<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
METRO INFORMATION SERVICES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously by written preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-----------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
METRO
INFORMATION SERVICES
REFLECTIONS II OFFICE BUILDING
200 GOLDEN OAK COURT
THIRD FLOOR
VIRGINIA BEACH, VIRGINIA 23452
NOTICE OF 1998 ANNUAL MEETING AND PROXY STATEMENT
May 1, 1998
Dear Shareholder:
The directors and officers of your company cordially invite you to attend
the Annual Meeting of Shareholders ("1998 Annual Meeting") of Metro Information
Services, Inc. ("Metro"), which will be held at The Waterside Marriott, 235 E.
Main Street, Norfolk, Virginia 23510, on Tuesday, June 9, 1998, at 2:30 p.m.
local time. Please bring proof of identity to be admitted to the meeting.
Shareholders of record on April 15, 1998 are entitled to vote at the 1998
Annual Meeting and all adjournments. Shareholders entitled to vote will elect
two directors, vote on ratification of the appointment of independent auditors
and vote on amendments to the Metro Information Services, Inc. Employee Stock
Purchase Plan, as described in the formal notice of meeting and proxy statement
appearing on the following pages.
Management will report on Metro's progress and comment on matters of current
interest. There will be a period of informal discussion in which shareholders
will have an opportunity to comment or ask questions.
Whether or not you plan to attend the meeting in person, we ask that you
carefully review the material on the following pages and vote your shares on the
matters that will come before the meeting. Please vote your shares by marking
your votes on the enclosed proxy card, signing and dating it and mailing it in
the enclosed business reply envelope promptly.
It is important that your shares are represented at the 1998 Annual Meeting,
whether or not you attend the meeting in person and regardless of the number of
shares you own. To make sure your shares are represented, I urge you to vote as
soon as possible by mailing your proxy card.
Very truly yours,
John H. Fain
Chairman and
Chief Executive Officer
<PAGE>
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
The 1998 Annual Meeting of Shareholders ("1998 Annual Meeting") of Metro
Information Services, Inc. will be held at The Waterside Marriott, 235 E. Main
Street, Norfolk, Virginia 23510, on Tuesday, June 9, 1998 at 2:30 p.m. local
time to consider and take action with respect to the following matters:
1. Election of two Class 2 Directors to serve for a term of three years or
until a successor is elected;
2. Ratification of the appointment of KPMG Peat Marwick LLP as independent
auditors for the Company for the year ending December 31, 1998;
3. Amendment of the Metro Information Services, Inc. Employee Stock
Purchase Plan; and
4. Such other business as may properly come before the meeting or any
adjournment thereof.
Holders of Common Stock of record at the close of business on April 15, 1998
are entitled to notice of, and to vote at, the 1998 Annual Meeting or any
adjournment thereof. A list of such holders will be open to the examination of
any shareholders, for any purpose germane to the meeting, at the offices of
Metro Information Services, Inc., Reflections II Office Building, 200 Golden Oak
Court, Third Floor, Virginia Beach, Virginia 23452, for a period of 10 days
before the meeting.
By Order of the Board of Directors,
Robert J. Eveleigh
Secretary
May 1, 1998
<PAGE>
PROXY STATEMENT FOR 1998 ANNUAL MEETING OF SHAREHOLDERS
METRO INFORMATION SERVICES, INC.
REFLECTIONS II OFFICE BUILDING
200 GOLDEN OAK COURT
THIRD FLOOR
VIRGINIA BEACH, VIRGINIA 23452
GENERAL
The Board of Directors of Metro Information Services, Inc. ("Metro" or the
"Company") solicits your proxy for use at the 1998 Annual Meeting of
Shareholders ("1998 Annual Meeting") to be held at The Waterside Marriott, 235
E. Main Street, Norfolk, Virginia 23510, on Tuesday, June 9, 1998 at 2:30 p.m.
local time and at any time the 1998 Annual Meeting is reconvened following an
adjournment.
Shareholders of record of Metro Common Stock at the close of business on
April 15, 1998 (the "Record Date") are entitled to vote at the 1998 Annual
Meeting. Shareholders of record can vote in person at the meeting or name
another person their proxy by mailing their signed proxy cards in the enclosed
reply envelope. Any shareholder giving a proxy may revoke it at any time before
it is exercised by executing another proxy or by appearing at the 1998 Annual
Meeting and voting in person.
On the Record Date, 14,838,844 shares of Metro Common Stock, $.01 par value
("Common Stock") were issued and outstanding. Each share entitles the holder to
one vote. The persons appointed by the enclosed proxy card have advised the
Board of Directors that it is their intention to vote at the meeting in
compliance with the instructions on the proxies received from shareholders and,
if no contrary instruction is indicated, FOR: (i) the election of the persons
nominated to serve as Class 2 Directors, (ii) the ratification of appointment of
KPMG Peat Marwick LLP as the Company's independent auditors for the year ending
December 31, 1998, (iii) the adoption and approval of an amendment to the Metro
Information Services, Inc. Employee Stock Purchase Plan and (iv) in accordance
with the recommendations of the Board of Directors on the other matters brought
before the meeting, as described herein.
The Class 2 Directors to be elected at the 1998 Annual Meeting will each be
elected by a plurality of the votes cast by the shareholders present in person
or by proxy and entitled to vote. With regard to the election of any Director,
votes may be cast for or withheld from each nominee. Votes that are withheld
will have no effect on the outcome of the election because each Director will be
elected by a plurality of votes cast.
Abstentions may be specified on all proposals submitted to a shareholder
vote other than the election of Directors. Abstentions and shares held of record
by a broker or its nominee ("broker shares") that are voted on any matter are
included in determining the number of votes present or represented at the
meeting. Broker shares that are not voted on any matter at the meeting are not
included in determining whether a quorum is present. If a quorum is present at
the meeting, votes that are withheld and broker shares that are not voted
(commonly referred to as "broker non-votes") are not included in determining the
number of votes cast in the election of directors or on other matters.
This proxy statement and the enclosed proxy card are being first mailed to
shareholders on or about May 1, 1998.
THE COMPANY'S 1997 ANNUAL REPORT IS BEING SENT TO ALL SHAREHOLDERS
CONCURRENTLY WITH THIS PROXY. THE COMPANY'S REPORT ON FORM 10-K, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION FOR THE COMPANY'S YEAR ENDED DECEMBER 31,
1997, INCLUDING THE FINANCIAL STATEMENTS, SCHEDULES AND A LIST OF EXHIBITS, MAY
BE OBTAINED FROM THE COMPANY WITHOUT CHARGE, ON THE REQUEST OF A SHAREHOLDER.
THE REQUEST SHOULD BE DIRECTED TO JULANN OPPASSER DONNELLY, INVESTOR RELATIONS,
AT THE COMPANY'S ADDRESS LISTED ABOVE OR BY TELEPHONE TO (757) 306-0299.
EXHIBITS WILL BE PROVIDED ON REQUEST AND PAYMENT OF THE COMPANY'S REASONABLE
EXPENSES IN FURNISHING THE EXHIBITS.
<PAGE>
ITEM 1--ELECTION OF DIRECTORS
The Board of Directors is composed of five members. The Board is divided
into three classes of directors, Class 1, Class 2 and Class 3, in accordance
with the Company's Bylaws. One director is a Class 1 director, two are Class 2
directors and two are Class 3 directors. The term of each class of directors
expires at the Annual Meeting as follows: Class 2 in 1998, Class 3 in 1999 and
Class 1 in 2000. Class 2 directors will be elected at the 1998 Annual Meeting.
The terms of the Class 2 Directors elected at the 1998 Annual Meeting will
expire at the Annual Meeting in 2001 or when their successors are elected and
qualified. If for any reason a nominee for election at the 1998 Annual Meeting
becomes unable or is unwilling to serve at the time of the 1998 Annual Meeting,
the persons named in the enclosed proxy card will have discretionary authority
to vote for a substitute nominee or nominees. It is not anticipated that any
nominee will be unavailable for election.
The following sets forth information as to each nominee for election at this
1998 Annual Meeting and each Director continuing in office, as well as Executive
Officers and other key personnel of Metro, including his or her age, present
principal occupation, other business experience during the last five years,
directorships in other publicly-held companies, membership on committees of the
Board of Directors and period of service with Metro:
NOMINEES FOR ELECTION AT THIS MEETING TO A TERM EXPIRING IN 2001:
RAY E. BECKER, 61, is founder and President of Consultants to Management,
Inc. of Ellsworth, Maine (management consulting services), and has held those
positions since 1995. From 1985 to 1994, Mr. Becker served in a variety of roles
with Keane, Inc., retiring as Vice President and Western Regional Manager for
Keane in 1994. Mr. Becker has served on Metro's Board of Directors since April
1997. Mr. Becker is a member of Metro's Audit and Compensation Committees.
ANDREW J. DOWNING, 42, is Executive Vice President and Chief Operating
Officer of the Company. Between 1983 and July 1996, Mr. Downing served in
various marketing capacities in the Company's Virginia Beach, Virginia office,
as a Regional Vice President and a Vice President of Operations. In July 1996,
Mr. Downing became Executive Vice President and Chief Operating Officer of the
Company. Mr. Downing has served on the Board of Directors since January 1997.
DIRECTORS CONTINUING TO SERVE
ROBERT J. EVELEIGH, 38, is a Director and Vice President of Finance,
Treasurer, Secretary and Chief Financial Officer of the Company. Between August
1988 and January 1997, Mr. Eveleigh was an attorney with Clark & Stant, P.C.,
the Company's general counsel. Mr. Eveleigh is also a certified public
accountant. Mr. Eveleigh became Metro's Vice President of Finance, Treasurer and
Chief Financial Officer on January 29, 1997 and its Secretary on April 30, 1998.
Mr. Eveleigh has served on Metro's Board of Directors since January 1997. Mr.
Eveleigh's term as a director expires at Metro's 1999 Annual Meeting.
JOHN H. FAIN, 49, is Chairman of the Board of Directors, President and Chief
Executive Officer of the Company. Mr. Fain is Chairman of Metro's Compensation
Committee and has been a Director since 1979. Mr. Fain's current term as a
director expires at Metro's 2000 Annual Meeting.
A. EUGENE LOVING, JR., 55, is Chairman of the Board and Chief Executive
Officer of Max Media Properties LLC ("Max"). Mr. Loving has held these positions
with Max and its predecessors since 1991. Mr. Loving has served on the Board of
Directors since April 1997. Mr. Loving's term as a director expires at Metro's
1999 Annual Meeting. Mr. Loving is a member of Metro's Audit and Compensation
Committees.
2
<PAGE>
OTHER EXECUTIVE OFFICERS OF THE COMPANY
FRANK B. BRACKEN, JR., 49, is a Vice President of Operations. Mr. Bracken
joined the Company in July 1984 and has served as a Vice President of Operations
since July 1996. He served as Division Director in the Company's Richmond,
Virginia office from January 1996 until being named a Vice President of
Operations. From January 1994 to December 1995, Mr. Bracken served as Metro's
National Account Marketing Director. From July 1984 to December 1993, he served
in various marketing positions in the Company's Richmond, Virginia office.
RONALD D. CHEATHAM, 44, became a Vice President of Operations effective
January 1, 1998. Mr. Cheatham joined the Company in 1993 and served as marketing
account representative until 1995. From 1995 to 1997, he served as director of
Metro's Nashville, Tennessee office.
RICHARD C. JAECKLE, 52, is a Vice President of Operations. Mr. Jaeckle
joined the Company in 1987 and has served as a Vice President of Operations
since January 1994. From July 1989 to December 1993, he was responsible for the
selection and development of new offices.
MICHAEL G. MARTIN, 43, became a Vice President of Operations effective
January 1, 1998. Mr. Martin joined the Company in 1989 and served as marketing
director of Metro's Winston-Salem, North Carolina office through 1997.
KATHLEEN A. NEFF, 47, is a Vice President of Operations. Ms. Neff joined
Metro in 1980 and from January 1983 to December 1995, she served as the
Technical Director of the Company's Richmond, Virginia office. She was named to
her current position in January 1996.
CERTAIN KEY PERSONNEL
BRADLEY B. BRESEMAN, 47, is Director of Quality Operations. He has served in
this position since he joined the Company in April 1995. Before joining Metro,
Mr. Breseman spent 22 years with A.B. Dick Company in various capacities, last
serving as Vice President, Service and Distribution.
STEVEN A. LURUS, 43, is Director of Finance and Chief Accounting Officer of
the Company. Mr. Lurus joined Metro in 1984 as Controller and became Director of
Finance in 1986. In 1991, he was named Secretary and Treasurer. Mr. Eveleigh
assumed from Mr. Lurus the position of Treasurer in 1997 and the position of
Secretary on April 30, 1998. Mr. Lurus is a certified public accountant. On
April 24, 1998, Mr. Lurus tendered his resignation from all positions he holds
with the Company effective May 31, 1998.
MARILYNN C. MOSCHEL, 50, is Director of Human Resources. She has served in
this position since she joined Metro in 1988. Before joining the Company, she
served as Director of Marketing and Human Resources for Goodman & Company CPA's.
R. LAWRENCE WHITLEY, 37, is Director of Information Services. From September
1988, when he joined the Company, through March 1989, Mr. Whitley was an
Information Systems Consultant working on the Company's recruiting systems. From
April 1989 through June 1992, he served as the Manager of Information Services
and, in July 1992, was named to his current position.
THE BOARD OF DIRECTORS
The business and affairs of Metro are managed under the direction of the
Board of Directors. The Board has responsibility for establishing broad
corporate policies and for the overall performance of Metro rather than
day-to-day operating details. Members of the Board of Directors are kept
informed of the Company's business by various reports and documents sent to them
each month as well as by reports presented at meetings of the Board and its
committees by officers and employees of Metro. The Board of Directors met five
times during 1997. Each of the directors participated in all Board meetings held
during the year.
3
<PAGE>
COMMITTEES OF THE BOARD
The Audit Committee, which is composed entirely of Directors who are not
officers or employees of Metro ("Outside Directors"), reviews the Company's
accounting functions, operations and management and the adequacy and
effectiveness of the internal controls and internal auditing methods and
procedures of the Company. The Audit Committee recommends to the Board the
appointment of the independent auditors for the Company. In connection with its
duties, the Audit Committee meets privately with the independent auditors. The
Audit Committee was formed in April 1997 and met once with all members present
during the year.
The Compensation Committee, which is composed of John H. Fain and two
Outside Directors, reviews and acts with respect to pension, compensation and
other employee benefit plans, approves the salary and compensation of the
officers of Metro other than chief executive officer and the other four most
highly compensated officers. The Compensation Committee makes recommendations to
the full Board of Directors concerning the salary and compensation of the chief
executive officer and the other four most highly compensated officers of Metro.
The Compensation Committee was formed in April 1997 and met once with all
members present in 1997 to consider the 1998 compensation plans for the
Company's executive officers.
The committee membership of the nominee Directors is set forth in their
biographical information above.
The Company does not have a nominating committee.
DIRECTOR COMPENSATION
Directors who are executive officers of the Company receive no compensation
for their service as members of either the Board of Directors or committees
thereof. During 1997, the Outside Directors, Mr. Becker and Mr. Loving, each
received an annual fee of $3,000, plus $500 for each Board of Directors and
committee meeting attended and reimbursement for their expenses. In addition,
under the Company's non-qualified stock option plan for Outside Directors (the
"Outside Directors Stock Plan"), each Outside Director received an option for
3,000 shares of the Common Stock on such director's initial election as a
director in April 1997 and an additional option for 1,000 shares of the Common
Stock for their participation in Metro's 1997 Annual Meeting, held June 10,
1997. At each Annual Meeting of shareholders thereafter, such director shall be
granted an additional option for 1,000 shares of the Common Stock. The options
granted to Outside Directors may be exercised immediately at a price equal to
the fair market value of the Common Stock on the date of grant. The options
expire 10 years after the date of grant or one year after the Outside Director
is no longer a director of the Company, whichever is earlier. Options for an
aggregate of 50,000 shares of the Common Stock may be granted under the Outside
Directors Stock Plan. The Company granted options for 8,000 shares under this
plan during 1997. In February 1998, the Board of Directors (with Mr. Becker and
Mr. Loving abstaining) increased the annual fee payable to Outside Directors to
$6,000 plus $1,000 for each Board of Directors and committee meeting attended.
4
<PAGE>
BENEFICIAL OWNERSHIP OF SECURITIES
The following table sets forth, as of April 15, 1998, certain information
regarding the beneficial ownership of Metro Common Stock, by (i) each of the
Company's directors, (ii) each of the executive officers named in the Summary
Compensation Table, (iii) all directors and officers of the Company as a group
and (iv) each person known by the Company to own beneficially more than 5% of
Common Stock. Unless otherwise indicated in the footnotes to the table below,
each person or entity named below has an address in care of the Company's
principal office. All share amounts have been rounded to the nearest whole
share.
<TABLE>
<CAPTION>
DIRECTORS, OFFICERS TOTAL
AND 5% SHAREHOLDERS OWNERSHIP(1) PERCENTAGE
- --------------------------------------------------------------------------------------- ------------ -------------
<S> <C> <C>
John H. Fain(2)........................................................................ 8,377,665 56.5%
Andrew J. Downing(3)................................................................... 513,363 3.5
Robert J. Eveleigh(4).................................................................. 1,809 *
Ray E. Becker(5)....................................................................... 4,000 *
Frank B. Bracken, Jr.(6)............................................................... 236,435 1.6
Richard C. Jaeckle(7).................................................................. 75,798 *
A. Eugene Loving, Jr.(8)............................................................... 4,100 *
Kathleen A. Neff(9).................................................................... 232,102 1.6
The Fain Family Irrevocable Trust 1993(10)............................................. 1,206,510 8.1
All directors and executive officers as a group (8 persons)(2)......................... 9,445,272 63.6
</TABLE>
- ------------------------
* Indicates less than 1%.
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission (the "Commission") and includes general
voting power or investment power with respect to securities. Shares of the
Common Stock subject to options and warrants currently exercisable or
exercisable within 60 days of the date of this Report are deemed outstanding
for computing the percentage of the person holding such options, but are not
deemed outstanding for computing the percentage of any other person. Except
as otherwise specified below, the persons named in the table above have sole
voting and investment power with respect to all shares of the Common Stock
shown as beneficially owned by them.
(2) Includes 1,206,510 shares of the Common Stock owned by a trust established
by Mr. Fain of which his wife, Joyce L. Fain, and his sister, Cynthia L.
Akins, are the co-trustees and of which Mr. Fain disclaims beneficial
ownership, 227,974 shares of the Common Stock held by a trust of which Mr.
Fain's son is the beneficiary and Mr. Fain is the trustee and of which Mr.
Fain disclaims beneficial ownership and 206,930 shares of the Common Stock
held by Ms. Akins as custodian for the benefit of Mr. Fain's daughter under
the Virginia Uniform Transfers to Minors Act of which Mr. Fain disclaims
beneficial ownership.
(3) Includes 60,759 shares of the Common Stock owned by a trust established by
Mr. Downing and his wife, Cheryl O. Downing, of which his wife is the sole
trustee. Also includes 1,000 option shares awarded in 1997 and currently
exercisable under the Incentive Stock Option Plan. The business address of
The Downing Irrevocable Trust 1997 is 2401 Haversham Close, Virginia Beach,
VA 23454.
(4) Includes 1,500 option shares awarded in 1997 and currently exercisable under
the Incentive Stock Option Plan.
(5) Includes 4,000 option shares awarded in 1997 and currently exercisable under
the Outside Directors Stock Plan. Mr. Becker's business address is P.O. Box
1448, Ellsworth, ME 04605.
(6) Includes 1,000 option shares awarded in 1997 and currently exercisable under
the Incentive Stock Option Plan.
(7) Includes 1,000 option shares awarded in 1997 and currently exercisable under
the Incentive Stock Option Plan.
5
<PAGE>
(8) Includes 4,000 option shares awarded in 1997 and currently exercisable under
the Outside Directors Stock Plan. Mr. Loving's business address is 900
Laskin Road, Virginia Beach, Virginia 23451.
(9) Includes 1,000 option shares awarded in 1997 and currently exercisable under
the Incentive Stock Option Plan.
(10) The business address of The Fain Family Irrevocable Trust 1993 is P.O. Box
8888, Virginia Beach, Virginia 23450.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company is required to identify any director or officer who failed to
timely file with the Securities and Exchange Commission a required report
relating to ownership and change in ownership of the Company's equity
securities. One officer, Steven A. Lurus, inadvertently did not report shares
owned by his spouse at the time they were married on a Form 4 for February 1997.
These shares were reported on a subsequently filed Form 4.
Another officer, Andrew J. Downing, inadvertently did not report a gift of
shares to charity from his Form 4 for December 1997. This gift was reported on a
subsequently filed Form 5.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1997, the Company was the lender and Mr. Fain was the borrower under
a March 1, 1995, $1.0 million credit line deed of trust note to the Company. The
highest amount outstanding under this note during 1997 was $550,000 in
principal. This note was secured by real property owned by Mr. Fain. This loan
was repaid in full and the note was canceled in January 1997 before the
Company's initial public offering on January 29, 1997 (the "IPO").
In 1987, the Company became an S corporation for federal and certain state
income tax purposes. As such, the Company's income was allocated and taxable to
the Company's individual shareholders, rather than to the Company. Between 1987
and December 31, 1996, the Company declared and made quarterly distributions to
its shareholders aggregating $25.7 million. These distributions were generally
in amounts in excess of amounts needed by the shareholders to pay the taxes on
the income allocated to them. In addition, on January 20, 1997, the Company
distributed $9.0 million to its shareholders, approximating the estimated
aggregate undistributed amount of income on which the Company's shareholders
were required to pay income taxes for tax years 1987 through 1996. In connection
with the IPO, the Company terminated its S corporation election effective
January 1, 1997.
The Company entered into an agreement with its existing shareholders before
the IPO providing for, among other things, the indemnification of the Company by
them for any federal, state and other income taxes (including interest) incurred
by the Company for any period for which it reported its taxable income as an S
corporation, but only to a maximum amount equal to the aggregate distributions
received by each existing shareholder from the Company with respect to periods
during which the Company was an S corporation.
Before joining the Company on January 29, 1997 as Vice President of Finance,
Treasurer and Chief Financial Officer, Robert J. Eveleigh was an attorney with
Clark & Stant, P.C., the Company's general counsel. Mr. Eveleigh spent the
majority of his time during his last few months of employment with Clark &
Stant, P.C. working on the IPO. During 1997, Clark & Stant, P.C. served as
general counsel to the Company.
The Audit Committee of the Board of Directors is responsible for reviewing
all transactions between the Company and any officer or director of the Company
or any entity in which an officer or director has a material interest. Any such
transactions must be on terms no less favorable than those that could be
obtained on an arms-length basis from independent third parties.
6
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning compensation
paid to or earned by the Company's President and Chief Executive Officer and
each of the Company's four other most highly compensated executive officers who
earned more than $100,000 (the "Named Executive Officers") for services rendered
during the years ended December 31, 1997, 1996 and 1995.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------
ANNUAL COMPENSATION SHARES OF
--------------------------------------------------- COMMON STOCK
NAME AND PRINCIPAL SALARY BONUS OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR ($) ($) COMPENSATION($)(1) OPTIONS(#) COMPENSATION($)
- -------------------------- --------- --------- --------- ------------------ --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
John H. Fain, 1997 300,000 195,000 -- -- 16,339(2)
Chairman of the Board, 1996 600,000 -- -- -- 7,889(3)
President and Chief 1995 600,000 -- 216,292 -- 14,489(3)
Executive Officer
Andrew J. Downing, 1997 240,000 159,914 -- 5,000 5,300(2)
Executive Vice President 1996 210,000 180,810 -- 5,000 749(3)
and Chief Operating 1995 144,000 166,930 43,258 -- 7,591(3)
Officer
Frank B. Bracken, Jr., 1997 180,000 145,729 -- 5,000 7,206(2)
Vice President of 1996 170,000 143,891 -- 5,000 --
Operations 1995 127,083 68,675 43,258 -- 761(3)
Richard C. Jaeckle, 1997 180,000 138,750 -- 5,000 6,086(2)
Vice President of 1996 180,000 99,787 -- 5,000 --
Operations 1995 144,000 88,618 43,258 -- 949(3)
Kathleen A. Neff, 1997 180,000 128,567 -- 5,000 10,673(2)
Vice President of 1996 165,000 100,203 -- 5,000 475(3)
Operations 1995 127,083 68,675 43,258 -- 7,494(3)
</TABLE>
- ------------------------
(1) Includes non-recurring, non-cash compensation accrued in the fourth quarter
of 1995 for Redeemable Common Stock issued for services performed in 1995 in
an amount equal to the excess of the fair market value of such stock over
the amount paid. The stock was issued pursuant to 30-day options and was
fully vested with the same rights to dividends as other issued and
outstanding Common Stock of the Company. Other compensation representing
less than $50,000 or 10% of the officer's salary and bonus has been omitted.
Does not include distributions to shareholders.
(2) Retirement Savings Plan and Trust contributions were $4,750 for each of the
Named Executive Officers. Amounts paid for excess accrued vacation and sick
leave amounted to $8,939 for Mr. Fain, $0 for Mr. Downing, $2,106 for Mr.
Bracken, $0 for Mr. Jaeckle and $5,413 for Ms. Neff. The remaining amounts
represent non-cash compensation for use of Company condominiums and other
miscellaneous amounts.
(3) Includes certain health insurance premiums paid by the Company for 1995 and
1996, amounts the Company contributed to the Metro Information Services,
Inc. Retirement Savings Plan and Trust, amounts paid for excess accrued
vacation and sick leave, non-cash compensation for use of Company
condominiums and other miscellaneous amounts.
7
<PAGE>
1997 OPTION GRANTS TABLE
The following table sets forth the number of options to purchase shares of
Common Stock granted to the Named Executive Officers during 1997.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL PRESENT
SHARES OPTIONS GRANTED EXERCISE OR VALUE ON
UNDERLYING TO EMPLOYEES BASE PRICE EXPIRATION DATE OF
NAME OPTIONS GRANTED IN 1997 ($/SHARE)(1) DATE GRANT($)(2)
- ---------------------------------------- ----------------- ------------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
John H. Fain............................ -- -- -- -- --
Andrew J. Downing....................... 5,000 1.3 16.00 12/29/06 41,550
Frank B. Bracken, Jr.................... 5,000 1.3 16.00 12/29/06 41,550
Richard C. Jaeckle...................... 5,000 1.3 16.00 12/29/06 41,550
Kathleen A. Neff........................ 5,000 1.3 16.00 12/29/06 41,550
</TABLE>
- ------------------------
(1) All options were granted on January 29, 1997 at an exercise price equal to
the fair market value of the underlying securities on that date. The options
vest ratably over five years and will expire, at the latest, nine years and
11 months after the date of grant.
(2) This value is based on the Black-Scholes option pricing model which includes
assumptions for variables such as interest rates, stock price volatility and
future dividend yield. The Company's use of this model is not an endorsement
of its accuracy. Whether the model assumptions used will prove to be
accurate cannot be known at the date of grant or as of the date of this
Report. The Black-Scholes model produces a value based on freely tradable
securities. Because the stock options awarded in 1997 are non-transferable,
the "present value" shown cannot be realized by the holder. Recognizing
these limitations of the model, the following assumptions were used to
estimate the present value on the date of grant: dividend yield of 0%,
risk-free rate of return of 6.3%, estimated volatility of 51% and estimated
average expected option term of 5 years. These options vest ratably over
five years beginning December 31, 1997.
1997 YEAR-END OPTION VALUE TABLE
During 1997, no stock options were exercised by any of the Named Executive
Officers. The following table sets forth the number and value of all unexercised
options at year end for these individuals:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT YEAR END (#) YEAR END ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------------------------------------------------- ----------------------- -----------------------
<S> <C> <C>
John H. Fain................................................... 0/0 0/0
Andrew J. Downing.............................................. 1,000/4,000 8,310/33,240
Frank B. Bracken, Jr........................................... 1,000/4,000 8,310/33,240
Richard C. Jaeckle............................................. 1,000/4,000 8,310/33,240
Kathleen A. Neff............................................... 1,000/4,000 8,310/33,240
</TABLE>
8
<PAGE>
EMPLOYMENT AGREEMENTS
In connection with the IPO, the Company entered into employment agreements
with each of its Named Executive Officers effective January 1, 1997. The
employment agreements provide for an initial term of one year. Thereafter, each
agreement will automatically renew for successive one-year terms unless
terminated by either party. Each employment agreement provides that an officer's
compensation will include a base salary, a performance bonus and other bonus
programs and benefit plans. The performance bonus is based on the Company's
achievement of specified levels of revenue and operating income as determined by
the Compensation Committee. The agreements contain provisions protecting against
use of the Company's confidential information and protecting the Company against
competition from each officer for a two-year period after termination of
employment in any market in which the Company operates. For 1998, the base
salaries of the Named Executive Officers are as follows: Mr. Fain, $330,000; Mr.
Downing, $264,000; Mr. Bracken, $200,000; Mr. Jaeckle, $200,000; and Ms. Neff,
$200,000.
Each employment agreement also includes a salary continuation arrangement in
the event of a serious illness or accident that leads to long-term disability or
in the event of termination of the agreement by the Company without cause. The
amount payable under these arrangements from Metro's funds and group disability
policy could exceed $100,000 under each employment agreement.
ITEM TWO--RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, on recommendation of the Audit Committee, has
appointed KPMG Peat Marwick LLP, as independent auditors, to audit the financial
statements of the Company for the year ending December 31, 1998. KPMG Peat
Marwick LLP has served as independent auditor for the Company since 1996.
A proposal will be presented at the meeting to ratify the appointment of
KPMG Peat Marwick LLP as Metro's independent auditors. One or more members of
that firm are expected to be present at the 1998 Annual Meeting to respond to
questions and to make a statement if they desire to do so. If the shareholders
do not ratify this appointment by the affirmative vote of a majority of the
shares present in person or represented by proxy at the meeting, other
independent auditors will be considered by the Board on recommendation of the
Audit Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF THE INDEPENDENT AUDITORS.
9
<PAGE>
ITEM THREE--AMENDMENT OF EMPLOYEE STOCK PURCHASE PLAN
INTRODUCTION
In 1996, the Board of Directors and shareholders approved the Company's
Employee Stock Purchase Plan (the "Purchase Plan"). The Purchase Plan provides a
means for the Company to encourage and assist staff members to acquire stock in
the Company. The Company believes the Purchase Plan will assist it in attracting
and retaining the services of its staff and provide incentives for staff to
exert maximum efforts for the success of the Company.
The following is a summary of some of the terms of the Purchase Plan. The
summary is qualified in its entirety by the full text of the Purchase Plan as
amended through the date of this proxy statement. The full text of the Purchase
Plan is attached as Exhibit A. Capitalized terms used in this Item Three and not
defined in this Item Three shall have the meaning assigned to them in Exhibit A.
PURPOSE
The Purchase Plan provides a means by which the Company's staff may
collectively purchase up to 250,000 shares of the Company's Common Stock through
payroll deductions. The Purchase Plan is an employee stock purchase plan under
Internal Revenue Code Section 423.
REASON FOR AMENDMENT
The Board determined that allowing staff members to purchase stock after
their termination of employment does not meet the Company's goal of rewarding
continued employment.
CURRENT STANDARD
If a Participant ceases to be an employee of the Company for any reason
(including, without limitation, death or retirement) during a purchase period,
the Participant or his personal representative: (i) will receive a stock
certificate for the number of whole and fractional shares of Common Stock paid
for pursuant to payroll deductions made on behalf of the Participant during the
purchase period up to the day before the date of the Participant's cessation of
employment and receive any balance remaining in the Participant's account after
such purchase; or (ii) will receive a cash refund of all sums previously
collected from the Participant during the purchase period. Any election provided
by this Section 6(h) shall be exercisable only during the 90-day period
following the date of the Participant's cessation of employment (but in no event
later than the last date of the purchase period) and the underlying right to
purchase stock under this Plan shall terminate on the exercise of such election.
If a Participant or his personal representative fails to make a timely election
under this Section 6(h), the Company shall treat such failure as an election to
exercise alternative (ii) above.
PROPOSED STANDARD
If a Participant ceases to be an employee of the Company for any reason
(including, without limitation, death or retirement) during a purchase period,
the Participant or his personal representative will receive a cash refund of all
sums previously collected from the Participant during the purchase period.
OTHER EFFECTS
The proposed amendment of the Purchase Plan will not affect the number of
shares of Common Stock available under the Purchase Plan, the price per share of
Common Stock offered under the Purchase Plan, the amounts to be received by the
Company for shares of Common Stock purchased under the Purchase Plan or the
federal income tax consequences to the Company or the participants in the
Purchase Plan.
10
<PAGE>
RESOLVED
Section 6(h) of the Metro Information Services, Inc. Employee Stock Purchase
Plan is amended by deleting Section 6(h) in its entirety and replacing it with
the following:
6. PURCHASE OF COMMON STOCK.
(h) TERMINATION OF EMPLOYMENT. If a participant ceases to be an employee of
the Company for any reason (including, without limitation, death or retirement)
during a purchase period, the Participant or his personal representative will
receive a cash refund of all sums previously collected from the Participant
during the purchase period.
VOTE REQUIRED
The amendment to the Purchase Plan will be approved if the votes cast in
favor of approval of the amendment to the Purchase Plan at the 1998 Annual
Meeting exceed the votes cast against approval.
THE BOARD BELIEVES THAT APPROVAL OF THE AMENDMENT TO THE EMPLOYEE STOCK
PURCHASE PLAN IS IN THE BEST INTEREST OF ALL SHAREHOLDERS AND, ACCORDINGLY,
RECOMMENDS A VOTE "FOR" THE PROPOSED AMENDMENT TO THE EMPLOYEE STOCK PURCHASE
PLAN.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has responsibility for
establishing and monitoring compensation programs of the Company's executive
officers, which include the Company's President and Chief Executive Officer,
Executive Vice President and Chief Operating Officer, Vice President and Chief
Financial Officer and each Vice President of Operations. The Compensation
Committee is composed of John H. Fain, the Company's Chairman of the Board,
President and Chief Executive Officer, and two Outside Directors. Mr. Fain does
not participate in the Compensation Committee's consideration of his
compensation.
The Compensation Committee was formed on April 18, 1997 after the IPO. The
1997 Compensation Plans ("1997 Compensation Plans") for the Company's executive
officers were established before the IPO. Accordingly, the Compensation
Committee was not involved in the determination of the 1997 Compensation Plans.
Mr. Fain, who was then the Company's sole Director, made those compensation
decisions. The Compensation Committee met once in 1997 to consider the 1998
compensation plans for the Company's executive officers.
The Company's 1997 Compensation Plans were designed and administered so that
a significant portion of each executive officer's compensation was linked to the
Company's financial performance and so that the interests of the Company's
executive officers were aligned with the interests of its shareholders. The
Company's compensation plans include base salary, incentive awards based on
financial performance of the Company for each quarter and the year and incentive
stock option awards. The base salary of the executive officers is based on a
number of factors, including base salary for executives in similar companies,
the experience and training of the executive officer and the length of service
of the executive officer with the Company. A significant percentage of the
executive officers' compensation for 1997 was based on the Company achieving
certain revenue, operating income and other performance goals, including
consultant growth, productivity and consultant retention. These goals were met
or exceeded by the Company.
11
<PAGE>
Before the IPO, the Company established the Metro Information Services, Inc.
1997 Employee Incentive Stock Option Plan (the "Incentive Stock Plan") to
provide incentive to the Company's key employees, including the executive
officers of the Company, to increase the value of the Company's stock. In 1997,
each of the executive officers (other than Mr. Fain, who is ineligible to
participate in the Incentive Stock Plan) received grants of options under the
Incentive Stock Plan. The options granted executive officers under the Incentive
Stock Plan vest over a five-year period.
This report is submitted by the members of the Compensation Committee:
Ray E. Becker
John H. Fain
A. Eugene Loving, Jr.
PERFORMANCE GRAPH
The following graph provides a comparison of the cumulative total
stockholder return on the Common Stock with the cumulative total return on The
Nasdaq Stock Market and a group of 10 peer companies during the period from the
IPO on January 29, 1997 through December 31, 1997. The comparison assumes that
$100 was invested at the beginning of the period in the stock or index and
assumes the reinvestment of any dividends. The Company selected a peer group of
other IT services companies with similar service offerings. The peer companies
are: Analysts International Corp., Ciber, Inc., Computer Horizons Corp.,
Computer Management Sciences, Inc., Computer Task Group, Inc., Cotelligent
Group, Inc., Data Processing Resources Corp., Keane, Inc., Renaissance
Worldwide, Inc. and SCB Computer Technology, Inc. The peer group index reflects
the weighted average market capitalization of the group.
[PERFORMANCE GRAPH]
This graph depicts the performance of $100 invested on January 29, 1997, in
the Company's Common Stock, Nasdaq Stock Market (U.S.) and peer group IT
services companies, including reinvestment of any dividends for the fiscal year
ended December 31, 1997.
Corresponding index value and Common Stock price values are given below:
<TABLE>
<CAPTION>
JANUARY 29, 1997 DECEMBER 31, 1997
---------------- -----------------
<S> <C> <C>
Metro Information Services, Inc......................... $ 100.00 $ 173.44
The Nasdaq Stock Market (U.S.).......................... $ 100.00 $ 116.86
Peer Group.............................................. $ 100.00 $ 183.33
</TABLE>
12
<PAGE>
SUBMISSION OF 1998 SHAREHOLDER PROPOSALS
Proposals of the shareholders intended to be presented at the Annual Meeting
in 1999 must be received by the Secretary of Metro Information Services, Inc.,
Reflections II Office Building, 200 Golden Oak Court, Third Floor, Virginia
Beach, Virginia 23452, no later than January 1, 1999 to be considered for
inclusion in the Company's 1999 proxy material.
ADDITIONAL INFORMATION
In addition to soliciting proxies through the mail, certain employees of
Metro and its transfer agent Firstar Trust Company, may solicit proxies in
person and by telephone. Metro has retained Firstar Trust Company to assist in
the solicitation of proxies, primarily from brokers, banks and other nominees,
for an estimated fee of $3,500. Metro will bear the cost of soliciting these
proxies. As is customary, Metro will, on request, reimburse brokers, bankers,
nominees, custodians and other record holders for their out-of-pocket expense of
forwarding proxy materials to the beneficial owners of the shares.
ANNUAL REPORT TO SHAREHOLDERS
The Company's 1997 Annual Report is being sent to all shareholders
concurrently with this proxy statement. The Company's report on Form 10-K, as
filed with the Securities and Exchange Commission for the Company's year ended
December 31, 1997, including the financial statements, schedules and a list of
exhibits, may be obtained from the Company without charge, on the request of a
shareholder. The request should be directed to Julann Oppasser Donnelly,
Investor Relations, at the Company's address listed above or by telephone to
(757) 306-0299. Exhibits will be provided on request and payment of the
Company's reasonable expenses in furnishing the exhibits.
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE THE ENCLOSED PROXY CARD AND MAIL IT
IN THE ENCLOSED POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE.
By Order of the Board of Directors,
Robert J. Eveleigh
Secretary
13
<PAGE>
EXHIBIT A
METRO INFORMATION SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
AMENDED AND RESTATED THROUGH MAY 1, 1998
1. PURPOSE.
The Metro Information Services, Inc. Employee Stock Purchase Plan (the "Plan")
is intended to provide certain employees ("Participants") of Metro Information
Services, Inc. (the "Company") with an opportunity to acquire a proprietary
interest in the Company through their participation in a plan designed to
qualify as an employee stock purchase plan under Section 423 of the Internal
Revenue Code of 1986 (the "Code").
2. ADMINISTRATION.
(a) COMMITTEE. This Plan shall be administered by a committee (the "Committee")
composed of at least two (2) members of the Board of Directors of the Company
(the "Board"). No person shall serve as a member of the Committee, or if a
member of the Committee, shall not participate in decisions concerning the
timing, pricing or amount of Stock to be made available for purchase hereunder,
unless such person is a disinterested person as described in Rule 16b-3
promulgated pursuant to Section 16(b) of the Securities Exchange Act of 1934, as
amended, or any successor rule ("Rule 16b-3"). This Plan is intended to meet the
requirements of Rule 16b-3 and shall be interpreted and administered so as to
comply with such rule. The Committee shall have full authority to administer
this Plan and to adopt such rules and regulations for administering this Plan as
it may deem necessary to comply with the requirements of Section 423 of the
Code. The Committee may delegate to an agent or agents any of its
responsibilities under this Plan except its responsibilities to: (1) establish
the number of shares available for purchase by employees during any purchase
period; (2) establish the maximum and minimum percentage of base compensation to
be paid by any single employee for the purchase of stock during any purchase
period and its authority and (3) construe and interpret the provisions of this
Plan.
(b) ACTIONS OF THE COMMITTEE. All actions taken and all interpretations and
determinations made by the Committee in good faith (including determinations of
fair market value) shall be final and binding on all Participants, the Company
and all other interested persons. No member of the Committee shall be personally
liable for any action, determination or interpretation made in good faith with
respect to this Plan and all members of the Committee shall, in addition to
their rights as directors, be fully protected by the Company with respect to any
such action, determination or interpretation.
3. PURCHASE PERIODS.
The first purchase period under this Plan shall commence on the effective date
of the Company's registration statement filed with the Securities and Exchange
Commission and shall terminate on March 31, 1997. Unless otherwise determined by
the Committee, a purchase period shall commence on the first day of each
succeeding calendar quarter and shall terminate on the last day of each such
quarter. The Committee may, from time to time, establish purchase periods with
differing commencement dates and durations. No two purchase periods shall run
concurrently.
4. ELIGIBILITY AND PARTICIPATION.
(a) Subject to Section 6(c)(iii), effective July 1, 1998, every employee of the
Company who, on the commencement date of the purchase period, has been employed
by the Company for at least three
14
<PAGE>
(3) months without a break in service of more than thirty (30) calendar days is
eligible to participate in this Plan during a purchase period.
(b) An employee may become a Participant in this Plan for a particular purchase
period only by completing the enrollment forms prescribed by the Committee
(including a purchase agreement and a payroll deduction authorization) and
filing such forms before the commencement of the purchase period with the person
designated by the Committee. No enrollment forms will be accepted from an
individual who is not on the active payroll of the Company on the filing date,
unless such individual is temporarily off the payroll by reason of illness,
vacation, jury duty or other employer-sponsored absence.
5. STOCK SUBJECT TO PLAN.
(a) COMMON STOCK. The stock that is purchasable by Participants shall be the
Company's authorized but unissued Common Stock, par value $.01 per share (the
"Common Stock"). To have sufficient shares available for sale under this Plan,
the Company may repurchase shares of Common Stock on the open market, issue
authorized but unissued stock or otherwise. The maximum number of shares that
may be sold to employees during any single purchase period shall be established
by the Committee before the beginning of the purchase period; provided, however,
that the total number of shares that may be sold to Participants throughout the
entire duration of this Plan shall not exceed 250,000 shares (subject to
adjustment under subparagraph (b) below).
(b) CHANGES IN CAPITAL STRUCTURE. If any change is made to the Common Stock
purchasable under this Plan (whether by reason of merger, consolidation,
reorganization, recapitalization, stock dividend in excess of twenty percent
(20%) at any single time, stock splits, combination of shares, exchange of
shares, changes in corporate structure or otherwise), then appropriate
adjustments shall be made to the maximum number of shares purchasable under this
Plan and the number of shares and price per share of stock subject to rights to
purchase stock outstanding under this Plan.
6. PURCHASE OF COMMON STOCK.
(a) RIGHT TO PURCHASE. An employee who becomes a Participant for a particular
purchase period shall have the right, as of the beginning of the purchase
period, to purchase Common Stock on the terms and conditions set forth in this
Plan and shall execute a purchase agreement embodying such terms and conditions
and such other provisions, not inconsistent with this Plan, as the Committee may
deem advisable.
(b) PURCHASE PRICE PER SHARE. Except as provided in Section 6(j), the purchase
price per share shall be eighty-five percent (85%) of the fair market value of a
share of Common Stock on the commencement date of the purchase period. The fair
market value of a share of Common Stock on any date shall be the closing sales
price, as quoted by the National Association of Securities Dealers through the
NASDAQ National Market System for the date in question, or, if the Common Stock
is listed on a national stock exchange, the officially-quoted closing sales
price on such exchange on the date in question. If the Common Stock is not
traded publicly, the fair market value of a share of Common Stock on any date
shall be determined, in good faith, by the Board or the Committee after
consultation with outside legal, accounting or other experts as the Board or the
Committee may deem advisable. If the Common Stock is not traded publicly, the
Board or the Committee shall maintain a written record of its method of
determining such value.
(c) TOTAL PURCHASE PRICE. Each Participant shall, for any purchase period, have
the right to purchase Common Stock with a total purchase price equal to a
designated percentage of his Compensation. A Participant's "Compensation" for a
particular purchase period shall be the amount of the Participant's (i) base
salary or wages or (ii) base salary or wages, plus overtime, bonuses and other
compensation, that is payable to the Participant at any time or from time to
time during the purchase period. Each Participant shall designate in his
purchase agreement the whole percentage of the Participant's Compensation the
15
<PAGE>
Participant wishes to use to pay for the purchase of Common Stock for the
particular purchase period, subject to the provisions set forth below which
shall be uniformly applied to all Participants in a particular purchase period:
(i) The maximum percentage of a Participant's Compensation that may be used to
pay for the Common Stock in a particular purchase period shall be five percent
(5%); provided, however, that the Committee shall establish before the beginning
of the purchase period a maximum number of shares (subject to adjustment under
Section 6(b)) that may be purchased during the purchase period by each
Participant.
(ii) The minimum percentage of a Participant's Compensation that may be used to
pay for the purchase of Common Stock in a particular period shall be one percent
(1%).
(iii) No right to purchase shares under this Plan shall be granted to an
employee if such employee would, immediately after the grant, own stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company. An employee's stock ownership shall be
determined under Section 424(d) of the Code and stock that an employee may
purchase under any outstanding options shall be treated as stock owned by the
employee.
Notwithstanding the provisions of paragraphs (i) and (ii) above, the Committee
may, in its discretion, establish any other maximum and minimum percentages of
Compensation to be used to pay for Common Stock under this Plan.
(d) ALLOCATION OF AVAILABLE SHARES. If the total number of shares of Common
Stock that may be purchased under the purchase agreements of all Participants
for a particular purchase period exceeds the number of shares available for sale
under this Plan, then the Committee shall make a pro rata allocation of the
available shares and shall notify each Participant of such allocation.
(e) PAYMENT. Payment of the purchase price for Common Stock under this Plan
shall be effected by means of payroll deductions, which shall begin with the
first pay period, the payment date for which occurs coincident with or
immediately following the commencement date of the relevant purchase period and
shall terminate with the last pay period, the payment date for which occurs on
or before the last day of the purchase period. Each payroll deduction shall be
an amount equal to the percentage of the Compensation included in that payroll
payment that was designated by the Participant in his purchase agreement
(subject to reduction as provided in Section 6(g)).
(f) TERMINATION OF RIGHT TO PURCHASE. A Participant may, at any time before the
last day of the purchase period, terminate his right to purchase stock under
this Plan by filing the prescribed notification form with the Committee or its
delegate. Any amounts deducted from the Participant's pay or otherwise collected
from him by reason of his participation in this Plan for such purchase period
shall be refunded and no further amounts will be collected from the Participant
(by payroll deduction or otherwise) during the remainder of the purchase period.
A Participant's termination of his right to purchase shall be irrevocable with
respect to the purchase period to which it pertains.
(g) REDUCTION OF COMPENSATION PERCENTAGE. A Participant may, once and only once
during a purchase period, other than after his termination of employment with
the Company, reduce the percentage of his Compensation to be paid for shares of
Common Stock under the purchase agreement to a lesser whole percentage by giving
written notice to the Committee.
(h) TERMINATION OF EMPLOYMENT. If a Participant ceases to be an employee of the
Company for any reason (including, without limitation, death or retirement)
during a purchase period, the Participant or his personal representative:
(i) will receive a stock certificate for the number of whole and fractional
shares of Common Stock paid for pursuant to payroll deductions made on behalf of
the Participant during the purchase period up to the day before the date of the
Participant's cessation of employment and receive any balance remaining in the
Participant's account after such purchase; or
16
<PAGE>
(ii) will receive a cash refund of all sums previously collected from the
Participant during the purchase period.
Any election provided by this Section 6(h) shall be exercisable only during the
90-day period following the date of the Participant's cessation of employment
(but in no event later than the last date of the purchase period) and the
underlying right to purchase stock under this Plan shall terminate on the
exercise of such election. If a Participant or his personal representative fails
to make a timely election under this Section 6(h), the Company shall treat such
failure as an election to exercise alternative (ii) above.
(i) EXERCISE. Each right to purchase stock under this Plan, other than a right
to purchase Common Stock that has been accelerated under this Plan or that has
previously terminated under this Plan, shall be exercised automatically on the
last day of the purchase period. Promptly after the date of exercise, the
Participant or the Participant's nominee, shall be issued a stock certificate
for the number of whole and fractional shares for which the Participant's right
to purchase has been exercised. Not more than one certificate shall be issued
pursuant to the exercise of any right to purchase Common Stock under this Plan.
Any excess of amounts collected during the purchase period, plus any beginning
balance over the purchase price of the issued shares, shall be, at the sole
option of the Company, promptly refunded or left on deposit for the ensuing
quarterly period, and, in any case, refunded after termination.
(j) REDUCTION OF PURCHASE PRICE. If the fair market value of a share of Common
Stock on the last day of the purchase period is less than the fair market value
of such share on the commencement date of the purchase period, then the purchase
price per share under this Plan on the last day of the purchase period shall be
reduced to eighty-five percent (85%) of the fair market value of such share on
the last day of the purchase period. Each right to purchase stock under this
Plan not previously exercised or terminated shall be automatically exercised on
the last day of the purchase period for the number of whole and fractional
shares obtained by dividing the sum on deposit from the Participant (and not
refunded) by the purchase price per share determined under this Section 6(j),
but in no event shall any right to purchase stock under this Plan be exercised
for more than the specified number of shares, if any, (subject to adjustment
under Section 5(b)) established by the Committee pursuant to Section 6(c)(i)
before the beginning of the purchase period, and the balance shall be, at the
sole option of the Company, promptly refunded or left on deposit for the ensuing
quarterly period.
(k) RIGHTS AS STOCKHOLDER. A Participant shall have no rights as a stockholder
with respect to shares subject to a right to purchase Common Stock granted under
this Plan until such right to purchase is exercised and a share certificate is
delivered to the Participant. No adjustments shall be made for dividends,
distributions or other rights for which the record date is before the date of
exercise.
(l) ASSIGNABILITY. No right to purchase Common Stock granted under this Plan
shall be assignable or transferable by a Participant other than by will or by
the laws of descent and distribution, and, during the lifetime of the
Participant, such rights to purchase Common Stock shall be exercisable only by
the Participant.
(m) ACCRUAL LIMITATIONS. No Participant shall be entitled to accrue rights to
purchase Common Stock under this Plan that, when aggregated with purchase rights
accruable by him under other qualified employee stock purchase plans (within the
meaning of Section 423 of the Code) of the Company, would permit such
Participant to purchase more than $25,000 worth of Common Stock (determined on
the basis of the fair market value of such Common Stock on the date the
Participant accrues purchase rights under the Plan) for each calendar year such
purchase rights are at any time outstanding.
(n) MERGER OR LIQUIDATION OF THE COMPANY. If the Company or its shareholders
enter into an agreement to dispose of all or substantially all of the assets of
the Company or to dispose of greater than fifty percent (50%) of the outstanding
capital stock of the Company by means of sale, merger, reorganization or
liquidation, each Participant shall be entitled to receive, as nearly as
reasonably may be determined, the cash, securities or property (or any
combination thereof) that a holder of one share of the Common Stock
17
<PAGE>
was entitled to receive at the time of such transaction. The Board or the
Committee shall take such steps in connection with such transactions as the
Board or the Committee shall deem necessary to assure that the provisions of
this Section shall thereafter be applicable, as nearly as reasonably may be
determined, to the said cash, securities or property (or any combination
thereof) as to which such Participant might thereafter be entitled to receive.
(o) NO INTEREST. No interest shall be paid on any monies refunded to
Participants pursuant to the provisions of this Plan.
(p) WITHHOLDING. The Company may withhold any taxes required by any law or
regulation of any governmental authority, whether federal, state or local, in
connection with the purchase of Common Stock under this Plan or the sale of such
stock that is not held for at least two (2) years after the beginning of the
purchase period during which the Common Stock was purchased. Such withholding
may include all or any portion of any payment or other compensation payable to
the Participant, unless the Participant reimburses the Company for such amount.
7. AMENDMENT.
The Board may from time to time alter, amend, suspend or discontinue this Plan;
provided, however, that no such action shall adversely affect rights and
obligations with respect to rights to purchase stock at the time outstanding
under this Plan and provided, further, that no such action of the Board may,
without the approval of the shareholders of the Company, increase the number of
shares subject to this Plan or the maximum number of shares for which a right to
purchase Common Stock under this Plan may be exercised (unless necessary to
effect the adjustments required by Section 5(b)), extend the term of this Plan,
alter the per share purchase price formula so as to reduce the purchase price
per share specified in this Plan, otherwise materially increase the benefits
accruing to Participants under the Plan or materially modify the requirements
for eligibility to participate in this Plan. Furthermore, the Plan may not,
without the approval of the shareholders of the Company, be amended in any
manner that will cause this Plan to fail to meet the requirements of an
"employee stock purchase plan" under Section 423 of the Code.
8. EFFECTIVE DATE
This Plan, as amended and restated, supersedes all prior versions of this
Plan. This Plan has been approved by the Board and shall become effective on the
date the shareholders of the Company approve this Plan.
Date: As amended through May 1, 1998.
METRO INFORMATION SERVICES, INC.
By: /s/ JOHN H. FAIN
------------------------------------------
John H. Fain
PRESIDENT
18
<PAGE>
METRO INFORMATION SERVICES, INC.
1998 ANNUAL MEETING OF SHAREHOLDERS - JUNE 9, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, a shareholder of Metro Information Services, Inc. (the
"Company"), hereby appoints John H. Fain, Andrew J. Downing and Robert J.
Eveleigh, and each of them, as proxies, each with the power to appoint a
substitute, and herby authorizes each of them to represent and to vote, as
designated below, all of the shares of stock of the Company held of record by
the undersigned on April 15, 1998, at the 1998 Annual Meeting of Shareholders
of the Company to be held on June 9, 1998 at 2:30 p.m. and at any and all
adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEE FOR EACH DIRECTOR POSITION,
"FOR" THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT
AUDITORS AND "FOR" THE AMENDMENT TO THE 1997 EMPLOYEE STOCK PURCHASE PLAN.
THESE MATTERS ARE DESCRIBED IN MORE DETAIL IN THE COMPANY'S PROXY STATEMENT.
(continued and to be signed and dated on reverse side)
<PAGE>
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
METRO INFORMATION SERVICES, INC. 1998 ANNUAL MEETING OF SHAREHOLDERS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1-3
1. ELECTION OF DIRECTORS: Ray E. Becker / / FOR / / WITHHOLD AUTHORITY
Andrew J. Downing / / FOR / / WITHHOLD AUTHORITY
2. To ratify the selection of KPMG Peat Marwick
LLP as the Company's Independent Auditors. / / FOR / / AGAINST / / ABSTAIN
3. To approve an amendment to the 1997
Employee Stock Purchase Plan. / / FOR / / AGAINST / / ABSTAIN
In their discretion, the proxy holders are authorized to vote upon such other
matters as may properly come before the 1998 Annual Meeting and at any and
all adjournments thereof.
Date ________________ NO. OF SHARES
Check appropriate box -----------------------------
Indicate changes below:
Address Change? / / Name Change? / /
-----------------------------
Signature(s) in Box
Please sign exactly as your
name appears on this Proxy.
When shares are held by
joint tenants, both should
sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full
title as such. If a
corporation, please sign in
full corporate name by
President or other
authorized officer. If a
partnership, please sign in
partnership name by
authorized person.
