-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SZAiJR56RjxInuRk+iq4CDyvWST+BUoXlSF1onOxu5gXQc3bXqrFKusgiNIfOWx9 5Y7BO3msq8C1JoeqklOxnw== 0000950133-02-001724.txt : 20020501 0000950133-02-001724.hdr.sgml : 20020501 ACCESSION NUMBER: 0000950133-02-001724 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: METROCALL INC CENTRAL INDEX KEY: 0000906525 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 541215634 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-21924 FILM NUMBER: 02628800 BUSINESS ADDRESS: STREET 1: 6677 RICHMOND HWY CITY: ALEXANDRIA STATE: VA ZIP: 22306 BUSINESS PHONE: 7036606677 MAIL ADDRESS: STREET 1: 6910 RICHMOND HWY CITY: ALEXANDRIA STATE: VA ZIP: 22306 10-K/A 1 w60147e10-ka.txt ANNUAL REPORT, AMENDMENT ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001 Commission File Number: 0-21924 METROCALL, INC. (Exact Name of Registrant as Specified in its Charter) DELAWARE 54-1215634 (State of incorporation ) (I.R.S. Employer Identification No.) 6677 RICHMOND HIGHWAY, ALEXANDRIA, VIRGINIA 22306 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) Registrant's Telephone Number, including area code: (703) 660-6677 Securities registered pursuant to Section 12(b) of the Act: Not applicable Securities registered pursuant to Section 12(g) of the Act: TITLE OF CLASS -------------- Common Stock ($.01 par value) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if the disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the common stock held by non-affiliates of the Registrant was approximately $5,673,124 based on the closing sales price on March 4, 2002. COMMON STOCK, PAR VALUE $0.01 - 89,975,772 SHARES OUTSTANDING ON APRIL 1, 2002 DOCUMENTS INCORPORATED BY REFERENCE: NONE ================================================================================ EXPLANATORY NOTE The registrant amends its Annual Report on Form 10-K for the fiscal year ended December 31, 2001, filed with the Securities and Exchange Commission on April 12, 2002, as follows: (1) Part III, Item 10, Directors and Executive Officers of the Registrant, (2) Part III, Item 11, Executive Compensation, (3) Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management, and (4) Part III, Item 13, Certain Relationships and Related Transactions. The specific changes are incorporated into the text and exhibits below. No other changes were made. 2 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth the names of the directors of Metrocall. The table also sets forth each such person's age as of April 1, 2002, the period during which he has served as a director, the expiration of his term, and the positions he currently holds with Metrocall.
DIRECTOR EXPIRATION POSITIONS HELD NAME AGE SINCE OF TERM WITH METROCALL ---- --- ----- ------- -------------- CLASS I DIRECTORS: - ------------------ None CLASS II DIRECTORS: - ------------------- Ronald V. Aprahamian 55 1995 Director Max D. Hopper 67 1997 Director CLASS III DIRECTORS: - -------------------- William L. Collins III 51 1994 2003 President, Chief Executive Officer, and Chairman of the Board Edward E. Jungerman 59 1997 2003 Director Francis A. Martin, III 58 1994 2003 Director Harold S. ("Pete") Wills 59 2000 2003 Director SERIES A PREFERRED STOCK - ------------------------ DESIGNATED DIRECTORS: - --------------------- Michael Greene 40 1997 2002 Director Royce R. Yudkoff 46 1997 2002 Director
We set forth below certain biographical information regarding the directors of Metrocall. Ronald V. Aprahamian has been a member of Metrocall's Board since May 1995. Mr. Aprahamian also serves on the Board of Directors of Sunrise Assisted Living, Inc., and Inciscent, Inc. is Chairman of Superior Consultants, a healthcare computer services firm, and is an independent investor. Mr. Aprahamian was Chairman and Chief Executive Officer of The Compucare Company, a health care computer software services firm, from January 1988 to October 1996. William L. Collins III has been President and Chief Executive Officer of Metrocall since January 1996 and has served as Director and Vice Chairman of the Board since September 1994, and has served as Chairman since May 2000. From 1988 to 1994, Mr. Collins was the Chairman of the Board, Chief Executive Officer, President and a director of FirstPAGE USA, Inc. and its predecessor companies. Mr. Collins serves as Chairman of the Board of Directors of USA Telecommunications, Inc., and Inciscent Inc. From 1977 to 1988, Mr. Collins was President of C&C, Inc., a national communications marketing and management company. Michael Greene has been a director of Metrocall since January 1997. He is a Partner of UBS Capital Americas LLC, which is the private equity subsidiary of the Union Bank of Switzerland. Mr. Greene has worked in Union Bank's private equity and leveraged finance businesses since he joined it in 1990. Mr. Greene serves on the Board of Directors of CBP Resources Inc. Max D. Hopper has been a director of Metrocall since December 1997. Mr. Hopper was also a director of ProNet Inc. ("ProNet") from May 1997 until ProNet's merger with Metrocall in December 1997. Since 1995, Mr. Hopper has been a Principal and CEO of Max D. Hopper Associates, a consulting firm that specializes in creating benefits for the strategic use of advanced information technologies. Prior to 1995, Mr. Hopper spent 20 years in several positions with AMR Corporation, American Airlines' parent company. Mr. Hopper is also a director for Accrue Software, Inc., Exodus Communications, Inc., Gartner Group, Inc., Payless Cashways, Inc., United Stationers, Inc, and US Data Corporation. Edward E. Jungerman has been a director of Metrocall since December 1997. Mr. Jungerman was a director of ProNet from 3 May 1992 until the merger of ProNet with Metrocall in December 1997. He has been President of Impulse Telecommunications Corporation, a strategic consulting firm, since 1986. Mr. Jungerman has over 25 years experience in the telecommunications field, including senior executive positions at Northern Telecom, Inc. and private, start-up ventures in the specialized advanced telecommunications services field. Francis A. Martin, III has been a director of Metrocall since November 1994. Mr. Martin is the President and Chief Executive Officer of MCP Holdings, LLC and Chairman of the Board, President and Chief Executive officer of Media Holdings, Inc. Mr. Martin previously served as President and Chief Executive Officer of Chronicle Broadcasting Company, a publicly-held television broadcasting company. Mr. Martin also serves on the Board of Directors of Inciscent, Inc. Harold S. ("Pete") Wills has been a director of Metrocall since March 2000. Mr. Wills was President of PSINet Inc. from September 1998 to November 2000 and a Director and Chief Operating Officer of PSINet from April 1996 to November 2000. He was Executive Vice President of PSINet from April 1996 to September 1998. Mr. Wills served as Chief Operating Officer of Hospitality Information Networks, Inc. from July 1995 through January 1996. Mr. Wills was elected to the Board of Directors pursuant to the terms of PSINet's stock purchase agreement with Metrocall, dated February 2, 2000. Royce R. Yudkoff has been a director of Metrocall since April 1997. Mr. Yudkoff is the Managing Partner of ABRY Partners, Inc., a private equity investment firm which invests in the communications and media industries. Prior to co-founding ABRY in 1988, Mr. Yudkoff was a partner at Bain & Company, an international management consulting firm where he had significant responsibility for Bain's media practice. Mr. Yudkoff serves on the Board of Directors of Muzak Holdings LLC. EXECUTIVE OFFICERS Executive officers of Metrocall serve at the pleasure of the Board of Directors, subject to the provisions of their employment agreements. This table sets forth the names of the executive officers of Metrocall, their ages as of April 1, 2002, and their positions with Metrocall.
NAME AGE POSITION ---- --- -------- William L. Collins III 51 President, Chief Executive Officer and Chairman of the Board Vincent D. Kelly 42 Chief Financial Officer, Treasurer, and Executive Vice President
We set forth below certain biographical information regarding the executive officers of Metrocall. William L. Collins III has been President and Chief Executive Officer of Metrocall since January 1996 and Chairman of the Board of Directors since May 2000. He served as Director and Vice Chairman of the Board from September 1994 to May 2000. From 1988 to 1994, Mr. Collins was the Chairman of the Board, Chief Executive Officer, President and a director of FirstPAGE USA, Inc. and its predecessor companies. Mr. Collins serves as Chairman of the Board of Directors of USA Telecommunications, Inc. From 1977 to 1988, Mr. Collins was President of C&C, Inc., a national communications marketing and management company. Vincent D. Kelly has been the Chief Financial Officer and Vice President of Metrocall since January 1989. Mr. Kelly has also served as Treasurer since August 1995. He was appointed Executive Vice President in February 1997. Mr. Kelly served as Chief Operating Officer of Metrocall from February 1993 through August 31, 1994, when Metrocall acquired FirstPAGE USA, Inc. Mr. Kelly was a director of Metrocall from 1990 until November 1996. Mr. Kelly is a certified public accountant. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Based on our records and other information, we believe that our directors and officers reported all transactions in Metrocall's common stock and options on a timely basis during the fiscal year ended December 31, 2001. 4 ITEM 11. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table sets forth a summary of all compensation during the last three fiscal years for (1) Metrocall's Chief Executive Officer, and (2) the executive officers of Metrocall whose aggregate annual salary and bonus exceed $100,000 for the year ended December 31, 2001 (the "named executive officers").
FOR THE LONG TERM YEAR COMPENSATION NAME AND ENDED ------------ ALL OTHER PRINCIPAL POSITION DECEMBER 31 SALARY BONUS(a) OPTIONS COMPENSATION ------------------ ----------- ------ -------- ------- ------------ William L. Collins III ............................ 2001 $530,000 $ - - $1,104,882(b) President, Chief Executive Officer and .......... 2000 530,000 425,000 225,000 44,800(c) Chairman of the Board ........................... 1999 500,000 425,000 150,000 51,292(c) Vincent D. Kelly .................................. 2001 $400,000 $ - - $ 803,300(d) Chief Financial Officer, ........................ 2000 400,000 320,000 150,000 3,643(e) Treasurer, and Executive Vice ................... 1999 375,000 325,000 100,000 3,200(e) Steven K. Jacoby .................................. 2001 $292,315(f) $ - - $ 803,077(f) Chief Operating Officer ......................... 2000 400,000 320,000 150,000 5,558(e) and Executive Vice President .................... 1999 375,000 325,000 100,000 3,200(e)
- ------------ (a) Includes bonuses earned in the year indicated, whether paid in the year indicated or the following year. (b) Payments by Metrocall for life insurance premiums pursuant to Mr. Collins' employment contract and retention payments made under his retention agreement as described under Employment Arrangements. (c) Payments made by Metrocall for life insurance premiums pursuant to Mr. Collins' employment contract. (d) Allocation of employer contribution under the Metrocall, Inc. Savings and Retirement Plan and retention payments made under Mr. Kelly's retention agreement as described under Employment Arrangements. (e) Allocation of employer contribution under the Metrocall, Inc. Savings and Retirement Plan. (f) Mr. Jacoby's 2001 salary is through September 11, 2001, the date of his death. Metrocall also paid Mr. Jacoby $800,000 under the terms of his retention agreement and paid Mr. Jacoby's estate upon his death $1,338,454 under the terms of his employment agreement. OPTION GRANTS IN 2001 No options were granted to the named executive officers during 2001. DIRECTOR COMPENSATION Directors who are full-time officers of Metrocall receive no additional compensation for serving on the Board or its committees. Directors who are not full-time officers of Metrocall receive an annual fee of $20,000, plus $2,500 for each regular board meeting attended and $1,500 for each special board or committee meeting attended (other than a committee meeting that occurs on the same day as an otherwise scheduled board meeting). Directors are reimbursed for travel costs and other out-of-pocket expenses 5 incurred in attending meetings. The Metrocall, Inc. 1996 Stock Option Plan, as amended, provides for formula grants of stock options to directors who have never been officers or employees of Metrocall and allows the Board to make discretionary grants to any director. Under the plan, every eligible director who begins service on the Board receives an initial option to purchase 10,000 shares of Metrocall's common stock. Each eligible director also receives an additional option to purchase 1,000 shares of Metrocall's common stock on each anniversary of the initial option, provided that the director continues to be an eligible director on each anniversary date. These options become fully exercisable six months after the date of grant. The exercise price for options granted to directors is the fair market value of Metrocall's common stock on the date the option is granted. During 2000, each non-employee director received formula options to purchase 1,000 shares of Metrocall's common stock at prices ranging from $1.969 per share to $9.00 per share. Each director who was not a full-time officer received discretionary grants to purchase 10,000 shares of Metrocall's common stock at $2.03 per share. In 2002, Metrocall terminated the 1996 Stock Option Plan. Messrs. Collins and Martin were appointed by Metrocall as directors of Inciscent, Inc., a strategic venture between Metrocall, Aether, PSINet, Hicks, Muse and others. In that capacity, each was awarded, along with the other Inciscent directors, options to purchase 20,000 shares of Inciscent common stock at an exercise price of $2.00 per share. One-third of the options become exercisable on May 4, 2001, and an additional 2.778% become exercisable each month thereafter so long as the director remains on the Inciscent board. The options expire on May 4, 2010. EMPLOYMENT ARRANGEMENTS Messrs. Collins and Kelly are parties to employment contracts that presently provide for terms of employment through December 31, 2004 (with automatic extensions). Under these agreements, as amended, Messrs. Collins and Kelly have salaries of $530,000 and $400,000 respectively. Each of these contracts provides for certain payments if the executive's employment is terminated without cause, if the executive terminates the contract for good reason or if the executive's employment is terminated by reason of death or disability. In such event, Metrocall will pay the executive or his estate the full base salary and benefits (in connection with termination without cause or resignation for good reason) that would otherwise have been paid to the executive during the remaining term of the agreement. Terminations without cause or resignations for good reason would also require Metrocall to pay the executive, at his election, the difference between the fair market value of stock subject to options (including those otherwise unexercisable) and the price he would have had to pay to exercise the options. If the executive voluntarily terminates employment (other than for good reason), Metrocall will pay the executive one year's base salary and benefits under the contract. The reasons for resignation for good reason under each contract include the termination of the employment of the other executive by the Company without cause or by the other executive for "good reason." Messrs. Collins and Kelly also are parties to separate change of control agreements which currently run through December 31, 2003 (with automatic extensions). Changes of control are defined as (1) any person's acquiring more than 50% of Metrocall voting stock that has the right to vote for the election of directors; (2) changes in Board membership such that those directors who were Board members on April 1, 2001, along with any directors subsequently added with approval of two-thirds of the Board, do not constitute at least 66 2/3% of the Board; (3) the consummation of a merger, consolidation or other business combination of Metrocall or any subsidiary with any other corporation unless the outstanding voting securities of Metrocall continue to represent at least a majority of the combined voting power of the securities of the surviving entity; (4) the consummation of an agreement for the sale, lease or other disposition by Metrocall of all or substantially all of its assets, other than to an entity, at least a majority of the combined voting power of outstanding securities of which are owned by stockholders of Metrocall in substantially the same proportions as their ownership in Metrocall prior to the sale, lease or other disposition; or (5) upon an entry by a court of an order confirming a plan of reorganization of Metrocall under Chapter 11 of the Bankruptcy Code. A change of control is also deemed to occur if the executive is removed at the request of a third party who has taken steps to effect a change of control or the termination was otherwise caused by a change of control. If an executive were terminated within two years following a change of control without "cause" or by the executive for "good reason" (each as defined in the agreements), the executive would be entitled to payment of two times the sum of his salary and annual target recent bonus within 30 days after termination of employment, together with a payment of the option spread (as described above), paid health coverage for up to 18 months, and certain other benefits. Payment would be grossed up, as necessary, to provide that the executive receives his payments net of any parachute excise taxes and any taxes on the excise payment (but the executive would remain responsible for any income taxes on the payment). Messrs. Collins and Kelly have entered into retention agreements whereby Metrocall paid them an amount equal to their annual base salary as currently in effect and their target annual bonus amount for the current fiscal year, reduced by any applicable withholding taxes, in one lump sum of cash or immediately available funds, as incentives for them to remain with the Company through its restructuring process and in consideration of amendments to their existing 6 employment and change of-control agreements. The executives are obligated to repay the amount of the payments (net of taxes paid and/or withheld) if the executive's employment ends prior to the earliest of (1) confirmation of a plan of reorganization in a Chapter 11 proceeding; (2) sale of all or substantially all of the assets of the company; (3) appointment of a trustee for the company; and (4) April 1, 2003. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Board of Directors has appointed a Compensation Committee to consider compensation matters. At December 31, 2001, Messrs. Wills, Greene and Yudkoff were members of the Compensation Committee. No member of this Committee was at any time during the 2001 fiscal year or at any other time an officer or employee of Metrocall. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Under the rules of the Securities and Exchange Commission, a beneficial owner of Metrocall's common stock is a person who directly or indirectly has or shares voting power or investment power with respect to the shares of common stock. Voting power is the power to direct the vote of the shares. Investment power is the power to dispose of or direct the disposition of the shares. Beneficial ownership of the shares also includes those shares as to which voting power or investment power may be acquired within 60 days. The information on beneficial ownership in the table and the footnotes below is based upon Metrocall's records and the most recent Schedule 13D or 13G filed by each such person or entity. Unless otherwise indicated, each person has sole voting power and sole investment power with respect to the shares shown.
NUMBER OF SHARES PERCENT OF COMMON BENEFICIALLY STOCK NAME OWNED OUTSTANDING ---- ----- ----------- William L. Collins III, President, Chief Executive Officer and Chairman of the Board 1,074,933(a) 1.2% Vincent D. Kelly, Chief Financial Officer, Treasurer and Executive Vice President 481,588(b) * Ronald V. Aprahamian, Director 106,000( c) * Michael Greene, Director 62,280(d) * Max D. Hopper, Director 60,000(e) * Edward E. Jungerman, Director 63,150(f) * Francis A. Martin, III, Director 103,000(g) * Harold S. Wills, Director 6,930,137(h) 7.7% Royce R. Yudkoff, Director 60,061(I) * ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (9 PERSONS) 8,941,149(j) 9.93% Global Card Holdings Inc. 13,250,000 14.73% Affiliate of Hicks, Muse, Tate and Furst 7,832,422 8.7% Aether Systems, LLC. 7,776,769 8.6% PSINet Inc. 6,930,137 7.7%
* Less than 1%. (a) Includes 19,396 shares owned of record by USA Telecommunications, Inc. ("USA Tel."); 305 shares owned by William L. Collins Jr.; and 711,846 shares to be issued upon the exercise of options granted under Metrocall's stock option plans. (b) Includes 406,588 shares issuable upon the exercise of options granted under Metrocall's stock option plans. (c) Includes 51,000 shares of Metrocall's common stock issuable upon the exercise of options granted under Metrocall's stock option plans. (d) Includes 14,280 shares held by UBS Capital LLC, of which Mr. Greene is a Managing Director and 48,000 shares of Metrocall's common stock issuable upon exercise of options granted under Metrocall's stock option plans. 7 (e) Includes 51,000 shares of Metrocall's common stock issuable upon exercise of options granted under Metrocall's stock plans. (f) Includes 62,250 shares of Metrocall's common stock issuable upon exercise of options granted under Metrocall's stock option plans. (g) Includes 53,000 shares of Metrocall's common stock issuable upon exercise of options granted under Metrocall's stock option plans. (h) Includes 6,920,137 shares held by PSINet Inc., as to which Mr. Wills disclaims beneficial ownership, and 10,000 shares of Metrocall's common stock to be issued upon exercise of options granted under Metrocall's stock option plans. (i) Includes 48,000 shares of Metrocall's common stock issuable upon exercise of options granted under Metrocall's stock option plans. (j) Includes an aggregate of 1,441,684 shares of Metrocall's common stock to be issued upon the exercise of options granted under Metrocall's stock option plans; and 19,701 shares through beneficial ownership. The following table sets forth beneficial ownership by Metrocall's directors and executive officers of shares of common stock of Inciscent, Inc., which may be deemed to be a subsidiary of Metrocall.
NUMBER OF INCISCENT SHARES PERCENT OF COMMON BENEFICIALLY STOCK NAME OWNED OUTSTANDING ---- ----- ----------- William L. Collins III, President, Chief Executive Officer and Chairman of the Board 628,164 (a) 3.5% Vincent D. Kelly, Chief Financial Officer, Treasurer and Executive Vice President 461,538 2.6% Ronald V. Aprahamian, Director 35,000 * Michael Greene, Director 35,000 * Max D. Hopper, Director 35,000 * Edward E. Jungerman, Director 35,000 * Francis A. Martin, III, Director 47,778 (a) * Royce R. Yudkoff, Director 35,000 * All Metrocall officers and directors as a group. 1,312,480 7.2%
(a) Includes options to acquire 12,778 shares of Inciscent common stock Messrs. Collins and Martin were appointed as directors by Metrocall of Inciscent, Inc. In that capacity, each was awarded, along with the other Inciscent directors, options to purchase 20,000 shares of Inciscent common stock at an exercise price of $2.00 per share. One-third of the options became exercisable on May 4, 2001, and an additional 2.778% become exercisable each month thereafter so long as the director remains on the Inciscent board. The options expire on May 4, 2010. AGGREGATE OPTION EXERCISES IN 2001 AND OPTION YEAR-END VALUE No options were exercised in 2001. The following table sets forth the fiscal year-end value of all unexercised options held by the named executive officers.
NAME NUMBER OF SHARES UNDERLYING UNEXERCISED OPTIONS AT DECEMBER VALUE OF UNEXERCISED IN-THE-MONEY 31, 2001 EXERCISABLE/UNEXERCISABLE OPTIONS AT DECEMBER 31, 2001 EXERCISABLE/UNEXERCISABLE William L. Collins III 711,846/375,000 -/- Vincent D. Kelly 406,588/250,000 -/-
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 8 Mr. William L. Collins, III, President, Chief Executive Officer, Director, and Chairman of the Board of Directors of Metrocall, is a general partner in three real estate partnerships that leased commercial office space to Metrocall in Alexandria, Virginia during 2001. The lease payments to entities with whom Mr. Collins is affiliated amounted to approximately $14,000 for the year ended December 31, 2001. Metrocall expects that the annual rent for the remaining lease in 2002 will amount to approximately $14,000. In July 1993, Metrocall entered into a Tax Indemnification Agreement with, among others, Mr. Vincent D. Kelly and certain former board members (the "Subchapter S stockholders"), which agreement relates to their respective income tax liabilities in connection with Metrocall's earlier status as an S Corporation. Because Metrocall became subject to corporate income taxation after Metrocall's initial public offering, the reallocation of income and deductions between the period during which Metrocall was treated as an S Corporation and the period during which Metrocall became subject to corporate income taxation may have increased the taxable income of one party while decreasing that of another party. Accordingly, the Tax Indemnification Agreement was intended to assure that taxes are borne by Metrocall on the one hand and the Subchapter S stockholders on the other hand only to the extent that such parties are required to report the related income for tax purposes. Subject to certain limitations, the Tax Indemnification Agreement generally provides that the Subchapter S stockholders will be indemnified by Metrocall with respect to federal and state income taxes (plus interest and penalties) shifted from a taxable year subsequent to the initial public offering to a taxable year in which Metrocall was an S Corporation. In addition, Metrocall will be indemnified by the Subchapter S stockholders, subject to certain limitations, with respect to federal and state income taxes (plus interest and penalties) that arise from a termination of S Corporation status prior to the date of such termination or which are shifted from taxable year in which Metrocall was an S Corporation to a taxable year subsequent to the consummation of the initial public offering. Any payment made by Metrocall to the Subchapter S stockholders pursuant to the Tax Indemnification Agreement likely will be considered by the Internal Revenue Service or the applicable state taxing authorities to be nondeductible by Metrocall for income tax purposes. As of April 1, 2002, no indemnification obligations have arisen under the Tax Indemnification Agreement with respect to any of the parties thereto. ProNet (and Metrocall as successor-in-interest) entered into an Incentive Compensation Agreement dated July 7, 1997 with Impulse Telecommunications Corporation regarding the development of certain messaging services. Mr. Jungerman is the President of Impulse Telecommunications Corporation. Maximum compensation under the Incentive Compensation Arrangement is $350,000. Metrocall also has a consulting service agreement with Impulse Telecommunications Corporation under which costs of services were approximately $60,000 and $0 in 2000 and 2001, respectively. No costs are expected to be incurred in 2002. Metrocall has agreed to provide services in an amount of $15 million to Inciscent, Inc. in return for Metrocall's ownership interest in Inciscent. Some members of Metrocall's Board of Directors have relationships with entities that have agreed to provide services or cash to Inciscent. Metrocall believes all transactions between Inciscent and Metrocall and between Inciscent and those entities of which some of Metrocall's directors and officers are directors or officers are on terms that are no less favorable than arms-length. During 2001, Metrocall provided administrative and other services in an amount of $1.0 million to Inciscent William L. Collins III is indebted to Inciscent, Inc., in the amount of $123,077, and Vincent D. Kelly is indebted to Inciscent in the amount of $92,308. This indebtedness was incurred in February 2000 to pay for Inciscent founders shares issued to each executive in connection with the organization of Inciscent. The notes bear interest at the rate of 6.25% and are repayable February 2, 2004 or earlier, if the executive ceases to be an employee of Inciscent or Metrocall. The indebtedness is secured by a pledge of the Inciscent stock issued to the executive. 9 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly authorized on April 30, 2002. METROCALL, INC. By:/s/ VINCENT D. KELLY ---------------------------- Vincent D. Kelly Chief Financial Office 10 -----END PRIVACY-ENHANCED MESSAGE-----