<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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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 1999 ANNUAL MEETING AND PROXY STATEMENT
May 3, 1999
Dear Shareholder:
The directors and officers of your company cordially invite you to attend
the Annual Meeting of Shareholders ("1999 Annual Meeting") of Metro Information
Services, Inc. ("Metro"), which will be held at The Sheraton Norfolk Waterside
Hotel, 777 Waterside Drive, Norfolk, Virginia 23510, on Tuesday, June 8, 1999,
at 2:30 p.m. local time. Please bring proof of identity to be admitted to the
meeting.
Shareholders of record on April 15, 1999 are entitled to vote at the 1999
Annual Meeting and all adjournments. Shareholders entitled to vote will elect
two directors, vote on an amendment to the Metro Information Services, Inc.
Employee Stock Purchase Plan, vote on approval of the Amended and Restated Metro
Information Services, Inc. 1997 Stock Option Plan and vote on ratification of
the appointment of independent auditors, 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 1999 Annual Meeting
even if you cannot 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 1999 ANNUAL MEETING OF SHAREHOLDERS
The 1999 Annual Meeting of Shareholders ("1999 Annual Meeting") of Metro
Information Services, Inc. will be held at The Sheraton Norfolk Waterside Hotel,
777 Waterside Drive, Norfolk, Virginia 23510, on Tuesday, June 8, 1999 at 2:30
p.m. local time to consider and take action with respect to the following
matters:
1. Election of two Class 3 Directors to serve for a term of three years
or until a successor is elected;
2. Amendment of the Metro Information Services, Inc. Employee Stock
Purchase Plan;
3. Approval of the Amended and Restated Metro Information Services,
Inc. 1997 Stock Option Plan;
4. Ratification of the appointment of KPMG LLP as independent auditors
for the Company for the year ending December 31, 1999; and
5. 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, 1999
are entitled to notice of, and to vote at, the 1999 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 3, 1999
<PAGE>
PROXY STATEMENT FOR 1999 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 1999 Annual Meeting of
Shareholders ("1999 Annual Meeting") to be held at The Sheraton Norfolk
Waterside Hotel, 777 Waterside Drive, Norfolk, Virginia 23510, on Tuesday, June
8, 1999 at 2:30 p.m. local time and at any time the 1999 Annual Meeting is
reconvened following an adjournment.
Shareholders of record of Metro Common Stock at the close of business on
April 15, 1999 (the "Record Date") are entitled to vote at the 1999 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 1999 Annual
Meeting and voting in person.
On the Record Date, 14,913,210 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 3 Directors, (ii) the adoption and approval of an
amendment to the Metro Information Services, Inc. Employee Stock Purchase Plan,
(iii) the adoption and approval of the Amended and Restated Metro Information
Services, Inc. Stock Option Plan, (iv) the ratification of appointment of KPMG
LLP as the Company's independent auditors for the year ending December 31, 1999
and (v) in accordance with the recommendations of the Board of Directors on the
other matters brought before the meeting, as described herein.
The Class 3 Directors to be elected at the 1999 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 3, 1999.
THE COMPANY'S 1998 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,
1998, 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 SUSAN HENDERSON, 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 3 in 1999, Class 1 in 2000 and
Class 2 in 2001. Class 3 directors will be elected at the 1999 Annual Meeting.
The terms of the Class 3 Directors elected at the 1999 Annual Meeting will
expire at the Annual Meeting in 2002 or when their successors are elected and
qualified. If for any reason a nominee for election at the 1999 Annual Meeting
becomes unable or is unwilling to serve at the time of the 1999 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
1999 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 2002:
ROBERT J. EVELEIGH, 39, is a Director and Vice President of Finance,
Secretary, Treasurer 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.
A. EUGENE LOVING, JR., 56, is Chairman of the Board and Chief Executive
Officer of Max Media 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 is a member of Metro's Audit Committee and its
Compensation Committee.
DIRECTORS CONTINUING TO SERVE
RAY E. BECKER, 62, is founder and President of Consultants to Management,
Inc. of Ellsworth, Maine, a management consulting firm, 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's term as a director expires at Metro's 2001 Annual Meeting.
Mr. Becker was named Chairman of Metro's Compensation Committee effective
February 1, 1999 and he is also a member of Metro's Audit Committee.
ANDREW J. DOWNING, 43, 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.
Mr. Downing's term as a director expires at Metro's 2001 Annual Meeting.
JOHN H. FAIN, 50, is Chairman of the Board of Directors, President and Chief
Executive Officer of the Company. Mr. Fain was Chairman of Metro's Compensation
Committee until succeeded by Mr. Becker effective February 1, 1999. Mr. Fain
remains a member of the Compensation Committee. Mr. Fain has been a Director
since 1979 and his current term as a director expires at Metro's 2000 Annual
Meeting.
2
<PAGE>
OTHER EXECUTIVE OFFICERS OF THE COMPANY
BRADLEY B. BRESEMAN, 48, became Vice President of Administrative Services
and Chief Administrative Officer effective July 1, 1998. Mr. Breseman joined
the Company in April 1995 and served as Director of Administrative Services
until being named to his current position. Before joining Metro, Mr. Breseman
spent 22 years with A.B. Dick Company in various capacities, last serving as
Vice President, Service and Distribution.
RONALD D. CHEATHAM, 45, is a Vice President of Operations. Mr. Cheatham
joined the Company in 1993 and has served as Vice President of Operations since
January 1998. He served as Division Director in the Company's Nashville,
Tennessee office from 1995 until being named a Vice President of Operations.
From 1993 to 1995, Mr. Cheatham served as a marketing account representative.
ARTHUR C. HARWOOD, 50, became a Vice President of Operations effective
January 1, 1999. Mr. Harwood joined the Company in 1993 and served as Division
Director in the Company's Jacksonville, Florida office from 1993 until being
named a Vice President of Operations.
RICHARD C. JAECKLE, 53, 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, 44, is a Vice President of Operations. Mr. Martin joined
the Company in 1989 and has served as a Vice President of Operations since
January 1998. He served as marketing director of Metro's Winston-Salem, North
Carolina office from 1989 until being named a Vice President of Operations.
KATHLEEN A. NEFF, 48, 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.
R. LAWRENCE WHITLEY, 38, is Vice President of Information Services and Chief
Information Officer. Mr. Whitley joined the Company in September 1988 and served
as Director of Information Services from July 1992 until being named to his
current position. From April 1989 through June 1992, he served as the Manager of
Information Services. From September 1988 through April 1989, he was an
Information Systems Consultant working on the Company's recruiting systems.
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
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 three times during
1998. Each of the directors participated in all Board meetings held during the
year.
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 1998.
3
<PAGE>
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 twice with all
members present in 1998 to consider the 1999 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 1998, the Outside Directors, Mr. Becker and Mr. Loving, each
received an annual fee of $6,000, plus $1,000 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
1,000 shares of the Common Stock for their participation in Metro's 1998 Annual
Meeting, held June 9, 1998. 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
2,000 shares under this plan during 1998.
BENEFICIAL OWNERSHIP OF SECURITIES
The following table sets forth, as of April 15, 1999, 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>
TOTAL
DIRECTORS, OFFICERS AND 5% SHAREHOLDERS OWNERSHIP (1) PERCENTAGE
- -------------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
John H. Fain(2)....................................................................... 8,360,665 56.1%
Andrew J. Downing(3).................................................................. 508,363 3.4
Robert J. Eveleigh(4)................................................................. 4,832 *
Ray E. Becker(5)...................................................................... 5,000 *
Frank B. Bracken, Jr.(6).............................................................. 203,664 1.4
Richard C. Jaeckle(7)................................................................. 82,575 *
A. Eugene Loving, Jr.(8).............................................................. 5,100 *
Kathleen A. Neff(9)................................................................... 209,102 1.4
The Fain Family Irrevocable Trust 1993(10)............................................ 1,206,510 8.1
All directors and executive officers as a group (12 persons)(2)....................... 9,254,694 61.9
</TABLE>
4
<PAGE>
- ------------------------
* 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 2,000 option shares awarded in 1997 and 1,000 option
shares awarded in 1998 which are 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 3,000 option shares awarded in 1997 and 1,000 options awarded in
1998 which are currently exercisable under the Incentive Stock Option Plan.
(5) Includes 4,000 option shares awarded in 1997 and 1,000 option shares
awarded in 1998 which are currently exercisable under the Outside Directors
Stock Plan. Mr. Becker's business address is P.O. Box 1448, Ellsworth, ME
04605.
(6) Includes 2,000 option shares awarded in 1997 and 1,000 option shares
awarded in 1998 which are currently exercisable under the Incentive Stock
Option Plan.
(7) Includes 2,000 option shares awarded in 1997 and 1,000 option shares
awarded in 1998 which are currently exercisable under the Incentive Stock
Option Plan.
(8) Includes 4,000 option shares awarded in 1997 and 1,000 option shares
awarded in 1998 which are currently exercisable under the Outside Directors
Stock Plan. Mr. Loving's business address is 900 Laskin Road, Virginia
Beach, Virginia 23451.
(9) Includes 2,000 option shares awarded in 1997 and 1,000 option shares
awarded in 1998 which are 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, Ron Cheatham, inadvertently did not report on Form 4
the sale of 300 shares, which he purchased through the Employee Stock Purchase
Plan, in August 1998. This sale was reported on a subsequently filed Form 5.
5
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no related party transactions required to be disclosed for 1998.
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.
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 $100,000 (the "Named Executive Officers") for services rendered
during the years ended December 31, 1998, 1997 and 1996.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------------
------------------------------- SHARES OF COMMON
SALARY BONUS STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS (#) COMPENSATION ($)
- ---------------------------------------------- --------- --------- --------- ------------------- ----------------
<S> <C> <C> <C> <C> <C>
John H. Fain,................................. 1998 330,000 130,000 -- 15,636(1)
Chairman of the Board, President and Chief 1997 300,000 195,000 -- 16,339(2)
Executive Officer 1996 600,000 -- -- 7,889(2)
Andrew J. Downing,............................ 1998 264,000 102,500 5,000 6,559(1)
Executive Vice President and Chief Operating 1997 240,000 159,914 5,000 5,330(2)
Officer 1996 210,000 180,810 5,000 749(2)
Frank B. Bracken, Jr.,........................ 1998 200,000 96,250 -- 5,800(1)
Vice President of Operations 1997 180,000 145,729 5,000 7,206(2)
1996 170,000 143,891 5,000 --
Richard C. Jaeckle,........................... 1998 200,000 122,500 5,000 6,000(1)
Vice President of Operations 1997 180,000 138,750 5,000 6,086(2)
1996 180,000 99,787 5,000 --
Kathleen A. Neff,............................. 1998 200,000 77,500 5,000 6,388(1)
Vice President of Operations 1997 180,000 128,567 5,000 10,673(2)
1996 165,000 100,203 5,000 475(2)
</TABLE>
- ------------------------
(1) Retirement Savings Plan and Trust contributions were $4,800 for each of the
Named Executive Officers. Amounts paid for excess accrued vacation and sick
leave amounted to $8,631 for Mr. Fain, $20 for Mr. Downing, $0 for Mr.
Bracken, $0 for Mr. Jaeckle and $0 for Ms. Neff. The remaining amounts
represent non-cash compensation for use of Company condominiums and other
miscellaneous amounts.
(2) Includes certain health insurance premiums paid by the Company for 1996,
amounts the Company contributed to the Metro Information Services, Inc.
Retirement Savings Plan and Trust, amounts paid for excess accrued vacation
and sick leave, non-cash compensation for use of Company condominiums and
other miscellaneous amounts for 1996 and 1997.
6
<PAGE>
1998 OPTION GRANTS TABLE
The following table sets forth the number of options to purchase shares of
Common Stock granted to the Named Executive Officers during 1998.
<TABLE>
<CAPTION>
PERCENT OF TOTAL
NUMBER OF SHARES OPTIONS GRANTED TO EXERCISE OR PRESENT VALUE
UNDERLYING EMPLOYEES BASE PRICE EXPIRATION ON DATE OF
NAME OPTIONS GRANTED IN 1998 ($/SHARE) (1) DATE GRANT ($) (2)
- ---------------------------------- ------------------- ----------------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
John H. Fain...................... -- -- -- -- --
Andrew J. Downing................. 5,000 2.0 27.75 12/01/07 75,300
Andrew J. Downing................. 5,000 2.0 27.50 11/28/08 72,700
Frank B. Bracken, Jr.............. 5,000 2.0 27.75 12/01/07 75,300
Richard C. Jaeckle................ 5,000 2.0 27.75 12/01/07 75,300
Richard C. Jaeckle................ 5,000 2.0 27.50 11/28/08 72,700
Kathleen A. Neff.................. 5,000 2.0 27.75 12/01/07 75,300
Kathleen A. Neff.................. 5,000 2.0 27.50 11/28/08 72,700
</TABLE>
- ------------------------
(1) All options were granted at an exercise price equal to the fair market value
of the underlying securities on the grant date. Options were granted on
1/1/98 at $27.75 and on 12/28/98 at $27.50. The options vest ratably over
five years and will expire, at the latest, nine years and 11 months after
the date of grant.
(2) This value is based on the Black-Scholes option pricing model which includes
assumptions for variables such as interest rates, stock price volatility and
future dividend yield. The Company's use of this model is not an endorsement
of its accuracy. Whether the model assumptions used will prove to be
accurate cannot be known at the date of grant or as of the date of this
Report. The Black-Scholes model produces a value based on freely tradable
securities. Because the stock options awarded in 1998 are non-transferable,
the "present value" shown cannot be realized by the holder. Recognizing
these limitations of the model, the following assumptions were used to
estimate the present value on the date of grant: 1/1/98 grants--dividend
yield of 0%, risk-free rate of return of 5.7%, estimated volatility of 56%
and estimated average expected option term of 5 years (these options vest
ratably over five years beginning December 31, 1998); 12/28/98
grants--dividend yield of 0%, risk-free rate of return of 4.6%, estimated
volatility of 56% and estimated average expected option term of 5 years
(these options vest ratably over five years beginning December 31, 1999).
1998 YEAR-END OPTION VALUE TABLE
During 1998, no stock options were exercised by any of the Named Executive
Officers. The following table sets forth the number and value of all unexercised
options at year end for these individuals:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT YEAR END (#) YEAR END ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---------------------------------------- ------------------------- -------------------------
<S> <C> <C>
John H. Fain............................ 0/0 0/0
Andrew J. Downing....................... 3,000/12,000 31,680/157,870
Frank B. Bracken, Jr.................... 3,000/7,000 31,680/85,170
Richard C. Jaeckle...................... 3,000/12,000 31,680/157,870
Kathleen A. Neff........................ 3,000/12,000 31,680/157,870
</TABLE>
7
<PAGE>
EMPLOYMENT AGREEMENTS
In connection with the Company's January 29, 1997 initial public offering,
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 1999, the base salaries of the Named Executive Officers
are as follows: Mr. Fain, $360,000; Mr. Downing, $300,000; Mr. Bracken,
$200,000; Mr. Jaeckle, $220,000; and Ms. Neff, $230,000.
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--APPROVAL OF AMENDMENT TO THE EMPLOYEE STOCK PURCHASE PLAN
INTRODUCTION
The Company's shareholders are being asked to approve an amendment to the
Company's Employee Stock Purchase Plan ("Stock Purchase Plan") to increase the
number of shares of the Company's Common Stock that may be purchased under the
Stock Purchase Plan from 250,000 to 500,000. The Board of Directors authorized
this increase on February 1, 1999, subject to the approval of the shareholders
at the 1999 Annual Meeting. The Stock Purchase Plan allows employees to purchase
shares through payroll deductions pursuant to a series of quarterly offerings.
As of the Record Date, employees had purchased 98,088.4021 total shares under
the Stock Purchase Plan.
RATIONALE FOR THE AMENDMENT
The Stock Purchase Plan was created as a means of attracting and retaining
outstanding management personnel and employees and to more closely align these
individuals' interests with those of the Company's shareholders. The Company
believes that an adequate reserve of shares available for purchase under the
Stock Purchase Plan is necessary to enable the Company to compete effectively
with other companies to secure and retain valuable employees.
SUMMARY OF THE STOCK PURCHASE PLAN
The following description is a summary of the key features of the Stock
Purchase Plan. A copy of the Stock Purchase Plan, as amended through June 9,
1998, is attached as Exhibit A to this Proxy Statement.
The Stock Purchase Plan was established pursuant to the provisions of
Section 423 of the Code. All full-time employees meeting certain service
requirements (as defined in the Stock Purchase Plan), except for employees who
own Common Stock of the Company or options on such stock which represent more
than 5% of Common Stock of the Company, are eligible to participate in the Stock
Purchase Plan. The Stock Purchase Plan is administered by a committee of the
Board of Directors that is intended to satisfy all applicable requirements
pertaining to disinterested administration under Rule 16b-3 of the 1934 Act
("Rule 16b-3") and Section 162(m) of the Code (the "Committee"). The Committee
may make certain adjustments set forth in the Stock Purchase Plan. The Board of
Directors may amend, alter or terminate the Stock Purchase Plan at any time,
provided that shareholder approval must generally be obtained for
8
<PAGE>
any change that would require shareholder approval under Rule 16b-3 or any other
regulatory or tax requirement. No rights under Stock Purchase Plan may be
impaired by such action without the consent of the holder thereof.
The Stock Purchase Plan provides that the purchase price of Common Stock
shall be not less than 85% of the fair market value of Common Stock on the date
of the offering commencement or termination, whichever is lower. Shares will be
made available in a series of quarterly offerings until the earlier of (i) the
time the shares reserved have been purchased or (ii) the end of the quarterly
offering. The Stock Purchase Plan provides that participants may purchase shares
of Common Stock through a payroll deduction unless, before the actual purchase,
a participant withdraws his accumulated payroll deductions. The Stock Purchase
Plan provides that no employee will be granted any right to purchase Common
Stock with a value in excess of $25,000 per year.
The Stock Purchase Plan provides that if there is a disposition of all or
substantially all of the assets of the Company or a disposition of greater than
50% of the outstanding capital stock of the Company by means of a sale, merger,
reorganization or liquidation, the holder of each outstanding option shall be
entitled to receive, at the time of the next succeeding quarterly offering for
each share as to which an option was exercised, the cash, securities and/or
property that the holder of one share of the Common Stock was entitled to
receive in the change in control transaction.
UNITED STATES FEDERAL TAX CONSEQUENCES OF THE STOCK PURCHASE PLAN
The following discussion summarizes the federal income tax consequences of
the Stock Purchase Plan based on current provisions of the Code, which are
subject to change. The summary does not cover any state or local tax
consequences of participation in the Stock Purchase Plan.
Under Section 423 of the Code, employees do not realize taxable income at
the commencement of the quarterly offering or when they complete their payment
for and receive delivery of the Common Stock that they are eligible to purchase,
provided such purchase occurs while they are employed by the Company or within
three months after termination of employment. If no disposition of such Common
Stock is made within two years after the date of execution of an agreement or
within one year after the date of acquisition, any gain or loss that may be
realized on the ultimate sale will be treated as long-term capital gain or loss.
If such Common Stock, however, is disposed of within such two-year or one-year
period, the difference between the market value of such Common Stock at the time
of purchase and the purchase price will be treated as income taxable to the
employee at ordinary income rates in the year the disposition occurs, and the
Company will be entitled to a federal tax deduction in the same amount in such
year.
Notwithstanding the above, if the purchase price of Common Stock when
offered was less than 100% of its then fair market value, then on a subsequent
disposition of Common Stock by the employee, including a disposition after the
two-year and one-year periods referred to above or the death of the employee
while holding such Common Stock, the employee will recognize compensation
taxable as ordinary income in an amount equal to the discount at the time of the
offer or, if less, the excess of the Common Stock's value at the time of such
disposition or death, as the case may be, over the original purchase price. The
Company's deductions described above may be subject to the limitations of
Section 162(m) of the Code. Based on current law, however, the Company does not
expect to be subject to such limitations.
9
<PAGE>
SHARES ISSUED IN 1998
Shares were issued in four quarterly installments pursuant to the Stock
Purchase Plan in 1998 at a weighted average purchase price of $24.914 per share
as set forth in the following table:
<TABLE>
<CAPTION>
BENEFICIAL OWNER AND POSITION NUMBER OF SHARES
- --------------------------------------------------------------------------- -----------------
<S> <C>
Andrew J. Downing,......................................................... 446.5302
Executive Vice President and Chief Operating Officer
Robert J. Eveleigh,........................................................ 593.8029
Vice President of Finance, Treasurer and Chief Financial Officer
Bradley B. Breseman,....................................................... 608.7734
Vice President of Administration and Chief Administrative Officer
Ronald D. Cheatham,........................................................ 638.2025
Vice President of Operations
Richard C. Jaeckle,........................................................ 1,053.8320
Vice President of Operations
Michael G. Martin,......................................................... 266.8179
Vice President of Operations
Arthur C. Harwood,......................................................... 539.9110
Vice President of Operations
All current executive officers as a group, including the above named
persons.................................................................. 4,147.8699
All employees as a group, including the above named persons................ 53,104.2578
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSED
AMENDMENT TO THE STOCK PURCHASE PLAN.
ITEM THREE--APPROVAL OF AMENDED AND RESTATED 1997 STOCK OPTION PLAN
INTRODUCTION
The Company shareholders are being asked to approve an Amended and Restated
1997 Stock Option Plan (the "Amended and Restated Stock Option Plan"). The
Amended and Restated Stock Option Plan amends and restates the Company's 1997
Incentive Stock Option Plan (the "Original Plan"). The amendments contained
within the Amended and Restated Stock Option Plan (a) increase the number of
shares of the Company's Common Stock that may be issued under the Amended and
Restated Stock Option Plan from 770,000 shares to 1,500,000 shares (the
"Additional Shares Amendment"), (b) allow the Company to issue stock options
that are not qualified under Section 422 of the Internal Revenue Code (the "NQSO
Amendment") and (c) allow certain employees of the Company who are paid on an
hourly basis to retain awards under the Amended and Restated Stock Option Plan
if they experience a break in service with the Company that does not last longer
than ninety (90) days (the "Hourly Consultant Amendment").
RATIONALE FOR THE ADDITIONAL SHARES AMENDMENT AND THE NQSO AMENDMENT
The Amended and Restated Stock Option Plan was created as a means of
attracting and retaining outstanding management personnel and employees and to
more closely align these individuals' interests with those of the Company's
shareholders. The Company believes that an adequate reserve of shares available
for issuance under the Amended and Restated Stock Option Plan and the ability to
grant nonqualified incentive stock options in addition to incentive stock
options that must comply with Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code") is necessary to enable the Company to compete
effectively with other companies to secure and retain valuable employees.
10
<PAGE>
RATIONALE FOR THE HOURLY CONSULTANT AMENDMENT
Virtually all of the Company's employees who provide consulting services to
customers qualify as employees for federal and state tax purposes. The Company
pays social security taxes, federal and state unemployment taxes and workers'
compensation insurance premiums for these individuals. As of March 31, 1999, the
Company had 3,020 employees, 2,949 of whom were full-time and 71 were part-time
(working 30 hours or less in a week). Of the 2,949 full-time employees, 2,446
were consultants and 503 were general and administrative staff. Of the 2,446
consultants, the Company classifies 1,471 as Regular Staff Members ("RSMs") and
975 as Associate Staff Members ("ASMs"). RSMs are entitled to full benefits and
substantially all are salaried and continue to earn full salary and benefits
even if not working on a project for a particular customer. The Company markets
RSMs to new clients in anticipation of the completion of current project
assignments. ASMs, on the other hand, are entitled only to statutory benefits
and, as of March 31, 1999, 785 were paid on an hourly basis ("Hourly
Consultants"). In addition to the statutory benefits, ASMs are permitted to
participate in a limited number of other Company benefits, but are required to
pay substantially all of the cost of these benefits. ASMs are employed only for
specific projects. As a result, even though the Company markets ASMs to new
clients in anticipation of completion of the current project assignments, ASMs
are at greater risk than RSMs of experiencing a break in service with the
Company.
As of March 31, 1999, 46 Hourly Consultants had received awards to purchase
51,960 shares of stock, 19,660 of which are subject to the approval of this
proposal, under the Stock Option Plan. Under the terms of the Original Stock
Option Plan, Hourly Consultants lose these awards if they experience any break
in service with the Company. Under the terms of the proposed Amended and
Restated Stock Option Plan, Hourly Consultants who experience a break in service
of ninety (90) days or less will retain their awards under the Amended and
Restated Stock Option Plan, including vesting rights. The Board believes this
amendment aligns Hourly Consultants interests with those of its shareholders by
providing Hourly Consultants an incentive for continuity of service. Options
granted to Hourly Consultants under the Original Plan will not be affected by
this amendment. It will only apply to grants under the Amended and Restated
Stock Option Plan.
SUMMARY OF THE AMENDED AND RESTATED STOCK OPTION PLAN
The following description is a summary of the key features of the Amended
and Restated Stock Option Plan. A copy of the Amended and Restated Stock Option
Plan is attached as Exhibit B to this Proxy Statement.
The Amended and Restated Stock Option Plan provides for the grant of
incentive stock options (i.e., options intended to qualify as incentive stock
options under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"))("ISOs") and options which are not intended to comply with Section 422
("NQSOs") to employees of the Company. As of March 31, 1999, outstanding and
unexercised stock options granted under the Original Stock Option Plan to
purchase 601,200 shares of common stock were held by 393 persons. Options to
purchase 60,680 shares have expired unexercised as a result of the termination
of employment of certain participants. As of March 31, 1999, 14,820 stock
options have been exercised.
The Committee administers the Original Stock Option Plan and would
administer the Amended and Restated Option Plan. The Committee may only grant
ISOs under the Original Stock Option Plan and would be entitled to grant NQSOs
as well under the Amended and Restated Plan. The exercise price of the options
granted under the Original Stock Option Plan and the Amended and Restated Stock
Option Plan may be no less than 100% of the fair market value of the shares on
the date of grant. The Committee has the authority to determine the terms
(including vesting and expiration) of the stock option grants; provided,
however, that the expiration date of ISOs shall comply with Section 422 of the
Code. At the discretion of the Committee, options may be exercised by payment of
the purchase price, in whole or in
11
<PAGE>
part, in cash, by promissory note or by the tendering of stock of the Company
having a fair market value on the date the option is exercised equal to the
purchase price. The ability to pay the purchase price in shares would, if
permitted by the Committee, enable the holder of the option to engage in a
series of successive stock for stock exercises and thereby fully exercise any
options with little or no cash investment. It is expected, however, that the
Committee will require the option holder to have owned any shares tendered in
satisfaction of the exercise price for at least six months. The Committee makes
determinations and interpretations with respect to the Stock Option Plan and
would make the same with respect to the Amended and Restated Stock Option Plan
that are binding on all interested parties.
Both the Original Stock Option Plan and the Amended and Restated Stock
Option Plan (together, the "Plans") provide that no option may be assigned,
transferred, pledged or otherwise encumbered by the individual to whom it is
granted, other than by will or by the laws of descent and distribution. They
also provide that each option will be exercisable, during such individual's
lifetime, only by the individual or after the individual's death, only by such
individual's legal representative.
Both Plans provide that the Board of Directors may amend, alter or terminate
the Plans at any time, provided that shareholder approval must generally be
obtained for any change that would require shareholder approval under Rule 16b-3
or any other regulatory or tax requirement. No rights under an outstanding
option may be impaired by such action without the consent of the holder thereof.
With the consent of the holder, the Committee may amend or modify the terms of
any outstanding option in any manner including to authorize the grant of new
options in substitution for surrendered options, provided that the amended or
modified terms are permitted by the Stock Option Plan as then in effect. In the
event of certain corporate transactions or events affecting the Common Stock or
the structure of the Company, the Committee may make certain adjustments set
forth in the Plans.
UNITED STATES FEDERAL TAX CONSEQUENCES OF THE PLANS
The following discussion summarizes the federal income tax consequences of
the Plans based on current provisions of the Code, which are subject to change.
The summary does not cover any state or local tax consequence of participation
in the Plans.
When an optionee exercises an incentive stock option while employed by the
Company or within the 30-day (one-year for death or disability; three-month for
retirement) period after termination of employment, no ordinary income will be
recognized by the optionee at that time, but the excess (if any) of the fair
market value of the shares acquired on such exercise over the option price will
be an adjustment to taxable income for purposes of the federal alternative
minimum tax applicable to individuals. If the shares acquired on exercise are
not disposed of before the expiration of one year after the date of transfer and
two years after the date of grant of the option, the excess (if any) of the
sales proceeds over the aggregate option price of such shares will be long-term
capital gain, and the Company will not be entitled to any tax deduction with
respect to such gain. If the shares are disposed of before the expiration of
such periods (a "disqualifying disposition"), the excess of the fair market
value of such shares at the time of exercise over the aggregate option price
(but not more than the gain on the disposition if the disposition is a
transaction on which a loss, if such had been realized, would have been
recognized) will be ordinary income at the time of such disqualifying
disposition and the Company will be entitled to a federal tax deduction in a
like amount.
Special rules may apply to a participant who is subject to Section 16(b) of
the 1934 Act (generally directors, executive officers and 10% stockholders), as
well as to Hourly ASMs who experience a break in service but retain Option
grants under the Amended and Restated Stock Option Plan if it is approved by
shareholders at the 1999 Annual Meeting. Certain additional special rules apply
if the exercise price for an option is paid for in shares previously owned by
the optionee rather than in cash. The deductions described above may be subject
to the limitations of Section 162(m) of the Code. Based on current law, however,
the Company does not expect to be subject to such limitations.
12
<PAGE>
NEW PLAN BENEFITS
The following table sets forth certain information regarding stock option
awards that were granted under the Amended and Restated Stock Option Plan,
subject to shareholder approval at this meeting, to certain executive officers
and employees on March 18, 1999. Directors who are not executive officers or
employees of the Company are not eligible for participation under the Amended
and Restated Stock Option Plan:
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIAL OWNER AND POSITION UNDERLYING OPTIONS
- --------------------------------------------------------------------- -----------------------
<S> <C>
Andrew J. Downing,................................................... 10,000
Executive Vice President and Chief Operating Officer
Robert J. Eveleigh,.................................................. 10,000
Vice President of Finance, Treasurer and Chief Financial Officer
Kathleen A. Neff,.................................................... 10,000
Vice President of Operations
Richard C. Jaeckle,.................................................. 10,000
Vice President of Operations
Michael G. Martin,................................................... 5,000
Vice President of Operations
R. Lawrence Whitley,................................................. 4,500
Vice President of Information Services and Chief Information
Officer
Bradley B. Breseman,................................................. 4,500
Vice President of Administration and Chief Administrative Officer
Ronald D. Cheatham,.................................................. 3,500
Vice President of Operations
Charles A. Adams,.................................................... 3,000
Vice President of Operations
Arthur C. Harwood,................................................... 2,000
Vice President of Operations
All current executive officers as a group, including the above named
persons............................................................ 62,500
All employees as a group, including the above named persons.......... 332,400
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSED
AMENDED AND RESTATED STOCK OPTION PLAN.
ITEM FOUR--RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, on recommendation of the Audit Committee, has
appointed KPMG LLP, as independent auditors, to audit the financial statements
of the Company for the year ending December 31, 1999. KPMG 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 LLP as Metro's independent auditors. One or more members of that firm are
expected to be present at the 1999 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.
13
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
John H. Fain, Chairman of the Board, President and Chief Executive Officer
of Metro, served as Chairman of the Compensation Committee during 1998. No other
interlocks or insider participation required to be disclosed under this caption
occurred during 1998.
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 Company's
January 1997 initial public offering. The 1997 Compensation Plans ("1997
Compensation Plans") for the Company's executive officers were established
before the initial public offering. 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 and twice in 1998 to consider the 1998
and 1999 compensation plans for the Company's executive officers.
The Company's 1997 and 1998 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 and 1998 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.
Before the Company's initial public offering, 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 and 1998, 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.
14
<PAGE>
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
Company's initial public offering on January 29, 1997 through December 31, 1998.
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 and 1998.
Corresponding index value and Common Stock price values are given below:
<TABLE>
<CAPTION>
JANUARY 29, 1997 DECEMBER 31, 1997 DECEMBER 31, 1998
---------------- ----------------- -----------------
<S> <C> <C> <C>
Metro Information Services, Inc......... $100.00 $173.44 $187.50
The Nasdaq Stock Market (U.S.).......... $100.00 $116.86 $163.99
Peer Group.............................. $100.00 $183.33 $171.04
</TABLE>
SUBMISSION OF 1999 SHAREHOLDER PROPOSALS
Proposals of the shareholders intended to be presented at the Annual Meeting
in 2000 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, 2000 to be considered for
inclusion in the Company's 2000 proxy material.
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<PAGE>
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 1998 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, 1998, 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 Susan Henderson, 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
16
<PAGE>
EXHIBIT A
METRO INFORMATION SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
AMENDED AND RESTATED THROUGH JUNE 9, 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
17
<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
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shall designate in his purchase agreement the whole percentage of the
Participant's Compensation the 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 will receive a cash refund of all sums previously collected from
the Participant during the purchase period.
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(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 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.
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(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 June 9, 1998.
<TABLE>
<S> <C> <C>
METRO INFORMATION SERVICES, INC.
By: /s/ JOHN H. FAIN
-----------------------------------------
John H. Fain, President
</TABLE>
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EXHIBIT B
AMENDED AND RESTATED
1997 STOCK OPTION PLAN
Metro Information Services, Inc., a Virginia corporation and its
subsidiaries, whether now existing or formed after the date hereof (the
"Corporation"), hereby adopts an amended and restated stock option plan (the
"Plan") to attract and retain key employees of the Corporation ("Employees").
This Plan replaces the Corporation's 1997 Incentive Stock Option Plan.
As a reward for the Employees' role in the continued growth and success of
the Corporation, the Corporation desires to provide to the Employees the
benefits inherent in ownership of the Corporation's common stock. This Plan
provides a means whereby the Employees are given an opportunity to purchase
shares of the Corporation's voting common stock on the exercise of the options
("Options") granted under this Plan.
This Plan is as follows:
1. OPTION STOCK. The aggregate number of shares that may be issued
pursuant to Options granted under this Plan is 1,500,000 shares of the Common
Stock of the Corporation (the "Stock").
2. EMPLOYEES ELIGIBLE TO RECEIVE OPTION. Only key Employees, including,
without limitation, an Employee who is an officer or director of the
Corporation, are eligible to participate in and receive Options under this Plan.
For the purposes of this Plan, the term "key employees" shall mean and include
all persons who have responsibility in the management, administration or
supervision of the business or affairs of the Corporation or who are engaged in
the development, sale, marketing, promotion or performance of the services of
the Corporation. Directors of the Corporation who are not employees of the
Corporation are not eligible to receive Options under this Plan. In determining
the Employees to whom Options shall be granted under this Plan and the number of
shares of the Stock as to which Options may be granted to an Employee, a
committee of the Board of Directors ("Committee") shall consider the duties of
the Employees, their present and potential contributions to the success of the
business of the Corporation and such other factors as the Committee may deem
relevant in furthering the purposes of granting such Options in the interest of
the Corporation. An Employee may receive more than one Option under this Plan.
3. DURATION OF THE STOCK OPTION PLAN. All Options authorized under this
Plan must be granted within nine (9) years and eleven (11) months from the date
this Plan is adopted by the Committee or by the shareholders of the Corporation,
whichever is earlier.
4. GRANT OF OPTIONS. The Committee shall set forth each Option and its
terms and conditions on a written stock option certificate ("Option
Certificate") that shall be duly authorized by the Committee. The Committee
shall determine the type or types of Options to be made to each Employee and
shall set forth in each Option Certificate the terms, conditions, and
limitations applicable to each Option. Options may be granted singly, in
combination or in tandem. Options also may be granted in combination or in
tandem with, in replacement of, or as alternatives to, grants or rights under
any other employee plan of the Corporation, including the plan of any acquired
entity. The Option Certificate shall set forth the number of shares of Stock
that the Employee may purchase during any calendar year. The Committee, in
granting the Option, may, in its sole discretion, include such terms and
conditions in the Option Certificate as may be required to make the Option
qualify as an incentive stock option, if applicable, under the Code.
5. INCENTIVE STOCK OPTIONS. Incentive stock options, or substitutes
therefor, are options to purchase shares of common stock of the Corporation
which, in addition to being subject to applicable terms, conditions, and
limitations established by the Committee, comply with Section 422 of the
Internal Revenue
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Code of 1986, as amended (the "Code"). Incentive stock options shall be
evidenced by Option Certificates which shall contain in substance the following
terms and conditions:
(a) OPTION PRICE. Each Option Certificate shall set forth the exercise
price per share of the stock ("Purchase Price"). The Purchase Price per share of
Stock deliverable upon the exercise of an incentive stock option shall not be
less than 100% of the fair market value of the stock on the day the incentive
stock option is granted, as determined by the Committee; provided, however, that
the Purchase Price per share of any Option granted to an Employee who, at the
time the Option is granted, is the owner of stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Corporation, shall not be less than one hundred ten percent (110%) of the fair
market value of the Stock on the date that such Option is granted.
(b) DURATION OF OPTION. Each Option Certificate, pursuant to which
incentive stock options are granted, shall state the period or periods of time
within which the incentive stock option may be exercised by the Employee, in
whole or in part, which shall be such period or periods of time as may be
determined by the Committee, provided that the exercise period shall not end
later than nine (9) years and eleven (11) months after the date of the grant of
the incentive stock option; provided, however, any Option granted to a person
who, at the time the Option is granted, is the owner of Stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Corporation, must be exercised no later than four (4) years and
eleven (11) months after the date on which the Option is granted. The Committee,
in its discretion, may reduce the time specified herein for the exercise of the
Option in the Option Certificate, but may not expand on the time specified
herein.
(c) EXERCISE OF INCENTIVE STOCK OPTION. Each Option shall be exercised, in
whole or in part, as to such number of shares of Stock and at such time or times
as the Committee shall have determined at the time of grant. No more than
$100,000 worth of incentive stock options, based on the Purchase Price granted
under this Plan or any other incentive stock option plan sponsored by the
Corporation, shall be first exercisable in any calendar year by any one
employee. Except as provided in paragraph 10, an Option may only be exercised if
the holder of the Option is, at the time of exercise, in the employ of the
Corporation.
(d) CODE COMPLIANCE. Each Option Certificate, pursuant to which incentive
stock options are granted, shall contain such other terms, conditions and
provisions as the Committee may determine to be necessary or desirable in order
to qualify such option as a tax-favored option within the meaning of Section 422
of the Code, or the regulations thereunder. Notwithstanding Section 13 hereof,
the Board shall have the power without further approval to amend the terms of
the Plan or any Option Certificates thereunder for such purpose.
6. NON-QUALIFIED STOCK OPTIONS. Non-qualified stock options, or
substitutes therefor, are options to purchase shares of common stock of the
Corporation which are not intended to comply with Section 422 of the Code.
Non-qualified stock options shall be evidenced by Option Certificates which
shall contain in substance the following terms and conditions:
(a) OPTION PRICE. The purchase price per share of stock deliverable upon
the exercise of a non-qualified stock option shall be not less than 100% of the
fair market value of the stock on the day the non-qualified stock option is
granted, as determined by the Committee.
(b) DURATION OF OPTION. Each Option Certificate, pursuant to which
non-qualified stock options are granted, shall state the period or periods of
time within which the non-qualified stock option may be exercised by the
Employee, in whole or in part, which shall be such period or periods of time as
may be determined by the Committee at the time of grant, provided that the
exercise period shall not end later than nine (9) years and eleven (11) months
after the date of the grant of the non-qualified stock option.
(c) CASHLESS EXERCISE. To the extent permitted under the applicable laws
and regulations under Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder, and with the
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consent of the Committee, the Corporation agrees to cooperate in a "cashless
exercise" of a non-qualified stock option. The cashless exercise shall be
effected by the Employee delivering to a registered securities broker acceptable
to the Corporation instructions to sell a sufficient number of shares of stock
to cover the costs and expenses associated therewith.
7. PAYMENT FOR SHARES. At the time the Option is granted, the Committee,
in its sole discretion, may require payment of the Purchase Price at the date of
exercise of any Option hereunder in any form permitted by the Code, including,
without limitation, payment (1) in cash, (2) using a promissory note payable
over a specified number of years bearing interest at a specified annual rate,
(3) in stock equal to the Purchase Price or (4) any combination of the foregoing
as set forth in the Option Certificate; provided, however, if the Option
Certificate does not set forth a form of payment, payment shall be in cash.
8. SHAREHOLDER RIGHTS. The holder of an Option shall not have any of the
rights of a shareholder of the Corporation with respect to the shares of the
Stock issuable on the exercise of the Option until one or more certificates
evidencing such shares ("Share Certificates") shall have been issued to the
holder of the Option.
9. RESTRICTIONS ON STOCK. All persons issued Share Certificates shall sign
an agreement with the Corporation indicating that they are not taking the Stock
with the view for sale or distribution of the Stock and, if no registration
statement is in effect with respect to such shares, that they recognize that the
issuance of the Stock is not subject to registration under the Securities Act of
1933, the Securities and Exchange Act of 1934 or any state agency of any State
respecting the sale and transfer of securities.
10. TERMINATION OF EMPLOYMENT.
(a) Except as provided in Section 10(b) or 10(c), no Option granted under
this Plan shall be exercisable more than thirty (30) days after the holder
ceases to be an Employee of the Corporation and, on that date, all outstanding
Options and any accompanying rights, to the extent they have not been exercised,
shall terminate immediately. Options granted under this Plan shall not be
affected by any change of employment so long as the holder continues to be an
Employee of the Corporation.
(b) If the holder of an Option dies while employed by the Corporation, the
Option may be exercised, as to any shares subject to the Option, by the
executor, administrator or personal representative of such deceased employee (or
by such other person at the time who is entitled by law to the rights of such
deceased employee under the Option) at any time within twelve (12) months after
the death of the Employee, but in no event after the expiration of the Option.
In the event that the employment of the holder of the Option of the Corporation
is terminated by reason of the disability of the holder of the Option, the
Option may be exercised, as to any shares subject to the Option, by the holder
thereof at any time within twelve (12) months after the date of such termination
of Employee, but in no event after the expiration of the term of the Option. For
the purposes of this Plan, the term "disability" shall mean a physical or mental
disability as defined in Section 22(e)(3) of the Code or, if such provision is
repealed, as determined by the Committee in its sole discretion. In the event
that the employment of the holder of any Option is terminated by reason of
retirement of the holder of the Option at such age as may be determined by the
Committee at the date of the grant of the Option, the Option may be exercised
(to the extent otherwise exercisable on the date of retirement of the holder of
the Option) by the holder thereof at any time within three (3) months after the
date of such retirement, but in no event after the expiration of the term of the
Option.
(c) Notwithstanding anything in this Plan to the contrary, if an Employee
consultant who is paid on an hourly basis ("Hourly Consultant") experiences a
break in service with the Corporation that lasts ninety (90) days or less, then
the Hourly Consultant shall be entitled to retain previously granted Options as
well as the vesting rights available at the time of such break in service.
11. NON-TRANSFERABILITY OF OPTIONS. Options may not be assigned,
transferred, pledged, hypothecated or disposed of in any way (whether by
operation of law or otherwise), except to the extent expressly
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provided for in this Plan and shall not be subject to execution, attachment or
similar process. Any assignment, transfer, pledge, hypothecation or other
disposition of any Option attempted contrary to the provisions of this Plan or
any levy of execution, attachment or other process attempted on an Option will
be null and void and without effect. Any attempt to make an assignment, pledge,
transfer, hypothecation or other disposition of an Option or any attempt to make
a levy of execution, attachment or other process will cause the Option to be
terminated immediately if the Corporation at any time should, in the sole
discretion of the Committee, so elect by written notice to the person entitled
to exercise the Option; provided, however, that any such termination of the
Option will not prejudice any rights or amenities of the Corporation that the
Corporation may have under this Plan or otherwise.
12. ADJUSTMENTS. If the Corporation shall at any time (a) be involved in a
transaction to which Section 424(a) of the Code is applicable, (b) declare a
dividend payable in stock, (c) subdivide or combine its stock or (d) be involved
in any other event that, in the judgment of the Committee, necessitates action
by way of adjusting the terms of the outstanding Options, then the Committee
shall take any action as, in its judgment, may be necessary to preserve the
outstanding Option holders' rights so that these rights remain substantially
proportionate to the rights as they existed before such event. To the extent
that such action shall include an increase or decrease in the number of shares
of Stock subject to outstanding Options under this Plan, the aggregate number of
shares of Stock available under Paragraph 1 of this Plan for issuance on
exercise of outstanding Options and of additional Options that may be granted
shall be increased or decreased proportionately, as the case may be. No action
shall be taken by the Committee under the provisions of this Paragraph that, in
its judgment, would constitute a modification, extension or renewal of the
Option within the meaning of Section 424(h) of the Code or that would prevent
the Option from qualifying as an incentive stock option within the meaning of
the Code. The determination of the Committee with respect to any matter in this
Paragraph shall be conclusive and binding on each holder of an Option granted
under this Plan.
13. TERMINATION AND AMENDMENT OF THIS PLAN. Unless sooner terminated, this
Plan shall terminate nine (9) years and eleven (11) months after the date
hereof, and no Option shall be granted hereunder after that date. At any time,
the Committee, without further approval of the shareholders may terminate or
amend this Plan without notice or make such modifications of this Plan as it
shall deem advisable; provided, however, that the Committee may not, without
prior approval of the holders of a majority of the outstanding shares of the
Stock of the Corporation (a) increase the maximum number of shares of Stock as
to which Options may be granted under this Plan (except as contemplated by the
provisions of Paragraph 11, (b) extend the term during which the Options may be
granted under this Plan, (c) permit the exercise of an Option after the date on
which such Option would otherwise terminate pursuant to the terms hereof or (d)
reduce the exercise price per share less than the purchase price as determined
by this Plan. No termination, amendment or modification of this Plan may,
without the consent of any person to whom any Option theretofore has been
granted, adversely affect the rights of such person under such Option or any
exercisable portion thereof. Notwithstanding the foregoing, this Plan, any
Option granted hereunder and the number of shares as to which any Option under
this Plan shall have been granted may be modified, retroactively at any time, to
conform to the provisions of the Code and the regulations promulgated thereunder
so that the Options under this Plan may qualify as incentive stock options
within the meaning of the Code. No such amendment shall be considered
prejudicial to the rights of any holder of any Option.
14. NO EMPLOYMENT RIGHTS. This Plan does not, directly or indirectly,
create any right for the benefit of any Employee or class of Employees to
purchase any Stock under the Plan or create in any Employee or class of
Employees any right with respect to continuation of employment by the
Corporation. This Plan shall not be deemed to interfere in any way with the
Corporation's right to terminate or otherwise modify an Employee's employment at
any time.
15. ADMINISTRATION. 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 grant of Options
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hereunder, unless such person is a non-employee director as defined 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 Corporation has amended and signed this Plan on the date indicated below
and shall be effective as of that date.
<TABLE>
<S> <C> <C>
METRO INFORMATION SERVICES, INC.
Date: March 18, 1999 By: /s/ JOHN H. FAIN
-----------------------------------------
John H. Fain, President
</TABLE>
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METRO INFORMATION SERVICES, INC.
1999 ANNUAL MEETING OF SHAREHOLDERS-JUNE 8, 1999
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 hereby 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, 1999, at the 1999 Annual Meeting of Shareholders
of the Company to be held on June 8, 1999 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 AMENDMENT TO THE EMPLOYEE STOCK PURCHASE PLAN, "FOR" THE APPROVAL
OF THE AMENDED AND RESTATED 1997 STOCK OPTION PLAN, AND "FOR" THE APPOINTMENT
OF KPMG LLP AS THE COMPANY'S INDEPENDENT AUDITORS. THESE MATTERS ARE
DESCRIBED IN MORE DETAIL IN THE COMPANY'S PROXY STATEMENT.
<PAGE>
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
METRO INFORMATION SERVICES, INC. 1999 ANNUAL MEETING OF SHAREHOLDERS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1-4
<TABLE>
<S> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS: A. EUGENE LOVING, JR. / / FOR / / WITHHOLD AUTHORITY
ROBERT J. EVELEIGH / / FOR / / WITHHOLD AUTHORITY
2. To approve an amendment to the Employee Stock Purchase Plan. / / FOR / / AGAINST / / ABSTAIN
3. To approve the Amended and Restated 1997 Stock Option Plan. / / FOR / / AGAINST / / ABSTAIN
4. To ratify the selection of KPMG LLP as the Company's Independent Auditors. / / FOR / / AGAINST / / ABSTAIN
</TABLE>
In their discretion, the proxy holders are authorized to vote upon such other
matters as may properly come before the 1999 Annual Meeting and at any and
all adjournments thereof.
Check appropriate box
Indicate changes below:
Address Change? / / Name Change? / /
Date
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NO. OF SHARES
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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.
