1997 INCENTIVE STOCK OPTION PLAN

 

                    EXHIBITS FOR S-1 REGISTRATION STATEMENT
                      OF METRO INFORMATION SERVICES, INC.

EXHIBIT 10.1  REGISTRANT'S 1997 INCENTIVE STOCK OPTION PLAN AND RELATED FORM OF
              STOCK OPTION AGREEMENT.

   
                     1997 INCENTIVE STOCK OPTION PLAN
    

         Metro Information Services, Inc., a Virginia corporation and its 
subsidiaries, whether now existing or formed after the date hereof (the 
"Corporation"), adopts an incentive stock option plan (the "Plan") under the 
Internal Revenue Code of 1986, as amended (the "Code") to attract and retain 
key employees of the Corporation ("Employees").

         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 designed to qualify as incentive stock options 
("Options") under Section 422 of the Code.

         This Plan is as follows:
   
         1.   OPTIONS STOCK.  The aggregate number of shares that may be 
issued pursuant to Options granted under this Plan is 770,000 shares of the  
Common Stock of the Corporation (the "Stock").

    

         2.   EMPLOYEES ELIGIBLE TO RECEIVE OPTION.  Only key Employees, 
including, without limitation, Employees who are officers or directors of the 
Corporation, are eligible to 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 Stock 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 OPTION.  The Committee shall set forth each Option and 
its terms and conditions on a written incentive stock option certificate 
("Option Certificate") that shall be duly authorized by the Committee.  The 
Option Certificate shall set forth the number of shares of Stock that the 
Employee may purchase during any calendar year.  The Stock shall be valued as 
set forth in Paragraph 5 below.  The Committee, in granting the Option, shall 
include such terms and conditions in the Option Certificate as may be 
required to make the Option qualify as an incentive stock option under the 
Code.

         5.   PURCHASE PRICE.  Each Option Certificate shall set forth the 
exercise price per share of the Stock ("Purchase Price").  The Purchase Price 
will not be less than one hundred percent (100%) of the fair market value of 
the Stock on the date that the Option is granted; 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.

         6.   TIME TO EXERCISE OPTION.  Each Option Certificate shall set 
forth that the Option is exercisable during a period no later than nine (9) 
years and eleven (11) months after the date on which the Option is granted; 
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.

         7.   PERSON EXERCISING OPTION-TRANSFER.  Only the Employee to whom 
the Option is granted may exercise the Option during the Employee's lifetime. 
Further, by its terms, no Option granted may be transferred to any other 
individual other than by the will of the Employee or by the laws of descent 
and distribution.

         8.   PAYMENT OF PURCHASE PRICE.  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.

         9.   EXERCISE OF OPTIONS.  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 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 Paragraphs 11 and 12, an Option may only be exercised if the 
holder of the Option is, at the time of exercise, in the employ of the 
Corporation.  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.

         10.  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.
   
         11.  TERMINATION OF EMPLOYMENT.  Except as provided in Paragraph 12, 
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.
    

         12.  EXERCISE ON DEATH, DISABILITY OR RETIREMENT OF THE EMPLOYEE.  
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.

         13.  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 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.

         14.  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, 
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.

         15.  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 14, (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 set forth in 
paragraph 5.  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.

         16.  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.

         17.  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 
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.

         18.  EFFECTIVE ON ADOPTION BY SHAREHOLDERS.  This Plan shall become 
effective on the adoption by the Board of Directors

and by approval of the shareholders of the Corporation after the date of 
adoption of this Plan by the Board of Directors.

         The Corporation has signed this Plan on the date indicated below to 
be effective as of that date.

                             METRO INFORMATION SERVICES, INC.

   

Date: December 24, 1996     By: /s/ John H. Fain
                                --------------------------------
                                John H. Fain, President

                   FORM OF 1997 INCENTIVE STOCK OPTION

                                                                     EXHIBIT 1

                                                           _____________, 1997

Dear _________________:

         Metro Information Services, Inc. (the "Corporation") has designated 
you to be a recipient of an option (the "Option") to purchase Common Stock of 
the Corporation (the "Stock") on the terms set forth in this letter and in 
the Metro Information Services, Inc. 1997 Incentive Stock Option Plan (the 
"Plan"). The Option is awarded pursuant to the Plan, which became effective 
on [____________ ___, 1997].  The Plan is administered by the Committee (as 
defined in the Plan). 

         Please refer to the Plan for certain conditions not set forth in 
this letter.  All provisions of the Option and this letter are subject to the 
terms of the Plan, and the terms of the Plan are incorporated into this 
letter by this reference.  Capitalized terms which are not defined in this 
letter shall have the meaning given those terms in the Plan.

    1.   OPTION.  In consideration of your agreements contained in this 
letter and subject to the vesting requirements set forth below, the 
Corporation grants you an Option to purchase from the Corporation ___ shares 
of Stock at $_____ per share.  Each Option is an incentive stock option as 
defined in the Plan.  The award of each Option is subject to the terms and 
conditions set forth below.

    2.   TERMS OF OPTION.

         A.   VESTING.  If you die, retire after your [sixty-fifth (65th)]
birthday or become disabled (as provided in the Plan), the Option will become 
100% vested.  Otherwise, the Option granted in Paragraph 1 will become vested 
as follows:

         [December 31, 1997            20% of the shares of Stock
         December 31, 1998             40% of the shares of Stock
         December 31, 1999             60% of the shares of Stock
         December 31, 2000             80% of the shares of Stock
         December 31, 2001            100% of the shares of Stock]

         B.   EXERCISE DATE.  Subject to the provisions set forth in this 
letter and in the Plan, you may not exercise the vested portion of any 
Option, in whole or in part, at any time after nine (9) years and eleven (11) 
months from the date on which the Option was granted; provided, however, that 
if you should own more than ten percent (10%) of the total combined voting 
power of all classes

of stock of the Corporation, you may not exercise the vested portion of the 
Option, in whole or in part, at any time after four (4) years and eleven (11) 
months from the date on which the Option was granted.

         C.   PAYMENT TERMS.  On the exercise of any Option, you shall 
deliver payment in full for such shares to be purchased as follows:  [Cash] 
[Promissory Note] [Common Stock of Metro].

         D.   EMPLOYMENT.  Except as provided below, you must continue to be 
an employee of the Corporation at all times through the appropriate vesting 
date for the Option to become vested.

              (1)  DEATH.  If you die while employed by the Corporation, the 
Option may be exercised by your executor, administrator or personal 
representative at any time within twelve (12) months after your death, but in 
no event after the expiration of the Option.

              (2)  DISABILITY.  If your employment with the Corporation is 
terminated  because of your disability, you may exercise the Option as to any 
shares subject to the Option at any time within twelve (12) months after the 
date of such termination, but in no event after the expiration of the Option.

              (3)  RETIREMENT.  If your employment with the Corporation is 
terminated  because of your retirement after your sixty-fifth (65th) 
birthday, you may exercise the Option at any time within three (3) months 
after the date of your retirement, but in no event after the expiration of 
the Option.

         E.   OTHER TERMINATION.  If your employment with the Corporation is 
terminated for any reason other than death, disability or retirement as 
provided above, you may exercise the Option as to any shares which are vested 
and subject to the Option at any time within three (3) months after the date 
of your termination of employment with the Corporation, but in no event after 
the expiration of the Option.  On such a termination of employment, Options 
with respect to any shares which are not vested shall be cancelled and 
without effect.

         F.   NONTRANSFERABILITY.  Other than by your will or by the laws of 
descent and distribution, you may not transfer, assign, pledge, hypothecate 
or dispose of in any way (whether by operation of law or otherwise) (a 
"Transfer") any Option granted to you to any other individual.  Any purported 
Transfer or any attempt to levy on, or execute on or place other process on 
the Option will be null and void and without effect and shall give the 
Committee the right, but not the obligation, to cancel this Option as 
provided in the Plan.

    3.   OTHER TERMS.

         A.   CHANGE IN CAPITALIZATION.  As provided in the Plan, appropriate 
adjustments shall be made in the number and kind of shares for which the 
Option may be exercised should there be a change in the capital structure of 
the Corporation.  The Board may take appropriate actions in good faith with 
respect to the Option in the event of a significant corporate or other 
capital transaction.

         B.   TAXES.  By signing this letter, you agree to make arrangements 
satisfactory to the Corporation to comply with any income and payroll tax 
withholding requirements that may apply on the exercise of the Option.

         C.   INVESTMENT.  By signing this letter, you agree to hold all of 
the Stock acquired pursuant to the exercise of the Option for investment 
purposes and not with a view for resale or distribution to the public, unless 
and until such time as the Stock so acquired shall have been registered under 
applicable state and federal securities laws or an exemption from such 
registration is available. By signing this letter, you agree to execute such 
documents as the Corporation may require with respect to state and federal 
securities laws, and you agree to any restrictions on the resale of Stock 
that may pertain.

         D.   NOTICE.  Written notice is deemed to have been given to the 
Corporation if delivered personally or mailed first class, postage prepaid, 
to the President of the Corporation at the principal business address of the 
Corporation or at such other address or to the attention of such other person 
as the Corporation shall have specified by prior written notice to you.

         E.   AGREEMENT.  In consideration of the grant of the Option, you 
hereby agree that you will comply with such other reasonable conditions as 
the Corporation may impose consistent with the Plan on the exercise of the 
Option; provided, however, that the provisions of this sentence shall not be 
interpreted as affecting any right that the Corporation may have to terminate 
your employment at any time.

         F.   NO RIGHT OF EMPLOYMENT.  You agree and acknowledge that this 
Option does not, directly or indirectly, create any right to continued 
employment with the Corporation.  You agree that this letter will be governed 
by the laws of the Commonwealth of Virginia.

         If you agree to the foregoing terms and conditions, please execute 
the attached copy of this letter and return it to the President of the 
Corporation.

                                            Sincerely,

                                            METRO INFORMATION SERVICES, INC.

                                            By:
                                               ------------------------------

                                            Its 
                                                -----------------------------

         I accept the foregoing Option according to the terms set forth in 
this letter and in the Metro Information Services, Inc. 1997 Incentive Stock 
Option Plan.

                                            ---------------------------------
                                            OPTION HOLDER

                                  EXHIBIT A

                       METRO INFORMATION SERVICES, INC.
                       1997 INCENTIVE STOCK OPTION PLAN

                        NOTICE OF EXERCISE OF OPTION

         Pursuant to the terms of the Option Agreement, dated 
________________, 1997, between METRO INFORMATION SERVICES, INC. and the 
undersigned Optionee, the Optionee hereby exercises the Option to purchase 
_______ shares of Corporation Stock.  The Optionee hereby delivers the full 
Option price with respect to the exercised Option, which is comprised of 
_____________.

         Executed this ____ day of _________, _____.

                                            OPTION HOLDER

                                            ------------------------------
                                            Signature

                                            ------------------------------
                                            Print or Type Name

         Metro Information Services, Inc. acknowledges receipt of the 
foregoing notice of exercise and payment of the Option Price this ___ day of 
___________, _____.

                                            METRO INFORMATION SERVICES, INC.

                                            By
                                              ----------------------------

                                            Its 
                                                -------------------------- 

Basic Info X:

Name: 1997 INCENTIVE STOCK OPTION PLAN
Type: Stock Option Plan
Date: Jan. 6, 1997
Company: METRO INFORMATION SERVICES INC
State: Virginia

Other info:

Date:

  • thirty 30
  • December 24 , 1996
  • December 31 , 1997 20 %
  • December 31 , 1998 40 %
  • December 31 , 1999 60 %
  • December 31 , 2001

Organization:

  • Board of Directors < PAGE
  • Commonwealth of Virginia
  • Type Name Metro Information Services , Inc.

Location:

  • Virginia

Money:

  • $ 100,000

Person:

  • John H. Fain
  • Optionee

Percent:

  • one hundred percent 100 %
  • ten percent 110 %
  • 80 %