasonably likely to result in Environmental
Liabilities that, individually or in the aggregate, would have a
Metrocall Material Adverse Effect.
(c) Metrocall has delivered to Arch true and complete
copies of all material environmental reports, studies,
investigations or correspondence regarding any Environmental
Liabilities of Metrocall or any environmental conditions at any
of the Metrocall Properties which are in possession of Metrocall
or its agents.
Section 4.22
Compliance
with Laws.
Neither Metrocall nor any of its Subsidiaries is
in violation of, or has violated or, to the knowledge of
Metrocall, received written notice of any violation of, any
applicable provisions of any laws, statutes, ordinances,
regulations, judgments, injunctions, orders or consent decrees,
except for any such violations that, individually or in the
aggregate, would not have a Metrocall Material Adverse Effect.
To the knowledge of Metrocall, no investigation, proceeding,
action or review relating to Metrocall or any of its
Subsidiaries by any governmental entity is pending or threatened
in writing, other than, in each case, those the outcome of which
would not, individually or in the aggregate, have a Metrocall
Material Adverse Effect.
Section 4.23
Permits and
Licenses.
(a) Metrocall or its appropriate Subsidiaries
hold all material approvals, licenses, permits, registrations
and similar type authorizations necessary for the lawful
ownership, lease, operation, use or maintenance of its
properties and the lawful conduct of its business as now
conducted, including, without limitation, those issued under or
pursuant to the Communications Act, the FCC Regulations and the
Telecommunications Laws (collectively, the
Metrocall
Permits
). All Metrocall Permits are validly issued and
in full force and effect, except as would not, individually or
in the aggregate, have a Metrocall Material Adverse Effect. Each
of Metrocall and its Subsidiaries is in compliance in all
respects with the terms and conditions of each Metrocall Permit,
except where the failure to be in compliance would not,
individually or in the aggregate, have a Metrocall Material
Adverse Effect. There is not pending, or to the knowledge of
Metrocall, threatened, any action by or before any governmental
or regulatory authority to revoke, suspend, cancel, rescind, or
modify in any material respect any of the Metrocall Permits.
Metrocall has timely made all regulatory filings required, and
paid all fees, assessments and contribution requirements
imposed, by any governmental authority, and all such filings and
the calculation of such fees, are accurate in all material
respects, except where the failure to make such filing or pay
such fees or assessments would not, individually or in the
aggregate, have a Metrocall Material Adverse Effect.
(b)
Section 4.23(b)
of the Metrocall Disclosure
Schedule contains a true and complete list of all Metrocall
Permits issued to Metrocall or any of its Subsidiaries by the
FCC (the
Metrocall FCC Licenses
) and all
pending applications for Metrocall Permits that would be
Metrocall FCC Licenses, if issued or granted. No such Metrocall
FCC License is subject to any restriction or condition which
would limit in any material respect the full operation of the
business of Metrocall and its Subsidiaries as now operated,
other than those restrictions or conditions routinely imposed in
conjunction with such FCC Licenses. The Metrocall FCC Licenses
are in good standing, are in full force and effect in all
material respects and are not materially impaired by any act or
omission of Metrocall, its Subsidiaries, or any of their
respective officers, directors, or employees.
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Section 4.24
Real
Property.
(a)
Section 4.24(a)
of the Metrocall Disclosure
Schedule sets forth a list of the addresses of all real property
owned by Metrocall or any of its Subsidiaries (the
Metrocall Owned Real Property
). Either
Metrocall or its Subsidiaries, as applicable, has good and
marketable fee title to each of the Metrocall Owned Real
Property, except for defects in title, easements, restrictive
covenants and similar encumbrances or impediments that, in the
aggregate, do not materially interfere with the ability of
Metrocall and its Subsidiaries to conduct their business, taken
as a whole, as currently conducted. There is no pending or, to
the knowledge of Metrocall, threatened condemnation or eminent
domain proceeding with respect to any Metrocall Owned Real
Property. All of the buildings, fixtures and other improvements
located on the Metrocall Owned Real Property are in good
operating condition and repair in all material respects.
(b)
Section 4.24(b)
of the Metrocall Disclosure
Schedule sets forth a list of all leases and similar agreements
(the
Metrocall Leases
) for real property
leased, subleased or licensed by Metrocall or any of its
Subsidiaries (the
Metrocall Leased Real
Property
) and the location of the premises subject to
the Metrocall Leases, except such Metrocall Leases the absence
of which, individually or in the aggregate, would not materially
interfere with the ability of Metrocall and its Subsidiaries to
conduct their business, taken as a whole, as currently
conducted. Neither Metrocall nor any of its Subsidiaries nor, to
the knowledge of Metrocall, any other party to any Metrocall
Lease, is in material default under any Metrocall Lease. Each
Metrocall Lease is valid and binding against Metrocall or any of
its Subsidiaries party thereto and, to the knowledge of
Metrocall, each other party thereto, and in full force and
effect, and all base rent payable by Metrocall or any of its
Subsidiaries, as tenant thereunder, is current. Metrocall or one
of its Subsidiaries has a valid leasehold interest in and the
right to use or occupy each such parcel of real property leased
by it, free and clear of all liens, except for any of the
following: (i) liens for taxes, assessments or governmental
charges or levies (A) not yet due or (B) delinquent
and being diligently contested in good faith;
(ii) statutory liens of carriers, warehousemen, mechanics,
materialmen and the like arising in the ordinary course of
business and for obligations not yet due and payable;
(iii) easements, restrictive covenants, rights of way and
other similar imperfections of title that do not materially
adversely affect the use of the property as presently used;
(iv) zoning, building and other similar restrictions that
do not materially adversely affect the use of the property as
presently used; (v) temporary security interests in favor
of suppliers of goods for which payment has not yet been made in
the ordinary course of business consistent with past practice;
(vi) liens on the interests of lessors (but not Metrocall
or any of its Subsidiaries as tenant or lessee);
(vii) liens listed in
Section 4.24(b)
of the
Metrocall Disclosure Schedule; and (viii) other liens or
encumbrances that would not, individually or in the aggregate,
reasonably be expected to materially affect the use of such
property subject thereto or affected thereby or otherwise
materially impair business operations at such property.
Section 4.25
State Takeover
Statutes.
The Metrocall Board has approved the execution of
this Agreement and the Ancillary Agreements to which Metrocall
is or will be a party and authorized and approved the Merger
prior to the execution by Metrocall of this Agreement and such
Ancillary Agreements and, to the knowledge of Metrocall, the
restrictions on business combinations contained in
Section 203 of the DGCL will not apply to this Agreement,
the Ancillary Agreements, the Transactions or the transactions
contemplated by the Ancillary Agreements. The Metrocall Board
has taken all such action required to be taken by it to provide
that this Agreement, the Ancillary Agreements, the Transactions
and the transactions contemplated by the Ancillary Agreements
shall be exempt from the restrictions on business combinations
contained in any moratorium, control
share, fair price or other anti-takeover laws
or regulations of any state (including Section 203 of the
DGCL).
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1
Conduct of
Business By Metrocall and Arch Pending the Merger.
Except as
otherwise contemplated by this Agreement and the Ancillary
Agreements or disclosed in the Disclosure Schedules, during the
period from the execution and delivery of this Agreement to the
Effective Time or termination of
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(a) conduct their respective businesses in the ordinary and
usual course of business and consistent with past practice for
the fiscal year ended December 31, 2003;
(b) not (i) except as necessary or appropriate to
comply with applicable laws or regulations, including SEC
regulations and requirements of the NASDAQ, amend or propose to
amend their respective certificates of incorporation or bylaws
(or comparable organizational documents), (ii) split,
combine or reclassify their outstanding capital stock, or
(iii) declare, set aside or pay any dividend or
distribution payable in cash, stock, property or otherwise,
except for the payment of dividends or distributions to a
Company by a wholly-owned Subsidiary of such Company;
(c) except for (i) issuances of Metrocall Common Stock
and Metrocall Preferred Stock required pursuant to the Metrocall
Plan of Reorganization and (ii) issuances of Arch Common
Stock required pursuant to the Arch Plan of Reorganization, not
issue, sell, pledge or dispose of, or agree to issue, sell,
pledge or dispose of, any additional shares of, or any options,
warrants or rights of any kind to acquire any shares of, their
capital stock of any class or any debt or equity securities
convertible into or exchangeable for such capital stock, except
that each Company may issue shares upon the exercise of
outstanding options and warrants, or pursuant to existing
agreements, in effect on the date hereof;
(d) not accelerate, amend or change the period of
exercisability or vesting of options, restricted stock or
similar awards under any employee stock incentive plan or
authorize cash payments in exchange for any options granted
under any of such plans except as required by the terms of such
plans or any related agreements in effect as of the date hereof;
(e) not (i) assume, incur or become contingently
liable with respect to any indebtedness for borrowed money other
than (A) borrowings under the existing credit facilities of
each Company, if applicable (the
Existing Credit
Facilities
), up to the existing borrowing limit on the
date hereof or other borrowings in the ordinary course of
business consistent with past practice or (B) financing
arrangements in connection with the payment of the Cash Election
Price on terms that are approved by Metrocall and Arch (in each
case such approval not to be unreasonably withheld or delayed),
(ii) redeem, purchase, acquire or offer to purchase or
acquire any shares of its capital stock or any options, warrants
or rights to acquire any of its capital stock or any security
convertible into or exchangeable for its capital stock other
than pursuant to the terms thereof or, in the case of equity
granted to employees of a Company or their respective
Subsidiaries, pursuant to an employee stock incentive plan of
such Company, (iii) take or fail to take any action which
action or failure to take action would cause either Company or
their stockholders (except to the extent that any stockholders
receive cash as part of the Metrocall Merger Consideration or in
lieu of fractional shares) to recognize gain or loss for federal
income tax purposes as a result of the consummation of the
Merger or would otherwise cause the Merger not to qualify as an
exchange described in Section 351 of the Code,
(iv) make any material acquisition of any assets or
businesses other than expenditures for current, fixed or capital
assets in the ordinary course of business consistent with past
practice, and (v) sell, pledge, dispose of or encumber any
material assets or businesses, or enter into any binding
contract, agreement, commitment or arrangement with respect to
any of the foregoing, other than sales or dispositions of
inventory or obsolete (or otherwise worthless) assets by either
Company or its Subsidiaries in the ordinary course of business
consistent with past practice;
(f) use all reasonable efforts to preserve intact their
respective business organizations and goodwill, keep available
the services of their respective present officers and key
employees, and preserve the goodwill and business relationships
with customers and others having business relationships with
them and not engage in any action, directly or indirectly, that
is intended, or would reasonably be expected to adversely impact
the Transactions;
(g) not enter into or amend any employment, severance,
change in control, special pay arrangement with respect to
termination of employment or other similar arrangements or
agreements with any directors, officers or key employees,
provided, however,
that if approved by the Arch Board,
Arch may adopt a retention
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(h) not increase the salary or monetary compensation of any
directors, executive officers or employees whose current annual
base salary is in excess of $200,000, except (A) for
increases in the ordinary course of business consistent with
past practice, (B) pursuant to contractual arrangements in
effect on December 31, 2003 or (C) in connection with
the assumption by such employee of material new or additional
responsibilities;
(i) not establish, adopt, enter into or materially amend
any collective bargaining agreement;
(j) except as expressly permitted under the proviso in
Section 5.1(g), not adopt, enter into or amend any pension
or retirement plan, trust or fund, except as required to comply
with changes in applicable law and not adopt, enter into or
amend in any material respect any bonus, profit sharing,
compensation, stock option, deferred compensation, health care,
employment or other employee benefit plan, agreement, trust,
fund or arrangement for the benefit or welfare of any employees
or retirees generally, other than in the ordinary course of
business consistent with past practice or as required pursuant
to an existing contractual relationship;
(k) use commercially reasonable efforts to maintain with
financially responsible insurance companies insurance on its
tangible assets and its businesses in such amounts and against
such risks and losses as are consistent with past practice;
(l) not make, change or revoke any material tax election or
make any material agreement or settlement regarding taxes with
any taxing authority;
(m) use commercially reasonable efforts to: (A) comply
in all material respects with the Communications Act, the FCC
Regulations and the Telecommunications Laws, (B) preserve
and retain all of its FCC Licenses, (C) file in a timely
manner all fees, reports, applications, or other materials
required to be filed under the Communications Act, the FCC
Regulations and the Telecommunications Laws, and (D) comply
in all material respects with the Exchange Act;
(n) not enter into any agreement or arrangement that limits
or otherwise restricts its or any of its Subsidiaries or any of
their respective affiliates or any successor thereto from
engaging or competing in any line of business or in any
geographic area which agreements or arrangements would,
individually or in the aggregate, have an Arch Material Adverse
Effect or Metrocall Material Adverse Effect, as applicable;
(o) not waive, release, assign, settle or compromise any
material claims, or any material litigation or arbitration which
would, individually or in the aggregate, have an Arch Material
Adverse Effect or Metrocall Material Adverse Effect, as
applicable; and
(p) not grant or credit any additional Units,
as such term is defined in Archs Management Long-Term
Incentive Plan, or make any similar award under Archs
Management Long-Term Incentive Plan or accelerate, amend or
change the period of exercisability or vesting of issued and
outstanding Units as of the date hereof or authorize
cash payments in exchange therefor, except as required by the
terms of Archs Management Long-Term Incentive Plan in
effect as of the date hereof.
Section 5.2
Acquisition
Transactions.
(a) Except as provided below, each
Company shall not, directly or indirectly, and shall instruct
its officers, directors, employees, Subsidiaries, agents and
advisors and other representatives (including any investment
banker, attorney or accountant retained by it), not to, directly
or indirectly, solicit, initiate or knowingly encourage
(including by way of furnishing nonpublic information), or take
any other action knowingly to facilitate, any inquiries or the
making of any proposal or offer (including any proposal or offer
to its stockholders) that constitutes, or may reasonably be
expected to lead to, any Competing Transaction (as defined in
Section 5.2(g)), or enter into or maintain or continue
discussions or negotiate with any Person in furtherance of such
inquiries, or agree to or endorse any Competing Transaction, or
authorize or permit any of the officers, directors or employees
of a Company or any Subsidiary thereof, or any investment
banker, financial advisor, attorney, accountant or other
representative retained by a Company or any Subsidiary thereof,
to take any such action.
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(b) Nothing contained in Section 5.2(a) shall prohibit
the board of directors of a Company from complying with
Rule 14d-9 or Rule 14e-2 promulgated under the
Exchange Act.
(c) Prior to obtaining the Arch Stockholders Approval
or Metrocall Stockholders Approval, as the case may be, if
the board of directors of a Company determines in good faith
that failing to do so would violate its fiduciary duties,
nothing contained in Section 5.2(a) or Section 5.2(d)
shall prohibit the board of directors of such Company from
considering and negotiating (including furnishing nonpublic
information) an unsolicited bona fide written proposal (the
Unsolicited Bid
) and approving or
recommending to the stockholders of such Company (and, in
conjunction with such recommendation, withdrawing its
recommendation in favor of the Merger) such Unsolicited Bid
which (A) was not received in violation of this
Section 5.2, (B) if executed or consummated would be a
Competing Transaction, (C) is not conditioned on financing
or is conditioned on financing that is, in the good faith
judgment of the board of directors of such Company after
consultation with its financial advisors, highly likely of being
obtained, and (D) the board of directors of such Company
determines in good faith, after consultation with its financial
advisor to such effect, that such Unsolicited Bid provides
greater value to such Companys stockholders than the
Merger, taking into consideration the financial impact of the
termination provisions set forth in Section 8.1 hereof.
(d) Each Company shall use its best efforts to notify the
other Company promptly, and in no event later than one Business
Day after receipt, if any proposal or offer, or any inquiry or
contact with any Person with respect thereto, regarding a
Competing Transaction is made. Each Company immediately shall
cease and cause to be terminated all existing discussions or
negotiations with any parties conducted heretofore with respect
to a Competing Transaction;
provided, however,
that such
Company shall not release any third party from, or waive any
provision of, any confidentiality or standstill agreement to
which it is a party. Each Company shall use its best efforts to
ensure that its officers, directors, employees, Subsidiaries,
agents and advisors or other representatives (including any
investment banker, attorney or accountant retained by it) are
aware of the restrictions described in this Section 5.2.
(e) In addition to the foregoing, no Company shall accept
or enter into any agreement, letter of intent or similar
document concerning a Competing Transaction for a period of not
less than five Business Days after the other Company has
received the notice provided for in Section 5.2(d) above,
which notice shall include the material terms of such Competing
Transaction and the identity of the Person or entity wishing to
enter into such Competing Transaction. Furthermore, during such
period a Company receiving the offer for the Competing
Transaction shall negotiate with the other Company in good faith
any proposal submitted to such Company by the other Company
which addresses the terms of the Competing Transaction.
(f)
Competing
Transaction
means any of the following involving
either Company or any Subsidiary of either Company and involving
in any case a business with net revenues, net income or assets
of 40% or more of the amount of net revenues, net income or
assets, respectively, of such Company and its Subsidiaries,
taken as a whole:
(i) any merger, consolidation, share exchange, business
combination or other similar transaction;
(ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of 15% or more of the assets of such party
and its Subsidiaries, taken as a whole, to a third party in a
single transaction or series of related transactions;
(iii) any tender offer or exchange offer for 15% or more of
the outstanding voting securities of such party or the filing of
a registration statement under the Securities Act in connection
therewith; or
(iv) any combination of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1
Appropriate
Actions; Consents; Filings.
(a) Metrocall and Arch
shall each use, and shall cause each of their respective
Subsidiaries to use, their reasonable best efforts to, as soon
as practicable after
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(b) The Companies shall (i) promptly (and not more
than 10 Business Days from the date of this Agreement) file, and
cause their respective Subsidiaries to file, with the FCC all
necessary applications for consent to transfer in accordance
with this Agreement all licenses, permits and authorizations
issued by the FCC to either of the Companies or their respective
Subsidiaries, (ii) diligently prosecute all applications
with the FCC, and all similar governmental authorities for
consent to the Transactions, (iii) use their best efforts
to resist or resolve any administrative proceeding or suit,
including appeals, that may be instituted to challenge the grant
of any such applications, (iv) furnish to the other party
such information and assistance as such party reasonably may
request in connection with the preparation or prosecution of any
such applications, (v) consult with and keep the other
party promptly apprised of any communications with, and
inquiries or requests for information from, such governmental
authorities with respect to the transactions contemplated
hereby, and (vi) use their reasonable best efforts to
obtain FCC approvals. The Companies shall cooperate to resolve
any objections to FCC and other governmental approvals of the
Transactions and shall not voluntarily take actions that would
give any governmental authorities grounds to institute
proceedings against either party.
(c) Each Company shall promptly (and in not more than five
Business Days from the date hereof) make its filings under the
HSR Act with respect to the Transactions and shall use all
commercially reasonable efforts to promptly make any other
required submission under the HSR Act and resolve such
objections, if any, as may be asserted by a governmental agency
with respect to the Transactions under the Antitrust Laws. In
connection therewith, if any administrative or judicial action
or proceeding is instituted (or threatened to be instituted)
challenging any Transaction as violative of any Antitrust Law,
each Company shall cooperate and use all commercially reasonable
efforts vigorously to contest and resist any such action or
proceeding and to have vacated, lifted, reversed, or overturned
any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent (each, an
Order
) that is in effect and that prohibits,
prevents, conditions or restricts consummation of the Merger or
the other Transactions, unless by mutual agreement the Companies
decide that such litigation or contest is not in their
respective best interests. Notwithstanding the provisions of the
immediately preceding sentence, it is expressly understood and
agreed that neither Company shall have any obligation to
litigate or contest any administrative or judicial action or
proceeding or any Order beyond the earlier of (i) the date
that either Company has a right of termination under
Section 8.1(b) or (ii) the date on which a ruling
preliminarily enjoining the Merger issued by a court of
competent jurisdiction. Each Company shall use all commercially
reasonable efforts to take such action as may be required to
cause the termination or expiration of any waiting periods
imposed under the HSR Act or other Antitrust Laws with respect
to such Transactions as promptly as possible after the execution
of this Agreement.
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(d) Neither Company shall be required to agree, as a
condition to any approval or waiver from any governmental
authority, to divest itself of or hold separate any Subsidiary,
division, business unit or material asset.
(e) Metrocall and Arch each shall consult with and keep the
other party apprised of the status of matters relating to
completion of the Transactions, including, without limitation,
promptly furnishing the other party with copies of notices or
other communications received by Metrocall or Arch, as the case
may be, or any of its Subsidiaries, from any third party and/or
any governmental authority with respect to the Merger and the
Transactions.
(f) Each of Metrocall and Arch shall give (or shall cause
their respective Subsidiaries to give) any notices to third
Persons, and use, and cause their respective Subsidiaries to
use, their reasonable best efforts to obtain any third Persons
consents (A) necessary, proper or advisable to consummate
the Transactions, (B) otherwise required under any
contracts, licenses, leases or other agreements in connection
with the consummation of the Transactions or (C) required to
prevent a Metrocall Material Adverse Effect or Arch Material
Adverse Effect from occurring prior to the Effective Time or any
like material adverse effect with respect to Parent from
occurring after the Effective Time. In the event that any party
shall fail to obtain any such third Person consent, such party
shall use its reasonable best efforts, and shall take any such
actions reasonably requested by the other parties, to limit the
adverse effect upon Metrocall, Arch and Parent, their respective
Subsidiaries, and their respective businesses resulting, or
which could reasonably be expected to result after the Effective
Time, from the failure to obtain such consent.
(g) Nothing in this Agreement shall require Metrocall or
Arch to agree to the imposition of conditions, the payment of
any material amounts (other than filing fees and Expenses
incurred by the parties in connection with obtaining such
consents or approvals) or any requirement of divestiture to
obtain any consents or approvals from third parties, including
governmental authorities, required to consummate the
Transactions, and in no event shall any party take, or be
required to take, any action that would have a Metrocall
Material Adverse Effect or an Arch Material Adverse Effect.
(h) Metrocall and Arch agree to cooperate with respect to,
and shall cause each of their respective Subsidiaries to
cooperate with respect to, and agree to use their reasonable
best efforts to contest and resist, any action, including
legislative, administrative or judicial action, and to have
vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order (whether temporary, preliminary or
permanent) of any governmental authority that is in effect and
that restricts, prevents or prohibits the consummation of the
Merger or any of the Transactions.
(i) In the event any litigation is commenced by any Person
relating to the Transactions, either party shall have the right,
at its own expense, to reasonably participate therein, and each
Company will not settle any such litigation without the consent
of the other, which consent will not be unreasonably withheld.
(j) In case at any time after the Effective Time any
further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of
Metrocall, Arch, Parent, Surviving Metrocall Corporation and
Surviving Arch Corporation shall take all such necessary action.
(k) To the extent reasonably practicable, neither Company
shall agree to participate in any meeting or discussion with any
governmental entity in respect of any filings, investigation or
other inquiry concerning this Agreement or the Transactions
unless it consults with the other party in advance and, to the
extent permitted by such governmental entity, gives the other
party the opportunity to attend and participate in such meeting
or discussion.
(l) Arch and Metrocall shall cooperate and coordinate with
each other and use their collective reasonable best efforts to
obtain financing required to pay the Cash Election Price at the
Closing (the
Financing
) as soon as
practicable after the date hereof on terms reasonably
satisfactory to Metrocall and Arch. Each of Metrocall and Arch
shall use its reasonable best efforts to make their respective
executive officers and other members of management and employees
available upon reasonable advance notice to participate in
discussions with financing sources, including roadshows and
lender meetings. Each of Metrocall and Arch
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(m) Metrocall and Arch expect that their respective
executive officers and other members of senior management will
continue to perform their respective duties and obligations and
intend that any such officers failure or refusal to
cooperate and to take all actions and to do all things
reasonably necessary, proper or advisable to consummate and make
effective the Transactions, including participating in any proxy
solicitation activities with respect to the Transactions and
securing the Financing, or otherwise fully cooperate shall
constitute grounds for dismissal of such officer with cause.
Section 6.2
Access To
Information
. Subject to applicable law, including laws
restricting access to competitively sensitive information, Arch
shall afford to Metrocall and its respective accountants,
counsel, financial advisors and other representatives (the
Metrocall Representatives
) and Metrocall and
its Subsidiaries shall afford to Arch and its accountants,
counsel, financial advisors and other representatives (the
Arch Representatives
) reasonable access
during normal business hours throughout the Interim Period (with
reasonable advance notice) to all of their respective
properties, books, contracts, commitments and records (including
tax returns) and, during such period, shall furnish promptly to
one another (i) a copy of each report, schedule and other
document filed or received by any of them pursuant to the
requirements of federal or state securities laws or filed by any
of them with the SEC in connection with the Transactions and
(ii) such other information concerning their respective
businesses, properties and personnel as either Company shall
reasonably request;
provided, however,
that such access
shall not unreasonably disrupt the furnishing partys
operations and shall not be deemed to permit the other party to
conduct any onsite environmental investigations or examinations,
other than a Phase I site assessment;
provided, further,
that no fact or information uncovered as a result of such access
shall amend or modify any representations or warranties made
herein or the conditions to the obligations of the respective
parties to consummate the Merger. Arch shall hold and shall use
its reasonable best efforts to cause the Arch Representatives to
hold, and Metrocall and its Subsidiaries shall hold and shall
use their reasonable best efforts to cause Metrocall
Representatives to hold, in strict confidence as
Evaluation Material under the Nondisclosure
Agreement dated October 3, 2003 between Arch and Metrocall
(the
Nondisclosure Agreement
) all nonpublic
documents and information furnished to each Company in
connection with the Transactions, except that (i) Arch and
Metrocall may disclose such information as may be necessary in
connection with seeking the Arch Required Statutory Approvals,
Arch Stockholders Approval, Metrocall Required Statutory
Approvals and Metrocall Stockholders Approval, and
(ii) each of Arch and Metrocall may disclose any
information that it is required by law or judicial or
administrative order to disclose,
provided, however,
that
in either case the disclosing party will use reasonable best
efforts to assure confidential treatment is accorded such
information.
Section 6.3
Registration
Statement and Proxy Statement.
(a) Metrocall and Arch
shall promptly prepare and file with the SEC the Joint Proxy
Statement/ Prospectus, and Metrocall, Arch and Parent shall
prepare and file with the SEC the Registration Statement (in
which the Joint Proxy Statement/ Prospectus shall be included as
a Prospectus) as promptly as practicable. Metrocall and Arch
each shall use, and shall cause Parent to use, its reasonable
best efforts to have the Registration Statement declared
effective under the Securities Act as promptly as practicable
(including by responding promptly to any comments made by the
SEC with respect thereto), and promptly thereafter mail the
Joint Proxy Statement/ Prospectus to the stockholders of
Metrocall and Arch. Metrocall and Arch each shall also use, and
shall cause Parent to use, its reasonable best efforts to obtain
prior to the effective date of the Registration Statement all
necessary state securities law or blue sky permits
and approvals required in connection with the Merger and the
Transactions and will pay all expenses incident thereto. Each
party shall notify the other of the receipt of the comments of
the SEC and of any requests by the SEC for amendments or
supplements to the Joint Proxy Statement/ Prospectus or the
Registration Statement or for additional information and shall
promptly supply one another with copies of all correspondence
between any of them (or their representatives) and the SEC (or
its staff) with respect thereto. Each of the Companies shall
provide the other with a reasonable opportunity to review and
comment on any amendment or supplement to the Registration
Statement and the Joint Proxy Statement/ Prospectus prior to
filing such with the SEC. If, at any time prior to the Metrocall
Stockholders Meeting or the Arch Stockholders Meeting, any event
shall occur relating to or affecting Metrocall, Arch, or
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(b) Metrocall and Arch each shall, and shall cause Parent
to, upon request by the other party, furnish the other party
with all information concerning itself, its Subsidiaries,
directors, officers and stockholders and such other matters as
may be reasonably necessary or advisable in connection with the
Joint Proxy Statement/ Prospectus, the Registration Statement or
any other statement, filing, notice or application made by, or
on behalf of, Metrocall, Arch, Parent or any of their respective
Subsidiaries to any third party and/or any governmental
authority in connection with the Merger and the Transactions.
(c) Prior to the date of approval of the Merger by their
respective stockholders, each of Arch and Metrocall shall, and
shall cause Parent to, correct promptly any information provided
by it to be used specifically in the Joint Proxy Statement/
Prospectus and Registration Statement that shall have become
false or misleading in any material respect and shall take all
steps necessary to file with the SEC and have declared effective
or cleared by the SEC any amendment or supplement to the Joint
Proxy Statement/ Prospectus or the Registration Statement so as
to correct the same and to cause the Joint Proxy Statement/
Prospectus as so corrected to be disseminated to the
stockholders of Arch and Metrocall, in each case to the extent
required by applicable law.
(d) Metrocall and Arch each shall, with respect to audited
financial statements, pro-forma financial statements or other
financial statements or other reports provided by any auditor or
other expert for inclusion in any Metrocall SEC Report or Arch
SEC Report, respectively, upon request by the other party, use
their commercially reasonable efforts to obtain without cost to
such requesting party, a consent letter from such auditor or
expert addressed to the requesting party to use such
auditors or experts name and include such statements
or reports in any Arch SEC Report or Metrocall SEC Report, as
applicable, to be filed by the requesting party.
(e) Each of the Companies will advise the other promptly
after it receives notice or otherwise becomes aware thereof, of
the time when the Registration Statement has become effective,
the issuance of any stop order, or the suspension of the
qualification of the Parent Common Stock issuable in connection
with the Mergers for offering or sale in any jurisdiction.
(f) Notwithstanding any other provision in this Agreement
to the contrary, no amendment or supplement (including by
incorporation by reference) to the Joint Proxy Statement/
Prospectus or the Registration Statement shall be made without
the approval of both Companies, which approval shall not be
unreasonably withheld or delayed;
provided
that with
respect to documents filed by a party which are incorporated by
reference in the Registration Statement or Joint Proxy
Statement/ Prospectus, this right of approval shall apply only
with respect to information relating to the other party or its
business, financial condition or results of operations;
provided, further,
that Arch or Metrocall may amend or
supplement the Joint Proxy Statement/ Prospectus or Registration
Statement (including by incorporation by reference) pursuant to
a Qualifying Amendment (as defined below) to effect such a
change in its recommendation made in accordance with
Section 5.2, and in such event, the right of approval shall
apply only with respect to information relating to the other
party or its business, financial condition or results of
operations, and shall be subject to the right of each party to
have its Board of Directors deliberations and conclusions
accurately described. A
Qualifying Amendment
means an amendment or supplement to the Joint Proxy Statement/
Prospectus or Registration Statement (including by incorporation
by reference) to the extent it contains (i) a change, in
accordance with Section 5.2, in the recommendation of the
Board of Directors of Arch or Metrocall, as applicable, with
respect to the transactions contemplated by this Agreement (as
the case may be), (ii) a statement of the
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Section 6.4
Stockholders
Approvals.
(a) Arch shall, as promptly as practicable,
duly take all action to call, give notice of, convene and hold a
meeting of the Arch stockholders and submit this Agreement and
the Transactions for the approval of its stockholders at such
meeting and shall use its reasonable best efforts and take all
necessary actions to obtain the Arch Stockholders
Approval. Such meeting of stockholders shall be held as soon as
practicable following the date upon which the Registration
Statement becomes effective. Subject to any change of
recommendation in accordance with Section 5.2, Arch shall,
through the Arch Board, recommend to its stockholders approval
of this Agreement and the Transactions and take all lawful
actions to solicit such adoption and approval.
(b) Metrocall shall, as promptly as practicable, submit
duly take all action to call, give notice of, convene and hold a
meeting of the Metrocall stockholders and this Agreement and the
Transactions for the approval of its stockholders at a meeting
of stockholders and shall use its reasonable best efforts and
take all necessary actions to obtain the Metrocall
Stockholders Approval. Such meeting of stockholders shall
be held as soon as practicable following the date upon which the
Registration Statement becomes effective. Subject to any change
of recommendation in accordance with Section 5.2, Metrocall
shall, through the Metrocall Board, recommend to its
stockholders approval of this Agreement and the Transactions and
take all lawful actions to solicit such adoption and approval.
Section 6.5
Compliance with
The Securities Act
. Each of Metrocall and Arch shall use its
reasonable best efforts to cause each officer, each director and
each other Person who is an
affiliate
of it,
for purposes of Rule 145 under the Securities Act
(
Rule 145
) at the time of the Arch
Stockholders Meeting or the Metrocall Stockholders Meetings, as
the case may be, each of whom shall be listed in
Section 6.5(a)
of the Arch Disclosure Schedule or
Section 6.5(b)
of the Metrocall Disclosure Schedule,
to deliver to Parent, at or prior to the Effective Time a
written agreement substantially in the form of
Exhibit B
attached hereto (an
Affiliate Agreement
)
to the effect that such Person will not offer to sell, sell or
otherwise dispose of any shares of Parent Common Stock issued in
the Merger, except, in each case, in accordance with the terms
of the Affiliate Agreement and pursuant to an effective
registration statement or in compliance with Rule 145, as
amended from time to time, or in a transaction which, in the
opinion of legal counsel satisfactory to Parent, is exempt from
the registration requirements of the Securities Act. Parent
shall use commercially reasonable efforts to take such customary
and reasonable actions, from time to time after the Effective
Time, as are necessary and advisable to allow any party to an
Affiliate Agreement to dispose of shares of Parent Common Stock
in accordance with Rule 145, if applicable.
Section 6.6
Expenses
.
Expenses (as defined herein) incurred in connection with this
Agreement and the Transactions shall be paid by the party
incurring such Expenses, except that those Expenses incurred in
connection with the filing, printing and mailing of the
Registration Statement and the Joint Proxy Statement/
Prospectus, and the filing fees under the Antitrust Laws, any
other filings fees under any governmental regulations and any
filing fees in connection with obtaining approvals under the
Communications Act, the FCC Regulations and the
Telecommunications Laws, as well as Expenses incurred in
connection with presentations made to governmental entities in
connection with the foregoing filings, shall be shared equally
by Metrocall and Arch. For purposes of this Agreement, the term
Expenses
means, with respect to any party
hereto, all reasonable out-of-pocket expenses (including all
fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party hereto and its affiliates,
but excluding any allocation of overhead) incurred by such party
or on its behalf in connection with or related to the
authorization, preparation, negotiation, execution and
performance of its obligations pursuant to this Agreement and
the consummation of the Merger, the preparation, printing,
filing and mailing of the Registration Statement, and the Joint
Proxy Statement/ Prospectus, the solicitation of stockholder
approvals and all other matters related to consummating the
Transactions and the Closing.
Section 6.7
Public
Statements
. Metrocall and Arch shall consult with each other
before issuing any press release or written employee
communication or otherwise making any public announcement with
respect to this Agreement, the Transactions or otherwise and
shall not issue any such press release or written
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Section 6.8
Notification of
Certain Matters
. Each of Metrocall and Arch agrees to give
prompt notice to the other of, and to use commercially
reasonable efforts to remedy, (i) the occurrence or failure
to occur of any event which occurrence or failure to occur would
be likely to cause any of its representations or warranties in
this Agreement to be untrue or inaccurate in any material
respect on the Closing Date in any case which would reasonably
be expected to result in the failure of one or more of the other
Companys conditions to closing set forth in
Article VII, (ii) any failure on its part to comply
with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it thereunder in any case which
would reasonably be expected to result in the failure of one or
more of the other Companys conditions to closing set forth
in Article VII and (iii) any event, development,
change, or effect that has or would reasonably be expected to
materially impair the operations of the business of such
Company;
provided, however,
that the delivery of any
notice pursuant to this Section 6.8 shall not limit or
otherwise affect the rights or remedies available hereunder to
the party receiving such notice.
Section 6.9
Directors
and Officers Indemnification.
(a) The
indemnification provisions of the respective certificates of
incorporation and bylaws of Parent, Surviving Metrocall
Corporation and Surviving Arch Corporation and their respective
Subsidiaries as in effect at the Effective Time shall not be
amended, repealed or otherwise modified for a period of six
years from the Effective Time in any manner that would adversely
affect the rights thereunder of individuals who at the Effective
Time were current or former directors, officers, employees or
agents of Arch or Metrocall or their respective Subsidiaries.
From and after the Effective Time, Parent, Surviving Metrocall
Corporation and Surviving Arch Corporation shall, and shall
cause their respective Subsidiaries to, jointly and severally
(provided that each Company and its Subsidiaries shall only be
liable with respect to current and former directors and officers
of such Company and its Subsidiaries) fulfill and honor in all
respects the obligations, including with respect to advancing
expenses, of Parent, Surviving Metrocall Corporation and
Surviving Arch Corporation, and their respective Subsidiaries,
pursuant to any indemnification agreements between Arch or
Metrocall, or any of their respective Subsidiaries, and their
respective current and former directors and officers in effect
immediately prior to the Effective Time and any indemnification
provisions under the Arch Certificate of Incorporation and Arch
Bylaws or Metrocall Certificate of Incorporation and Metrocall
Bylaws, or the certificate of incorporation, bylaws and
comparable organizational documents of any such Subsidiaries,
respectively, as in effect on the date hereof.
(b) In the event Parent, Surviving Metrocall Corporation or
Surviving Arch Corporation or any of their respective
Subsidiaries, successors or assigns (i) consolidates with
or merges into any other Person and shall not be the continuing
or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its
properties and assets to any other Person, then, and in each
such case, reasonably adequate provisions shall be made so that
its successors and assigns shall assume the obligations of
Parent, Surviving Metrocall Corporation, Surviving Arch
Corporation, or any such Subsidiaries, as applicable, as set
forth in this Section 6.9 to the extent such assumption
does not occur by operation of law.
(c) For a period of six years after the Effective Time,
Parent shall cause to be maintained in effect for each current
and former director and officer of Arch and Metrocall as of the
Effective Time, liability insurance coverage with respect to
matters arising at or prior to the Effective Time, in such
amounts and
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(d) The rights of each indemnified party hereunder shall be
in addition to, and not in limitation of, any other rights such
indemnified party may have under the Arch Certificate of
Incorporation or Arch Bylaws or Metrocall Certificate of
Incorporation or Metrocall Bylaws, respectively, any
indemnification agreement, under the DGCL, or otherwise. The
provisions of this Section 6.9 shall survive the
consummation of the Merger and expressly are intended to benefit
each of the indemnified parties.
(e) Parent shall, or shall cause one or more of the
Surviving Corporations or their respective Subsidiaries to, pay
all reasonable expenses, including reasonable attorneys
fees, that may be incurred by any Person indemnified hereunder
in enforcing the indemnity and other obligations provided in
this Section 6.9.
Section 6.10
Listing
.
Metrocall and Arch shall use, and shall cause Parent to use, its
reasonable best efforts to effect, at or before the Effective
Time, authorization for listing on the Nasdaq, upon official
notice of issuance, of the shares of Parent Common Stock to be
issued pursuant to the Merger or to be reserved for issuance
(i) upon the exercise of Arch Stock Options, Metrocall
Stock Options or Metrocall Warrants or (ii) in respect of
Arch Stock Rights or Metrocall Stock Rights.
Section 6.11
Employee
Matters.
(a) To the extent permitted by Parents
employee benefit plans and applicable law, Parent will use
reasonable efforts to give each employee of Arch and Metrocall
who is retained by Parent or any of its Subsidiaries after the
Effective Time (a
Retained Employee
) full
credit for purposes of eligibility and vesting and determination
of the level of benefits under any employee benefit plans or
arrangements maintained by Parent or any subsidiary of Parent
for such Retained Employees service with Arch or
Metrocall, as applicable to the same extent recognized by Arch
or Metrocall, as applicable, immediately prior to the Effective
Time. In no event shall Retained Employees be entitled to any
credit to the extent that it would result in a duplication of
benefits with respect to the same period of service.
(b) To the extent permitted by Parents employee
benefit plans and applicable law, Parent will (i) waive all
limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements
applicable to the Retained Employees under any welfare benefit
plans that such employees may be eligible to participate in
after the Effective Time, other than limitations or waiting
periods that are already in effect with respect to such
employees and that have not been satisfied as the Effective Time
under any welfare plan maintained for the Retained Employees
immediately prior to the Effective Time, and (ii) provide
each Retained Employee with credit for any portion of
co-payments and deductibles paid prior to the Effective Time
which relate to any period or portion thereof occurring, or
benefit inuring, after the Effective Time in satisfying any
applicable deductible or out-of-pocket requirements under any
welfare plans that such employees are eligible to participate in
after the Effective Time.
(c) Nothing in this Section 6.11 shall be interpreted
as preventing Parent from amending, modifying or terminating any
of the Parent Benefits Plans or other contracts, arrangements,
commitments or understandings, in accordance with their terms
and applicable law.
(d) As of the Effective Time, Parent shall assume and honor
in accordance with their terms all employment, severance and
other compensation agreements and arrangements existing and
disclosed by Arch or Metrocall, as applicable, prior to the
execution of this Agreement which are between Arch or Metrocall,
as applicable, and any respective director, officer, or employee
thereof except as otherwise expressly agreed between Parent and
such Person, including the acceleration of any vesting provision
of any Arch Stock Option, Arch Stock Right or Metrocall Stock
Option, or any unvested or restricted Arch Common Stock issued
under the Arch Stock Plan, which may be triggered by the Merger.
(e) As of or promptly following the Effective Time, Parent
will establish a key employee retention program for the benefit
of key employees identified as such by Parents Board (or
the compensation committee thereof) with such terms as are
approved by Parents Board (or the compensation committee
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(f) As of or promptly following the Effective Time, Parent
will establish an equity incentive plan for members of the
Parent Board and officers and employees of Parent and its
Subsidiaries, and reserve for issuance thereunder (in the form
of stock options, restricted stock grants or as otherwise
determined by the Parent Board or the compensation committee
thereof) a number of shares of Parent Common Stock not to exceed
7% of the issued and outstanding shares of Parent Common Stock
as of the Effective Time (exclusive of Metrocall Stock Options,
Metrocall Stock Rights, Metrocall Warrants, Arch Stock Options
and Arch Stock Rights that are exchanged as of the Effective
Time for corresponding rights to receive Parent Common Stock
pursuant to Section 2.1). The terms, conditions,
eligibility of participants and the allocations to eligible
participants shall be determined by the Parent Board (or the
compensation committee thereof) and in accordance with
applicable law, rule and regulation.
(g) As of or prior to the Effective Time, but effective as
of the Effective Time, Parent shall, and shall cause Metrocall,
Arch and/or any of their respective Subsidiaries, to enter into
an employment agreement and bonus arrangements with the Chief
Executive Officer of Metrocall as of the date of this Agreement
to serve as the Chief Executive Officer of Parent from and after
the Effective Time, on and subject to the terms and conditions
set forth on
Schedule 6.11(g)
and such other
customary terms and conditions as may be agreed among the
parties thereto. In the event that the Chief Executive Officer
of Metrocall as of the date of this Agreement is, at any time on
or prior to the Effective Time, for any reason unwilling or
unable to serve as Chief Executive Officer of Parent,
(i) prior to the Effective Time, the persons selected to
serve on the Parent Board pursuant to Section 6.14, and
(ii) on and after the Effective Time, the members of the
Parent Board, shall promptly select and approve an individual to
serve as the Chief Executive Officer of Parent as follows:
(x) an individual so selected who is employed by Arch or
Metrocall or any of their respective Subsidiaries as of the date
of this Agreement, shall be approved by not less than six of the
nine persons selected to serve on the Parent Board or not less
than six of the nine members of the Parent Board, as the case
may be, or (y) in the event that no individual referred to
in the preceding clause (x) is approved as provide therein,
an individual who is not employed by Arch or Metrocall or any of
their respective Subsidiaries as of the date of this Agreement
to serve as the Chief Executive Officer of Parent will be
selected and approved, by not less than five of the nine persons
selected to serve on the Parent Board or not less than five of
the nine members of the Parent Board, as the case may be.
(h) The Chief Executive Officer of Metrocall during the
Interim Period may recommend for appointment one or more
candidates to serve as executive officers of Parent, which
appointments shall require the approval of a majority of the
individuals selected to serve on the Parent Board.
(i) Arch does not intend, and does not intend for its
Subsidiaries, to take any action or omit to take any action
which would or could reasonably be expected to cause a
Change in Control under Archs Management
Long-Term Incentive Plan, the Arch Stock Plan or any related
Restricted Stock Agreement or Nonstatutory Stock Option
Agreement or under the respective employment agreements of
Messrs. Baker, Daniels and Pottle, in each case as such
term is defined therein, or otherwise provide a reasonable basis
for any participant therein or party thereto, as applicable, to
believe that a Change in Control has occurred or
will occur as a consequence of the consummation of the
Transactions.
Section 6.12
Tax-Free
Transaction.
(a) The Merger is intended to constitute
an exchange described in Section 351 of the Code. From and
after the date of this Agreement, each party hereto shall use
all reasonable efforts to cause the Merger to qualify, and shall
not, without the prior written consent of the other parties
hereto, knowingly take any actions or cause any actions to be
taken which could reasonably be expected to prevent the Merger
from qualifying as an exchange described in Section 351 of
the Code. If the Merger shall fail to qualify as an exchange
described in Section 351 of the Code, then the parties hereto
agree to negotiate in good faith to restructure the Merger in
order that it shall otherwise qualify as a transaction that is
in whole or in part tax-free under the Code. Following the
Effective Time, and consistent with any such consent, neither of
the Surviving Corporations nor Parent nor any of their
respective affiliates knowingly and voluntarily shall take any
action or cause any action to be taken which could reasonably be
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(b) Following the Effective Time, Parent shall conduct its
business and shall cause each of the Surviving Corporations to
conduct its business, in a manner which would not jeopardize the
characterization of the Merger as an exchange described in
Section 351 of the Code or otherwise as a transaction that
is whole or in part tax-free under the Code. Parent will provide
certain factual representations as reasonably requested by Arch
or Metrocall as necessary to confirm that Parent will not take
any action on or after the Effective Time that would jeopardize
the tax free nature of the Merger as an exchange described in
Section 351 of the Code or otherwise as a transaction that
is in whole or in part tax-free under the Code.
Section 6.13
Exemption From
Liability Under Section 16(b).
(a) Provided that
Arch and Metrocall delivers to Parent the Section 16
Information (as defined below) with respect to Arch and
Metrocall, respectively, prior to the Effective Time, the Board
of Directors of Parent (the
Parent Board
), or
a committee of Non-Employee Directors thereof (as such term is
defined for purposes of Rule 16b-3(d) under the Exchange
Act), shall adopt a resolution in advance of the Effective Time
providing that the receipt by the Insiders (as defined herein)
of Parent Common Stock in exchange for shares of Arch Common
Stock or Metrocall Common Stock, as applicable, and of options
on Parent Common Stock upon assumption and conversion by Parent
of Arch Stock Options or Metrocall Stock Options, as applicable,
in each case pursuant to the Transactions and to the extent that
such securities are listed in the Section 16 Information, are
intended to be exempt from liability pursuant to Rule 16b-3
under the Exchange Act.
(b)
Section 16 Information
means
information accurate in all respects regarding the Insiders, the
number of shares of Arch Common Stock or Metrocall Common Stock,
as applicable, or other equity securities thereof deemed to be
beneficially owned by each Insider and expected to be exchanged
for Parent Common Stock in connection with the Merger.
(c)
Insiders
means those officers and
directors of Arch and Metrocall who are subject to the reporting
requirements of Section 16(a) of the Exchange Act.
Section 6.14
Directors of
Parent and Surviving Corporations
. (a) As of the
Effective Time, (i) eight of the nine directors
constituting the full Parent Board shall be as set forth in
Section 1 of
Schedule A
attached hereto, and
(ii) the ninth director of the Parent Board shall be the
individual nominated by the Arch Board to serve on the Parent
Board as set forth in Section 5 of
Schedule A
(or if such individual is unable to serve on the Parent
Board as a result of death or incapacitation, the individual
nominated by the Arch Board to serve on the Parent Board as the
alternate ninth director as set forth in Section 6 of
Schedule A
), and Section 1 of
Schedule A
shall be amended accordingly. The parties intend that the
selection of the ninth member of the Parent Board shall be
deemed to have been made by the Arch Board and shall not
constitute or give rise, upon consummation of the Transactions,
to a Change in Control under Archs Management
Long-Term Incentive Plan, the Arch Stock Plan or any related
Restricted Stock Agreement or under the respective employment
agreements of Messrs. Baker, Daniels and Pottle.
Immediately after the Effective Time, the Chairman of the Parent
Board shall be the member of the Metrocall Board designated as
such on Section 1 of
Schedule A; provided
that
if prior to the Effective Time such person is unable or
unwilling to serve in such capacity, another person selected to
serve on the Parent Board will be promptly selected and approved
to serve as the Chairman of the Parent Board by not less than
five of the nine persons selected to serve on the Parent Board,
and Section 1 of
Schedule A
shall be amended
accordingly.
(b) As of the Effective Time, the directors constituting
the Audit Committee, Compensation Committee and Nominating and
Governance Committee of the Parent Board shall be as set forth
in Sections 2, 3 and 4, respectively, of
Schedule A
attached hereto, each such Person to serve from the
Effective Time until his or her successor has been duly elected
and qualified, or until his or her earlier death, resignation,
or removal in accordance with the Parent Certificate of
Incorporation and Parent Bylaws. The Chairman of each of the
Audit Committee, Compensation Committee and Nominating and
Governance Committee of the Parent Board shall be selected and
approved to so serve by a majority of persons selected to serve
on the Parent Board.
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(c) In the event that any individual listed in
Sections 1, 2, 3 or 4 of
Schedule A
who is a
member of the Metrocall Board on the date hereof is unable or
unwilling to serve on the Parent Board or any committee thereof
as of the Effective Time, then, prior to the Effective Time, the
Metrocall Board shall designate a candidate to replace such
individual, which candidate shall be approved by the Arch Board,
such approval not to be unreasonably withheld, and the relevant
sections of
Schedule A
shall be amended accordingly.
(d) In the event that any individual listed in
Sections 1, 2, 3 or 4
Schedule A
who is a
member of the Arch Board on the date hereof is unable or
unwilling to serve on the Parent Board or any committee thereof
as of the Effective Time, then, prior to the Effective Time, the
Arch Board shall designate a candidate to replace such
individual, which candidate shall be approved by the Metrocall
Board, such approval not to be unreasonably withheld, and the
relevant section(s) of
Schedule A
shall be amended
accordingly.
(e) Each of Metrocall and Arch shall take such action, and
shall cause Parent to take such action, as shall reasonably be
deemed by either thereof to be advisable to give effect to the
provisions set forth in this Section 6.14.
(f) Each of the foregoing Persons shall serve from the
Effective Time until his or her successor has been duly elected
and qualified, or until his or her earlier death, resignation,
or removal in accordance with the Parent Certificate of
Incorporation and Parent Bylaws.
Section 6.15
Redemption of
Notes
. Prior to the Closing Date, Arch shall cause Arch
Holdings, Inc. (
Arch Holdings
) to redeem in
full all outstanding 12% Subordinated Secured Compounding Notes
due 2009, in accordance with the Indenture, dated May 29,
2002, among Arch Holdings, the guarantors listed therein and The
Bank of New York, as Trustee.
Section 6.16
Redemption of
Preferred Stock
. On or prior to the earlier of the record
date Metrocall Stockholders Meeting and June 30, 2004,
Metrocall shall redeemed, or shall have caused the redemption
of, all issued and outstanding shares of Metrocall Preferred
Stock, and shall have defeased, or caused the defeasance, all
shares of Metrocall Preferred Stock reserved for issuance under
the Metrocall Plan of Reorganization. On or prior to the mailing
of Joint Proxy Statement/ Prospectus, Metrocall shall have
delivered the required notice of such redemption or defeasance,
as applicable.
Section 6.17
Control of
Other Partys Business
. Nothing contained in this
Agreement shall give any party, directly or indirectly, the
right to control or direct the operations of any other party
prior to the consummation of the Mergers. Prior to the
consummation of the Mergers, each party shall independently
exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its operations.
ARTICLE VII
CONDITIONS
Section 7.1
Conditions to
Each Partys Obligation to Effect the Merger
. The
respective obligations of each party to effect the Merger shall
be subject to the fulfillment at or prior to the Closing Date of
the following conditions:
(a) the Arch Stockholders Approval and the Metrocall
Stockholders Approval;
(b) the Registration Statement shall have been declared
effective by the SEC in accordance with the provisions of the
Securities Act, and no stop order suspending such effectiveness
shall have been issued and remain in effect and no proceeding
for that purpose shall have been instituted by the SEC or any
state regulatory authorities;
(c) the shares of Parent Common Stock issuable in the
Merger and those to be reserved for issuance upon exercise of
stock options shall have been authorized for listing on Nasdaq
upon official notice of issuance;
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(d) no preliminary or permanent injunction or other order
or decree by any federal or state court which prevents,
prohibits or makes illegal the consummation of the Merger shall
have been issued and remain in effect (each party agreeing to
use its reasonable efforts to have any such injunction, order or
decree lifted);
(e) no statute, rule or regulation shall have been enacted
by any state or federal government or governmental agency in the
United States which would prevent or prohibit the consummation
of the Merger or make the Merger illegal;
(f) any waiting period applicable to consummation of the
Merger under the HSR Act shall have expired or been terminated;
(g) the FCC shall have granted its consent to the Merger;
and
(h) the number of Appraisal Shares shall not exceed 8% of
the total number of Metrocall Fully Diluted Shares as of the
Effective Time.
Section 7.2
Additional
Conditions to Obligation of Arch to Effect the Merger
.
Unless waived by Arch, the obligation of Arch to effect the
Merger shall be subject to the fulfillment at the Closing Date
of the following additional conditions:
(a) (i) Metrocall shall have performed in all material
respects its obligations contained in this Agreement required to
be performed on or prior to the Closing Date, (ii) the
representations and warranties of Metrocall contained in this
Agreement (x) that are qualified as to Metrocall Material
Adverse Effect shall be true and correct on and as of the date
made and (except to the extent that such representations and
warranties speak as of an earlier date, in which case on and as
of that date) on and as of the Closing Date as if made at and as
of such date and (y) that are not qualified as to Metrocall
Material Adverse Effect shall be true and correct (without
regard to any materiality qualifier in any such representations
or warranties) on and as of the date made and (except to the
extent that such representations and warranties speak as of an
earlier date, in which case on and as of the date) on and as of
the Closing Date as if made at and as of such date, except for
failures of the representations and warranties referred to in
this clause (ii) to be true and correct as would not reasonably
be expected to have, individually or in the aggregate, a
Metrocall Material Adverse Effect, and (iii) Arch shall
have received a certificate of the Chief Executive Officer of
Metrocall to that effect;
(b) between the date hereof and the Effective Time, there
shall not have occurred any Metrocall Material Adverse Effect;
and
(c) Arch shall have received a written opinion of
Latham & Watkins, in form and substance reasonably
acceptable to it, dated as of the Closing Date to the effect
that, on the basis of the facts, representations and assumptions
set forth or referred to in such opinion, for U.S. federal
income tax purposes the Merger will constitute an exchange
described in Section 351 of the Code. In rendering such
opinion, counsel to Arch shall be entitled to rely upon
assumptions and representations reasonably satisfactory to such
counsel, including representations set forth in certificates of
officers of Parent, Arch Acquiring Sub, Metrocall Acquiring Sub,
Arch and Metrocall.
Section 7.3
Additional
Conditions to Obligation of Metrocall to Effect the Merger
.
Unless waived by Metrocall, the obligation of Metrocall to
effect the Merger shall be subject to the fulfillment at the
Closing Date of the following additional conditions:
(a) (i) Arch shall have performed in all material
respects its obligations contained in this Agreement required to
be performed on or prior to the Closing Date, (ii) the
representations and warranties of Arch contained in this
Agreement (x) that are qualified as to Arch Material
Adverse Effect shall be true and correct on and as of the date
made and (except to the extent that such representations and
warranties speak as of an earlier date, which case on and as of
that date) on and as of the Closing Date as if made at and as of
such date and (y) that are not qualified as to Arch
Material Adverse Effect shall be true and correct (without
regard to any materiality qualifier in any such representations
or warranties) on and as of the date made and (except to the
extent that such representations and warranties speak as of an
earlier date, in which case on and as of the date) on and as of
the Closing Date as if made at and as of such date, except for
failures of the representations and warranties referred to in
this clause (ii) to be true and correct as would not
reasonably be
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(b) Between the date hereof and the Effective Time, there
shall not have occurred any Arch Material Adverse Effect; and
(c) Metrocall shall have received a written opinion of
Schulte Roth & Zabel LLP, in form and substance
reasonably acceptable to it, dated as of the Closing Date to the
effect that, on the basis of the facts, representations and
assumptions set forth or referred to in such opinion, for U.S.
federal income tax purposes the Merger will constitute an
exchange described in Section 351 of the Code. In rendering
such opinion, counsel to Metrocall shall be entitled to rely
upon assumptions and representations reasonably satisfactory to
such counsel, including representations set forth in
certificates of officers of Parent, Arch Acquiring Sub,
Metrocall Acquiring Sub, Arch and Metrocall.
ARTICLE VIII
TERMINATION
Section 8.1
Termination
.
This Agreement may be terminated and the Merger may be abandoned
at any time prior to the Effective Time, notwithstanding any
requisite adoption and approval of this Agreement, as follows:
(a) by mutual written consent duly authorized by the
Metrocall Board and the Arch Board;
(b) by either Metrocall or Arch, if the Effective Time
shall not have occurred on or before December 31, 2004;
provided, however,
that in the event that all conditions
set forth in Article VII are satisfied or waived and the
Companies have not consummated the Transactions due to a failure
to obtain on reasonable terms the financing required to pay the
Cash Election Price, then such date may be extended for no
longer than 60 days by either Metrocall or Arch by
providing written notice thereof to the other Person on or prior
to December 31, 2004;
provided further, however,
that the right to terminate this Agreement under this
Section 8.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement shall
have caused, or resulted in, the failure of the Effective Time
to occur on or before such date;
(c) by either Metrocall or Arch, if any injunction, order
or decree of the type described in Section 7.1(d) shall
have been entered and shall have become final and nonappealable,
provided,
that the party seeking to terminate this
Agreement pursuant to this Section 8.1(c) shall have used
its reasonable best efforts to prevent the entry of and to
remove such injunction, order or decree;
(d) by Arch, if prior to the Metrocall Stockholders
Approval, (i) the Metrocall Board withdraws or in any
materially adverse respect modifies or changes its
recommendation of this Agreement or the Merger or shall have
resolved to do so; or (ii) the Metrocall Board shall have
recommended to the stockholders of Metrocall a Competing
Transaction or shall have resolved to do so;
(e) by Metrocall if, prior to the Arch Stockholders
Approval, (i) the Arch Board withdraws or in any materially
adverse respect modifies or changes its recommendation of this
Agreement or the Merger or shall have resolved to do so, or
(ii) the Arch Board shall have recommended to the
stockholders of Arch a Competing Transaction or shall have
resolved to do so;
(f) by either Arch or Metrocall if (i) this Agreement
and the Merger shall fail to receive the requisite votes for the
Metrocall Stockholders Approval at the Metrocall
Stockholders Meeting (assuming the existence of a quorum where a
vote was taken, and including any adjournment of such meeting)
or (ii) this Agreement and the Merger shall fail to receive
the requisite votes for the Arch Stockholders Approval at
the Arch Stockholders Meeting (assuming the existence of a
quorum where a vote was taken, and including any adjournment of
such meeting);
(g) by Arch, upon a breach of any representation, warranty,
covenant or agreement on the part of Metrocall set forth in this
Agreement, or if any representation or warranty of Metrocall
shall have become untrue, incomplete or incorrect, in either
case such that the conditions set forth in Section 7.2(a)
would not be
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(h) by Metrocall, upon breach of any representation,
warranty, covenant or agreement on the part of Arch set forth in
this Agreement, or if any representation or warranty of Arch
shall have become untrue, incomplete or incorrect, in either
case such that the conditions set forth in Section 7.3(a)
would not be satisfied (a
Terminating Arch
Breach
);
provided, however,
that Arch shall
have 30 days after written notice of such default,
specifying in reasonable detail the nature of such default, is
given to Arch by Metrocall to cure such Terminating Arch Breach,
and Metrocall may not terminate this Agreement under this
Section 8.1(h), if such Terminating Arch Breach is curable
by Arch through the exercise of its reasonable efforts within
such 30-day period and for so long as Arch continues to exercise
such reasonable efforts; and
provided further, however,
that the immediately preceding proviso shall not in any event be
deemed to extend any date set forth in Section 8.1(b);
(i) by Metrocall, if, prior to the Metrocall
Stockholders Approval, the Metrocall Board determines in
accordance with Section 5.2 to approve a Competing
Transaction, but only after Metrocall (A) provides Arch
with no less than five Business Days notice of its determination
to approve such Competing Transaction, including all material
terms thereof, (B) within such period, has in good faith
negotiated, and has caused its financial and legal advisors to
negotiate, with Arch to make such adjustments in the terms and
conditions of this Agreement as would cause the transactions
contemplated by this Agreement to be more favorable, from a
financial point of view, to the stockholders of Metrocall than
such Competing Transaction, and (C) taking into account any
amendments made to this Agreement pursuant to clause (B), the
Metrocall Board determines in good faith that the Competing
Transaction is more favorable, from a financial point of view,
to the stockholders of Metrocall than the transactions
contemplated by this Agreement, provided that Metrocalls
right to terminate this Agreement under this Section 8.1(i)
shall not be available if Metrocall is then in breach of
Section 5.2; or
(j) by Arch, if, prior to the Arch Stockholders
Approval, the Arch Board determines in accordance with
Section 5.2 to approve a Competing Transaction, but only
after Arch (A) provides Metrocall with no less than five
Business Days notice of its determination to approve such
Competing Transaction, including all material terms thereof,
(B) within such period, has in good faith negotiated, and
has caused its financial and legal advisors to negotiate, with
Metrocall to make such adjustments in the terms and conditions
of this Agreement as would cause the transactions contemplated
by this Agreement to be more favorable, from a financial point
of view, to the stockholders of Arch than such Competing
Transaction, and (C) taking into account any amendments
made to this Agreement pursuant to clause (B), the Arch Board
determines in good faith that the Competing Transaction is more
favorable, from a financial point of view, to the stockholders
of Arch than the transactions contemplated by this Agreement,
provided that Arch right to terminate this Agreement under this
Section 8.1(j) shall not be available if Arch is then in
breach of Section 5.2.
Section 8.2
Effect of
Termination.
(a) Except as provided in this Section 8.2
and Section 8.3, in the event of termination of this
Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void, there shall be no liability under this
Agreement on the part of any party hereto or any partys
affiliates or any partys officers or directors, and all
rights and obligations of each party hereto shall cease,
provided, however,
that (i) the provisions of
Sections 6.2, 6.6, 8.2, and 8.3, Article IX shall
survive and (ii) subject to Section 8.3(d), nothing
herein shall relieve any party hereto from liability for the
willful or intentional breach of any of its representations and
warranties or the willful or intentional breach of any of its
covenants or agreements set forth in this Agreement.
(b) For a period of twelve months from the date of any
termination of this Agreement, neither Company, nor any of their
respective Subsidiaries, shall, directly or indirectly, solicit
the employment of any
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Section 8.3
Termination
Fee.
(a) In the event that (i) either Company
shall terminate this Agreement pursuant to
Section 8.1(f)(i) and, in either case, at the time of such
termination there shall exist or be proposed a Competing
Transaction in respect of Metrocall which is consummated or with
respect to which Metrocall enters into a definitive agreement
within 12 months thereafter, (ii) Arch shall terminate
this Agreement pursuant to Section 8.1(d), or
(iii) Metrocall shall terminate this Agreement pursuant to
Section 8.1(i), then Metrocall shall pay to Arch
$12 million, promptly after demand for payment is made to
Metrocall or, in the case of subpart (i) hereof, after the
execution and delivery of such agreement or the consummation of
such Competing Transaction.
(b) In the event that (i) either Company shall
terminate this Agreement pursuant to Section 8.1(f)(ii)
and, in either case, at the time of such termination there shall
exist or be proposed a Competing Transaction in respect of Arch
which is consummated or with respect to which Arch enters into a
definitive agreement within 12 months thereafter,
(ii) Metrocall shall terminate this Agreement pursuant to
Section 8.1(e), or (iii) Arch shall terminate this
Agreement pursuant to Section 8.1(j), then Arch shall pay
to Metrocall $12 million, promptly after demand for payment
is made to Arch or, in the case of subpart (i) hereof,
after the execution and delivery of such agreement or the
consummation of such Competing Transaction.
(c) Any payment required to be made pursuant to this
Section 8.3 shall be made not later than two Business Days
after (i) delivery to the paying party of notice of demand
for payment, (ii) the execution of a definitive agreement
relating to a Competing Transaction or (iii) the
consummation of such Competing Transaction (in the case of
clause (ii) or (iii), the paying Company shall promptly
notify the other Company of such event and the other Company
shall designate an account for such payment in writing), as
required by this Section 8.3, and shall be made by wire
transfer of immediately available funds to an account designated
by the other Company in the notice of demand for payment, or in
the case of clause (ii) or (iii), other written
instruction. In the event both Arch and Metrocall would
otherwise be entitled to payments under Section 8.3
(a) and (b) respectively, neither Company shall be
required to make any payment under this Section 8.3. In no
event shall either Company be entitled to collect amounts
pursuant to this Section 8.3 relating to more than one
specified event.
(d) In the event fees are payable under this
Section 8.3, such fees set forth in this Section 8.3
shall constitute the sole and exclusive remedy for any loss,
liability, damage or claim arising out of or in connection with
any nonperformance of a covenant, breach, failure of a condition
precedent or termination of this Agreement.
(e) Each of the parties acknowledge that the agreements
contained in Section 8.3 are an integral part of the
Transactions, and that, without these agreements, the other
party would not enter into this Agreement; accordingly, if
either of the parties fails to pay in a timely manner the
amounts due pursuant to Section 8.3 and, in order to obtain
such payment, the other party makes a claim that results in a
judgment against the first party for the amounts set forth in
this Section 8.3, the first party shall pay the other party
its costs and expenses (including attorneys fees and
expenses) in connection with such suit, together with interest
on the applicable amounts at the prime rate as set forth in The
Wall Street Journal (Northeastern Edition), in effect on the
date such payment was originally required to be made.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1
Non-Survival of
Representations and Warranties.
No representations,
warranties or obligations in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the
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Section 9.2
Amendments and
Waivers; Delays and Omissions.
(a) The provisions of
this Agreement may not be amended, modified, supplemented or
terminated, and waivers or consents to departure from the
provisions hereof may not be given, except by written instrument
duly executed by the parties hereto by action taken by or on
behalf of their respective boards of directors at any time prior
to the Effective Time;
provided, however,
that after the
Arch Stockholders Approval and the Metrocall
Stockholders Approval, no waiver or amendment may be made,
except such waivers and amendments that have received the
requisite stockholder approval and such waivers and amendments
that are permitted to be made without stockholder approval under
the Delaware General Corporation Laws.
(b) Except as expressly provided herein, no delay or
omission to exercise any right, power or remedy accruing to any
party, upon any breach of default of another party under this
Agreement, shall impair any such right, power or remedy of such
party nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any
similar breach or default thereafter occurring; nor shall any
waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any
waiver of compliance with the performance of any obligation or
other act of any other party hereto shall be valid only if set
forth in an instrument in writing signed by the party or parties
to be bound thereby.
Section 9.3
Notices.
All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery,
facsimile, any nationally recognized courier guaranteeing
overnight delivery, or first class registered or certified mail,
return receipt requested, postage prepaid, addressed to the
applicable party at the address set forth below or such other
address as may hereafter be designated by such party to the
other parties in accordance with the provisions of this Section:
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All such notices and communications shall be deemed to have been
duly given: at the time delivered, if delivered by hand; when
noted on a confirmation report (or if such delivery date is not
a Business Day, on the next Business Day), if sent by facsimile;
on the next Business Day, if timely delivered to a nationally
recognized courier guaranteeing overnight delivery; if and when
received, if deposited in the United States mail, postage
prepaid, certified or registered, return receipt requested.
Section 9.4
Binding
Agreement; No Assignment.
This Agreement shall inure solely
to the benefit of and be binding upon each of the parties
hereto. This Agreement shall not be assigned by any party by
operation of law or otherwise. Except as otherwise provided in
Sections 6.9 and 6.11 herein, this Agreement is not
intended to confer upon any Person, except for the parties
hereto, any rights or remedies hereunder.
Section 9.5
Counterparts.
This Agreement may be executed in counterparts (including by
facsimile), each of which, when so executed and delivered, shall
be deemed to be an original and enforceable, but all of which,
taken together, shall constitute one and the same instrument.
Section 9.6
Descriptive
Headings, Etc.
The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning of terms contained herein. Unless the context
of this Agreement otherwise requires: (i) words of any
gender shall be deemed to include each other gender;
(ii) words using the singular or plural number shall also
include the plural or singular number, respectively;
(iii) the words hereof, herein and
hereunder and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement, and Section and
paragraph references are to the Sections and paragraphs of this
Agreement; (iv) the word including and words of
similar import when used in this Agreement means
including, without limitation, unless otherwise
specified; (v) or is not exclusive;
(vi) provisions apply to successive events and
transactions; (vii) knowledge, with respect to
any party, means the actual knowledge of the executive officers
of that party; and (viii) Business Day means
any day on which the principal offices of the SEC in Washington,
D.C. are open to accept filings, other than any such day banks
in New York City are permitted or required by law to be closed.
Section 9.7
Severability.
In the event that any one or more of the provisions,
paragraphs, words, clauses, phrases or sentences contained
herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason,
the validity, legality and enforceability of any such provision,
paragraph, word, clause, phrase or sentence in every other
respect and of the other remaining provisions, paragraphs,
words, clauses, phrases or sentences hereof shall not be in any
way impaired, it being
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Section 9.8
Governing Law.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without
giving effect to the conflict of laws principles thereof).
Section 9.9
Entire
Agreement.
(a) This Agreement, including the Arch
Disclosure Schedule and the Metrocall Disclosure Schedule, the
Ancillary Agreements and the related documents and instruments
delivered pursuant to this Agreement, together with any other
written agreements delivered by the parties substantially
concurrently with this Agreement (collectively, the
Other Agreements
), are intended by the
parties as a final expression of their agreement and intended to
be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject
matter contained herein; it being understood that the
Nondisclosure Agreement shall continue in full force and effect
until the Closing and shall survive any termination of this
Agreement. There are no restrictions, promises, representations,
warranties, covenants or undertakings relating to such subject
matter, other than those set forth or referred to herein or in
the Other Agreements. This Agreement and the Other Agreements
supersede all prior agreements and understandings between the
Companies and the other parties to this Agreement, both written
and oral, with respect to such subject matter.
(b) The Exhibits and Schedules identified in this Agreement
are incorporated herein by reference and made a part hereof.
Section 9.10
Consent to
Jurisdiction.
Each party to this Agreement hereby
irrevocably and unconditionally agrees that any action, suit or
proceeding, at law or equity, arising out of or relating to this
Agreement or any agreements or transactions contemplated hereby
may only be brought in any federal court of the Southern
District of New York or any state court located in New York
County, State of New York, and hereby irrevocably and
unconditionally expressly submits to the personal jurisdiction
and venue of such courts for the purposes thereof and hereby
irrevocably and unconditionally waives (by way of motion, as a
defense or otherwise) any and all jurisdictional, venue and
convenience objections or defenses that such party may have in
such action, suit or proceeding. Each party hereby irrevocably
and unconditionally consents to the service of process of any of
the aforementioned courts. Nothing herein contained shall be
deemed to affect the right of any party to serve process in any
manner permitted by law or commence legal proceedings or
otherwise proceed against any other party in any other
jurisdiction to enforce judgments obtained in any action, suit
or proceeding brought pursuant to this Section.
Section 9.11
Further
Assurances.
Each party hereto shall do and perform or cause
to be done and performed all such further acts and things and
shall execute and deliver all such other agreements,
certificates, instruments and documents as any other party
hereto reasonably may request in order to carry out the intent
and accomplish the purposes of this Agreement and the
consummation of the Transactions. Any out-of-pocket costs
associated with complying with this Section shall be borne by
the requesting party.
Section 9.12
Construction.
The parties hereto acknowledge that each of them has had the
benefit of legal counsel of its own choice and has been afforded
an opportunity to review this Agreement with its legal counsel
and that this Agreement shall be construed as if jointly drafted
by the parties.
Section 9.13
Waiver of Jury
Trial.
EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES TRIAL
BY JURY IN ANY ACTION, SUIT OR PROCEEDING, WHETHER AT LAW OR
EQUITY, BROUGHT BY ANY OF THEM IN CONNECTION WITH THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 9.14
Specific
Performance.
The parties hereto agree that irreparable
damage would occur in the event any of the provisions of this
Agreement were not to be performed in accordance with the terms
hereof and that the parties shall be entitled to specific
performance of the terms hereof in addition to any other
remedies at law or in equity.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed and delivered by their respective officers as of the date
first written above.
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ANNEX B
[to be filed by amendment]
ANNEX C
AMENDED AND RESTATED BYLAWS
OF
WIZARDS-PATRIOTS HOLDINGS, INC.
TABLE OF CONTENTS
i
ii
iii
AMENDED AND RESTATED BYLAWS
OF
WIZARDS-PATRIOTS HOLDINGS, INC.
ARTICLE I
OFFICES
Section 1.1
Registered
Office.
The registered office of the Corporation shall be in
Wilmington, Delaware, and the initial registered agent in charge
thereof shall be Corporation Service Company.
Section 1.2
Other Offices.
The Corporation may also have offices at such other places,
both within and without the State of Delaware, as the Board of
Directors may from time to time determine or as may be necessary
or useful in connection with the business of the Corporation.
ARTICLE II
STOCKHOLDERS
Section 2.1
Place of
Meetings.
All meetings of stockholders shall be held at such
place as may be designated from time to time by the Board of
Directors, or, if not so designated, at the principal office of
the Corporation.
Section 2.2
Annual Meeting.
The annual meeting of stockholders for the election of
directors and for the transaction of such other business as may
properly be brought before the meeting shall be held on a date
and at a time designated by the Board of Directors (which date
shall not be a legal holiday in the place where the meeting is
to be held). If no annual meeting is held in accordance with the
foregoing provisions, a special meeting may be held in lieu of
the annual meeting, and any action taken at that special meeting
shall have the same effect as if it had been taken at the annual
meeting, and in such case all references in these Bylaws to the
annual meeting of the stockholders shall be deemed to refer to
such special meeting.
Section 2.3
Special
Meetings.
Special meetings of stockholders for any purpose
or purposes may be called at any time by the holders of
twenty-five percent (25%) of the outstanding stock of the
Corporation, a majority of the members of the Board of
Directors, whether constituting a quorum or not, the Chairman of
the Board of Directors or the Chief Executive Officer of the
Corporation, but such special meetings may not be called by any
other person or persons. Business transacted at any special
meeting of stockholders shall be limited to matters relating to
the purpose or purposes stated in the notice of meeting.
Section 2.4
Notice of
Meetings.
Except as otherwise provided by law, written
notice of each meeting of stockholders, whether annual or
special, shall be given not less than 10 nor more than
60 days before the date of the meeting to each stockholder
entitled to vote at such meeting. Without limiting the manner by
which notice otherwise may be given to stockholders, any notice
shall be effective if given by a form of electronic transmission
consented to (in a manner consistent with the General
Corporation Law of the State of Delaware) by the stockholder to
whom the notice is given. The notices of all meetings shall
state the place, date and time of the meeting and the means of
remote communications, if any, by which stockholders and
proxyholders may be deemed to be present in person and vote at
such meeting. The notice of a special meeting shall state, in
addition, the purpose or purposes for which the meeting is
called. If notice is given by mail, such notice shall be deemed
given when deposited in the United States mail, postage prepaid,
directed to the stockholder at such stockholders address
as it appears on the records of the Corporation. If notice is
given by electronic transmission, such notice shall be deemed
given at the time specified in Section 232 of the General
Corporation Law of the State of Delaware.
Section 2.5
Waivers of
Notice.
Whenever the giving of any notice is required by
statute, the Certificate of Incorporation or these Bylaws, a
waiver thereof, in writing and delivered to the corporation,
signed by the person or persons entitled to said notice, whether
before or after the event as to which such
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Section 2.6
Voting List.
The Secretary shall prepare, at least 10 days before
every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder
and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, for a
period of at least 10 days prior to the meeting:
(i) on a reasonably accessible electronic network, provided
that the information required to gain access to such list is
provided with the notice of the meeting, or (ii) during
ordinary business hours, at the principal place of business of
the Corporation. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and
may be inspected by any stockholder who is present.
Section 2.7
Quorum.
Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, the holders of a majority of the
shares of the capital stock of the Corporation issued and
outstanding and entitled to vote at the meeting, present in
person, present by means of remote communication in a manner, if
any, authorized by the Board of Directors in its sole
discretion, or represented by proxy, shall constitute a quorum
for the transaction of business. A quorum, once established at a
meeting, shall not be broken by the withdrawal of enough votes
to leave less than a quorum.
Section 2.8
Adjournments.
Any meeting of stockholders may be adjourned from time to
time to any other time and to any other place at which a meeting
of stockholders may be held under these Bylaws by the
stockholders present or represented at the meeting and entitled
to vote, although less than a quorum, or, if no stockholder is
present, by any officer entitled to preside at or to act as
secretary of such meeting. It shall not be necessary to notify
any stockholder of any adjournment of less than 30 days if
the time and place of the adjourned meeting, and the means of
remote communication, if any, by which stockholders and
proxyholders may be deemed to be present in person and vote at
such adjourned meeting, are announced at the meeting at which
adjournment is taken, unless after the adjournment a new record
date is fixed for the adjourned meeting. At the adjourned
meeting, the Corporation may transact any business which might
have been transacted at the original meeting.
Section 2.9
Voting and
Proxies.
Each stockholder shall have one vote for each share
of stock entitled to vote held of record by such stockholder,
unless otherwise provided by law or the Certificate of
Incorporation. Each stockholder of record entitled to vote at a
meeting of stockholders may vote in person (including by means
of remote communications, if any, by which stockholders may be
deemed to be present in person and vote at such meeting) or may
authorize another person or persons to vote for such stockholder
by a proxy executed or transmitted in a manner permitted by the
General Corporation Law of the State of Delaware by the
stockholder or such stockholders authorized agent and
delivered (including by electronic transmission) to the
Secretary of the Corporation. No such proxy shall be voted upon
after three years from the date of its execution, unless the
proxy expressly provides for a longer period. A duly executed
appointment of proxy shall be irrevocable if the appointment
form states that it is irrevocable and if, and only as long as,
it is coupled with an interest sufficient in law to support an
irrevocable power.
Section 2.10
Action at
Meeting.
When a quorum is present at any meeting, any matter
other than the election of directors to be voted upon by the
stockholders at such meeting shall be decided by the vote of the
holders of shares of stock having a majority of the votes cast
by the holders of all of the shares of stock present or
represented and voting on such matter (or if there are two or
more classes of stock entitled to vote as separate classes, then
in the case of each such class, the holders of a majority of the
stock of that class present or represented and voting on such
matter), except when a different vote is required by law, the
Certificate of Incorporation or these Bylaws. When a quorum is
present at any meeting, any election by
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Section 2.11
Nomination of
Directors.
(a) Except for (i) any directors entitled to be
elected by the holders of preferred stock or any other
securities of the Corporation (other than stock) and
(ii) any directors elected in accordance with
Section 3.7 hereof by the Board of Directors to fill a
vacancy, only persons who are nominated in accordance with the
procedures in this Section 2.11 shall be eligible for
election as directors. Nomination for election to the Board of
Directors of the Corporation at a meeting of stockholders may be
made (i) by or at the direction of the Board of Directors
or (ii) by any stockholder of the Corporation who
(x) complies with the notice procedures set forth in
Section 2.11(b) and (y) is a stockholder of record on
the date of the giving of such notice and on the record date for
the determination of stockholders entitled to vote at such
meeting.
(b) To be timely, a stockholders notice must be
received by the Secretary at the principal executive offices of
the Corporation as follows: (x) in the case of an election
of directors at an annual meeting of stockholders, not less than
60 days nor more than 90 days prior to the first
anniversary of the preceding years annual meeting;
provided, however,
that (i) in the case of the
annual meeting of stockholders of the Corporation to be held in
2005 or (ii) in the event that the date of the annual
meeting in any other year is advanced by more than 20 days,
or delayed by more than 60 days, from the first anniversary
of the preceding years annual meeting, a
stockholders notice must be so received not earlier than
the ninetieth day prior to such annual meeting and not later
than the close of business on the later of (A) the sixtieth
day prior to such annual meeting and (B) the tenth day
following the day on which notice of the date of such annual
meeting was mailed or public disclosure of the date of such
annual meeting was made, whichever first occurs; or (y) in
the case of an election of directors at a special meeting of
stockholders, not earlier than the ninetieth day prior to such
special meeting and not later than the close of business on the
later of (i) the sixtieth day prior to such special meeting
and (ii) the tenth day following the day on which notice of
the date of such special meeting was mailed or public disclosure
of the date of such special meeting was made, whichever first
occurs.
The stockholders notice to the Secretary shall set forth:
(a) as to each proposed nominee (i) such persons
name, age, business address and, if known, residence address,
(ii) such persons principal occupation or employment,
(iii) the class and number of shares of stock of the Corporation
which are beneficially owned by such person, and (iv) any
other information concerning such person that must be disclosed
as to nominees in proxy solicitations pursuant to
Regulation 14A under the Securities Exchange Act of 1934,
as amended; (b) as to the stockholder giving the notice
(i) such stockholders name and address, as they
appear on the Corporations books, (ii) the class and
number of shares of stock of the Corporation which are owned,
beneficially and of record, by such stockholder, (iii) a
description of all arrangements or understandings between such
stockholder and each proposed nominee and any other person or
persons (including their names) pursuant to which the
nomination(s) are to be made by such stockholder and (iv) a
representation that such stockholder intends to appear in person
or by proxy at the meeting to nominate the person(s) named in
its notice; and (c) as to the beneficial owner, if any, on
whose behalf the nomination is being made (i) such
beneficial owners name and address, (ii) the class
and number of shares of stock of the Corporation which are
beneficially owned by such beneficial owner, and (iii) a
description of all arrangements or understandings between such
beneficial owner and each proposed nominee and any other person
or persons (including their names) pursuant to which the
nomination(s) are to be made. In addition, to be effective, the
stockholders notice must be accompanied by the written
consent of the proposed nominee to serve as a director if
elected. The Corporation may require any proposed nominee to
furnish such other information as may reasonably be required to
determine the eligibility of such proposed nominee to serve as a
director of the Corporation.
(c) The chairman of any meeting shall, if the facts
warrant, determine that a nomination was not made in accordance
with the provisions of this Section 2.11, and if the
chairman should so determine, the chairman shall so declare to
the meeting and the defective nomination shall be disregarded.
(d) Except as otherwise required by law, nothing in this
Section 2.11 shall obligate the Corporation or the Board of
Directors to include in any proxy statement or other stockholder
communication distributed on
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Section 2.12
Notice of
Business at Annual Meetings.
(a) At any annual meeting of the stockholders, only such
business shall be conducted as shall have been properly brought
before the meeting. To be properly brought before an annual
meeting, business must be (i) specified in the notice of
meeting (or any supplement thereto) given by or at the direction
of the Board of Directors, (ii) otherwise properly brought
before the meeting by or at the direction of the Board of
Directors, or (iii) properly brought before the meeting by
a stockholder. For business to be properly brought before an
annual meeting by a stockholder, (i) if such business
relates to the election of directors of the Corporation, the
procedures in Section 2.11 must be complied with and
(ii) if such business relates to any other matter, the
stockholder must (x) have given timely notice thereof in
writing to the Secretary in accordance with the procedures set
forth in Section 2.12(b) and (y) be a stockholder of
record on the date of the giving of such notice and on the
record date for the determination of stockholders entitled to
vote at such annual meeting.
(b) To be timely, a stockholders notice must be
received by the Secretary at the principal executive offices of
the Corporation not less than 60 days nor more than
90 days prior to the first anniversary of the preceding
years annual meeting;
provided, however,
that
(i) in the case of the annual meeting of stockholders of
the Corporation to be held in 2005 or (ii) in the event
that the date of the annual meeting in any other year is
advanced by more than 20 days, or delayed by more than
60 days, from the first anniversary of the preceding
years annual meeting, a stockholders notice must be
so received not earlier than the ninetieth day prior to such
annual meeting and not later than the close of business on the
later of (A) the sixtieth day prior to such annual meeting
and (B) the tenth day following the day on which notice of
the date of such annual meeting was mailed or public disclosure
of the date of such annual meeting was made, whichever first
occurs.
The stockholders notice to the Secretary shall set forth
as to each matter the stockholder proposes to bring before the
annual meeting (i) a brief description of the business
desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting,
(ii) the name and address, as they appear on the
Corporations books, of the stockholder proposing such
business, and the name and address of the beneficial owner, if
any, on whose behalf the proposal is made, (iii) the class
and number of shares of stock of the Corporation which are
owned, of record and beneficially, by the stockholder and
beneficial owner, if any, (iv) a description of all
arrangements or understandings between such stockholder or such
beneficial owner, if any, and any other person or persons
(including their names) in connection with the proposal of such
business by such stockholder and any material interest of the
stockholder or such beneficial owner, if any, in such business,
and (v) a representation that such stockholder intends to
appear in person or by proxy at the annual meeting to bring such
business before the meeting. Notwithstanding anything in these
Bylaws to the contrary, no business shall be conducted at any
annual meeting of stockholders except in accordance with the
procedures set forth in this Section 2.12;
provided
that any stockholder proposal which complies with
Rule 14a-8 of the proxy rules (or any successor provision)
promulgated under the Securities Exchange Act of 1934, as
amended, and is to be included in the Corporations proxy
statement for an annual meeting of stockholders shall be deemed
to comply with the requirements of this Section 2.12.
(c) The chairman of any meeting shall, if the facts
warrant, determine that business was not properly brought before
the meeting in accordance with the provisions of this
Section 2.12, and if the chairman should so determine, the
chairman shall so declare to the meeting and such business shall
not be brought before the meeting.
Section 2.13
Conduct of
Meetings.
(a)
Chairman of Meeting.
Meetings of stockholders
shall be presided over by the Chairman of the Board, if any, or
in the Chairmans absence by the Vice Chairman of the
Board, if any, or in the Vice Chairmans absence by the
Chief Executive Officer, or in the Chief Executive
Officers absence by the President, or in the
Presidents absence by a Vice President, or in the absence
of all of the foregoing persons by a chairman designated by the
Board of Directors, or in the absence of such designation by a
chairman chosen by vote of the stockholders at the meeting. The
Secretary shall act as secretary of the meeting, but in
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(b)
Rules, Regulations and Procedures.
The Board of
Directors of the Corporation may adopt by resolution such rules,
regulations and procedures for the conduct of any meeting of
stockholders of the Corporation as it shall deem appropriate
including, without limitation, such guidelines and procedures as
it may deem appropriate regarding the participation by means of
remote communication of stockholders and proxyholders not
physically present at a meeting. Except to the extent
inconsistent with such rules, regulations and procedures as
adopted by the Board of Directors, the chairman of any meeting
of stockholders shall have the right and authority to prescribe
such rules, regulations and procedures and to do all such acts
as, in the judgment of such chairman, are appropriate for the
proper conduct of the meeting. Such rules, regulations or
procedures, whether adopted by the Board of Directors or
prescribed by the chairman of the meeting, may include, without
limitation, the following: (i) the establishment of an
agenda or order of business for the meeting; (ii) rules and
procedures for maintaining order at the meeting and the safety
of those present; (iii) limitations on attendance at or
participation in the meeting to stockholders of record of the
Corporation, their duly authorized and constituted proxies or
such other persons as shall be determined; (iv) restrictions on
entry to the meeting after the time fixed for the commencement
thereof; and (v) limitations on the time allotted to
questions or comments by participants. Unless and to the extent
determined by the Board of Directors or the chairman of the
meeting, meetings of stockholders shall not be required to be
held in accordance with the rules of parliamentary procedure.
(c)
Closing of Polls.
The chairman of the meeting
shall announce at the meeting when the polls for each matter to
be voted upon at the meeting will be opened and closed. If no
announcement is made, the polls shall be deemed to have opened
when the meeting is convened and closed upon the final
adjournment of the meeting. After the polls close, no ballots,
proxies or votes or any revocations or changes thereto may be
accepted.
(d)
Inspectors of Election.
In advance of any
meeting of stockholders, the Board of Directors, the Chairman of
the Board, the Vice Chairman of the Board, if any, the Chief
Executive Officer or the President shall appoint one or more
inspectors or election to act at the meeting and make a written
report thereof. One or more other persons may be designated as
alternate inspectors to replace any inspector who fails to act.
If no inspector or alternate is present, ready and willing to
act at a meeting of stockholders, the chairman of the meeting
shall appoint one or more inspectors to act at the meeting.
Unless otherwise required by law, inspectors may be officers,
employees or agents of the Corporation. Each inspector, before
entering upon the discharge of such inspectors duties,
shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of
such inspectors ability. The inspector shall have the
duties prescribed by law and shall take charge of the polls and,
when the vote in completed, shall make a certificate of the
result of the vote taken and of such other facts as may be
required by law.
Section 2.14
Action without
Meeting.
(a)
Taking of Action by Consent.
Any action required
or permitted to be taken at any annual or special meeting of
stockholders of the Corporation may be taken without a meeting,
without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, is signed by the
holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote on
such action were present and voted. Except as otherwise provided
by the Certificate of Incorporation, stockholders may act by
written consent to elect directors;
provided, however,
that, if such consent is less than unanimous, such action by
written consent may be in lieu of holding an annual meeting only
if all of the directorships to which directors could be elected
at an annual meeting held at the effective time of such action
are vacant and are filled by such action.
(b)
Electronic Transmission of Consents.
A telegram,
cablegram or other electronic transmission consenting to an
action to be taken and transmitted by a stockholder or
proxyholder, or by a person or persons authorized to act for a
stockholder or proxyholder, shall be deemed to be written,
signed and dated for the purposes of this section, provided that
any such telegram, cablegram or other electronic transmission
sets forth or is delivered with information from which the
Corporation can determine (A) that the telegram,
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(c)
Notice of Taking of Corporate Action.
Prompt
notice of the taking of corporate action without a meeting by
less than unanimous written consent shall be given to those
stockholders who have not consented in writing and who, if the
action had been taken at a meeting, would have been entitled to
notice of the meeting if the record date for such meeting had
been the date that written consents signed by a sufficient
number of holders to take the action were delivered to the
Corporation.
ARTICLE III
DIRECTORS
Section 3.1
General Powers.
The business and affairs of the Corporation shall be managed
by or under the direction of a Board of Directors, who may
exercise all of the powers of the Corporation except as
otherwise provided by law, the Certificate of Incorporation or
these Bylaws. In the event of a vacancy in the Board of
Directors, the remaining directors, except as otherwise provided
by law, may exercise the powers of the full Board until the
vacancy is filled.
Section 3.2
Number,
Election and Qualification.
The number of directors which
shall constitute the whole Board of Directors shall be
determined from time to time by resolution of the Board of
Directors, but in no event shall be less than three. The
directors shall be elected at the annual meeting of stockholders
by such stockholders as have the right to vote on such election.
Directors need not be stockholders of the Corporation.
Section 3.3
Term of Office.
Each director shall hold office until the next annual
meeting and until a successor is elected and qualified, or until
such directors earlier death, resignation or removal.
Section 3.4
Quorum.
A
majority of the directors at any time in office shall constitute
a quorum for the transaction of business. In the event one or
more of the directors shall be disqualified to vote at any
meeting, then the required quorum shall be reduced by one for
each director so disqualified, provided that in no case shall
less than one-third of the number of directors fixed pursuant to
Section 3.2 of these Bylaws constitute a quorum. If at any
meeting of the Board of Directors there shall be less than such
a quorum, a majority of the directors present may adjourn the
meeting from time to time without further notice other than
announcement at the meeting, until a quorum shall be present.
Section 3.5
Action at
Meeting.
Every act or decision done or made by a majority of
the directors present at a meeting duly held at which a quorum
is present shall be regarded as the act of the Board of
Directors unless a greater number is required by law, by the
Certificate of Incorporation or by these Bylaws.
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Section 3.6
Removal.
Except as otherwise provided by the General Corporation Law
of the State of Delaware, any one or more or all of the
directors may be removed, with or without cause, by the holders
of a majority of the shares then entitled to vote at an election
of directors, except that the directors elected by the holders
of a particular class or series of stock may be removed without
cause only by vote of the holders of a majority of the
outstanding shares of such class or series.
Section 3.7
Vacancies.
Any vacancy in the Board of Directors, however occurring,
including a vacancy resulting from an enlargement of the Board,
shall be filled only by vote of a majority of the directors then
in office, although less than a quorum, or by a sole remaining
director. A director elected to fill a vacancy shall be elected
for the unexpired term of such directors predecessor in
office, and a director chosen to fill a position resulting from
an increase in the number of directors shall hold office until
the next annual meeting of stockholders and until a successor is
elected and qualified, or until such directors earlier
death, resignation or removal.
Section 3.8
Resignation.
Any director may resign by delivering a resignation in
writing or by electronic transmission to the Corporation at its
principal office or to the Chairman of the Board, the Vice
Chairman of the Board, if any, the Chief Executive Officer, the
President or the Secretary. Such resignation shall be effective
upon receipt unless it is specified to be effective at some
later time or upon the happening of some later event.
Section 3.9
Regular
Meetings.
Regular meetings of the Board of Directors may be
held without notice at such time and place as shall be
determined from time to time by the Board of Directors;
provided
that any director who is absent when such a
determination is made shall be given notice of the
determination. A regular meeting of the Board of Directors may
be held without notice immediately after and at the same place
as the annual meeting of stockholders.
Section 3.10
Special
Meetings.
Special meetings of the Board of Directors may be
held at any time and place designated in a call by a majority of
the members of the Board of Directors, whether constituting a
quorum or not, the Chairman of the Board or the Chief Executive
Officer of the Corporation.
Section 3.11
Notice of
Special Meetings.
Notice of any special meeting of directors
shall be given to each director by the Secretary or by the
officer or one of the directors calling the meeting. Notice
shall be duly given to each director (i) by giving notice
to such director in person or by telephone at least
24 hours in advance of the meeting, (ii) by sending a
telegram, telecopy or electronic mail, or delivering written
notice by hand, to such directors last known business,
home or electronic mail address at least 48 hours in
advance of the meeting, or (iii) by sending written notice,
via first-class mail or reputable overnight courier, to such
directors last known business or home address at least
72 hours in advance of the meeting. A notice or waiver of
notice of a meeting of the Board of Directors need not specify
the purposes of the meeting.
Section 3.12
Meetings by
Conference Communications Equipment.
Directors may
participate in meetings of the Board of Directors or any
committee thereof by means of conference telephone or other
communications equipment by means of which all persons
participating in the meeting can hear each other, and
participation by such means shall constitute presence in person
at such meeting.
Section 3.13
Action by
Written Consent.
Any action required or permitted to be
taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members
of the Board or committee, as the case may be, consent to the
action in writing or by electronic transmission, and the written
consents and electronic transmissions are filed with the minutes
of proceedings of the Board or committee.
Section 3.14
Committees.
The Board of Directors may designate one or more committees,
each committee to consist of one or more of the directors of the
Corporation. The Board may designate one or more directors as
alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the
absence or disqualification of a member of a committee, the
member or members of the committee present at any meeting and
not disqualified from voting, whether or not such member or
members constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member. Any such
committee,
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Section 3.15
Compensation
of Directors.
Directors may be paid such compensation for
their services and such reimbursement for expenses of attendance
at meetings as the Board of Directors may from time to time
determine. No such payment shall preclude any director from
serving the Corporation or any of its parent or subsidiary
corporations in any other capacity and receiving compensation
for such service.
ARTICLE IV
OFFICERS
Section 4.1
Titles.
The
officers of the Corporation shall consist of a Chief Executive
Officer, a President, a Chief Operating Officer, a Chief
Financial Officer, a Secretary, a Treasurer and such other
officers with such other titles as the Board of Directors may
determine, including a Chairman of the Board, a Vice Chairman of
the Board and one or more Vice Presidents, Assistant Treasurers,
and Assistant Secretaries. The Board of Directors may appoint
such other officers as it may deem appropriate.
Section 4.2
Election.
The Chief Executive Officer, President, Treasurer and
Secretary shall be elected annually by the Board of Directors at
its first meeting following the annual meeting of stockholders.
Other officers may be appointed by the Board of Directors at
such meeting or at any other meeting.
Section 4.3
Qualification.
No officer need be a stockholder. Any two or more offices
may be held by the same person.
Section 4.4
Tenure.
Except as otherwise provided by law, by the Certificate of
Incorporation or by these Bylaws, each officer shall hold office
until such officers successor is elected and qualified,
unless a different term is specified in the resolution electing
or appointing such officer, or until such officers earlier
death, resignation or removal.
Section 4.5
Resignation and
Removal.
Any officer may resign by delivering a written
resignation to the Corporation at its principal office or to the
Chief Executive Officer or the Secretary. Such resignation shall
be effective upon receipt unless it is specified to be effective
at some later time or upon the happening of some later event.
Any officer may be removed at any time, with or without cause,
by vote of a majority of the entire number of directors then in
office.
Except as the Board of Directors may otherwise determine, no
officer who resigns or is removed shall have any right to any
compensation as an officer for any period following such
officers resignation or removal, or any right to damages
on account of such removal, whether such officers
compensation be by the month or by the year or otherwise, unless
such compensation is expressly provided in a duly authorized
written agreement with the Corporation.
Section 4.6
Vacancies.
The Board of Directors may fill any vacancy occurring in any
office for any reason and may, in its discretion, leave unfilled
for such period as it may determine any offices other than those
of Chief Executive Officer, President, Treasurer and Secretary.
Each such successor shall hold office for the unexpired term of
such officers predecessor and until a successor is elected
and qualified, or until such officers earlier death,
resignation or removal.
Section 4.7
Chairman of the
Board.
The Board of Directors may appoint from its members a
Chairman of the Board. If the Board of Directors appoints a
Chairman of the Board, such Chairman shall
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Section 4.8
Vice Chairman
of the Board.
The Board of Directors may appoint from its
members a Vice Chairman of the Board. If the Board of Directors
appoints a Vice Chairman of the Board, such Vice Chairman shall
perform such duties and possess such powers as are assigned by
the Board of Directors. The Vice Chairman of the Board shall
preside at all meetings of the Board of Directors and
stockholders in the absence of the Chairman of the Board. Such
Vice Chairman shall also possess the other specific authority as
provided elsewhere in these Bylaws.
Section 4.9
Chief Executive
Officer.
The Chief Executive Officer of the Corporation
shall have overall responsibility and authority for the
Corporations strategic planning and for evaluating
potential mergers and acquisitions and new business
opportunities, subject to the authority of the Board of
Directors. The Chief Executive Officer may execute bonds,
mortgages and other contracts, under the seal of the
Corporation, if required, except where required or permitted by
law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by
the Board of Directors to some other officer or agent of the
Corporation, provided that the Chief Executive Officer, in the
absence of the President, may sign or execute any document or
instrument where the signing and execution thereof shall be
expressly delegated to the President of the
Corporation. In the event the Chief Executive Officer of the
Corporation is for any reason unwilling or unable to serve as
Chief Executive Officer of the Corporation, the members of the
Board of Directors, shall promptly select and approve an
individual to serve as the Chief Executive Officer of the
Corporation as follows: (x) an individual so selected who
was employed by Arch Wireless, Inc. or Metrocall Holdings, Inc.
or any of their respective subsidiaries, as of or prior to the
date such companies entered in to a merger agreement, shall be
approved by not less than two-thirds (2/3) of the directors on
the Board of Directors or (y) in the event that no
individual referred to in the preceding clause (x) is
approved as provide therein, the Board of Directors will select
and approve by a majority vote, an individual who was not
employed by Arch Wireless, Inc. or Metrocall Holdings, Inc. or
any of their respective subsidiaries, as of or prior to the date
such companies entered into a merger agreement, to serve as the
Chief Executive Officer of the Corporation.
Section 4.10
Chief
Operating Officer.
The Chief Operating Officer of the
Corporation shall have overall responsibility and authority for
the technical systems, sales and marketing and customer service
operations of the Corporation, subject to the authority of the
Chief Executive Officer.
Section 4.11
Chief
Financial Officer.
The Chief Financial Officer of the
Corporation shall have overall responsibility and authority for
the financial affairs of the Corporation including, without
limitation, oversight of the Corporations accounting,
inventory, management information systems, internal audit and
billing functions, subject to the authority of the Chief
Executive Officer.
Section 4.12
President.
The President shall perform such other duties and shall have
such other powers as the Board of Directors and the Chief
Executive Officer may from time to time prescribe.
Section 4.13
Vice
Presidents.
Any Vice President shall perform such duties and
possess such powers as the Board of Directors or the Chief
Executive Officer may from time to time prescribe. In the event
of the absence, inability or refusal to act of the Chief
Executive Officer, the President, and then the Vice President
(or if there shall be more than one, the Vice Presidents in the
order determined by the Board of Directors), shall perform the
duties of the Chief Executive Officer and when so performing
shall have all the powers of and be subject to all the
restrictions upon the Chief Executive Officer. The Board of
Directors may assign to any Vice President the title of
Executive Vice President, Senior Vice President or any other
title selected by the Board of Directors.
Section 4.14
Secretary and
Assistant Secretaries.
The Secretary shall perform such
duties and shall have such powers as the Board of Directors or
the Chief Executive Officer may from time to time prescribe. In
addition, the Secretary shall perform such duties and have such
powers as are incident to the office of the secretary, including
without limitation the duty and power to give notices of all
meetings of stockholders and
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Any Assistant Secretary shall perform such duties and possess
such powers as the Board of Directors, the Chief Executive
Officer or the Secretary may from time to time prescribe. In the
event of the absence, inability or refusal to act of the
Secretary, the Assistant Secretary (or if there shall be more
than one, the Assistant Secretaries in the order determined by
the Board of Directors) shall perform the duties and exercise
the powers of the Secretary.
In the absence of the Secretary or any Assistant Secretary at
any meeting of stockholders or directors, the chairman of the
meeting shall designate a temporary secretary to keep a record
of the meeting.
Section 4.15
Treasurer and
Assistant Treasurers.
The Treasurer shall perform such
duties and shall have such powers as may from time to time be
assigned by the Board of Directors or the Chief Executive
Officer. In addition, the Treasurer shall perform such duties
and have such powers as are incident to the office of treasurer,
including without limitation the duty and power to keep and be
responsible for all funds and securities of the Corporation, to
deposit funds of the Corporation in depositories selected in
accordance with these Bylaws, to disburse such funds as ordered
by the Board of Directors, to make proper accounts of such
funds, and to render as required by the Board of Directors
statements of all such transactions and of the financial
condition of the Corporation.
The Assistant Treasurers shall perform such duties and possess
such powers as the Board of Directors, the Chief Executive
Officer or the Treasurer may from time to time prescribe. In the
event of the absence, inability or refusal to act of the
Treasurer, the Assistant Treasurer (or if there shall be more
than one, the Assistant Treasurers in the order determined by
the Board of Directors) shall perform the duties and exercise
the powers of the Treasurer.
Section 4.16
Salaries.
Officers of the Corporation shall be entitled to such
salaries, compensation or reimbursement as shall be fixed or
allowed from time to time by the Board of Directors.
Section 4.17
Bonds.
The
Corporation may secure the fidelity of any or all of its
officers or agents by bond or otherwise.
ARTICLE V
CAPITAL STOCK
Section 5.1
Issuance of
Stock.
Unless otherwise voted by the stockholders and
subject to the provisions of the Certificate of Incorporation,
the whole or any part of any unissued balance of the authorized
capital stock of the Corporation or the whole or any part of any
shares of the authorized capital stock of the Corporation held
in the Corporations treasury may be issued, sold,
transferred or otherwise disposed of by vote of the Board of
Directors in such manner, for such lawful consideration and on
such terms as the Board of Directors may determine.
Section 5.2
Certificates of
Stock.
Every holder of stock of the Corporation shall be
entitled to have a certificate, in such form as may be
prescribed by law and by the Board of Directors, certifying the
number and class of shares owned by such holder in the
Corporation. Each such certificate shall be signed by, or in the
name of the Corporation by, the Chairman or Vice Chairman, if
any, of the Board of Directors, or the President or a Vice
President, and the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation. Any or
all of the signatures on the certificate may be a facsimile.
Each certificate for shares of stock which are subject to any
restriction on transfer pursuant to the Certificate of
Incorporation, these Bylaws, applicable securities laws or any
agreement among any number of stockholders or among such holders
and the Corporation shall have conspicuously noted on the face
or back of the certificate either the full text of the
restriction or a statement of the existence of such restriction.
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There shall be set forth on the face or back of each certificate
representing shares of such class or series of stock of the
Corporation a statement that the Corporation will furnish
without charge to each stockholder who so requests a copy of the
full text of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
Section 5.3
Transfers.
Except as otherwise established by rules and regulations
adopted by the Board of Directors, and subject to applicable
law, shares of stock may be transferred on the books of the
Corporation by the surrender to the Corporation or its transfer
agent of the certificate representing such shares properly
endorsed or accompanied by a written assignment or power of
attorney properly executed, and with such proof of authority or
the authenticity of signature as the Corporation or its transfer
agent may reasonably require. Except as may be otherwise
required by law, by the Certificate of Incorporation or by these
Bylaws, the Corporation shall be entitled to treat the record
holder of stock as shown on its books as the owner of such stock
for all purposes, including the payment of dividends and the
right to vote with respect to such stock, regardless of any
transfer, pledge or other disposition of such stock until the
shares have been transferred on the books of the Corporation in
accordance with the requirements of these Bylaws.
Section 5.4
Lost, Stolen or
Destroyed Certificates.
The Corporation may issue a new
certificate of stock in place of any previously issued
certificate alleged to have been lost, stolen, or destroyed,
upon such terms and conditions as the Board of Directors may
prescribe, including the presentation of reasonable evidence of
such loss, theft or destruction and the giving of such indemnity
as the Board of Directors may require for the protection of the
Corporation or any transfer agent or registrar.
Section 5.5
Record Date.
The Board of Directors may fix in advance a date as a record
date for the determination of the stockholders entitled to
notice of or to vote at any meeting of stockholders, or entitled
to receive payment of any dividend or other distribution or
allotment of any rights in respect of any change, conversion or
exchange of stock, or for the purpose of any other lawful
action. Such record date shall not be more than 60 nor less than
10 days before the date of such meeting, nor more than
60 days prior to any other action to which such record date
relates.
If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day before
the day on which notice is given, or, if notice is waived, at
the close of business on the day before the day on which the
meeting is held. If no record date is fixed, the record date for
determining stockholders for any other purpose shall be at the
close of business on the day on which the Board of Directors
adopts the resolution relating to such purpose.
A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting;
provided, however
, that the
Board of Directors may fix a new record date for the adjourned
meeting.
Section 5.6
Stockholders of
Record.
The Corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner
of shares to receive dividends, to receive notifications, to
vote as such owner, and to exercise all the rights and powers of
an owner. The Corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have
express or other notice thereof except as otherwise may be
provided by the Delaware General Corporation Law.
ARTICLE VI
INSURANCE
The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent
of the Corporation (or is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee
or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise) against
liability asserted against or incurred by such person in such
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ARTICLE VII
INDEMNIFICATION
Section 7.1
General.
The Corporation shall, to the fullest extent permitted by
the Delaware General Corporation Law (including, without
limitation, Section 145 thereof) or other provisions of the
laws of Delaware relating to indemnification of directors,
officers, employees and agents, as the same may be amended and
supplemented from time to time, indemnify any and all such
persons whom it shall have power to indemnify under the Delaware
General Corporation Law or such other provisions of law. The
Corporation shall, and shall cause its respective subsidiaries
to, jointly and severally fulfill and honor in all respects the
obligations, including with respect to advancing expenses,
pursuant to any indemnification agreements between Arch
Wireless, Inc. or Metrocall Holdings, Inc., or any of their
respective subsidiaries, and their respective current and former
directors and officers in effect immediately prior to the
Effective Time and any indemnification provisions under Arch
Wireless, Inc.s Certificate of Incorporation and Bylaws or
Metrocall Holdings, Inc.s Certificate of Incorporation and
Bylaws, or the certificate of incorporation, bylaws and
comparable organizational documents of such companies
subsidiaries, respectively, as in effect on the Effective Date.
In the event that the Corporation or any of its respective
subsidiaries, successors or assigns (i) consolidates with
or merges into any entity not affiliated with the Corporations
and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers
all or substantially all of its properties and assets to entity
not affiliated with any of the Corporation, then, and in each
such case, reasonably adequate provisions shall be made so that
its successors and assigns shall assume the obligations of the
Corporation, or any such subsidiaries, as applicable, as set
forth in this Article VII to the extent such assumption
does not occur by operation of law. The indemnification
provisions of this Article VII as in effect at the
Effective Time shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in
any manner that would adversely affect the rights thereunder of
individuals who at the Effective Time were current or former
directors, officers, employees or agents of Arch Wireless, Inc.
or Metrocall Holdings, Inc. or their respective subsidiaries.
Section 7.2
Indemnification
in Actions, Suits or Proceedings Other Than Those By Or in Right
of the Corporation.
Without limiting the generality of
Section 7.1, to the fullest extent permitted, and subject
to the conditions imposed, by law, and pursuant to
Section 145 of the General Corporation Law unless otherwise
determined by the Board of Directors:
(a) The Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any
threatened, pending completed action, suit or proceeding
(whether criminal, administrative or investigative) by reason of
fact that such person is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, against expenses (including
attorneys fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person
acted in good faith and in a manner which such person reasonably
believed to be in or not opposed to the best interests of the
Corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe that such conduct
was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself create a
presumption that the person did not act in good faith and in a
manner which such person reasonably believed to be in or not
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Section 7.3
Indemnification
in Actions, Suits or Proceedings By or in the Right of the
Corporation.
Without limiting the generality of Section 7.1, to the
fullest extent permitted, and subject to the conditions imposed,
by law, and pursuant to Section 145 of the General
Corporation Law unless otherwise determined by the Board of
Directors:
(a) The Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by
or in the right of the Corporation to procure a judgment in its
favor by reason of the fact that such person is or was a
director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise,
against expenses (including attorneys fees) actually and
reasonably incurred by such person in connection with the
defense or settlement of such action or suit if such person
acted in good faith and in a manner which such person reasonably
believed to be in or not opposed to the best interests of the
Corporation. No such indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Corporation unless and only to
the extent that the court in which such action or suit was
brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.
Section 7.4
Authorization
Of Indemnification.
Any indemnification under this
Section 7 shall be made by the Corporation only as
authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is
proper in the circumstances because such person or persons have
met the applicable standard of conduct set forth in Sections 7.2
and 7.3 hereof. Such determination shall be made (a) by the
Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or
proceeding, or (b) if such a quorum is not obtainable, or,
even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel, in a written opinion, or
(c) by a majority of the stockholders entitled to vote
generally in the election of directors.
Section 7.5
Advancement Of
Expenses.
Corporation may advance expenses (including
attorneys fees) incurred by a director or officer in
advance of the final disposition of such action, suit or
proceeding upon the receipt of an undertaking by or on behalf of
the director or officer to repay such amount if it shall
ultimately be determined that such director or officer is not
entitled to indemnification.
The Corporation may advance expenses (including attorneys
fees) incurred by any employee or agent in advance of the final
disposition of such action, suit or proceeding upon such terms
and condition, if any, as the Board of Directors deems
appropriate.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1
Fiscal Year.
Except as from time to time otherwise designated by the
Board of Directors, the fiscal year of the Corporation shall
begin on the first day of January of each year and end on the
last day of December in each year.
Section 8.2
Corporate Seal.
The corporate seal shall be in such form as shall be
approved by the Board of Directors.
Section 8.3
Waiver of
Notice.
Whenever notice is required to be given by law, by
the Certificate of Incorporation or by these Bylaws, a written
waiver signed by the person entitled to notice, or a waiver by
electronic transmission by the person entitled to notice,
whether before, at or after the time stated in such notice,
shall be deemed equivalent to notice. Attendance of a person at
a meeting shall constitute a waiver of notice of such meeting,
except when the person attends a meeting for the express purpose
of objecting at the
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Section 8.4
Voting of
Securities.
Except as the Board of Directors may otherwise
designate, the President or the Treasurer may waive notice of,
and act as, or appoint any person or persons to act as, proxy or
attorney-in-fact for this Corporation (with or without power of
substitution) at any meeting of stockholders or shareholders of
any other corporation or organization, the securities of which
may be held by this Corporation.
Section 8.5
Inspection Of
Books And Records.
Any stockholder, in person or by attorney
or other agent, shall, upon written demand under oath stating
the purpose thereof, have the right during the usual hours for
business to inspect for any proper purpose the
Corporations stock ledger, a list of its stockholders, and
its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean a purpose reasonably
related to such persons interest as a stockholder. In
every instance where an attorney or other agent shall be the
person who seeks the right to inspection, the demand under oath
shall be accompanied by a power of attorney or such other
writing which authorizes the attorney or other agent to so act
on behalf of the stockholder. The demand under oath shall be
directed to the Corporation at its registered office or at its
principal place of business.
Section 8.6
Dividends.
The Board of Directors may declare dividends upon the
capital stock of the Corporation, subject to the provisions of
the Certificate of Incorporation (including the Certificate of
Designation) and the laws of the State of Delaware.
Section 8.7
Reserves.
The Board of Directors may set apart, out of the funds of
the Corporation available for dividends, a reserve or reserves
for any proper purpose and may abolish any such reserve.
Section 8.8
Execution of
Instruments.
All checks, drafts or other orders for the
payment of money, and promissory notes of the Corporation shall
be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time
designate.
Section 8.9
Evidence of
Authority.
A certificate by the Secretary, or an Assistant
Secretary, or a temporary Secretary, as to any action taken by
the stockholders, directors, a committee or any officer or
representative of the Corporation shall as to all persons who
rely on the certificate in good faith be conclusive evidence of
such action.
Section 8.10
Certificate of
Incorporation.
All references in these Bylaws to the
Certificate of Incorporation shall be deemed to refer to the
Certificate of Incorporation of the Corporation, as amended and
in effect from time to time.
Section 8.11
Transactions
with Interested Parties.
No contract or transaction between
the Corporation and one or more of the directors or officers, or
between the Corporation and any other corporation, partnership,
association, or other organization in which one or more of the
directors or officers are directors or officers, or have a
financial interest, shall be void or voidable solely for this
reason, or solely because the director or officer is present at
or participates in the meeting of the Board of Directors or a
committee of the Board of Directors at which the contract or
transaction is authorized or solely because any such
directors or officers votes are counted for such
purpose, if such contract or transaction complies with the
provisions of Section 144 of the Delaware General
Corporation Law.
Section 8.12
Severability.
Any determination that any provision of these Bylaws is for
any reason inapplicable, illegal or ineffective shall not affect
or invalidate any other provision of these Bylaws.
Section 8.13
Pronouns.
All pronouns used in these Bylaws shall be deemed to refer
to the masculine, feminine or neuter, singular or plural, as the
identity of the person or persons may require.
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ARTICLE IX
AMENDMENTS
Except as may be limited pursuant to Section 7.1, the Board
of Directors shall have the power to amend or repeal any Bylaw
adopted by the shareholders, and any Bylaw adopted by the Board
of Directors shall be subject to amendment or repeal by the
shareholders as well as by the directors either by the
shareholders at any meeting, or by vote of a majority of the
shares present or represented thereat, or by the Board of
Directors by a vote of a majority of the Board of Directors;
except that Section 4.9 of the Bylaws may be amended only
by the affirmative vote of two-thirds (2/3) of the directors of
the Board of Directors.
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ANNEX D
WIZARDS-PATRIOTS HOLDINGS, INC.
Resolutions passed at the
RESOLVED, that the Amended and Restated Certificate of
Incorporation of the Corporation in the form attached hereto, is
hereby approved and adopted and the Chief Executive Officer is
hereby directed to place a copy of such Bylaws in the Minute
Book of the Corporation;
RESOLVED, that the Amended and Restated Bylaws of the
Corporation in the form attached hereto (the
Bylaws), is hereby approved and adopted and the
Chief Executive Officer is hereby directed to place a copy of
such Bylaws in the Minute Book of the Corporation;
RESOLVED, pursuant to a unanimous resolution of the shareholders
of the Corporation, each of the following persons has been
elected to the office or offices of the Corporation set forth
opposite his name below, to serve, subject to the earlier of his
death, resignation or removal, in accordance with the Bylaws of
the Corporation and the laws of the State of Delaware, until his
successor or successors shall have been duly elected and shall
have qualified:
(iv)
Hazardous Material
includes, without
regard to amount and/or concentration (a) any element,
compound, or chemical that is defined, listed or otherwise
classified as a contaminant, pollutant, toxic pollutant, toxic
or hazardous substances, extremely hazardous substance or
chemical, hazardous waste, medical waste, biohazardous or
infectious waste, special waste, or solid waste under
Environmental Laws; (b) petroleum, petroleum-based or
petroleum-derived products; (c) polychlorinated biphenyls;
(d) any substance exhibiting a hazardous waste
characteristic including but not limited to corrosivity,
ignitibility, toxicity or reactivity as well as any radioactive
or explosive materials; and (e) asbestos-containing
materials and manufactured products containing Hazardous
Materials.
(v)
Release
means any spilling, leaking,
pumping, emitting, emptying, discharging, injecting, escaping,
leaching, migrating, dumping, or disposing of Hazardous
Materials (including the abandonment or discarding of barrels,
containers or other closed receptacles containing Hazardous
Materials) into the environment.
(vi)
Remedial Action
means all actions
taken to (i) clean up, remove, remediate, contain, treat,
monitor, assess, evaluate or in any other way address Hazardous
Materials in the indoor or outdoor environment;
(ii) prevent or minimize a Release or threatened Release of
Hazardous Materials so they do not migrate or endanger or
threaten to endanger public health or welfare or the indoor or
outdoor environment; (iii) perform pre-remedial studies and
investigations and post-remedial operation and maintenance
activities; or (iv) any other actions defined by 42 U.S.C. 9601.
(a) If to Metrocall, to:
Metrocall Holdings, Inc.
6677 Richmond Highway
Alexandria, VA 22306
Attention: Vincent D. Kelly
Facsimile:(703) 768-9625
With a copy to:
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Attention: Andre Weiss, Esq.
Jeffrey
S. Sabin, Esq.
Facsimile: (212) 593-5955
(b) If to Arch, to:
Arch Wireless, Inc.
1800 West Park Drive,
Suite 250
Westborough, MA 01581
Attention: C. Edward Baker, Jr.
Facsimile: (508) 870-6076
With a copy to each of:
Arch Wireless, Inc.
1800 West Park Drive,
Suite 250
Westborough, MA 01581
Attention: William E. Redmond, Jr.
Facsimile: (518) 581-2323
Arch Wireless, Inc.
1800 West Park Drive,
Suite 250
Westborough, MA 01581
Attention: Patricia A. Gray, Esq.
Facsimile: (866) 207-3384
Latham & Watkins
555 Eleventh Street, NW, Suite 1000
Washington, DC 20004
Attention: Eric L. Bernthal, Esq.
William
P. ONeill, Esq.
Facsimile: (202) 637-2201
WIZARDS-PATRIOTS HOLDING, INC.
By:
/s/ VINCENT D. KELLY
Name: Vincent D. Kelly
Title: Chief Executive Officer
WIZARDS ACQUIRING SUB, INC.
By:
/s/ VINCENT D. KELLY
Name: Vincent D. Kelly
Title: Chief Executive Officer
METROCALL HOLDINGS, INC.
By:
/s/ VINCENT D. KELLY
Name: Vincent D. Kelly
Title: President and Chief Executive Officer
PATRIOTS ACQUIRING SUB, INC.
By:
/s/ VINCENT D. KELLY
Name: Vincent D. Kelly
Title: Chief Executive Officer
ARCH WIRELESS, INC.
By:
/s/ WILLIAM E. REDMOND, JR.
Name: William E. Redmond , Jr.
Title: Director
Page
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ARTICLE IX
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Name
Office(s)
RESOLVED, that the following person is hereby elected to the
office or offices of the Corporation set forth opposite his name
below, to serve, subject to the earlier of his death,
resignation or removal, in accordance with the Bylaws of the
Corporation and the laws of the State of Delaware, until his
successor or successors shall have been duly elected and shall
have qualified:
Name
Office(s)
RESOLVED, that the Corporation establish an Audit Committee for the purposes of:
(a) selecting the outside auditors for the Corporation; | |
(b) assisting the Board in fulfilling its responsibility to oversee (i) the managements conduct of the Corporations financial reporting process (including the managements development and maintenance of systems of internal accounting and financial controls), (ii) the integrity of the Corporations financial statements, (iii) the Corporations compliance with legal and regulatory requirements, (iv) the qualifications and independence of the Corporations outside auditors and (v) the performance of the Corporations internal audit function and outside auditors; | |
(c) preparing the audit committee report required by the rules of the Securities and Exchange Commission (the SEC) to be included in the Corporations annual proxy statement; and | |
(d) performing such other functions as the Board shall determine. |
D-1
RESOLVED, that each of the following persons is hereby elected
to serve on the Audit Committee, subject to the earlier of his
death, resignation or removal, in accordance with the Bylaws of
the Corporation and the laws of the State of Delaware, until his
successor or successors shall have been duly elected and shall
have qualified:
Name
Office(s)
RESOLVED, that the Corporation establish a Compensation Committee for the purposes of:
(a) overseeing the administration of the compensation plans, in particular the incentive compensation and equity-based plans of the Corporation (and, to the extent appropriate, the subsidiaries of the Corporation); | |
(b) discharging the Boards responsibilities relating to the compensation of the Corporations executives; | |
(c) reviewing and making recommendations on director compensation; | |
(d) preparing the annual report in executive compensation required by the rules and regulations of the SEC to be included in the Corporations annual proxy statement; and | |
(e) performing such other functions as the Board shall determine. |
RESOLVED, that each of the following persons is hereby elected
to serve on the Compensation Committee, subject to the earlier
of his death, resignation or removal, in accordance with the
Bylaws of the Corporation and the laws of the State of Delaware,
until his successor or successors shall have been duly elected
and shall have qualified:
Name
Office(s)
RESOLVED, that the Corporation establish a Nominating and Governance Committee for the purposes of:
(a) evaluating and recommending director candidates to the Board; | |
(b) making recommendations to the Board concerning committee appointments; | |
(c) developing, recommending and annually reviewing corporate governance guidelines for the Corporation and overseeing corporate governance matters; | |
(d) recommending director compensation and benefits policies for the Board; | |
(e) coordinating an annual evaluation of the Board; and | |
(h) performing such other functions as the Board shall determine. |
None of the members of the Nominating and Governance Committee shall be an officer or full-time employee of the Corporation or of any subsidiary or affiliate of the Corporation.
RESOLVED, that each of the following persons is hereby elected to serve on the Nominating and Governance Committee, subject to the earlier of his death, resignation or removal, in accordance with the
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Name | Office(s) | |
|
|
|
[Insert Compensation Committee members]
|
Chairman
|
|
Member
|
||
Member
|
||
Member
|
RESOLVED, that the Audit Committee, the Compensation Committee, and the Nominating and Governance Committee at each of their respective initial meetings shall create charters or other organizational documents for review and approval by the Board of Directors and select a Chairman of such committee;
RESOLVED, that each of the officers of the Corporation is hereby authorized to execute and deliver, in the name of and on behalf of the Corporation, such other documents, instruments and certificates and to take such other actions as he, in his sole discretion, deems necessary or appropriate to carry out the full intent and purposes of the foregoing resolutions.
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AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
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AMENDED AND RESTATED BYLAWS
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ANNEX E
March 28, 2004
The Board of Directors
Metrocall Holdings, Inc.
6677 Richmond Highway
Alexandria, VA 22306
Dear Members of the Board:
We understand that Metrocall Holdings, Inc. (Metrocall) proposes to enter into an agreement and plan of merger (the Merger Agreement), to be dated as of March 28, 2004, with Arch Wireless, Inc. (Arch), pursuant to which each of Metrocall and Arch will merge (collectively, the Merger) with a wholly-owned subsidiary of a newly formed holding company whose only assets immediately following the Merger will be all of the capital stock of Metrocall and Arch (Parent). In the Merger, each share of common stock, par value $0.0001 per share, of Metrocall (Metrocall Common Stock), other than Excluded Shares ( as defined below), will be converted into the right to receive, at the election of the holder thereof, either
(i) 1.876 shares of common stock, par value $0.0001 per share, of Parent (Parent Common Stock), or | |
(ii) $75 in cash (the Cash Consideration); |
provided that if holders of more or less than 2,000,000 shares of Metrocall Common Stock elect to receive Cash Consideration, a proration process will be applied so that 2,000,000 shares of Metrocall Common Stock are converted into Cash Consideration and the remaining shares of Metrocall Common Stock (other than the Excluded Shares) will be converted into 1.876 shares of Parent Common Stock. The aggregate number of shares of Parent Common Stock to be so issued and the aggregate Cash Consideration of $150,000,000 is referred to in this letter as the Merger Consideration. For the purposes of this letter, Excluded Shares means the shares of Metrocall Common Stock held by Metrocall as treasury stock, by Arch or any its subsidiaries, by Metrocall or Arch as trustee under any existing employee benefit plan and by any holder who is entitled to demand and properly demands appraisal of such shares under applicable law.
You have requested our opinion as to the fairness, from a financial point of view, to the holders of Metrocall Common Stock (other than holders of Excluded Shares) of the Merger Consideration. In connection with this opinion, we have:
(i) Reviewed the financial terms and conditions of a draft of the Merger Agreement, dated March 28, 2004; | |
(ii) Analyzed certain historical business and financial information relating to Metrocall and Arch; | |
(iii) Reviewed various financial forecasts and other data provided to us by Metrocall and Arch relating to their respective businesses and relating to Parent after the Merger; | |
(iv) Held discussions with members of the senior managements of Metrocall and Arch with respect to the businesses and prospects of the Metrocall and Arch, respectively, as well as the strategic objectives of each and the possible benefits which might be realized following the Merger; | |
(v) Reviewed the historical stock prices and trading volumes of the Metrocall Common Stock and Archs Class A common stock, par value $0.0001 per share (Arch Common Stock); and | |
(vi) Conducted such other financial studies, analyses and investigations as we deemed appropriate. |
We have relied upon the accuracy and completeness of the foregoing information, and have not assumed any responsibility for any independent verification of such information or any independent valuation or appraisal of any of the assets or liabilities of Metrocall or Arch or concerning the solvency or fair value of Metrocall, Arch or Parent. With respect to financial forecasts, we have assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of management
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Further, our opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof.
In rendering our opinion, we have assumed that the Merger will be consummated on the terms described in the Merger Agreement, without any waiver of any material terms or conditions by Metrocall and that obtaining the necessary regulatory approvals for the Merger will not have an adverse effect on Parent. We have also assumed that the executed Merger Agreement will conform in all material respects to the draft reviewed by us.
We do not express any opinion as to the price at which shares of Metrocall Common Stock or Arch Common Stock may trade subsequent to the announcement of the Merger or the price at which shares of Parent Common Stock may trade subsequent to the consummation of the Merger. Lazard noted that in conducting its analysis it was unable to perform a comparable companies analysis because Metrocall and Arch represent the only two independent, publicly-traded paging companies and, in Lazards determination, there were no relevant comparable companies outside of the paging industry. Lazard also noted that it was not able to perform a precedent transaction analysis because the only comparable transactions involving independent companies in the paging industry occurred in an earlier period of the industrys life cycle which, in Lazards determination, made such transaction incomparable to the merger.
Lazard Frères & Co. LLC is acting as investment banker to Metrocall in connection with the Merger and will receive a fee for our services, a substantial portion of which is contingent upon the closing of the Merger. Also, as you are aware, we have from time to time in the past provided investment banking and financial advisory services to Metrocall and its affiliates, for which we received fees. Lazard Frères & Co. LLC provides a full range of financial advisory and other services and, in the course of our business, may from time to time effect transactions and hold securities, including derivative securities, of Metrocall and Arch for our own account and the accounts of clients and customers, and, accordingly, may hold a long or short position in such securities and may provide advisory and other services in the future.
Our engagement and the opinion expressed herein are for the benefit of Metrocalls Board of Directors, and our opinion is rendered to Metrocalls Board of Directors in connection with its consideration of the Merger. Our opinion does not address the merits of the underlying decision by Metrocall to engage in the Merger or the relative merits of the Merger as compared to other business strategies or transactions that might be available to Metrocall. In that regard, we were not authorized to solicit, and did not solicit, third party indications of interest in acquiring all or a part of Metrocall or engaging in a business combination or any other strategic transaction with Metrocall. We express no opinion or recommendation as to how the shareholders of Metrocall or Arch should vote at any stockholders meeting to be held in connection with the Merger or as to the election available to holders of Metrocall Common Stock with respect to the Merger Consideration. It is understood that this letter may not be disclosed or otherwise referred to without our prior consent, except as may otherwise be required by law or by a court of competent jurisdiction.
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Based on and subject to the foregoing, we are of the opinion that the Merger Consideration is fair, from a financial point of view, to holders of Metrocall Common Stock (other than holders of Excluded Shares).
Very truly yours, | |
LAZARD FRÈRES & CO. LLC |
By: | /s/ JIM MILLSTEIN |
|
|
Jim Millstein | |
Managing Director |
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ANNEX F
March 29, 2004
The Board of Directors
Gentlemen:
We understand that Arch Wireless, Inc. (Arch), Metrocall Holdings, Inc. (Metrocall), Wizards-Patriots Holdings, Inc. (HoldCo), all of the outstanding stock of which will be owned by Metrocall, Wizards Acquiring Sub (Metrocall Sub), a wholly owned subsidiary of HoldCo, and Patriots Acquiring Sub (Arch Sub), a wholly owned subsidiary of HoldCo, have entered into an Agreement and Plan of Merger dated March 29, 2004 (the Agreement), pursuant to which Arch Sub will be merged (the Arch Merger) with and into Arch and Metrocall Sub will be merged (the Metrocall Merger) with and into Metrocall (the Arch Merger together with the Metrocall Merger, the Merger or Transaction). Each Arch common stockholder, subject to certain exceptions, will receive 1.0000 share (the Arch Exchange Ratio) of common stock, par value, $0.0001 per share, of HoldCo (HoldCo Common Stock) in exchange for each common share of Arch and each common stockholder of Metrocall, subject to certain exceptions, will have the right to receive either 1.876 shares of HoldCo Common Stock (the Metrocall Exchange Ratio) or $75.00 in cash in exchange for each common share of Metrocall, subject to certain prorationing mechanisms as described more fully in the Agreement, such that as a result of the Transaction, the common stockholders of Arch will receive, in aggregate, 72.5% of the HoldCo Common Stock immediately after the Merger, giving effect to the exercise of all options and the common stockholders of Metrocall will receive, in aggregate, 27.5% of the HoldCo Common Stock, giving effect to the exercise of all options, and cash in the amount of $150.0 million (such cash amount together with the Metrocall Exchange Ratio, the Metrocall Merger Consideration and, together with the Arch Exchange Ratio, the Merger Consideration).
You have asked us to render our opinion as to whether the Merger Consideration is fair, from a financial point of view, to the public common stockholders of Arch.
In the course of performing our review and analyses for rendering this opinion, we have:
| reviewed the Agreement; |
| reviewed Archs Annual Reports to Stockholders and Annual Reports on Form 10-K for the years ended December 31, 2002 and December 31, 2003, its Plan of Reorganization dated January 15, 2002 and its Reports on Form 8-K for the three years ended the date hereof; |
| reviewed certain operating and financial information relating to Archs business and prospects, including projections for the five years ended December 31, 2008 (the Arch Projections), all as prepared and provided to us by Archs management; |
| reviewed Metrocalls Annual Reports to Stockholders and Annual Reports on Form 10-K for the years ended December 31, 2002 and December 31, 2003, its Plan of Reorganization dated June 3, 2002 and its Reports on Form 8-K for the three years ended the date hereof; |
| reviewed certain operating and financial information relating to Metrocalls business and prospects, including projections for the five years ended December 31, 2008 (the Metrocall Projections), all as prepared and provided to us by Metrocalls management; |
| reviewed certain operating and financial information relating to Metrocalls business and prospects, including projections for the five years ended December 31, 2008 (the Adjusted Metrocall Projections and, together with the Arch Projections and the Metrocall Projections, the Projections), all as prepared and provided to us by Archs management; |
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| reviewed certain estimates of cost savings and other combination benefits expected to result from the Merger, prepared and provided to us by Archs management (the Arch Synergies); |
| reviewed certain estimates of cost savings and other combination benefits expected to result from the Merger, prepared and provided to us by Metrocalls management (the Metrocall Synergies and, together with the Arch Synergies, the Synergies); |
| reviewed certain estimates of accrued tax liabilities and assets, as well as projected cash tax estimates, for Metrocall, Arch and HoldCo prepared and provided to us by Archs tax advisors (the Tax Estimates); |
| met with certain members of Archs senior management to discuss Archs and Metrocalls respective businesses, operations, historical and projected financial results and future prospects as well as the future prospects of HoldCo, and to discuss the Arch Projections, the Adjusted Metrocall Projections, the Arch Synergies and the Metrocall Synergies; |
| met with certain members of Metrocalls senior management to discuss Archs and Metrocalls respective business, operations, historical and projected financial results and future prospects as well as the future prospects of HoldCo, and to discuss the Metrocall Projections and the Metrocall Synergies; |
| reviewed the historical prices, trading multiples and trading volumes of the common shares of Arch and Metrocall; |
| performed discounted cash flow analyses based on (i) the Arch Projections, the Adjusted Metrocall Projections and the Arch Synergies and (ii) the Arch Projections, the Metrocall Projections, and the Metrocall Synergies; |
| reviewed the pro forma financial results, financial condition and capitalization of HoldCo furnished to us by Archs management giving effect to the Merger; and |
| conducted such other studies, analyses, inquiries and investigations as we deemed appropriate. |
We have relied upon and assumed, without independent verification, the accuracy and completeness of the financial and other information provided to us by Arch and Metrocall, including, without limitation, the Arch Projections, the Metrocall Projections, the Adjusted Metrocall Projections, the Arch Synergies and the Metrocall Synergies. With respect to the Arch Projections, the Adjusted Metrocall Projections, the Arch Synergies and the Tax Estimates, we have relied on representation that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the senior management of Arch as to the expected future performance of Arch, Metrocall on a standalone basis, of the expected amount and timing of the Arch Synergies and the Tax Estimates, and HoldCo. With respect to the Metrocall Projections and the Metrocall Synergies, we have relied on representation that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the senior management of Metrocall as to the expected future performance of Metrocall on a standalone basis and of the expected amount and timing of the Metrocall Synergies. We have not assumed any responsibility for the independent verification of any such information or of the Projections, Tax Estimates and Synergies estimates provided to us, and we have further relied upon the assurances of the senior managements of Arch and Metrocall that they are unaware of any facts that would make the information, Projections, Tax Estimates and Synergies estimates provided to us incomplete or misleading.
In arriving at our opinion, we have not performed or obtained any independent appraisal of the assets or liabilities (contingent or otherwise) of Arch, Metrocall or HoldCo, nor have we been furnished with any such appraisals. In rendering our opinion, we have analyzed the Transaction as a strategic business combination not involving a sale of control of Arch, and we have not solicited, nor were we asked to solicit, third party acquisition interest in Arch. We have assumed that the Transaction will qualify as a tax-free transaction within the meaning of Section 351 of the Internal Revenue Code. We have assumed that the Transaction will
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be consummated in a timely manner and in accordance with the terms of the Agreement without any limitations, restrictions, conditions, amendments or modifications, regulatory or otherwise, that collectively would have a material effect on Arch, Metrocall or HoldCo.
We do not express any opinion as to the price or range of prices at which the shares of common stock of Arch and Metrocall may trade subsequent to the announcement of the Transaction or as to the price or range of prices at which the shares of HoldCo Common Stock may trade subsequent to the consummation of the Transaction.
We have acted as a financial advisor to Arch in connection with the Transaction and will receive a customary fee for such services, a substantial portion of which is contingent on successful consummation of the Transaction. Bear Stearns has been previously engaged by Arch to provide certain investment banking and financial advisory services for which we received customary fees. In the ordinary course of business, Bear Stearns and its affiliates may actively trade the equity and debt securities and/or bank debt of Arch and/or Metrocall for our own account and for the account of our customers and, accordingly, may at any time hold a long or short position in such securities or bank debt.
It is understood that this letter is intended for the benefit and use of the Board of Directors of Arch and does not constitute a recommendation to the Board of Directors of Arch or any holders of Arch common stock as to how to vote in connection with the Transaction. This opinion does not address Archs underlying business decision to pursue the Transaction, the relative merits of the Transaction as compared to any alternative business strategies that might exist for Arch or the effects of any other transaction in which Arch might engage. This letter is not to be used for any other purpose, or be reproduced, disseminated, quoted from or referred to at any time, in whole or in part, without our prior written consent; provided, however, that this letter may be included in its entirety in any joint proxy statement/prospectus to be distributed to the holders of Arch common stock in connection with the Transaction. Our opinion is subject to the assumptions and conditions contained herein and is necessarily based on economic, market and other conditions, and the information made available to us, as of the date hereof. We assume no responsibility for updating or revising our opinion based on circumstances or events occurring after the date hereof.
Based on and subject to the foregoing, it is our opinion that, as of the date hereof, the Merger Consideration is fair, from a financial point of view, to the public common stockholders of Arch.
Very truly yours, | |
BEAR, STEARNS & CO. INC. |
By: | /s/ H. C. CHARLES DIAO |
|
|
H.C. Charles Diao | |
Senior Managing Director |
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ANNEX G
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
§ 262. Appraisal Rights
(a) Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of the stockholders shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word stockholder means a holder of record of stock in a stock corporation and also a member of record of a nonstock corporation; the words stock and share mean and include what is ordinarily meant by those words and also membership or membership interest of a member of a nonstock corporation; and the words depository receipt mean a receipt or other instrument issued by a depository representing an interest in one or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to § 251 (other than a merger effected pursuant to § 251(g) of this title), § 252, § 254, § 257, § 258, § 263 or § 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in subsection (f) of § 251 of this title. | |
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything except: |
a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof; | |
b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 holders; | |
c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; or | |
d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of this paragraph. |
(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation. |
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(c) Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision, the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for such meeting with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) hereof that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section. Each stockholder electing to demand the appraisal of such stockholders shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholders shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholders shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or | |
(2) If the merger or consolidation was approved pursuant to § 228 or § 253 of this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holders shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holders shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holders shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given. |
G-2
(e) Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections (a) and (d) hereof and who is otherwise entitled to appraisal rights, may file a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder shall have the right to withdraw such stockholders demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10 days after such stockholders written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court shall appraise the shares, determining their fair value exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with a fair rate of interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. In determining the fair rate of interest, the Court may consider all relevant factors, including the rate of interest which the surviving or resulting corporation would have had to pay to borrow money during the pendency of the proceeding. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, permit discovery or other pretrial proceedings and may proceed to trial upon the appraisal prior to the final determination of the stockholder entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted such stockholders certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Interest may be simple or compound, as the Court may direct. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Courts decree may be enforced
G-3
(j) The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorneys fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholders demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.
G-4
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20.
Indemnification
of Directors and Officers.
Section 145(a) of the General Corporation Law of the State
of Delaware referred to also as Delaware Corporation
Law provides, in general, that a corporation shall have
the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, other than an action by or in
the right of the corporation, because the person is or was a
director or officer of the corporation. Such indemnity may be
against expenses, including attorneys fees, judgments,
fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or
proceeding, if the person acted in good faith and in a manner
the person reasonably believed to be in or not opposed to the
best interests of the corporation and if, with respect to any
criminal action or proceeding, the person did not have
reasonable cause to believe the persons conduct was
unlawful.
Section 145(b) of the Delaware Corporation Law provides, in
general, that a corporation shall have the power to indemnify
any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by
or in the right of the corporation to procure a judgment in its
favor because the person is or was a director or officer of the
corporation, against any expenses (including attorneys
fees) actually and reasonably incurred by the person in
connection with the defense or settlement of such action or suit
if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification
shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to be indemnified
for such expenses which the Court of Chancery or such other
court shall deem proper.
Section 145(g) of the Delaware Corporation Law provides, in
general, that a corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a
director or officer of the corporation against any liability
asserted against the person in any such capacity, or arising out
of the persons status as such, whether or not the
corporation would have the power to indemnify the person against
such liability under the provisions of the law.
Article VII of the Registrants Bylaws requires
indemnification to the fullest extent permitted under Delaware
law of any person who is or was a director or officer of the
Registrant who is or was involved or threatened to be made so
involved in any proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such
person is or was serving as a director, officer, employee or
agent of the Registrant or was serving at the request of the
Registrant as a director, officer, employee or agent of any
other enterprise.
The foregoing statements are subject to the detailed provisions
of Section 145 of the Delaware Corporation Law and
Article VII of the Bylaws of the Registrant.
II-1
II-2
The undersigned Registrant hereby undertakes:
II-3
Insofar as indemnification for liabilities under the Securities
Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions
described in Item 20 above, or otherwise, the registrant
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore
unenforceable. If a claim of indemnification against such
liabilities, other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling
person of the registrant in a 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 it is against public policy as
expressed in the Securities Act and will be governed by the
final adjudication of such issue.
II-4
Item 21.
Exhibits and Financial Statement Schedules
Exhibit
Number
Description
2
.1
Agreement and Plan of Merger, dated as of
March 29, 2004, by and among Wizards-Patriots
Holdings, Inc., Wizards Acquiring Sub, Inc. Metrocall
Holdings, Inc., Patriots Acquiring Sub, Inc., and Arch
Wireless, Inc., (included as Annex A, to the joint
proxy statement/ prospectus forming a part of this Registration
Statement and incorporated herein by reference).
3
.1
Certificate of Incorporation of the Registrant.*
3
.2
Form of Amended and Restated Certificate of
Incorporation of the Registrant.**
Exhibit
Number
Description
3
.3
Bylaws of the Registrant.*
3
.4
Form of Amended and Restated Bylaws of the Registrant (included
as Annex C to the joint proxy statement/ prospectus forming
part of this Registration Statement and incorporated herein by
reference).
4
.1
Specimen certificate of Registrant common stock, par value
$0.0001 per share.**
5
.1
Opinion of Schulte Roth & Zabel LLP regarding legality
of securities being registered.**
8
.1
Opinion of Schulte Roth & Zabel LLP regarding certain
U.S. income tax aspects of the merger.**
8
.2
Opinion of Latham & Watkins LLP regarding certain
U.S. income tax aspects of the merger.**
21
.1
Subsidiaries of the Registrant.*
23
.1
Consent of Schulte Roth & Zabel LLP (included as part
of its opinion filed as Exhibit 5.1 and incorporated herein
by reference).**
23
.2
Consent of Ernst & Young LLP.*
23
.3
Consent of KPMG LLP.*
23
.4
Consent of PricewaterhouseCoopers LLP. *
23
.5
Statement regarding Predecessor Auditor Arthur Andersen, LLP
(1)
23
.6
Consent of Schulte Roth & Zabel LLP (included as part
of its opinion filed as Exhibit 8.1 and incorporated herein
by reference)**
23
.7
Consent of Latham & Watkins LLP (included as part of
its opinion filed as Exhibit 8.2 and incorporated herein by
reference)**
23
.8
Consent of Lazard Freres & Co. LLC*
23
.9
Consent of Bear, Stearns & Co. Inc.*
99
.1
Opinion of Lazard Freres & Co. LLC (included as
Annex E to the joint proxy statement/ prospectus forming a
part of this Registration Statement and incorporated herein by
reference).
99
.2
Opinion of Bear, Stearns & Co. Inc. (included as
Annex F to the joint proxy statement/ prospectus forming a
part of this Registration Statement and incorporated herein by
reference).
99
.3
Form of Proxy of Metrocall Holdings, Inc.**
99
.4
Form of Metrocall Cash Election**
99
.5
Form of Proxy of Arch Wireless, Inc.**
99
.6
Consent of Vincent D. Kelly to be named a director.*
99
.7
Consent of Royce Yudkoff to be named a director.*
99
.8
Consent of Matthew Oristano to be named a director.*
99
.9
Consent of William E. Redmond, Jr. to be named a director.*
99
.10
Consent of Richard A. Rubin to be named a director.*
99
.11
Consent of James V. Continenza to be named a director.*
99
.12
Consent of David C. Abrams to be named a director.*
*
Filed herewith.
**
To be filed by amendment.
(1)
Omitted pursuant to Rule 437a. The consolidated financial
statements of each of Metrocall Holdings, Inc. and Arch
Wireless, Inc. for the year ended December 31, 2001
incorporated in this Registration Statement by reference have
been audited by Arthur Andersen LLP, independent public
accountants (AA). However, after reasonable efforts,
neither Metrocall Holdings, Inc. nor Arch
Wireless, Inc. has been able to obtain the written consent
of AA with respect to the incorporation by reference of such
financial statements in this Registration Statement. Therefore,
Metrocall Holdings, Inc. and Arch Wireless, Inc. have
dispensed with the requirement to file the written consent of AA
in reliance upon Rule 437a of the Securities Act of 1933.
As a result, you may not be able to recover damages from AA
under Section 11
of the Securities Act of 1933, for any untrue statements of
material fact or any omissions to state a material fact, if any,
contained in the aforementioned financial statements of
Metrocall Holdings, Inc. and Arch Wireless, Inc. which
are incorporated in this Registration Statement by reference.
Item 22.
Undertakings
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) to include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement,
or the most recent post-effective amendment thereof, which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement; and
(iii) to include any material information with respect to
the agreement and plan of merger not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose 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.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(4) That, for purposes of determining any liability under
the Securities Act of 1933, each filing of the registrants
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 plans
annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in this
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.
(5) 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.
(6) That every prospectus (i) that is filed pursuant
to paragraph (2) immediately preceding, 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.
(7) 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 any such request, and to send the incorporated
documents by first class mail or other equally prompt means,
including information contained in documents filed after the
effective date of this registration statement through the date
of responding to such request.
(8) 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 this registration statement when it became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on
Form S-4 and has duly caused this Registration Statement to
be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Alexandria, State of Virginia, as of
May 21, 2004.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-4 has been signed below by
the following persons in the capacities indicated, on the
21st day of May, 2004.
II-5
WIZARDS-PATRIOTS HOLDINGS, INC.
By:
/s/ VINCENT D. KELLY
Vincent D. Kelly
President and Chief Executive Officer
Name and Signature
Title
Date
/s/ VINCENT D. KELLY
Vincent D. Kelly
President and Chief Executive Officer
May 21, 2004
/s/ GEORGE Z. MORATIS
George Z. Moratis
Senior Vice President, Treasurer and Chief
Accounting Officer
May 21, 2004
EXHIBIT INDEX
Exhibit
Number
Description
2
.1
Agreement and Plan of Merger, dated as of
March 29, 2004, by and among Wizards-Patriots
Holdings, Inc., Wizards Acquiring Sub, Inc. Metrocall
Holdings, Inc., Patriots Acquiring Sub, Inc., and Arch
Wireless, Inc., (included as Annex A, to the joint
proxy statement/ prospectus forming a part of this Registration
Statement and incorporated herein by reference).
3
.1
Certificate of Incorporation of the Registrant.*
3
.2
Form of Amended and Restated Certificate of
Incorporation of the Registrant.**
3
.3
Bylaws of the Registrant.*
3
.4
Form of Amended and Restated Bylaws of the
Registrant (included as Annex C to the joint proxy
statement/ prospectus forming part of this Registration
Statement and incorporated herein by reference).
4
.1
Specimen certificate of Registrant common stock,
par value $0.0001 per share.**
5
.1
Opinion of Schulte Roth & Zabel LLP
regarding legality of securities being registered.**
8
.1
Opinion of Schulte Roth & Zabel LLP
regarding certain U.S. income tax aspects of the merger.**
8
.2
Opinion of Latham & Watkins LLP
regarding certain U.S. income tax aspects of the merger.**
21
.1
Subsidiaries of the Registrant.*
23
.1
Consent of Schulte Roth & Zabel LLP
(included as part of its opinion filed as Exhibit 5.1 and
incorporated herein by reference).**
23
.2
Consent of Ernst & Young LLP.*
23
.3
Consent of KPMG LLP.*
23
.4
Consent of PricewaterhouseCoopers LLP. *
23
.5
Statement regarding Predecessor Auditor Arthur
Andersen, LLP (1)
23
.6
Consent of Schulte Roth & Zabel LLP
(included as part of its opinion filed as Exhibit 8.1 and
incorporated herein by reference)**
23
.7
Consent of Latham & Watkins LLP
(included as part of its opinion filed as Exhibit 8.2 and
incorporated herein by reference)**
23
.8
Consent of Lazard Freres & Co. LLC*
23
.9
Consent of Bear, Stearns & Co. Inc.*
99
.1
Opinion of Lazard Freres & Co. LLC
(included as Annex E to the joint proxy statement/
prospectus forming a part of this Registration Statement and
incorporated herein by reference).
99
.2
Opinion of Bear, Stearns & Co. Inc.
(included as Annex F to the joint proxy statement/
prospectus forming a part of this Registration Statement and
incorporated herein by reference).
99
.3
Form of Proxy of Metrocall Holdings, Inc.**
99
.4
Form of Metrocall Cash Election**
99
.5
Form of Proxy of Arch Wireless, Inc.**
99
.6
Consent of Vincent D. Kelly to be named a
director.*
99
.7
Consent of Royce Yudkoff to be named a director.*
99
.8
Consent of Matthew Oristano to be named a
director.*
99
.9
Consent of William E. Redmond, Jr. to be
named a director.*
99
.10
Consent of Richard A. Rubin to be named a
director.*
Exhibit
Number
Description
99.11
Consent of James V. Continenza to be named a
director.*
99.12
Consent of David C. Abrams to be named a
director.*
*
Filed herewith.
**
To be filed by amendment.
(1)
Omitted pursuant to Rule 437a. The consolidated financial
statements of each of Metrocall Holdings, Inc. and Arch
Wireless, Inc. for the year ended December 31, 2001
incorporated in this Registration Statement by reference have
been audited by Arthur Andersen LLP, independent public
accountants (AA). However, after reasonable efforts,
neither Metrocall Holdings, Inc. nor Arch
Wireless, Inc. has been able to obtain the written consent
of AA with respect to the incorporation by reference of such
financial statements in this Registration Statement. Therefore,
Metrocall Holdings, Inc. and Arch Wireless, Inc. have
dispensed with the requirement to file the written consent of AA
in reliance upon Rule 437a of the Securities Act of 1933.
As a result, you may not be able to recover damages from AA
under Section 11 of the Securities Act of 1933, for any
untrue statements of material fact or any omissions to state a
material fact, if any, contained in the aforementioned financial
statements of Metrocall Holdings, Inc. and Arch
Wireless, Inc. which are incorporated in this Registration
Statement by reference.
Exhibit 3.1
CERTIFICATE OF
INCORPORATION
FIRST:
The name of the corporation is
WIZARDS-PATRIOTS HOLDINGS, INC.
SECOND:
The address of the initial registered office of the
corporation in the State of Delaware is 615 South DuPont Highway, in
the City of Dover, County of Kent, 19901, and the name of the initial
registered agent therein and in charge thereof, upon whom process
against the corporation may be served is National Corporate Research,
Ltd.
THIRD:
The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of
Delaware.
FOURTH:
The total number of shares the corporation shall have
authority to issue is one hundred (100) shares with a par value of
$.0001 each.
FIFTH:
The corporation shall have perpetual existence.
SIXTH:
No director shall be personally liable to the corporation or any
of its stockholders for monetary damages for breach of fiduciary duty as
a director, except for liability (i) for any breach of the directors
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware
General Corporation Law or (iv) for any transaction from which the
director derived an improper personal benefit. Any repeal or
modification of this Article Sixth by the stockholders of the
corporation shall not adversely affect any right or protection of a
director of the corporation existing at the time of such repeal or
modification with respect to acts or omissions occurring prior to such
repeal or modification.
OF
WIZARDS-PATRIOTS HOLDINGS, INC.
SEVENTH: The Corporation shall have the right to indemnify any and all directors and officers to the fullest extent permitted by the Delaware General Corporation Law.
EIGHTH: The name and mailing address of the incorporator is Ann Marie Cummins, c/o National Corporate Research, Ltd., 225 West 34 th Street, Suite 910, New York, New York 10122.
I, being the sole incorporator hereinbefore named, hereby sign this certificate for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware this 5 th day of March, 2004.
|
/s/ Ann Marie Cummins | |
|
|
|
|
Ann Marie Cummins, | |
|
Sole Incorporator |
Exhibit 3.3
BYLAWS
of
WIZARDS-PATRIOTS HOLDINGS, INC.
ARTICLE I
Stockholders
Section 1.1.
Annual Meetings.
An annual meeting of stockholders shall be
held for the election of directors at such date, time and place, either within
or without the State of Delaware, as may be designated by resolution of the
Board of Directors from time to time. Any other proper business may be
transacted at the annual meeting.
Section 1.2.
Special Meetings.
Special meetings of stockholders for any
purpose or purposes may be called at any time by the Board of Directors, or by
a committee of the Board of Directors which has been designated by the Board of
Directors and whose powers and authority, as expressly provided in a resolution
of the Board of Directors, include the power to call such meetings, but such
special meetings may not be called by any other person or persons.
Section 1.3.
Notice of Meetings.
Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting
shall be given which shall state the place, date and hour of the meeting, and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called. Unless otherwise provided by law, the certificate of incorporation
or these bylaws, the written notice of any meeting shall be given not less than
ten nor more than sixty days before the date of the meeting to each stockholder
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
given when deposited in the mail, postage prepaid, directed to the stockholder
at his address as it appears on the records of the corporation.
Section 1.4.
Adjournments.
Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business
which might have been transacted at the original meeting. If the adjournment
is for more than thirty days, or if after the adjournment a new record date is
fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
Section 1.5. Quorum. Except as otherwise provided by law, the certificate of incorporation or these bylaws, at each meeting of stockholders the presence in person or by proxy of the holders of shares of stock having a majority of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote at the meeting shall be necessary and sufficient to constitute a quorum. In the absence of a quorum, the stockholders so present may, by majority vote, adjourn the meeting from time to time in the manner provided in Section 1.4 of these bylaws until a quorum shall attend. Shares of its own stock belonging to the corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the corporation to vote stock, including but not limited to, its own stock, held by it in a fiduciary capacity.
Section 1.6. Organization. Meetings of stockholders shall be presided over by the Chairman of the Board, if any, or, in his absence, by the Vice Chairman of the Board, if any, or, in his absence, by the President, or, in his absence, by a Vice President, or, in the absence of the foregoing persons, by a chairman designated by the Board of Directors, or, in the absence of such designation, by a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but, in his absence, the chairman of the meeting may appoint any person to act as secretary of the meeting.
Section 1.7. Voting; Proxies. Except as otherwise provided by the certificate of incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by him which has voting power upon the matter in question. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for him by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the corporation. Voting at meetings of stockholders need not be by written ballot and need not be conducted by inspectors of election unless so determined by the holders of shares of stock having a majority of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote thereon which are present in person or by proxy at such meeting. At all meetings of stockholders for the election of directors a plurality of the votes cast shall be sufficient to elect. All other elections and questions shall, unless otherwise provided by law, the certificate of incorporation or these bylaws, be decided by the vote of the holders of shares of stock having a majority of the votes which could be cast by the holders of all shares of stock entitled to vote thereon which are present in person or represented by proxy at the meeting.
Section 1.8. Fixing Date for Determination of Stockholders of Record. In order that the corporation may determine the stockholders entitled to notice of or to vote at any
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meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date: (1) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, not be more than sixty nor less than ten days before the date of such meeting; (2) in the case of determination of stockholders entitled to express consent to corporate action in writing without a meeting shall not be more than ten days from the date upon which the resolution fixing the record date is adopted by the Board of Directors; and (3) in the case of any other action, shall not be more that sixty days prior to such other action. If no record date is fixed: (1) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (2) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting when no prior action of the Board of Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation in accordance with applicable law, or, if prior action by the Board of Directors is required by law, shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action; and (3) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
Section 1.9. List of Stockholders Entitled to Vote. Unless all of the outstanding shares of stock of the corporation are held by a single holder, the Secretary shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list also shall be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. Upon the willful neglect or refusal of the directors to produce such a list at any meeting for the election of directors, they shall be ineligible for election to any office at such meeting. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders or the books of the corporation, or to vote in person or by proxy at any meeting of stockholders.
Section 1.10. Action By Consent of Stockholders. Unless otherwise restricted by the certificate of incorporation, any action required or permitted to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and
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without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.
ARTICLE II
Board of Directors
Section 2.1. Number; Qualifications. The Board of Directors shall consist of one or more members, the numbers thereof to be determined from time to time by resolution of the Board of Directors. Directors need not be stockholders.
Section 2.2. Election; Resignation; Vacancies. The Board of Directors initially shall consist of the persons named as directors in the organizational consent to action of the sole incorporator, and each director so elected shall hold office until the first annual meeting of stockholders or until his successor is elected and qualified. At the first annual meeting of stockholders and at each annual meeting thereafter, the stockholders shall elect directors each of whom shall hold office for a term of one year or until his successor is elected and qualified. Any director may resign at any time upon written notice to the corporation. Any newly created directorship or any vacancy occurring in the Board of Directors for any cause may be filled by a majority of the remaining members of the Board of Directors, although such majority is less than a quorum, or by a plurality of the votes cast at a meeting of stockholders, and each director so elected shall hold office until the expiration of the term of office of the director whom he has replaced or until his successor is elected and qualified.
Section 2.3. Regular Meetings. Regular meetings of the Board of Directors may be held at such places within or without the State of Delaware and at such times as the Board of Directors may from time to time determine, and if so determined notices thereof need not be given.
Section 2.4. Special Meetings. Special meetings of the Board of Directors may be held at any time or place within or without the State of Delaware whenever called by the President, any Vice President, the Secretary, or by any member of the Board of Directors. Notice of a special meeting of the Board of Directors shall be given by the person or persons calling the meeting at least twenty-four hours before the special meeting.
Section 2.5. Telephonic Meetings Permitted. Members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting thereof by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this bylaw shall constitute presence in person at such meeting.
Section 2.6. Quorum; Vote Required for Action. At all meetings of the Board of Directors a majority of the whole Board of Directors shall constitute a quorum for the
4
transaction of business. Except in cases in which the certificate of incorporation or these bylaws otherwise provide, the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.
Section 2.7. Organization. Meetings of the Board of Directors shall be presided over by the Chairman of the Board, if any, or in his absence by the Vice Chairman of the Board, if any, or in his absence by the President, or in their absence by a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting.
Section 2.8. Informal Action by Directors. Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board of Directors or such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or such committee.
ARTICLE III
Committees
Section 3.1. Committees. The Board of Directors, by resolution passed by a majority of the whole Board of Directors, may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of the committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent permitted by law and to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it.
Section 3.2. Committee Rules. Unless the Board of Directors otherwise provides, each committee designated by the Board of Directors may make, alter and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board of Directors conducts its business pursuant to Article II of these bylaws.
ARTICLE IV
Officers
Section 4.1. Executive Officers; Election; Qualifications; Term of Office; Resignation; Removal; Vacancies. The Board of Directors shall elect a President and Secretary,
5
and it may, if it so determines, choose a Chairman of the Board and a Vice Chairman of the Board from among its members. The Board of Directors also may choose a Chief Executive Officer, one or more Vice Presidents, one or more Assistant Secretaries, a Treasurer and one or more Assistant Treasurers and such other officers as the Board of Directors may determine. Each such officer shall hold office until the first meeting of the Board of Directors after the annual meeting of stockholders next succeeding his election, and until his successor is elected and qualified or until his earlier resignation or removal. Any officer may resign at any time upon written notice to the corporation. The Board of Directors may remove any officer with or without cause at any time, but such removal shall be without prejudice to the contractual rights of such officer, if any, with the corporation. Any number of offices may be held by the same person. Any vacancy occurring in any office of the corporation by death, resignation, removal or otherwise may be filled for the unexpired portion of the term by the Board of Directors at any regular or special meeting.
Section 4.2. Powers and Duties of Executive Officers. The officers of the corporation shall have such powers and duties in the management of the corporation as may be prescribed by the Board of Directors and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board of Directors. The Board of Directors may require any officer, agent or employee to give security for the faithful performance of his duties.
ARTICLE V
Stock
Section 5.1. Certificates. Every holder of stock shall, upon request, be entitled to have a certificate signed by or in the name of the corporation by the Chairman or Vice Chairman of the Board of Directors, if any, or the President or Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the corporation, certifying the number of shares owned by him in the corporation. Any of or all the signatures on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue.
Section 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates. The corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.
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ARTICLE VI
Indemnification
Section 6.1. Right to Indemnification. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a proceeding), other than a proceeding by or in the right of the corporation, by reason of the fact that the person is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with the defense of such proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. Not opposed to the best interest of the corporation shall include actions taken in service to an employee benefit plan that are in the interest of the participants and beneficiaries of the employee benefit plan.
Section 6.2. Prepayment of Expenses. The corporation shall pay the actual and reasonable expenses incurred in defending a proceeding, other than a proceeding by or in the right of the corporation, in advance of its final disposition if the corporation determines that the person likely will satisfy the requirements of Section 6.1 and upon the receipt of an undertaking satisfactory to the corporation, which may require that such undertaking include a bond, security interest, or other security for such undertaking, by or on behalf of such person to repay such amount if it shall ultimately be determined that the person is not entitled to be indemnified by the corporation under this Article VI.
Section 6.3. Indemnity if Successful on the Merits. If a person is entitled, under state law, to indemnification by reason of being successful on the merits in defense of any proceeding, the corporation shall indemnify that person to the extent required by law.
Section 6.4. Exercise of Powers. All decisions under this Article VI shall be made by the Board of Directors, or, if the Board of Directors are not able to decide or so directs, by independent legal counsel selected by a majority of the directors then in office. The corporations exercise of the power to indemnify and advance expenses pursuant to this Article VI shall not be deemed to limit any other exercise or restriction of such powers by the corporation; provided , that any repeal or modification of this Article VI shall not adversely affect any right or protection of any person in respect to any act or omission occurring prior to the time of such repeal or modification.
Section 6.5. Applicable Law. The rights granted under this Article VI shall be limited to the extent any applicable laws limit such rights to indemnity or the power to indemnify.
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ARTICLE VII
Miscellaneous
Section 7.1. Fiscal Year. The fiscal year of the corporation shall be January 1 through December 31 each year unless determined otherwise by resolution of the Board of Directors.
Section 7.2. Seal. The corporate seal shall have the name of the corporation inscribed thereon and shall be in such form as may be approved from time to time by the Board of Directors.
Section 7.3. Waiver of Notice of Meetings of Stockholders, Directors and Committees. Any written waiver of notice, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of any regular or special meeting of the stockholders, directors, or members of a committee of directors need be specified in any written waiver of notice.
Section 7.4. Interested Directors; Quorum. No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if: (1) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by the vote of the stockholders; or (3) the contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof, or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.
Section 7.5. Form of Records. Any records maintained by the corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs, or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time. The corporation shall so convert any records so kept upon the request of any person entitled to inspect the same.
8
Section 7.6. Amendment of Bylaws. These bylaws may be altered or repealed, and new bylaws made, by the Board of Directors, but the stockholders may make additional bylaws and may alter and repeal any bylaws whether adopted by them or otherwise.
9
Exhibit 21.1
Name of Subsidiary
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State of Incorporation
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Wizards Acquiring Sub, Inc.
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Delaware | |
Patriots Acquiring Sub, Inc.
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Delaware |
Exhibit 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption Experts in the
Registration Statement (Form S-4) and related Joint Proxy Statement/Prospectus
of Wizards-Patriots Holdings Inc. for the registration of 27,810,511 shares of
its common stock and to the incorporation by reference therein of our report
dated March 12, 2004, with respect to the consolidated financial statements and
schedule of Metrocall Holdings, Inc. included in its Annual Report (Form 10-K)
for the year ended December 31, 2003, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
McLean, Virginia
May 18, 2004
Exhibit 23.3
KPMG LLP
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Suite 3100
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717 North Harwood Street
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Dallas, TX 75201-6585
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Independent Auditors Consent
The Board of Directors
Weblink Wireless, Inc.:
We consent to the incorporation by reference in the registration statement on Forms S-4 of Metrocall Holdings, Inc. of our report dated February 21, 2003, except for note 15(a) which is as of March 1, 2003, with respect to the consolidated balance sheet of Weblink Wireless, Inc. as of December 31, 2002, and the related consolidated statements of operations, stockholders equity (deficit), and cash flows for the periods from January 1, 2002 through September 8, 2002 and September 9, 2002 through December 31, 2002, which report appears in the Form 8-K of Metrocall Holdings, Inc. and to the reference to our firm under the heading Experts in the registration statement. Our report refers to the adoption of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets.
Dallas, Texas
May 18, 2004
Exhibit 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-4 of Wizards-Patriots Holdings,
Inc. of our report dated February 26, 2004 relating to the
financial statements as of December 31, 2003 and
December 31, 2002 and for the period from January 1,
2002 to May 31, 2002 and for the period from June 1,
2002 to December 31, 2002, which appears in Arch Wireless
Inc.s Annual Report on Form 10-K for the year ended
December 31, 2003. We also consent to the incorporation by
reference of our report dated February 26, 2004 relating to
the financial statement schedule for the year ended
December 31, 2003 and the five months ended May 31,
2002 and for the seven months ended December 31, 2002,
which appears in such Annual Report on Form 10-K. We also
consent to the reference to us under the heading
Experts in such Registration Statement.
Boston, Massachusetts
/s/ PRICEWATERHOUSECOOPERS LLP
Exhibit 23.8
May 21, 2004
Board of Directors
Wizards-Patriots Holdings, Inc.
6677 Richmond Highway
Alexandria, Virginia 22306
Members of the Board:
We hereby consent to the use in the Registration Statement of Wizards-Patriots Holdings, Inc. on Form S-4 and in the Joint Proxy Statement/Prospectus of Metrocall Holdings, Inc. and Arch Wireless, Inc., the form of which is part of the Registration Statement, of our opinion dated March 28, 2004, appearing as Annex E to such Joint Proxy Statement/Prospectus, to the description therein of such opinion and to the references to our name contained therein under the headings Summary of the Joint Proxy Statement/Prospectus, The MergerBackground of the Merger, The MergerMetrocalls Reasons for the Merger and The MergerOpinion of Metrocalls Financial Advisor. In giving the foregoing consent, we do not admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933 (the Securities Act), or the rules and regulations promulgated thereunder, nor do we admit that we are experts with respect to any part of such Registration Statement within the meaning of the term experts as used in the Securities Act or the rules and regulations promulgated thereunder.
Lazard Freres & Co. | ||||
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By: |
/s/ Jim Millstein
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Name: | Jim Millstein | ||
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Title: | Managing Director |
Exhibit 23.9
CONSENT OF BEAR, STEARNS
& CO. INC.
We hereby consent to the use in the Registration Statement of
Wizards-Patriots Holdings, Inc. on Form S-4 and in the Joint Proxy
Statement/Prospectus of Metrocall Holdings, Inc. and Arch Wireless, Inc., the
form of which is part of the Registration Statement, of our opinion dated March
28, 2004, appearing as Annex F to such Joint Proxy Statement/Prospectus, to the
description therein of such opinion and to the references to our name contained
therein under the headings Summary of the Joint Proxy Statement/Prospectus,
The MergerBackground of the Merger, The MergerArchs Reasons for the
Merger and The MergerOpinion of Archs Financial Advisor. In giving the
foregoing consent, we do not admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933 (the
Securities Act), or the rules and regulations promulgated thereunder, nor do
we admit that we are experts with respect to any part of such Registration
Statement within the meaning of the term experts as used in the Securities
Act or the rules and regulations promulgated thereunder.
Bear Stearns & Co.
By:
/s/ H. C. Charles Diao
Exhibit 99.6
Consent of Person Named
as About to Become a Director
Pursuant to Rule 438 promulgated under the Securities Act of 1933, the undersigned, who has agreed to serve as a member of the Board of Directors of Wizards-Patriots Holdings, Inc. (the Company) hereby grants the Company consent to use his name in its Registration Statement on Form S-4 and all amendments, including post-effective amendments, to the Registration Statement (or any other Registration Statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933).
Dated: May 21, 2004
By:
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/s/ Vincent D. Kelly
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Name: Vincent D. Kelly |
Exhibit 99.7
Consent of Person Named
as About to Become a Director
Pursuant to Rule 438 promulgated under the Securities Act of 1933, the undersigned, who has agreed to serve as a member of the Board of Directors of Wizards-Patriots Holdings, Inc. (the Company) hereby grants the Company consent to use his name in its Registration Statement on Form S-4 and all amendments, including post-effective amendments, to the Registration Statement (or any other Registration Statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933).
Dated: May 21, 2004
By:
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/s/ Royce Yudkoff
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Name: Royce Yudkoff |
Exhibit 99.8
Consent of Person Named
as About to Become a Director
Pursuant to Rule 438 promulgated under the Securities Act of 1933, the undersigned, who has agreed to serve as a member of the Board of Directors of Wizards-Patriots Holdings, Inc. (the Company) hereby grants the Company consent to use his name in its Registration Statement on Form S-4 and all amendments, including post-effective amendments, to the Registration Statement (or any other Registration Statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933).
Dated: May 19, 2004
By:
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/s/ Matthew Oristano
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Name: Matthew Oristano |
Exhibit 99.9
Consent of Person Named
as About to Become a Director
Pursuant to Rule 438 promulgated under the Securities Act of 1933, the undersigned, who has agreed to serve as a member of the Board of Directors of Wizards-Patriots Holdings, Inc. (the Company) hereby grants the Company consent to use his name in its Registration Statement on Form S-4 and all amendments, including post-effective amendments, to the Registration Statement (or any other Registration Statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933).
Dated: May 18, 2004
By:
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/s/ William E. Redmond, Jr.
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Name: William E. Redmond, Jr. |
Exhibit 99.10
Consent of Person Named
as About to Become a Director
Pursuant to Rule 438 promulgated under the Securities Act of 1933, the undersigned, who has agreed to serve as a member of the Board of Directors of Wizards-Patriots Holdings, Inc. (the Company) hereby grants the Company consent to use his name in its Registration Statement on Form S-4 and all amendments, including post-effective amendments, to the Registration Statement (or any other Registration Statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933).
Dated: May 19, 2004
By:
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/s/ Richard A Rubin
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Name: Richard A Rubin |
Exhibit 99.11
Consent of Person Named
as About to Become a Director
Pursuant to Rule 438 promulgated under the Securities Act of 1933, the undersigned, who has agreed to serve as a member of the Board of Directors of Wizards-Patriots Holdings, Inc. (the Company) hereby grants the Company consent to use his name in its Registration Statement on Form S-4 and all amendments, including post-effective amendments, to the Registration Statement (or any other Registration Statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933).
Dated: May 20, 2004
By:
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/s/ James V. Continenza
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Name: James V. Continenza |
Exhibit 99.12
Consent of Person Named
as About to Become a Director
Pursuant to Rule 438 promulgated under the Securities Act of 1933, the undersigned, who has agreed to serve as a member of the Board of Directors of Wizards-Patriots Holdings, Inc. (the Company) hereby grants the Company consent to use his name in its Registration Statement on Form S-4 and all amendments, including post-effective amendments, to the Registration Statement (or any other Registration Statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933).
Dated: May 19, 2004
By:
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/s/ David C. Abrams
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Name: David C. Abrams |