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EXHIBIT 4.2
XPEDIOR STOCK INCENTIVE PLAN
I.
PURPOSE
1.1 PURPOSE. The purpose of the XPEDIOR STOCK INCENTIVE PLAN (the "Plan")
is to provide a means through which Xpedior Incorporated, a Delaware corporation
(the "Company"), may attract able persons to serve as employees, directors,
consultants, or advisors of the Company and its Affiliates and to provide a
means whereby those individuals upon whom the responsibilities of the successful
administration and management of the Company rest, and whose present and
potential contributions to the welfare of the Company are of importance, may
acquire and maintain stock ownership, thereby strengthening their concern for
the welfare of the Company. A further purpose of the Plan is to provide such
individuals with additional incentive and reward opportunities designed to
enhance the profitable growth of the Company. Accordingly, the Plan provides for
granting Incentive Stock Options, options that do not constitute Incentive Stock
Options, Restricted Stock Awards, or any combination of the foregoing, as is
best suited to the circumstances of the particular employee, consultant,
advisor, or director as provided herein.
II.
DEFINITIONS
2.1 DEFINITIONS. The following definitions shall be applicable throughout
the Plan, unless specifically modified by any Paragraph:
2.1.1 "AFFILIATE" means, with respect to any person, any other person
directly or indirectly controlling, controlled by, or under common control
with such other person.
2.1.2 "AWARD" means, individually or collectively, any Option or
Restricted Stock Award.
2.1.3 "BOARD" means the Board of Directors of the Company.
2.1.4 "CAUSE" shall mean "cause" as defined in Holder's employment
agreement or consulting agreement with the Company or any Affiliate and, in
the absence of such an employment agreement or consulting agreement or such
a definition, "Cause" shall mean a determination by the Committee that
Holder (i) has engaged in negligence or willful misconduct in the
performance of his duties, (ii) has substantially failed to meet any
material expectations associated with Holder's employment, director, or
consulting position, because of substandard performance by Holder, (iii)
has been convicted of a misdemeanor involving moral turpitude or of any
felony, (iv) has willfully refused without proper legal reason to perform
his duties and responsibilities, (v) has materially breached any corporate
policy or code of conduct established by the Company or an Affiliate, (vi)
has breached any provision of any agreement with the Company or any
Affiliate, or (vii) has engaged in dishonest or fraudulent conduct with
respect to the business, reputation, or affairs of the Company or any
Affiliate.
2.1.5 "CHANGE OF CONTROL VALUE" means the amount determined in
accordance with Paragraph 9.4.
2.1.6 "CODE" means the Internal Revenue Code of 1986, as amended.
Reference in the Plan to any section of the Code shall be deemed to include
any amendments or successor provisions to such section and any regulations
under such section.
2.1.7 "COMMITTEE" means a committee of the Board that is selected by
the Board as provided in Paragraph 4.1.
2.1.8 "COMMON STOCK" means the common stock, par value $0.01 per
share, of the Company.
2.1.9 "COMPANY" means Xpedior Incorporated, a Delaware corporation.
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2.1.10 "CONSULTANT" means any person who is not an Employee and who is
providing advisory or consulting services to the Company or any parent or
subsidiary corporation (as defined in section 424 of the Code).
2.1.11 "CORPORATE CHANGE" means either (i) any merger, share exchange,
consolidation, recapitalization, or reorganization of the Company, (ii) the
Company sells, leases, or exchanges, or agrees to sell, lease, or exchange,
all or substantially all of its assets to any other person or entity (other
than Metamor Worldwide, Inc. and its Affiliates), (iii) the Company is to
be dissolved and liquidated, (iv) any person or entity (other than Metamor
Worldwide, Inc.), including a "group" as contemplated by Section 13(d)(3)
of the 1934 Act, acquires or gains ownership or control (including, without
limitation, power to vote) of more than 50% of the outstanding shares of
the Company's voting stock (based upon voting power), or (v) at such time
as the Common Stock is registered under the 1934 Act, as a result of or in
connection with a contested election of Directors, the persons who were
Directors of the Company before such election shall cease to constitute a
majority of the Board; provided, however, that the following shall not be a
Corporate Change: (A) any merger, share exchange, consolidation,
recapitalization, or reorganization or any sale, lease, exchange, or
similar transaction, which involves solely the Company and one or more
entities that were wholly-owned, directly or indirectly, by the Company
immediately prior to such event, (B) any transaction or series of
integrated transactions immediately following which the record holders of
the voting stock of the Company immediately prior to such transaction or
series of transactions continue to hold immediately following such
transaction or series of transactions 50% or more of the voting stock
(based upon voting power) of (1) any entity that owns, directly or
indirectly, the stock of the Company, (2) any entity with which the Company
has merged, or (3) any entity that owns an entity with which the Company
has merged, and (C) any merger, share exchange, consolidation,
recapitalization, or reorganization or any sale, lease, exchange, or
similar transaction as contemplated in clauses (i) through (v) above, which
involves the Company if immediately prior to such event more than 50% of
the outstanding shares of the Company's voting stock (based on voting
power) is owned by Metamor Worldwide, Inc.
2.1.12 "DETRIMENTAL ACTIVITY" means a determination by the Company
that one or more of the following has occurred without the written consent
of the Company: (i) Holder has breached or violated any employment-related
agreement between Holder and the Company or an Affiliate; (ii) Holder has
breached or violated any other written agreement or release of claims
between Holder and the Company or an Affiliate; (iii) Holder has violated a
written policy of the Company or an Affiliate; (iv) Holder has improperly
used or disclosed, either during or subsequent to his employment with the
Company and its Affiliates, any proprietary or confidential information of
the Company or any Affiliate; or (v) Holder has been convicted of, or has
entered a guilty plea with respect to, a felony crime, whether or not
connected with the Company or any Affiliate.
2.1.13 "DIRECTOR" means (i) an individual elected to the Board by the
stockholders of the Company or by the Board under applicable corporate law
who is serving on the Board on the date the Plan is adopted by the Board or
is elected to the Board after such date and (ii) for purposes of and
relating to eligibility for the grant of an Award, also means an individual
elected to the board of directors of any parent or subsidiary corporation
(as defined in section 424 of the Code).
2.1.14 "EMPLOYEE" means any person in an employment relationship with
the Company or any parent or subsidiary corporation (as defined in section
424 of the Code).
2.1.15 "FAIR MARKET VALUE" means, as of any specified date, the
closing sales price of the Common Stock (i) reported on the National Market
System of NASDAQ on that date or (ii) if the Common Stock is listed on a
national securities exchange, reported on the stock exchange composite tape
on that date; or, in either case, if no sales occur on that date, on the
last preceding date on which such sales of the Common Stock occur. If the
Common Stock is not traded on the National Market System of NASDAQ or a
national securities exchange but is traded over the counter at the time a
determination of its fair market value is required to be made hereunder,
its fair market value shall be deemed to be equal to the average between
the closing bid and asked prices of Common Stock on the most recent date on
which Common Stock was publicly traded. In the event Common Stock is not
publicly traded at the time a determination of its value is required to be
made hereunder, the determination of its fair market value shall be made by
the Committee in such manner as it deems appropriate.
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2.1.16 "FORFEITURE RESTRICTIONS" shall have the meaning assigned to
such term in Paragraph 8.1.
2.1.17 "HOLDER" means an Employee, Consultant, or Director who has
been granted an Award.
2.1.18 "INCENTIVE STOCK OPTION" means an incentive stock option within
the meaning of section 422 of the Code.
2.1.19 "1934 ACT" means the Securities Exchange Act of 1934, as
amended.
2.1.20 "OPTION" means an Award granted under Section VII and includes
both Incentive Stock Options to purchase Common Stock and Options that do
not constitute Incentive Stock Options to purchase Common Stock.
2.1.21 "OPTION AGREEMENT" means a written agreement between the
Company and a Holder with respect to an Option.
2.1.22 "PLAN" means the Xpedior Stock Incentive Plan, as amended from
time to time.
2.1.23 "RESTRICTED STOCK AGREEMENT" means a written agreement between
the Company and a Holder with respect to a Restricted Stock Award.
2.1.24 "RESTRICTED STOCK AWARD" means an Award granted under Section
VIII.
2.1.25 "STOCK APPRECIATION RIGHT" shall have the meaning assigned to
such term in Paragraph 7.4.
2.2 NUMBER AND GENDER. Wherever appropriate herein, words used in the
singular shall be considered to include the plural, and words used in the plural
shall be considered to include the singular. The masculine gender, where
appearing in the Plan, shall be deemed to include the feminine gender.
2.3 HEADINGS. The headings of Sections and Paragraphs herein are included
solely for convenience, and, if there is any conflict between such headings and
the text of the Plan, the text shall control. All references to Sections and
Paragraphs are to this document unless otherwise indicated.
III.
EFFECTIVE DATE AND DURATION OF THE PLAN
3.1 EFFECTIVE DATE. The Plan shall become effective upon the date of its
adoption by the Board. Notwithstanding any provision in the Plan or in any
Option Agreement, an Option that is an Incentive Stock Option shall not vest or
be exercisable prior to the date upon which the Plan is approved by the
stockholders of the Company within twelve months after its adoption by the
Board, and if the Plan is not approved by the stockholders of the Company within
twelve months after its adoption by the Board, such Option shall not be an
Incentive Stock Option.
3.2 DURATION OF PLAN. No further Awards may be granted under the Plan after
ten years from the date the Plan is adopted by the Board. The Plan shall remain
in effect until all Awards granted under the Plan have been satisfied or
expired.
IV.
ADMINISTRATION
4.1 COMPOSITION OF COMMITTEE. The Plan shall be administered by a Committee
of, and appointed by, the Board. The Committee shall be comprised solely of two
or more outside directors (within the meaning of section 162(m) of the Code and
applicable interpretative authority thereunder) and constituted so as to permit
the Plan to comply with Rule 16b-3, as currently in effect or as hereafter
modified or amended, promulgated under the 1934 Act. In the absence of the
Board's appointment of such Committee to administer the Plan, the Board shall
serve as the Committee.
4.2 POWERS. Subject to the express provisions of the Plan, the Committee
shall have authority, in its discretion, to determine which Employees,
Consultants, or Directors shall receive an Award, the time or times when such
Award shall be made, whether an Incentive Stock Option or nonqualified Option
shall be granted, and the number of shares to be subject to each Option or
Restricted Stock Award. In making such determinations, the Committee shall take
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into account the nature of the services rendered by the respective Employees,
Consultants, or Directors, their present and potential contribution to the
Company's success, and such other factors as the Committee in its discretion
shall deem relevant.
4.3 ADDITIONAL POWERS. The Committee shall have such additional powers as
are delegated to it by the other provisions of the Plan. Subject to the express
provisions of the Plan, these additional powers shall include the powers (i) to
construe the Plan and the respective agreements executed hereunder, (ii) to
prescribe rules and regulations relating to the Plan, (iii) to determine the
terms, restrictions, and provisions of the agreement relating to each Award,
including such terms, restrictions, and provisions as shall be requisite in the
judgment of the Committee to cause designated Options to qualify as Incentive
Stock Options, and (iv) to make all other determinations necessary or advisable
for administering the Plan. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any agreement relating
to an Award in the manner and to the extent it shall deem expedient to carry it
into effect. The determinations of the Committee on the matters referred to in
this Section IV shall be conclusive and binding on all persons.
V.
GRANT OF AWARDS; LIMITATIONS;
STOCK SUBJECT TO THE PLAN
5.1 GRANT OF AWARDS. The Committee may from time to time in its discretion
grant Awards to one or more Employees, Consultants, or Directors determined by
it to be eligible for participation in the Plan in accordance with the
provisions of Section VI.
5.2 RESCISSION OF AWARDS ON ACCOUNT OF DETRIMENTAL ACTIVITY. Unless the
agreement evidencing an Award specifies otherwise, the Committee may cancel,
rescind, suspend, withhold, or otherwise limit or restrict any unexpired,
unpaid, or deferred Award at any time if the Committee determines that the
Holder has engaged in any Detrimental Activity. Upon exercise, payment, or
delivery pursuant to an Award, the Holder shall certify in a manner acceptable
to the Committee that he has not engaged in any Detrimental Activity. In the
event the Committee determines that a Holder has engaged in any Detrimental
Activity prior to, or during the six months after, any exercise, payment, or
delivery pursuant to an Award, (i) such exercise, payment, or delivery may be
rescinded by the Committee within six months of such determination, (ii) in the
event of such rescission, the Holder shall pay to the Company the amount of any
gain realized or payment received as a result of the rescinded exercise,
payment, or delivery, in such manner and on such terms and conditions as the
Committee may require, and (iii) the Company shall be entitled to set-off
against the amount of any such gain any amount owed to the Holder by the
Company.
5.3 LIMITATION ON SHARES ISSUED. Subject to adjustment in the same manner
as provided in Section IX with respect to shares of Common Stock subject to
Options then outstanding, the aggregate number of shares of Common Stock that
may be issued under the Plan shall not exceed 15,000,000 shares. Notwithstanding
any provision in the Plan to the contrary, the maximum number of shares that may
be subject to Options granted under the Plan to an eligible individual during
any calendar year may not exceed 2,000,000 shares (subject to adjustment in the
same manner as provided in Section IX with respect to shares of Common Stock
subject to Options then outstanding). The limitation set forth in the preceding
sentence shall be applied in a manner that will permit compensation generated
under the Plan to constitute "performance-based" compensation for purposes of
section 162(m) of the Code, including, without limitation, counting against such
maximum number of shares, to the extent required under section 162(m) of the
Code and applicable interpretative authority thereunder, any shares subject to
Options that are canceled or repriced. Shares shall be deemed to have been
issued under the Plan only (i) to the extent actually issued and delivered
pursuant to an Award or (ii) to the extent an Award is settled in cash. To the
extent that an Award lapses or the rights of its Holder terminate, any shares of
Common Stock subject to such Award shall again be available for the grant of an
Award.
5.4 STOCK OFFERED. The stock to be offered pursuant to the grant of an
Award may be authorized but unissued Common Stock or Common Stock previously
issued and outstanding and reacquired by the Company.
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VI.
ELIGIBILITY
6.1 ELIGIBILITY FOR AWARD. Awards may be granted only to persons who, at
the time of grant, are Employees, Consultants, or Directors. An Award may be
granted on more than one occasion to the same person, and, subject to the
limitations set forth in the Plan, such Award may include an Incentive Stock
Option, an Option that is not an Incentive Stock Option, a Restricted Stock
Award, or any combination thereof.
VII.
STOCK OPTIONS
7.1 OPTION PERIOD. The term of each Option shall be as specified by the
Committee at the date of grant.
7.2 LIMITATIONS ON EXERCISE OF OPTION. An Option shall be exercisable in
whole or in such installments and at such times as determined by the Committee.
The Committee in its sole discretion may provide that an Option shall be
exercisable only upon the attainment of one or more performance goals or targets
established by the Committee, which are based on (1) the price of a share of
Common Stock, (2) the Company's earnings per share, (3) the Company's market
share, (4) the market share of a business unit of the Company designated by the
Committee, (5) the Company's sales, (6) the sales of a business unit of the
Company designated by the Committee, (7) the net income (before or after taxes)
of the Company or any business unit of the Company designated by the Committee,
(8) the cash flow return on investment of the Company or any business unit of
the Company designated by the Committee, (9) the earnings before or after
interest, taxes, depreciation, and/or amortization of the Company or any
business unit of the Company designated by the Committee, (10) the economic
value added, or (11) the return on stockholders' equity achieved by the Company.
7.3 SPECIAL LIMITATIONS ON INCENTIVE STOCK OPTIONS. An Incentive Stock
Option may be granted only to an individual who is an Employee at the time the
Option is granted. To the extent that the aggregate Fair Market Value
(determined at the time the respective Incentive Stock Option is granted) of
Common Stock with respect to which Incentive Stock Options are exercisable for
the first time by an individual during any calendar year under all incentive
stock option plans of the Company and its parent and subsidiary corporations
exceeds $100,000, such Incentive Stock Options shall be treated as Options that
do not constitute Incentive Stock Options. The Committee shall determine, in
accordance with applicable provisions of the Code, Treasury regulations, and
other administrative pronouncements, which of a Holder's Incentive Stock Options
will not constitute Incentive Stock Options because of such limitation and shall
notify the Holder of such determination as soon as practicable after such
determination. No Incentive Stock Option shall be granted to an individual if,
at the time the Option is granted, such individual owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or of its parent or subsidiary corporation, within the meaning of
section 422(b)(6) of the Code, unless (i) at the time such Option is granted the
option price is at least 110% of the Fair Market Value of the Common Stock
subject to the Option and (ii) such Option by its terms is not exercisable after
the expiration of five years from the date of grant. An Incentive Stock Option
shall not be transferable otherwise than by will or the laws of descent and
distribution, and shall be exercisable during the Holder's lifetime only by such
Holder or the Holder's guardian or legal representative.
7.4 OPTION AGREEMENT. Each Option shall be evidenced by an Option Agreement
in such form and containing such provisions not inconsistent with the provisions
of the Plan as the Committee from time to time shall approve, including, without
limitation, provisions to qualify an Incentive Stock Option under section 422 of
the Code. Each Option Agreement shall specify the effect of termination of (i)
employment, (ii) the consulting or advisory relationship, or (iii) membership on
the Board or board of directors of any parent or subsidiary corporation (as
defined in section 424 of the Code), as applicable, on the exercisability of the
Option. An Option Agreement may provide for the payment of the option price, in
whole or in part, by the delivery of a number of shares of Common Stock (plus
cash if necessary) having a Fair Market Value equal to such option price.
Moreover, an Option Agreement may provide for a "cashless exercise" of the
Option by establishing procedures whereby the Holder, by a properly executed
written notice, directs (i) an immediate market sale or margin loan respecting
all or a part of the shares of Common Stock to which he is entitled upon
exercise pursuant to an extension of credit by the Company to the Holder of the
option price, (ii) the delivery of the shares of Common Stock from the Company
directly to a brokerage firm, and (iii) the delivery of the option price from
sale or margin loan proceeds from the brokerage firm directly to the Company.
Furthermore, an Option Agreement may provide for the surrender of the right to
purchase shares under the Option in return for a payment in cash or shares of
Common Stock or a combination of cash and shares of Common Stock equal in value
to the excess of the Fair Market Value of the shares with respect to which the
right to purchase is surrendered over the
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option price therefor ("Stock Appreciation Right"), on such terms and conditions
as the Committee in its sole discretion may prescribe. In the case of any such
Stock Appreciation Right that is granted in connection with an Incentive Stock
Option, such right shall be exercisable only when the Fair Market Value of the
Common Stock exceeds the price specified therefor in the Option or the portion
thereof to be surrendered. The terms and conditions of the respective Option
Agreements need not be identical.
7.5 OPTION PRICE AND PAYMENT. The price at which a share of Common Stock
may be purchased upon exercise of an Option shall be determined by the Committee
but, subject to adjustment as provided in Section IX, in the case of an
Incentive Stock Option, such purchase price shall not be less than (i) the Fair
Market Value of a share of Common Stock on the date such Option is granted, and
(ii) in the case of an Option that is not an Incentive Stock Option, such
purchase price shall not be less than 85% of the Fair Market Value of a share of
Common Stock on the date such Option is granted. The Option or portion thereof
may be exercised by delivery of an irrevocable notice of exercise to the
Company. The purchase price of the Option or portion thereof shall be paid in
full in the manner prescribed by the Committee. Separate stock certificates
shall be issued by the Company for those shares acquired pursuant to the
exercise of an Incentive Stock Option and for those shares acquired pursuant to
the exercise of any Option that does not constitute an Incentive Stock Option.
7.6 STOCKHOLDER RIGHTS AND PRIVILEGES. The Holder shall be entitled to all
the privileges and rights of a stockholder only with respect to such shares of
Common Stock as have been purchased under the Option and for which certificates
of stock have been registered in the Holder's name.
7.7 OPTIONS AND RIGHTS IN SUBSTITUTION FOR STOCK OPTIONS GRANTED BY OTHER
CORPORATIONS. Options and Stock Appreciation Rights may be granted under the
Plan from time to time in substitution for stock options held by individuals
employed by corporations who become Employees as a result of a merger or
consolidation of the employing corporation with the Company or any subsidiary,
or the acquisition by the Company or a subsidiary of the assets of the employing
corporation, or the acquisition by the Company or a subsidiary of stock of the
employing corporation with the result that such employing corporation becomes a
subsidiary.
VIII.
RESTRICTED STOCK AWARDS
8.1 FORFEITURE RESTRICTIONS. Shares of Common Stock that are the subject of
a Restricted Stock Award shall be subject to restrictions on disposition by the
Holder and an obligation of the Holder to forfeit and surrender the shares to
the Company under certain circumstances (the "Forfeiture Restrictions"). The
Forfeiture Restrictions shall be determined by the Committee in its sole
discretion, and the Committee may provide that the Forfeiture Restrictions shall
lapse upon (i) the attainment of one or more performance goals or targets
established by the Committee, which are based on (1) the price of a share of
Common Stock, (2) the Company's earnings per share, (3) the Company's market
share, (4) the market share of a business unit of the Company designated by the
Committee, (5) the Company's sales, (6) the sales of a business unit of the
Company designated by the Committee, (7) the net income (before or after taxes)
of the Company or any business unit of the Company designated by the Committee,
(8) the cash flow return on investment of the Company or any business unit of
the Company designated by the Committee, (9) the earnings before or after
interest, taxes, depreciation, and/or amortization of the Company or any
business unit of the Company designated by the Committee, (10) the economic
value added, or (11) the return on stockholders' equity achieved by the Company,
(ii) the Holder's continued employment as an Employee or continued service as a
Consultant or Director for a specified period of time, (iii) the occurrence of
any event or the satisfaction of any other condition specified by the Committee
in its sole discretion, or (iv) a combination of any of the foregoing. Each
Restricted Stock Award may, in the discretion of the Committee, have different
Forfeiture Restrictions. The Forfeiture Restrictions applicable to a particular
Restricted Stock Award shall not be changed except as permitted by Paragraph 8.2
and Section IX.
8.2 OTHER TERMS AND CONDITIONS. Common Stock awarded pursuant to a
Restricted Stock Award shall be represented by a stock certificate registered in
the name of the Holder of such Restricted Stock Award. The Holder shall have the
right to receive dividends with respect to Common Stock subject to a Restricted
Stock Award, to vote Common Stock subject thereto, and to enjoy all other
stockholder rights, except that (i) the Holder shall not be entitled to delivery
of the stock certificate until the Forfeiture Restrictions have expired, (ii)
the Company shall retain custody of the stock until the Forfeiture Restrictions
have expired, (iii) the Holder may not sell, transfer, pledge, exchange,
hypothecate, or otherwise dispose of the stock until the Forfeiture Restrictions
have expired, and (iv) a breach of the terms and conditions established by the
Committee pursuant to the Restricted Stock Agreement shall cause a forfeiture
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of the Restricted Stock Award. At the time of such Award, the Committee may, in
its sole discretion, prescribe additional terms, conditions, or restrictions
relating to Restricted Stock Awards, including, but not limited to, rules
pertaining to the termination of employment or service as a Consultant or
Director (by retirement, disability, death, or otherwise) of a Holder prior to
expiration of the Forfeitures Restrictions. Such additional terms, conditions,
or restrictions shall be set forth in a Restricted Stock Agreement made in
conjunction with the Award.
8.3 PAYMENT FOR RESTRICTED STOCK. The Committee shall determine the amount
and form of any payment for Common Stock received pursuant to a Restricted Stock
Award, provided that, in the absence of such a determination, a Holder shall not
be required to make any payment for Common Stock received pursuant to a
Restricted Stock Award, except to the extent otherwise required by law.
8.4 RESTRICTED STOCK AGREEMENT. At the time any Award is made under this
Section VIII, the Company and the Holder shall enter into a Restricted Stock
Agreement setting forth each of the matters contemplated hereby and such other
matters as the Committee may determine to be appropriate. The terms and
provisions of the respective Restricted Stock Agreements need not be identical.
IX.
RECAPITALIZATION OR REORGANIZATION
9.1 NO EFFECT ON BOARD'S OR STOCKHOLDERS' POWER. The existence of the Plan
and the Awards granted hereunder shall not affect in any way the right or power
of the Board or the stockholders of the Company to make or authorize (i) any
adjustment, recapitalization, reorganization, or other change in the Company's
capital structure or its business, (ii) any merger, share exchange, or
consolidation of the Company, (iii) any issue of debt or equity securities
ranking senior to or affecting Common Stock or the rights thereof, (iv) the
dissolution or liquidation of the Company, (v) any sale, lease, exchange, or
other disposition of all or any part of its assets or business, or (vi) any
other corporate act or proceeding.
9.2 ADJUSTMENT IN THE EVENT OF STOCK SUBDIVISION, CONSOLIDATION, OR
DIVIDEND. The shares with respect to which Options may be granted are shares of
Common Stock as presently constituted, but if, and whenever, prior to the
expiration of an Option theretofore granted, the Company shall effect a
subdivision or consolidation of shares of Common Stock or the payment of a stock
dividend on Common Stock without receipt of consideration by the Company, the
number of shares of Common Stock with respect to which such Option may
thereafter be exercised (i) in the event of an increase in the number of
outstanding shares, shall be proportionately increased, and the purchase price
per share shall be proportionately reduced, and (ii) in the event of a reduction
in the number of outstanding shares, shall be proportionately reduced, and the
purchase price per share shall be proportionately increased. Any fractional
share resulting from such adjustment shall be rounded up to the next whole
share.
9.3 ADJUSTMENT IN THE EVENT OF RECAPITALIZATION OR CORPORATE CHANGE.
9.3.1 If the Company recapitalizes, reclassifies its capital stock, or
otherwise changes its capital structure (a "recapitalization"), the number
and class of shares of Common Stock covered by an Option theretofore
granted shall be adjusted so that such Option shall thereafter cover the
number and class of shares of stock and securities to which the Holder
would have been entitled pursuant to the terms of the recapitalization if,
immediately prior to the recapitalization, the Holder had been the holder
of record of the number of shares of Common Stock then covered by such
Option.
9.3.2 Notwithstanding any provision in this Paragraph 9.3 or elsewhere
in the Plan to the contrary, this Subparagraph 9.3.2 shall only be
effective after Metamor Worldwide, Inc. ceases to own ten percent or more
of the Common Stock. If a Corporate Change occurs, then no later than (i)
ten days after the approval by the stockholders of the Company of a
Corporate Change, other than a Corporate Change resulting from any person
or entity acquiring or gaining ownership or control of more than 50% of the
outstanding shares of the Company's voting stock, or (ii) thirty days after
a Corporate Change resulting from a person or entity acquiring or gaining
ownership or control of more than 50% of the outstanding shares of the
Company's voting stock, the Committee, acting in its sole discretion and
without the consent or approval of any Holder, may effect one or more of
the following alternatives, which alternatives may vary among individual
Holders and which may vary among Options held by any individual Holder: (1)
accelerate the vesting of any Options then outstanding, (2) accelerate the
time at which Options then outstanding and vested may be exercised so that
such Options
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may be exercised in full for a limited period of time on or before a
specified date (before or after such Corporate Change) fixed by the
Committee, after which specified date all unexercised Options and all
rights of Holders thereunder shall terminate, (3) require the mandatory
surrender to the Company by selected Holders of some or all of the
outstanding Options held by such Holders (irrespective of whether such
Options are then vested and/or exercisable under the provisions of the Plan
or Option Agreement) as of a date, before or after such Corporate Change,
specified by the Committee, in which event the Committee shall thereupon
cancel such Options and pay to each Holder an amount of cash per share
equal to the excess, if any, of the amount calculated in Paragraph 9.4
below (the "Change of Control Value") of the shares subject to such Option
over the exercise price(s) under such Options for such shares, (4) make
such adjustments to Options then outstanding as the Committee deems
appropriate to reflect such Corporate Change (provided, however, that the
Committee may determine in its sole discretion that no adjustment is
necessary to Options then outstanding), or (5) provide that the number and
class of shares of Common Stock covered by an Option theretofore granted
shall be adjusted so that such Option shall thereafter cover the number and
class of shares of stock or other securities or property (including,
without limitation, cash) to which the Holder would have been entitled
pursuant to the terms of the agreement of merger, consolidation, or sale of
assets or dissolution if, immediately prior to such merger, consolidation,
or sale of assets or dissolution, the Holder had been the holder of record
of the number of shares of Common Stock then covered by such Option.
9.4 CHANGE OF CONTROL VALUE. For the purposes of clause (3) in Paragraph
9.3 above, the "Change of Control Value" shall equal the amount determined in
the following clause (i), (ii), or (iii), whichever is applicable: (i) the per
share price offered to stockholders of the Company in any such merger,
consolidation, sale of assets, or dissolution transaction, (ii) the price per
share offered to stockholders of the Company in any tender offer or exchange
offer whereby a Corporate Change takes place, or (iii) if such Corporate Change
occurs other than pursuant to a tender or exchange offer, the Fair Market Value
per share of the shares into which such Options being surrendered are
exercisable, as determined by the Committee as of the date determined by the
Committee to be the date of cancellation and surrender of such Options. In the
event that the consideration offered to stockholders of the Company in any
transaction described in this Paragraph 9.4 or in Paragraph 9.3 above consists
of anything other than cash, the Committee shall determine the fair cash
equivalent of the portion of the consideration offered that is other than cash.
9.5 OTHER ADJUSTMENTS. In the event of stock dividends, spin offs of
assets, or other extraordinary dividends, stock splits, recapitalizations,
mergers, consolidations, reorganizations, liquidations, combinations, exchanges,
issuances of rights or warrants, or similar transactions or events not otherwise
provided for by this Section IX, (i) any outstanding Awards and any agreements
evidencing such Awards shall be subject to adjustment by the Committee in its
discretion as to the number and price of shares of Common Stock or other
consideration subject to such Awards and (ii) the aggregate number of shares
available under the Plan may be appropriately adjusted by the Committee, whose
determination shall be conclusive and binding on all parties.
9.6 STOCKHOLDER ACTION. If any event giving rise to an adjustment provided
for in the above Paragraphs requires stockholder action, such adjustment shall
not be effective until such action has been taken.
9.7 NO ADJUSTMENT EXCEPT AS PROVIDED HEREIN. Except as hereinbefore
expressly provided, the issuance by the Company of shares of stock of any class
or securities convertible into shares of stock of any class for cash, property,
labor, or services, upon direct sale, upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, and in any case whether or not
for fair value, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number of shares of Common Stock subject to Awards
theretofore granted or the purchase price per share, if applicable.
X.
AMENDMENT AND TERMINATION OF THE PLAN
10.1 TERMINATION OF PLAN. The Board in its discretion may terminate the
Plan at any time with respect to any shares, class, or series of Common Stock
for which Awards have not theretofore been granted.
10.2 AMENDMENT OF PLAN. The Board shall have the right to alter or amend
the Plan or any part thereof from time to time; provided that no change in any
Award theretofore granted may be made that would impair the rights of the Holder
without the consent of the Holder; and provided, further, that the Board may
not, without approval of the
<PAGE> 9
stockholders, amend the Plan to (i) increase the maximum aggregate number of
shares that may be issued under the Plan or (ii) change the class of individuals
eligible to receive Awards under the Plan.
XI.
MISCELLANEOUS
11.1 NO RIGHT TO AN AWARD. Neither the adoption of the Plan nor any action
of the Board or of the Committee hereunder (including, but not limited to, the
granting of an Award) shall be deemed to give an Employee, Consultant, or
Director any right to be granted an Option, a right to a Restricted Stock Award,
or any other rights hereunder except as may be evidenced by an Option Agreement
or a Restricted Stock Agreement duly executed on behalf of the Company, and then
only to the extent and on the terms and conditions expressly set forth therein.
11.2 UNFUNDED PLAN. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of funds or assets to insure the payment of any Award.
11.3 NO EMPLOYMENT/CONSULTING/MEMBERSHIP RIGHTS CONFERRED. Nothing
contained in the Plan shall (i) confer upon any Employee or Consultant any right
with respect to continuation of employment or a consulting or advisory
relationship with the Company or any subsidiary or (ii) interfere in any way
with the right of the Company or any subsidiary to terminate any Employee's
employment or any Consultant's consulting or advisory relationship at any time.
Nothing contained in the Plan shall confer upon any Director any right with
respect to continuation of membership on the Board or on the board of directors
of any parent or subsidiary corporation (as defined in section 424 of the Code).
11.4 COMPLIANCE WITH OTHER LAWS. The Company shall not be obligated to
issue any Common Stock pursuant to any Award granted under the Plan at any time
when the shares covered by such Award have not been registered under the
Securities Act of 1933 and such other state and federal laws, rules, or
regulations as the Company or the Committee deems applicable and, in the opinion
of legal counsel to the Company, there is no exemption from the registration
requirements of such laws, rules, or regulations available for the issuance and
sale of such shares. No fractional shares of Common Stock shall be delivered,
nor shall any cash in lieu of fractional shares be paid.
11.5 WITHHOLDING. The Company shall have the right to deduct in connection
with all Awards any taxes required by law to be withheld and to require any
payments required to enable it to satisfy its withholding obligations.
11.6 NO RESTRICTION ON CORPORATE ACTION. Nothing contained in the Plan
shall be construed to prevent the Company or any parent or subsidiary from
taking any corporate action, which is deemed by the Company or such parent or
subsidiary to be appropriate or in its best interest, whether or not such action
would have an adverse effect on the Plan or any Award made under the Plan. No
Employee, Consultant, Director, beneficiary, or other person shall have any
claim against the Company or any parent or subsidiary as a result of any such
action.
11.7 RESTRICTIONS ON TRANSFER. An Award (other than an Incentive Stock
Option, which shall be subject to the transfer restrictions set forth in
Paragraph 7.3) shall not be transferable otherwise than (i) by will or the laws
of descent and distribution or (ii) with the consent of the Committee.
11.8 GOVERNING LAW. The Plan shall be construed in accordance with the laws
of the state of Texas.
