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Exhibit 10.4
June 15, 2000
Xpedior Incorporated
One North Franklin, Suite 1500
Chicago, Illinois 60606
Attention: President and Chief Executive Officer
Ladies and Gentlemen:
1. Reference is made to the 7% Convertible Subordinated Promissory Note Due
2002 dated as of September 24, 1999 in the original principal amount of
$7,171,639 (the "Note") of Xpedior Incorporated, a Delaware corporation
(the "Company"), issued to Mark D. Hansen (the "Holder"). Terms defined in
the Note and not otherwise defined herein are used herein with the meanings
so defined.
2. Notwithstanding anything to the contrary in Annex I of the Note:
(a) The unpaid principal amount of the Note shall be automatically
converted by the Holder in whole into 433,823 fully paid and
nonassessable shares of Stock (the "Shares") on the date hereof
immediately prior to the merger (the "Merger") of PSINet Shelf IV
Inc., a Delaware corporation, with and into Metamor Worldwide, Inc., a
Delaware corporation ("Metamor"); and
(b) $364,477 representing all interest on the Note accrued and unpaid
through the date hereof shall be paid promptly, in cash, after
conversion of the Note pursuant to paragraph 2(a) but in no event
later than three business days after the date hereof.
3. The Holder acknowledges and agrees that effective upon conversion of the
Note pursuant to paragraph 2 above, the Note shall be deemed satisfied and
paid in full and shall be canceled and of no further force or effect and
the Subordinated Guaranty entered into by Metamor and the Holder with
respect to the Note shall automatically be terminated and of no further
force or effect.
4. If (a) the aggregate amount of proceeds that the Holder receives from his
sales of Shares to a third party or third parties within the 16 month
period following the date hereof (without reduction for brokers and
underwriters commissions, discounts and fees and transaction and similar
fees and expenses) is less than (b) the aggregate amount of proceeds that
the Holder would have received from a sale of such Shares at a per share
price equal to $16.5312, the Company shall promptly after the expiration of
such 16
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month period (or, if earlier, after the Holder has sold all of his Shares), pay
to the Holder an amount equal to such shortfall, provided that the Holder shall
use all reasonable efforts to sell the Shares at the best available price and
terms at the time of sale. All payments required to be made by the Company
pursuant to this paragraph shall be subordinated to all present and future
amounts that may be owing to any senior lender to the Company on such form and
terms as may reasonably be required by such senior lender. The Holder shall
execute all documents reasonably required by any such senior lender to evidence
such subordination.
5. The Company's and the Holder's rights and obligations with respect to
registration of the Shares are set forth in Annex I hereto. Terms defined
herein and not otherwise defined in Annex I are used therein with the
meanings so defined.
6. The Holder hereby confirms that his representations and warranties set
forth in Section 3(b)(v) of the Stock Purchase Agreement dated as of
September 17, 1999 by and among the Company, Kinderhook Systems, Inc., the
Holders and the other parties thereto are true and correct as of the date
hereof.
7. The Company hereby releases its security interest in the Shares and agrees
that at the request of the Holder it will execute any UCC termination
statement with respect thereto.
8. The Holder has good and valid title to the Note free and clear of all
liens, pledges, mortgages, security interests and other encumbrances.
9. The Company agree to deliver certificates representing the Shares to the
Holder within 10 business days of the date hereof.
10. The Note dated February 22, 2000 issued by the Holder to the Company shall
remain outstanding but the Holder shall apply all net proceeds from sales
of Shares to the prepayment of the principal amount of such Note and to the
payment of all accrued and unpaid interest thereon until paid in full.
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If the foregoing is in accordance with your understanding of our agreement,
kindly sign this letter in the space provided below, whereupon this letter will
become a binding agreement between us.
/s/ Mark D. Hansen
________________________
Mark D. Hansen
XPEDIOR INCORPORATED
By ______________________
Title:
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If the foregoing is in accordance with your understanding of our agreement,
kindly sign this letter in the space provided below, whereupon this letter will
become a binding agreement between us.
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Mark D. Hansen
XPEDIOR INCORPORATED
By Caesar J. Belbel
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Title: Senior Vice President, General
Counsel and Secretary
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Annex I
Registration Rights
Section 1. Shelf Registration Statement. At any time after the Company has
become eligible to file a Registration Statement on Form S-3 (or any successor
form) subject to Section 2, on or prior to the 60th day (or, if such date is not
a trading day, the next trading day following such 60th day) (the "Required
Filing Date") after the delivery to the Company by the Holder of a notice
demanding that the Company register all of the Shares ("Registrable
Securities"), the Company shall use all reasonable efforts to prepare for
filing with the Securities & Exchange Commission (the "Commission"), and cause
to be declared effective a "shelf" registration statement pursuant to Rule 415
under the Securities Act (the "Shelf Registration Statement") providing for the
sale by the Holder of the Registrable Securities; provided, however, (i) that
the Holder may only deliver one demand notice pursuant to this Section 1 and
(ii) the Company shall not be required to register any Registrable Securities
pursuant to this paragraph that are eligible for sale pursuant to Rule 144 under
the Securities Act of 1933, as amended (the "Securities Act"). The Company shall
use all reasonable efforts to cause the Commission to declare effective the
Shelf Registration Statement as soon as reasonably practicable. The Company
agrees to use reasonable efforts to keep the Shelf Registration Statement
continuously effective for a period ending on the earliest to occur of (a) the
date on which all Shares covered thereby are eligible for sale pursuant to Rule
144 under the Securities Act, (b) the date on which all Shares covered thereby
have been sold or otherwise transferred or disposed of by the Holder or (c) June
15, 2001. The Company shall not be obligated to effect more than one
registration for Stock pursuant to this Annex I.
Section 2. Deferring Filing.
(a) Notwithstanding anything to the contrary in this Note, the Company may
defer the filing (but not the preparation) of the Shelf Registration Statement
until a date not later than forty-five (45) days after the Required Filing Date
if, prior to filing the registration statement, the Company had determined to
effect a registered underwritten public offering for the Company's account and
had taken substantial steps to effect such offering.
(b) If (i) there is material non-public information regarding the Company
which the Company's senior management or Board of Directors reasonably
determines not to be in the Company's best interest to disclose, and which the
Company is not otherwise required to disclose, or (ii) there is a significant
business opportunity or event (including, but not limited to, the acquisition
or disposition of assets or any merger, consolidation, tender offer, joint
venture, strategic alliance or other similar transaction) available to the
Company which the Company's senior management or Board of Directors reasonably
determines not to be in the Company's best interest to disclose, then the
Company may postpone or suspend for any individual period of less than 30 days
and aggregate periods not to exceed 90 days in any calendar year filing of a
Registration Statement, prospectus, prospectus supplement or any report, form or
statement incorporated by reference or to be incorporated by reference into any
of the foregoing, or any amendment to any of the foregoing, and suspend offers
and sales pursuant to the foregoing, and, upon delivery of written notice from
the Company of any such postponement or suspension, the Holder shall cease and
be prohibited from making any offers or sales of Registrable Securities pursuant
thereto. The Holder shall keep confidential and not use for any purpose such
written notice and the contents thereof, and any related information, unless and
until such information has been disclosed publicly by the Company,
Section 3. Other Duties of Company. In connection with the Company's obligations
with respect to the Shelf Registration Statement as set forth in Section 1, the
Company shall use reasonable efforts to: (a)
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furnish to the Holder a copy of the Shelf Registration Statement, each
amendment and supplement thereto and such reasonable number of copies of the
prospectus included in such registration statement (including each preliminary
prospectus), as the Holder may reasonably request in order to facilitate the
disposition of the Shares owned by the Holder and covered by the Shelf
Registration Statement; (b) notify the Holder at any time when a prospectus
relating thereto is required to be delivered under the Securities Act within the
period that the Company is required to keep the Shelf Registration Statement
effective of the happening of any event as a result of which the prospectus
included in such Shelf Registration Statement (as then in effect) contains an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances then existing, not misleading, and the Company will prepare
and as soon as reasonably practicable file a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such Shares,
such prospectus will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances then existing, not
misleading; (c) advise the Holder, after receiving notice thereof, of any stop
order issued or threatened by the Commission with respect to the Shelf
Registration Statement and to use its reasonable efforts to take all actions
required to prevent the entry of such stop order, or to remove it if entered;
and (d) use its reasonable efforts to cause all Shares included in such Shelf
Registration Statement to be listed, by the date of the first sale of Shares
pursuant to such Shelf Registration Statement, on the principal securities
exchange on which the Company's common stock is then listed.
Section 4. Discontinuance of Dispositions. The Holder agrees that, upon receipt
of any notice from the Company of the happening of any event of the kind
described in Sections 3(b) or 3(c) above, such Holder will forthwith discontinue
disposition of Shares pursuant to the Shelf Registration Statement until such
Holder receives the copies of the supplemented or amended prospectus
contemplated by Section 3(b) above, any stop order is removed or any threatened
stop order is withdrawn or otherwise resolved, and, if so directed by the
Company, such Holder will deliver to the Company all copies of the prospectus
covering such Shares at the time of receipt of such notice.
Section 5. Prospectus Delivery Requirements. The Holder hereby covenants that
he will not make any sale of Shares that are registered in accordance with this
Annex I without complying with the prospectus delivery requirements under the
Securities Act.
Section 6. Information Requests by the Company. The Company may require the
Holder to furnish the Company with such information regarding such Holder and
the distribution of such Shares as the Company may from time to time request in
writing. The Holder agrees to notify the Company as promptly as practicable
after he obtains knowledge thereof of any inaccuracy or change in information
previously furnished by such Holder to the Company or of the occurrence of any
event in either case as a result of which any prospectus relating to such
registration contains an untrue statement of a material fact regarding such
Holder or the distribution of such Shares or omits to state any material fact
regarding such Holder or the distribution of such Shares required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing, and promptly to furnish to the Company any
additional information required to correct and update any previously furnished
information or required so that such prospectus shall not contain, with respect
to such Holder or the distribution of such Shares an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances then
existing, not misleading.
Section 7. Expenses. All expenses incident to the Company's performance of or
compliance with the provisions of this Annex I will be borne by the Company,
except that the Holder shall pay any and all
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underwriting fees, discounts or commissions and fees and disbursements of
counsel to such Holder attributable to the sale of Shares.
Section 8. Indemnification and Contribution with Respect to Registration Rights.
(a) In the event of a registration of any of the Shares under the
Securities Act pursuant to this Annex IV, the Company will indemnify and hold
harmless the Holder against any losses, claims, damages or liabilities, joint
or several, to which such Holder may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Shares were registered under the Securities Act pursuant to
this Annex IV, any preliminary prospectus or final prospectus contained therein,
or any amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse such Holder for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case if and to the extent that any such loss, claim, damage,
liability or action arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished by the Holder in writing specifically for use in such
registration statement or prospectus.
(b) In the event of a registration of any of the Shares under the
Securities Act pursuant to this Annex IV, the Holder will indemnify and hold
harmless the Company, each person, if any, who controls the Company within the
meaning of the Securities Act, each officer of the Company who signs the
registration statement, each director of the Company, each underwriter and each
person who controls any underwriter within the meaning of the Securities Act,
against all losses, claims, damages or liabilities, joint or several, to which
the Company or such officer, director, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such Shares were
registered under the Securities Act pursuant to this Annex I, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Company and each
such officer, director, underwriter and controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage or liability; provided, however, that
such Holder will be liable hereunder in any such case if and only to the extent
that any such loss, claim, damage, liability or action arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining
to such Holder, as such, furnished in writing to the Company by such Holder
specifically for use in such registration statement or prospectus; provided,
further, however, that the liability of the Holder hereunder shall be limited to
the net proceeds received by such Holder from the sale of Shares covered by such
registration statement.
(c) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) the Holder
exercising rights under this Annex I makes a claim for indemnification pursuant
to this Annex I, but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Annex I provides for indemnification in such case, or (ii) contribution
under the Securities Act may be
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required on the part of any such Holder in circumstances for which
indemnification is provided under this Annex I; then, and in each such case, the
Company and such Holder will contribute to the aggregate losses, claims, damages
or liabilities to which they may be subject (after contribution from others) in
such proportion so that such Holder is responsible for the portion represented
by the percentage that the public offering of its Stock offered by the
registration statement bears to the public offering price of all securities
offered by such registration statement, and the Company is responsible for the
remaining portion; provided, however, that, in any such case, (A) the Holder
will not be required to contribute any amount in excess of the public offering
price of all such Shares offered by him pursuant to such registration statement,
and (B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.
Section 9. Piggy-back Registration. If at any time prior to such time as the
Company has become eligible to file a Registration Statement on Form S-3 (or any
successor form), the Company shall determine to prepare and file with the SEC a
registration statement relating to an offering for its own account for cash or
the account of others under the Securities Act of any of its common stock,
other than on Form S-4 or Form S-8 relating to equity securities to be issued
solely in connection with any acquisition of any entity or business or equity
securities issuable in connection with any stock option or other employee
benefit plan, the Company shall send to the Holder written notice of such
determination and, if within 20 days after receipt of such notice, the Holder
shall so request in writing, the Company shall include in such registration
statement all or any part of the Registrable Securities the Holder requests to
be registered; provided, however, that the Company shall not be required to
register any shares of Registrable Securities pursuant to this paragraph that
are eligible for sale pursuant to Rule 144 under the Securities Act. If the
total amount of securities, including Registrable Securities, to be included in
such registration statement exceeds the amount of securities that the managing
underwriter (or, if the offering is not being underwritten, the Company's Board
of Directors) determines, in its written opinion, in good faith is compatible
with the success of the offering, then the number of shares that may be included
in the registration statement shall be allocated as follows: (1) first, to the
Company or, if the offering is being made for the account of persons other than
the Company, such persons (2) second, to such other persons who are
participating in such offering who have the right to include their shares in
such registration statement on a priority basis to other persons participating
in such offering (other than the persons described in clause (1)), and (3) to
the Holder and to any other persons participating in such offering on a pro
rata basis based on the number of shares of securities that each Holder and
such other persons have the right to request to be included in such
registration.
Section 10. Underwriting Agreements, etc. As a condition to participation in
any underwritten offering the Holder shall enter into such underwriting, lock-up
and other agreements, and execute such other instruments, as is customary in an
underwritten offering. As a condition to participation in any non-underwritten
offering, the Holder shall cooperate to provide such information necessary for
the preparation of the registration statement as is customary in a non-
underwritten offering. The Holder may not participate in any registration
hereunder unless the Holder executes and delivers an agreement not to divulge
any proprietary or confidential information of the Company or any of its
subsidiaries which becomes known to the Holder in connection with any such
registration.
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