Document:

exv10w2

 

Exhibit 10.2

EMPLOYMENT AGREEMENT

     This Employment Agreement, dated as of November 16, 2004 (the “Agreement”)
is made by and between USA Mobility, Inc., a Delaware corporation, (the
“Company”) and Vincent D. Kelly (the “Executive”).

     WHEREAS, in connection with the transactions contemplated by the Agreement
and Plan of Merger by and among Wizards-Patriots Holdings, Inc., Metrocall
Holdings, Inc., Wizards Acquiring Sub, Inc., Arch Wireless, Inc. and Patriots
Acquiring Sub, Inc. dated as of March 29, 2004, as amended (the “Merger
Agreement”) the Company desires to employ the Executive and the Executive
desires to be employed by the Company.

     NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:

	1.	 	Employment. The Company shall employ the Executive as the Chief
Executive Officer and President of the Company based upon the terms and
conditions set forth in this Agreement, for the period of time specified
in Section 3. In such positions, the Executive shall report directly and
exclusively to the Board of Directors of the Company (the “Board”).
	 
	2.	 	Duties and Authority. During the term of this Agreement, as the
Chief Executive Officer and President of the Company, under the direction
and subject to the control of the Board (which direction shall be such as
is customarily exercised over a chief executive officer of a public
company), the Executive shall be responsible for the business, affairs,
properties and operations of the Company, and shall have general executive
charge, management and control of the Company, with all such powers and
authority with respect to such business, affairs, properties, and
operations as may be reasonably incident to such duties and
responsibilities, and shall perform such other duties for the Company as
the Board may determine from time to time. The Executive shall devote the
Executive’s reasonable best efforts and full business time, energies and
talents to the performance of the Executive’s duties and the advancement
of the business and affairs of the Company.
	 
	3.	 	Term. The term of this Agreement and the period of employment of
the Executive by the Company hereunder (the “Agreement Term”) shall
commence on the Effective Time (as defined in the Merger Agreement) (the
“Effective Date”) and shall end on a date three (3) years from the
Effective Date (the “Third Anniversary”), unless earlier terminated
pursuant to Section 7 herein; provided that the Agreement
Term shall be automatically extended for additional one (1) year periods
on each anniversary of the Third Anniversary, unless and until either
party provides non-renewal Notice to the other party not less than ninety
(90) days before such anniversary date that such party is terminating this
Agreement, which termination shall be effective as of the end of such
initial Agreement Term or extended term, as the case may be (the
“Expiration Date”), or until sooner terminated as hereinafter set forth.

 

 

	4.	 	Compensation and Expenses.

	(a)	 	Base Salary. In consideration for the Executive’s
services and subject to the terms and conditions of this Agreement,
the Company shall pay to the Executive an annual base salary (the
“Base Salary”) equal to Six Hundred Thousand Dollars ($600,000),
commencing as of the Effective Date. The Base Salary shall be
payable biweekly or in such other installments as shall be
consistent with the Company’s payroll procedures. The Company shall
deduct and withhold all necessary social security and withholding
taxes and any other similar sums required by law or authorized by
the Executive with respect to the payment of the Base Salary. The
Board shall review the Base Salary annually before December 31 and
may, in its discretion, increase, but not decrease, his Base Salary
in any renewal, extension or replacement of this Agreement. The
Board shall also review the appropriateness of creating additional
forms of nonqualified executive compensation to cover the Executive.
	 
	(b)	 	Annual Bonus. With respect to the remainder of 2004,
the Executive shall be entitled to a minimum bonus payment of
$530,000, payable in February 2005; provided that
Metrocall Holdings, Inc. achieves certain targets for free cash flow
on a standalone basis set by the Compensation Committee of the Board
of Directors Metrocall Holdings, Inc. in November 2003 (as set forth
on Exhibit A attached hereto). For years after 2004, the Executive
shall be eligible for an annual bonus equal to a maximum of 200% of
Base Salary based on achievement of certain bonus targets set by the
Board or a committee thereof (the “Annual Bonus”); provided that the
Executive is employed by the Company on December 31 of each calendar
year.
	 
	(c)	 	Benefits. To the maximum extent permitted by
applicable state and federal law, the Executive shall be eligible,
at no cost to the Executive, to participate in all of the Company’s
benefit plans, including fringe benefits available to the Company’s
senior executives, as such plans or programs are in effect from time
to time, and use of an automobile.
	 
	(d)	 	Holidays and Vacation. The Executive shall be
entitled to (i) time off for all public holidays observed by the
Company and (ii) vacation days in accordance with the applicable
policies for the Company’s senior executives as in effect from time
to time.
	 
	(e)	 	Reimbursement of Expenses. The Company shall
reimburse the Executive for all reasonable expenses the Executive
incurs in accordance with the reasonable policies and procedures
adopted from time to time by the Company.

	5.	 	Confidential Information.

	(a)	 	“Confidential Information” means any and all Company and
Company subsidiary proprietary information, technical data, patent
applications, inventions or discoveries (whether patentable or not),
know-how and trade secrets, as well as

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	 	 	operating, design and manufacturing procedures disclosed to the
Executive, including before the date of this Agreement.
“Confidential Information” further means, without limitation,
research, product development activities, processes, products,
specifications, designs, diagrams, illustrations, programs,
concepts, ideas, marketing plans, proposals, financial information,
confidential reports, communications and customer lists and data,
as well as the nature and results of the Company’s and its
subsidiaries’ research and development activities, and all other
materials and information related to the business or activities of
the Company and its subsidiaries that are not generally known to
the public; provided, however, that the term
“Confidential Information” excludes information that (i) is or
becomes generally available to the public other than through acts
by the Executive in violation of this Agreement, (ii) was legally
within the Executive’s possession prior to disclosure to the
Executive by or on behalf of the Company or its predecessor, which
prior possession can be evidenced by the Executive’s written
records in existence prior to the effective date of any Prior
Employment Document, or (iii) becomes available to the Executive on
a non-confidential basis from a source other than the Company or a
subsidiary or predecessor of the Company, provided that such source
is not bound by a confidentiality agreement with the Company or any
of its subsidiaries, or by any other contractual, legal or
fiduciary obligation of confidentiality to the Company or any of
its subsidiaries, or any other party with respect to such
information.
	 
	(b)	 	Except as may be required by the lawful order of a court or
agency of competent jurisdiction, the Executive covenants and agrees
that, during the Agreement Term and at all times thereafter, the
Executive will keep secret and confidential all Confidential
Information, and will not at any time, without the prior written
consent of the Board or a person authorized by the Board, publish or
disclose any Confidential Information, either directly or
indirectly, to any third party, use for the Executive’s own benefit
or advantage, or make available for others to use (except to third
parties in connection with possible transactions or business with
the Company).
	 
	(c)	 	To the extent that any court or agency seeks to have the
Executive disclose Confidential Information, the Executive shall
promptly inform the Company, and shall take all reasonable steps
necessary to prevent disclosure of any Confidential Information
until the Company has been informed of such requested disclosure,
and the Company has an opportunity to respond to such court or
agency. To the extent that the Executive obtains information on
behalf of the Company or any of its subsidiaries that may be subject
to attorney-client privilege as to the Company’s attorneys, the
Executive shall take reasonable steps necessary to maintain the
confidentiality of such information and to preserve such privilege.
	 
	(d)	 	The Executive acknowledges that the restrictions contained in
Section 5(b) and 5(c) are reasonable and necessary, in view of the
nature of the Company’s business, in order to protect the legitimate
interests of the Company, and that any
violation thereof would result in irreparable injury to the
Company. Therefore,

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	 	 	the Executive agrees that in the event of a
breach or threatened breach by the Executive of the provisions of
Section 5(b) and (c), the Company shall be entitled to obtain from
any court of competent jurisdiction, preliminary or permanent
injunctive relief restraining the Executive from disclosing or
using any such Confidential Information. The Executive also
acknowledges that nothing in this Section 5 shall be construed as
limiting the Executive’s duty of loyalty to the Company, or any
other duty he may otherwise have to the Company, while he is
employed by the Company.

	6.	 	Covenant Not to Compete. The Executive agrees that, through his
position as Chief Executive Officer and President of the Company and the
various other positions with the Company that he has held from time to
time, the Executive has established and will continue to establish
valuable and recognized expertise in the paging business and has had and
will have access to the Company’s Confidential Information. The Executive
hereby enters into a covenant restricting the Executive from soliciting
employees of the Company and its subsidiaries and from competing against
the Company upon the terms and conditions described below:

	(a)	 	During the Executive’s employment and for a period of two (2)
years after the Date of Termination for any reason, the Executive
shall not:

	(i)	 	induce or attempt to induce any employees of the
Company or those of any of its subsidiaries to terminate their
employment, or refrain from renewing or extending such
employment, with the Company or such subsidiary in order to
become an director, officer, employee, consultant or
independent contractor to or for any other individual or
entity other than the Company or its subsidiaries;
	 
	(ii)	 	at any time and in any state or other
jurisdiction in the United States in which the Company is
engaged in business or has developed plans to engage in
business: (1) engage or be a part of any Person (including as
a director, consultant, employee, agent, or representative),
or have any direct or indirect financial interest (whether as
a partner, shareholder, or owner) in any Person that engages
in the business of owning and operating narrowband one-way
paging and wireless messaging networks, voice mail services or
data transmitting services (the “Business”); or (2)
participate as an employee or officer in any enterprise in
which the Executive’s responsibility relates to the Business;
	 
	(iii)	 	directly or indirectly own an equity interest in
any Competitor (other than ownership of 1% or less of the
outstanding stock of any corporation listed on a national
stock exchange or included in the NASDAQ System). The term
“Competitor” means any Person a portion of the business of
which (and during any period in which it intends to enter into
business activities that would be) is materially competitive
in any way with the Business of the Company; or

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	(iv)	 	solicit or cause or encourage any person to
solicit any Business in competition with the Company or a
subsidiary from any Person who is a client of the Company or
of a subsidiary during the Executive’s employment hereunder.

	(b)	 	The Executive agrees that the restrictions set forth in this
Section 6 are reasonable, proper, and necessitated by legitimate
business interests of the Company and do not constitute an unlawful
or unreasonable restraint upon the Executive’ ability to earn a
livelihood. The parties agree that in the event any of the
restrictions in this Agreement, interpreted in accordance with the
Agreement as a whole, are found to be unreasonable a court of
competent jurisdiction, such court shall determine the limits
allowable by law and shall enforce the same. The parties further
agree that nothing in this Section 6 shall be construed as limiting
the Executive’s duty of loyalty to the Company, or any other duty he
may otherwise have to the Company, while he is employed by the
Company.
	 
	(c)	 	The Executive further acknowledges that it may be impossible
to assess the monetary damages incurred by the Executive’s violation
of this Agreement, and that violation of this Agreement will cause
irreparable injury to the Company. Accordingly, the Executive
agrees that the Company will be entitled, in addition to all other
rights and remedies that may be available, to an injunction
enjoining and restraining the Executive and any other involved party
from committing a violation of this Agreement.

	7.	 	Termination. Notwithstanding any other provision of this
Agreement, this Agreement shall terminate upon the death of the Executive,
or it may be terminated with thirty (30) days’ written notice as follows:

	(a)	 	The Company may terminate this Agreement:

	(i)	 	at any time if the Executive is Disabled (as
defined below) for a period of six (6) months or more;
	 
	(ii)	 	at any time with “Cause.” For purposes of this
Agreement. “Cause” means (A) dishonesty of a material nature
that relates to the performance of services under this
Agreement; (B) criminal conduct (other than minor infractions
and traffic violations) that relates to the performance of
services under this Agreement, (C) the Executive’s willfully
breaching or failing to perform his duties as described in
Section 2 hereof (other than any such failure resulting from
the Executive’s being Disabled), within a reasonable period of
time after a written demand for substantial performance is
delivered to the Executive by the Board, which demand
specifically identifies the manner in which the Board believes
that the Executive has not substantially performed his duties;
or (D) the willful engaging by the Executive in conduct that
is demonstrably and materially injurious to the Company,
monetarily or otherwise. No act or failure to act on the
Executive’s part shall be deemed “willful” unless done, or

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	 	 	omitted to be done, by the Executive not in good faith and
without reasonable belief that such action or omission was in
the best interests of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been
delivered to the Executive a certificate of a resolution duly
adopted by the affirmative vote of not less than seventy-five
percent (75%) of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive’s counsel, to be heard
before the Board), finding that in the good faith opinion of
the Board, the Executive has engaged in the conduct set forth
in this paragraph and specifying the particulars thereof in
detail; or
	 
	(iii)	 	at any time without Cause upon Notice from the
Company to the Executive, which Notice shall be effective
immediately or such later time as is specified in such Notice.

	(b)	 	The Executive may terminate this Agreement at any time upon
sixty (60) days’ Notice to the Company.
	 
	(c)	 	At any time by the mutual agreement of the parties. Any
termination of the Executive’s employment by mutual agreement of the
parties shall be memorialized by written agreement signed by the
Executive and duly-appointed officers of the Company.
	 
	(d)	 	Any purported termination of the Executive’s employment by
the Company or by the Executive shall be communicated by written
Notice of Termination to the other party hereto in accordance with
Section 11. For purposes of this Agreement, a “Notice of
Termination” shall mean a notice that shall indicate the Date of
Termination (which shall not be earlier than the date on which such
Notice is sent), the specific provision of this Agreement relied
upon and that shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive’s employment. The “Date of Termination” means the last
day the Executive is employed by the Company hereunder (including
any successor to the Company as determined in accordance with
Section 14). If the Executive becomes employed by the entity into
which the Company is merged, or the purchaser of substantially all
of the assets of the Company, or a successor to such entity or
purchaser, the Executive shall not be treated as having terminated
employment for purposes of this Agreement until such time as the
Executive terminates employment with the successor (including,
without limitation, the merged entity or purchaser).

	8.	 	Compensation Upon Termination.

	(a)	 	Death. If the Executive’s employment is terminated by
the Executive’s death, the Company shall pay to the Executive’s
estate, or as may be directed by the legal representatives to such
estate, (i) the Executive’s Base Salary in effect on the date

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	 	 	immediately prior to the Executive’s death, through the
Executive’s date of death; (ii) all other unpaid amounts, if any,
to which the Executive is entitled as of the date of the
Executive’s death, under any Company fringe benefit or incentive
compensation plan or program, at the time such payments would
otherwise ordinarily be due; and (iii) the Executive’s full Base
Salary that would have been payable to the Executive from the
Executive’s date of death through the Expiration Date, in a lump
sum within forty-five (45) days after his death.

	(b)	 	Disability. Following the use of all sick days to
which the Executive is entitled under the policies applicable to the
Company’s senior executives, while he is Disabled until the Date of
Termination, the Company shall, in lieu of payment of his Base
Salary, (i) pay the Executive a disability benefit equal to 50% of
the Base Salary that he would otherwise be entitled to receive for
the period in which he is Disabled; (ii) all other unpaid amounts,
if any, to which the Executive is entitled as of the Executive’s
date of disability, under any Company fringe benefit or incentive
compensation plan or program, at the time such payments are due; and
(iii) the Executive’s full Base Salary that would have been payable
to the Executive from the Executive’s Date of Termination through
the Expiration Date, in a lump sum within forty-five (45) days after
such Date of Termination; provided, however, that any
payments made to the Executive during the Disability Period shall be
reduced by any amounts paid or payable to the Executive under any
Company disability benefit plans. Subject to the terms of this
Agreement, the Executive shall not be required to perform services
under this Agreement during any period that he is Disabled. The
Executive shall be considered “Disabled” during any period in which
he has an illness, or a physical or mental disability, or similar
incapacity, that renders him incapable, after reasonable
accommodation, of performing his duties under this Agreement. In
the event of a dispute as to whether the Executive is Disabled, the
Company may refer the same to a licensed practicing physician of the
Company’s choice, and the Executive agrees to submit to such tests
and examinations as such physician shall deem appropriate. During
the period in which the Executive is Disabled, the Company may
appoint a temporary replacement to assume the Executive’s
responsibilities.
	 
	(c)	 	For Cause. If the Company terminates the Executive’s
employment for Cause, the Company shall pay the Executive’s Base
Salary in effect on the date immediately prior to such termination,
through the date specified in the Notice of Termination and the
Company shall have no further obligations to the Executive under
this Agreement.
	 
	(d)	 	Voluntary. If the Executive terminates his employment
for other than Good Reason, the Company shall pay the Executive the
Executive’s Base Salary in effect on the date immediately prior to
such termination, through the date specified in the Notice of
Termination. The Company shall have no further obligations to the
Executive under this Agreement.

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	 	 	“Good Reason” means the occurrence, without the Executive’s express
written consent, of any of the following circumstances:

	(i)	 	the Company’s failure to perform or observe any
of the material terms or provisions of this Agreement and the
continued failure of the Company to cure such default within
fifteen (15) days after the Executive gives a written demand
for performance to the Company, which demand shall describe
specifically the nature of such alleged failure to perform or
observe such material terms or provisions;
	 
	(ii)	 	the assignment to the Executive of any duties
inconsistent with, or any substantial diminution in, such
Executive’s status or responsibilities as in effect on the
date hereof, including imposition of travel obligations that
are materially greater than is reasonably required by the
Company’s business;
	 
	(iii)	 	(I) a reduction in the Executive’s Base Salary
as in effect on the date hereof, as that amount may be
increased from time to time; or (II) the failure to pay a
bonus award to which the Executive is otherwise entitled, at
the time such bonuses are usually paid;
	 
	(iv)	 	a change in the principal place of the
Executive’s employment, as in effect on the date hereof or as
in effect after any subsequent change to which the Executive
consented in writing, to a location more than thirty-five (35)
miles distant from the location of such principal place;
	 
	(v)	 	(I) the Company’s failure to continue in effect
any incentive compensation plan or stock option plan in which
the Executive participates, unless the Company has provided an
equivalent alternative compensation arrangement (embodied in
an ongoing substitute or alternative plan) to the Executive,
or (II) the Company’s failure to continue the Executive’s
participation in any such incentive or stock option plan on
substantially the same basis, both in terms of the amount of
benefits provided and the level of the Executive’s
participation relative to other participants;
	 
	(vi)	 	the Company’s violation of any applicable
criminal law not due to the Executive’s gross negligence or
willful misconduct;
	 
	(vii)	 	the failure of the Company or any successor to
obtain a satisfactory written agreement from any successor to
assume and agree to perform this Agreement, as contemplated in
Section 14 below; or
	 
	(viii)	 	any purported termination of the Executive’s employment that
is not effected pursuant to a Notice of Termination satisfying
the requirements of Sections 7(a)(ii) or 7(d), as applicable.
For purposes of this Agreement, no such purported termination
shall be effective except as constituting Good Reason.

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     The Executive’s continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstances constituting Good Reason
hereunder.

	(e)	 	Other. If the Company terminates the Executive’s
employment other than for Cause or Disability or if the Executive
terminates employment with the Company for Good Reason, the Company
shall pay the Executive:

	(i)	 	the Executive’s Base Salary through the date
specified in the Notice of Termination within ten (10)
business days after such date and all other unpaid amounts, if
any, to which the Executive is entitled as of the date
specified in the Notice of Termination under any Company
fringe benefit or incentive compensation plan or program, at
the time such payments are due;
	 
	(ii)	 	an amount equal to the product of (a) the greater
of (x) two or (y) the number of years (and fraction thereof)
remaining in the Term as of the date specified in the Notice
of Termination, times (b) the full Base Salary then in effect
within forty-five (45) days after such date specified in the
Notice of Termination;
	 
	(iii)	 	an amount equal to the Annual Bonus paid or
payable to the Executive with respect to the annual period
prior to the year in which the termination of the Executive’s
employment occurs;
	 
	(iv)	 	reimbursement of the cost of continuation
coverage of group health coverage pursuant to the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”) for the
duration of the applicable period to the extent Executive
elects such continuation coverage and is eligible and subject
to the terms of the plan and the law; and
	 
	(v)	 	full vesting of any equity compensation and the
lapse of all restrictions with respect to any restricted stock
granted to the Executive.
	 
	(vi)	 	Gross-Up Payments. If any payment or the
value of any benefit received or to be received by the
Executive in connection with the Executive’s termination or
contingent upon a Change of Control of the Company (whether
received or to be received pursuant to the terms of this
Agreement (the “Agreement Payments”) or of any other plan,
arrangement, or agreement of the Company, its successors, any
person whose actions result in a Change of Control of the
Company, or any person affiliated with any of them (or which,
as a result of the completion of the transactions causing a
Change of Control, will become affiliated with any of them
(“Other Payments” and, together with the Agreement Payments,
the “Payments”)) would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended
(the “Tax Code”) or any comparable federal, state, or local
excise tax (such excise tax, together with any interest and
penalties, are hereinafter collectively

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	 	 	referred to as the “Excise Tax”), as determined as provided
below, the Company shall pay to the Executive an additional
amount (the “Gross-Up Payment”) such that the net amount the
Executive retains, after deduction of the Excise Tax on
Agreement Payments and Other Payments and any federal, state,
and local income tax and Excise Tax upon the payment provided
for by Section 8 hereof, and any interest, penalties, or
additions to tax payable by the Executive with respect
thereto shall be equal to the total present value of the
Agreement Payments and Other Payments at the time such
Payments are to be made. The intent of the parties is that
the Company shall be solely responsible for and shall pay,
any Excise Tax on any Payments and Gross-Up Payment and any
income and employment taxes (including, without limitation,
penalties and interest) imposed on any Gross-Up Payments as
well as any loss of deduction caused by the Gross-Up Payment.

	(2)	 	All determinations required to be
made under this Section 8(e)(vi), including, without
limitation, whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such
determinations, shall be made by tax counsel (either a
law firm or a nationally recognized public accounting
firm) selected by the Company and reasonable acceptable
to the Executive (“Tax Counsel”). The Company shall
cause the Tax Counsel to provide detailed supporting
calculations to the Company and the Executive within
fifteen (15) business days after notice is given by the
Executive to the Company that any or all of the Payments
have occurred, or such earlier time as is requested by
the Company. Within two (2) business days after such
notice is given to the Company, the Company shall
instruct the Tax Counsel to timely provide the data
required by this Section 8(e)(vi) to the Executive. The
Company shall pay all fees and expenses of the Tax
Counsel. The Company shall pay any Excise Tax
determined pursuant to this Section 8(e)(vi) to the
Internal Revenue Service (the “IRS”) and/or other
appropriate taxing authority on behalf of the Executive
within five (5) days after receipt of the Tax Counsel’s
determination. If the Tax Counsel determines that there
is substantial authority (within the meaning of Section
6662 of the Tax Code) that no Excise Tax is payable by
the Executive, the Tax Counsel shall furnish the
Executive with a written opinion that the failure to
disclose or report the Excise Tax on the Executive’s
federal income tax return will not constitute a
substantial understatement of tax or be reasonably
likely to result in the imposition of a negligence or
similar penalty. Any determination by the Tax Counsel
shall be binding upon the Company and the Executive in
the absence of material mathematical or legal error.

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	 	 	As a result of the uncertainty in the application of
Section 4999 of the Tax Code at the time of the initial
determination by the Tax Counsel hereunder, it is
possible that the Company will not have made Gross-Up
payments that should have been made or that it will
have made Gross-Up Payments that should not have been
made, in each case, consistent with the calculations
required to be made hereunder. If the Company exhausts
its remedies pursuant to Section 8(e)(vi)(3) below and
the Executive is thereafter required to pay an Excise
Tax, the Tax Counsel shall determine the amount of
underpayment of Excise Taxes that has occurred and the
Company shall promptly pay any such underpayment to the
IRS or other appropriate taxing authority on the
Executive’s behalf or, if the Executive has previously
paid such underpayment, to the Executive. If the Tax
Counsel determines that an overpayment of Gross-Up
payments has occurred, any such overpayment shall be
treated for all purposes as a loan to the Executive
with interest at the applicable federal rate provided
in Section 7872(f)(2) of the Tax Code, due and payable
within ninety (90) days after written demand to the
Executive by the Company; provided, however, that the
Executive shall have no duty or obligation whatsoever
to repay such loan if the Executive’s receipt of the
overpayment, or any portion thereof, is includible in
the Executive’s income and the Executive’s repayment of
the same is not deductible by the Executive for federal
and state income tax purposes.
	 
	(3)	 	The Executive shall notify the
Company, in writing of any claim by the IRS or state or
local taxing authority, that, if successful, would
result in any Excise Tax or an underpayment of Gross-Up
Payments. Such notice shall be given as soon as
practicable but no later than fifteen (15) business days
after the Executive is informed in writing of the claim
and shall inform the Company of the nature of the claim,
the administrative or judicial appeal period, and the
date on which any payment of the claim must be paid.
The Executive shall not pay any portion of the claim
before the expiration of the thirty (30) day period
following the date on which the Executive gives such
notice to the Company (or such shorter period ending on
the date that any amount under the claim is due). If
the Company notifies the Executive in writing before the
expiration of such thirty (30) day period that it
desires to contest the claim, the Executive shall:

	(A)	 	give the Company any
information reasonably requested by the Company
relating to the claim;
	 
	(B)	 	take such action in
connection with contesting the claim as the
Company shall reasonably request in writing from
time

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	 	 	to time, including, without limitation, accepting
legal representation concerning the claim by an
attorney selected by the Company who is
reasonably acceptable to the Executive; and

	(C)	 	cooperate with the
Company in good faith in order to effectively
contest the claim; provided,
however, that the Company shall bear and
pay directly all costs and expenses (including,
without limitation, additional interest and
penalties and attorneys’ fees) incurred in such
contests and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any
Excise Tax or income tax (including, without
limitation, interest and penalties thereon)
imposed as a result of such representation.
Without limitation upon the foregoing provisions
of this Section 8(e)(vi)(3)(C), except as provided
below, the Company shall control all proceedings
concerning such contest and, in its sole opinion,
may pursue or forgo any and all administrative
appeal, proceedings, hearings and conferences with
the taxing authority pertaining to the claim. At
the Company’s written request and upon payment to
the Executive of an amount at least equal to the
claim plus any additional amount necessary to
obtain the jurisdiction of the appropriate
tribunal and/or court, the Executive shall pay the
same and sue for a refund. The Executive agrees
to prosecute any contest of a claim to a
determination before any administrative tribunal,
in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall
determine; provided, however, that
if the Company requests the Executive to pay the
claim and sue for a refund, the Company shall
advance the amount of such payment to the
Executive, on an interest-free basis, and shall
indemnify and hold the Executive harmless on an
after-tax basis, from any Excise Tax or income tax
(including, without limitation, interest and
penalties thereon) imposed on such advance or for
any imputed income on such advance. Any extension
of the statute of limitations relating to the
assessment of any Excise Tax for the taxable year
of the Executive that is subject of the claim is
to be limited solely to the claim. Furthermore,
the Company’s control of the contest shall be
limited to the issues for which a Gross-Up Payment
would be payable hereunder. The Executive shall
be entitled to settle or contest, as the case may
be, any other issue raised by the IRS or any other
taxing authority.

12

 

	(4)	 	If, after the Executive receives an
amount the Company advanced pursuant to Section
8(e)(vi)(3) above, the Executive receives any refund of
a claim and/or any additional amount that was necessary
to obtain jurisdiction, the Executive shall promptly pay
to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes
applicable thereto). If, after the Executive receives
an amount the Company advanced pursuant to Section
8(e)(vi)(3) above, a determination is made that the
Executive shall not be entitled to any refund of the
claim, and the Company does not notify the Executive in
writing of its intent to contest such denial or refund
of a claim before the expiration of the thirty (30) days
after such determination, then the portion of such
advance attributable to a claim shall be forgiven and
shall not be required to be repaid. The amount of such
advance attributable to a claim shall offset, to the
extent thereof, the amount of the underpayment required
to be paid by the Company to the Executive.
	 
	(5)	 	If, after the Company advances an
additional amount necessary to obtain jurisdiction,
there is a final determination made by the taxing
authority that the Executive is not entitled to any
refund of such amount, or any portion thereof, then the
Executive shall repay such nonrefundable amount to the
Company within thirty (30) days after the Executive
receives notice of such final determination. A final
determination shall occur when the period to contest or
otherwise appeal any decision by an administrative
tribunal or court of initial jurisdiction has been
waived or the time for contesting or appealing the same
has expired.

	 	 	“Change of Control” means the first to occur after the
Effective Date of the following: (i) any Person or group of
Persons acting in concert, in a transaction or a series of
transactions, is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing more
than fifty percent (50%) of the combined voting power of the
Company’s then outstanding securities that have the right to
vote for the election of directors generally (not including
in such securities beneficially owned by such Person any
securities acquired directly from or received through an
exchange offer with the Company); or (ii) there is
consummated a merger, consolidation or other business
combination (including an exchange of securities with the
security holder’s of a corporation that is a constituent in
such business combination) of the Company or any direct or
indirect subsidiary of the Company with any other
corporation, other than a merger, consolidation or business
combination which would result in the voting securities of
the Company outstanding immediately prior to such merger,
consolidation or business combination continuing to represent
at least a majority of the combined voting power of the
securities having the

13

 

	 	 	right to vote for the election of directors generally of the
Company or the surviving entity or any parent thereof
outstanding immediately after such merger, consolidation or
business combination (either by remaining outstanding or by
being converted into or exchanged for voting securities of
the surviving entity or parent thereof) or (iii) there is
consummated an agreement for the sale, lease or other
disposition by the Company of all or substantially all of the
Company’s assets, other than a sale, lease or other
disposition by the Company of all or substantially all of the
Company’s assets to an entity, at least a majority of the
combined voting power of the outstanding securities of which
are owned by stockholders of the Company in substantially the
same proportions as their ownership of the Company
immediately prior to such sale.

	(vii)	 	Notwithstanding the foregoing, a “Change of
Control” shall not be deemed to have occurred by virtue of the
consummation of any transaction or series of integrated
transactions immediately following which the record holders of
the stock (entitled to vote for directors) of the Company
immediately prior to such transaction or series of
transactions continue to have substantially the same
proportionate ownership in an entity which owns all or
substantially all of the assets of the Company immediately
following such transaction or series of transactions.

	(f)	 	Mitigation. The Executive shall not be required to
mitigate amounts payable pursuant to this section by seeking other
employment or otherwise.

	9.	 	Effect of Termination. If the Executive (a) is a member of the
Board or that of any of the Company’s subsidiaries or, or (b) holds any
other position with the Company and the Company’s subsidiaries on the Date
of Termination, the Executive shall resign from all such positions as of
such date.
	 
	10.	 	Termination of Other Agreements. By their execution of this
Agreement, each of the Company and the Executive confirm the termination,
as of the Effective Date of all rights and obligations that each of the
parties may have had under (a) the Restated Employment Agreement between
the Executive and Metrocall Holdings, Inc. and Metrocall Inc., dated as of
February 5, 2003, as amended on March 29, 2004 and (b) any other
employment, consulting, non-competition, bonus or other compensatory plan,
program, arrangement or contract relating to the employment of the
Executive, written or oral, between the Executive and the Company, the
Company’s predecessor or any person affiliated with the Company or its
predecessor entered into prior to the Effective Date (together, the “Prior
Employment Documents”).
	 
	11.	 	Notices. All notices, demands, requests, or other communications
required or permitted to be given or made hereunder (collectively,
“Notice”) shall be in writing and shall be delivered, telecopied, or
mailed by first class registered or certified mail, postage prepaid,
addressed as follows:

14

 

     (a) if to the Company:

	 	 	 
	

	 	USA Mobility, Inc.
	

	 	6677 Richmond Highway
	

	 	Alexandria, Virginia 22306
	

	 	Telecopier: (703) 768-9625
	 
	 	 
	

	 	with a copy (which shall not constitute notice) to:
	 
	 	 
	

	 	Schulte Roth & Zabel LLP
	

	 	919 Third Avenue
	

	 	New York, New York 10022
	

	 	Telecopier: (212) 593-5955
	 
	 	 
	

	 	Attention: Jeffrey S. Sabin, Esq.

     (b) if to the Executive:

	 	 	 
	

	 	Vincent D. Kelly
	

	 	11807 Chapel Road
	

	 	Clifton, VA 20124

	 	 	or to such other address as may be designated by either party in a notice
to the other. Each notice, demand, request, or other communication that
shall be given or made in the manner described above shall be deemed
sufficiently given or made for all purposes three (3) days after it is
deposited in the U.S. mail, postage prepaid, or at such time as it is
delivered to the addressee (with the return receipt, the delivery
receipt, the answer back or the affidavit of messenger being deemed
conclusive evidence of such delivery) or at such time as delivery is
refused by the addressee upon presentation.
	 
	12.	 	Severability. The invalidity or unenforceability of any one or
more provisions of this Agreement shall not affect the validity or
enforceability of the other provisions of this Agreement, which shall
remain in full force and effect. The parties agree that in the event any
of the provisions in this Agreement, interpreted in accordance with the
Agreement as a whole, are found to be unenforceable by a court of
competent jurisdiction, such court shall determine the limits allowable by
law and shall enforce the same.
	 
	13.	 	Survival. It is the express intention and agreement of the
parties that the provisions of Section 5 shall survive the termination of
this Agreement, and that the provisions of Section 6 shall survive for two
(2) years following the termination of this Agreement.
	 
	14.	 	Assignment; Successors. The rights and obligations of the parties
to this Agreement shall not be assignable, except that the rights and
obligations of the Company hereunder shall be assignable in connection
with any subsequent merger, consolidation, sale of substantially all of
the assets of the Company, or similar reorganization of a
successor. The Company will require any successor (whether direct or in
direct, by purchase,

15

 

	 	 	merger, consolidation, or otherwise) to all or
substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company is required to perform it.
Failure of the Company to obtain such assumption and agreement before the
effectiveness of any such succession shall be a breach of this Agreement
and shall entitle the Executive to compensation from the Company as
provided in Section 8(e) herein.
	 
	15.	 	Binding Effect. Subject to any provisions restricting assignment,
this Agreement shall be binding upon the parties and shall inure to the
benefit of the parties and their respective heirs, devisees, executors,
administrators, legal representatives, successors, and assigns.
	 
	16.	 	Amendment Waiver. This Agreement shall not be amended, altered or
modified except by an instrument in writing duly executed by all parties.
Neither the waiver by any of the parties of a breach of or a default under
any of the provisions of this Agreement, nor the failure of either of the
parties, on one or more occasions, to enforce any of the provisions of
this Agreement or to exercise any right or privilege hereunder, shall
thereafter be construed as a waiver of any subsequent breach or default of
a similar nature, or as a waiver of any such provisions, rights, or
privileges.
	 
	17.	 	Headings. Section headings contained in this Agreement are
inserted for convenience of reference only, shall not be deemed to be a
part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction, or scope of any of the provisions of
this Agreement.
	 
	18.	 	Governing Law. This Agreement, the rights and obligations of the
parties, and any claims or disputes arising from this Agreement, shall be
governed by and construed in accordance with the laws of the Commonwealth
of Virginia (but not including the choice of law rules thereof).
	 
	19.	 	Entire Agreement. This Employment Agreement contains the entire
agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements, written or oral, with respect
thereto, including, but not limited to, the Prior Employment Documents.
	 
	20.	 	Indemnification. In consideration of this Agreement, the
Executive hereby waives any and all rights under and releases, and
indemnifies and holds the Company (and its officers, directors, employees
and agents) and its successors and assigns, harmless from any damage,
loss, liability, judgment, fine, penalty, assessment, settlement, cost, or
expense including, without limitation, reasonable expenses of
investigation, reasonable attorneys’ fees and other reasonable legal costs
and expenses incident to any of the foregoing or to the enforcement of
this Section 20, whether or not suit is brought or, if brought, whether or
not such suit is successful, in whole or in part arising out of or
relating to any and all employment, consulting, non-competition, bonus, or
other compensatory plan, program, arrangement, or contract relating to the
employment of the Executive, written or oral, between the Executive and
the Company or
any person affiliated with the Company entered into prior to the
Effective Date, including, without limitation, the Prior Employment
Documents.

16

 

	21.	 	Arbitration. Either party may designate in writing to the other
(in which case this Section 21 shall have effect but not otherwise) that
any dispute that may arise directly or indirectly in connection with this
Agreement, the Executive’s employment, or the termination of the
Executive’s employment, whether arising in contract, statute, tort, fraud,
misrepresentation, or other legal theory, shall be determined solely by
arbitration in Washington, D.C. under the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association
(the “AAA”). The only legal claims between the Executive, on the one
hand, and the Company or any subsidiary, on the other, that would not be
included in this Agreement to arbitrate are claims by the Executive for
workers’ compensation or unemployment compensation benefits, claims for
benefits under a Company or subsidiary benefit plan if the plan does not
provide for arbitration of such disputes, and claims by the Executive that
seek judicial relief in the form of specific performance of the right to
be paid until the termination date during the pendency of any dispute or
controversy arising under Section 7(a)(ii). If this Section 21 is in
effect, any claim with respect to this Agreement, the Executive’s
employment, or the termination of the Executive’s employment must be
established by a preponderance of the evidence submitted to the impartial
arbitrator. A single arbitrator shall conduct any arbitration. The
arbitrator shall have the authority to order a pre-hearing exchange of
information by the parties including, without limitation, production of
requested documents, and examination by deposition of parties and their
authorized agents. If this Section 21 is in effect, the decision of the
arbitrator (i) shall be final and binding, (ii) shall be rendered within
ninety (90) days after the impanelment of the arbitrator, and (iii) shall
be kept confidential by the parties to such arbitration. The arbitration
award may be enforced in any court of competent jurisdiction. The Federal
Arbitration Act, 9 U.S.C. §§ 1-15, not state law, shall govern the
arbitrability of all claims.
	 
	22.	 	Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.

17

 

     IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or
have caused this Agreement to be duly executed, on their behalf as of the day
and year first hereinabove written.

	 	 	 
	

	 	USA Mobility, Inc.
	 
	 	 
	

	 	By: /s/George Z. Moratis
	

	 	

	Date: November 16, 2004

	 	Its: Senior Vice President and Treasurer
	 
	 	 
	

	 	/s/ Vincent D. Kelly
	

	 	

	Date: November 16, 2004

	 	Vincent D. Kellyexv10w3

 

Exhibit 10.3

AMENDMENT NO. 2

Dated as of November 15, 2004

TO THE

AGREEMENT AND PLAN OF MERGER

Dated as of March 29, 2004,

as amended by an amendment dated October 5, 2004,

By and Among

USA MOBILITY, INC.

WIZARDS ACQUIRING SUB, INC.

METROCALL HOLDINGS, INC.,

PATRIOTS ACQUIRING SUB, INC.

AND

ARCH WIRELESS, INC.

 

 

AMENDMENT NO. 2 TO THE

AGREEMENT AND PLAN OF MERGER

     AMENDMENT NO. 2 (this “Amendment”), dated as of November 15, 2004,
to the Agreement and Plan of Merger, dated as of March 29, 2004, as amended by
an amendment dated October 5, 2004 (the “Agreement”), among USA
Mobility, Inc. (formerly 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”).

     All capitalized terms used but not defined in this Amendment shall have
the meanings given to them in the Agreement, as amended hereby. Unless
otherwise indicated, all references to Exhibits, Schedules and Sections in this
Amendment shall refer to the respective Exhibits, Schedules and Sections of the
Agreement.

     The parties have agreed to amend certain provisions of the Agreement as
set forth herein pursuant to the terms and conditions hereof.

     Accordingly, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

     Section 1. Amendments to Section 6.14 of the Agreement (Directors of
Parent and Surviving Corporation).

     (a) Section 6.14(a) of the Agreement is hereby replaced in its entirety
with the following:

     “No later than 1 business day prior to the Effective Time, Metrocall shall
cause Parent to appoint the seven directors set forth in Section 1 of
Schedule A attached hereto to the Parent Board and Mr. Vincent D. Kelly
shall be removed or shall resign from the Parent Board. Immediately after the
Effective Time, (i) eight of the nine directors constituting the full Parent
Board shall be set forth in Section 2 of Schedule A attached hereto and
(ii) the ninth director shall be the individual nominated by the Arch Board to
serve on the Parent Board as set forth in Section 6 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 7 of
Schedule A), and Section 2 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 Arch’s 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. Prior to 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. Immediately after the Effective Time, the Chairman of the Parent
Board shall be the member of the Metrocall Board designated as such on Section
2 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 2 of Schedule
A shall be amended accordingly.”

     (b) Section 6.14(b) of the Agreement is hereby replaced in its entirety
with the following:

     “Immediately following the Effective Time, the Parent Board shall meet and
cause the Audit Committee, Compensation Committee and Nominating and Governance
Committee of the Parent Board to be formed comprising the persons set forth in
Sections 3, 4 and 5, respectively, of Schedule A attached hereto, each
such Person to serve from immediately following 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 set forth on Section 2 of Schedule
A attached hereto.”

     (c) Section 6.14(f) of the Agreement is hereby replaced in its entirety
with the following:

     “Each of the Persons listed in Section 1 of Schedule A shall serve
from his or her appointment to the Parent Board prior to 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. Each person listed in Section
2 of Schedule A who is not listed in Section 1 of Schedule A
shall serve from immediately after 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 2. Amendment to Schedule A to the Agreement.

        Schedule A to the Agreement is hereby replaced in its entirety with
Schedule A attached hereto.

     Section 3. Except as expressly set forth in this Amendment, the Agreement
shall remain in full force and effect in accordance with the provisions thereof
as in existence on the date hereof. After the date hereof, any reference to
the Agreement shall mean the Agreement as modified by the provisions of this
Amendment.

     Section 4. This Amendment may be executed by the parties in counterparts,
in which event shall be deemed an original and all of which together shall
constitute but one agreement. Notwithstanding the foregoing, the parties may deliver executed
counterparts via facsimile transmission, with original counterparts to be
delivered in due course, which shall be effective as delivery of an original.

All other terms and conditions of Article IX of the Agreement are incorporated
into this Amendment by reference.

[SIGNATURE PAGE FOLLOWS]

-2-

 

     IN WITNESS WHEREOF, the parties have caused this Amendment to be signed
and delivered by their respective officers as of the date first written above.

	 	 	 	 	 	 	 
	 	 	USA MOBILITY, 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: Chief Executive Officer and President	 	 
	 
	 	 	 	 	 	 
	 	 	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: Interim President

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