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
( X ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
CDI CORP.
- ------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
CDI CORP.
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
( X ) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( ) 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:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: /
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
Set forth the amount on which the filing fee is calculated and state
how it was determined.
( ) 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.:
----------------------------------------------------------------------
3) Filing Party:
----------------------------------------------------------------------
4) Date Filed:
----------------------------------------------------------------------
<PAGE>
[LOGO]
CDI CORP.
1717 ARCH STREET, 35TH FLOOR
PHILADELPHIA, PENNSYLVANIA 19103-2768
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 3, 1994
To Shareholders:
The Annual Meeting of the Shareholders of CDI Corp. (the "Company"), a
corporation organized under the laws of the Commonwealth of Pennsylvania, will
be held in the Forum Room, on the 8th Floor of Mellon Bank Center, 1735 Market
Street, Philadelphia, Pennsylvania, on Tuesday, May 3, 1994, at 10:00 A.M.,
for the following purposes:
1. To elect eight directors of the Company to serve during the ensuing
year or until their successors have been duly elected and qualified;
2. To act upon a proposal to increase the number of shares of Common Stock
which may be issued under the Company's Non-Qualified Stock Option and
Stock Appreciation Rights Plan from 300,000 to 800,000; and
3. To transact such other business as may properly come before the meeting
or any and all adjournments or postponements of the meeting.
Only shareholders of record on March 3, 1994 are entitled to notice of and to
vote at the Annual Meeting. IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN
PERSON AND DESIRE TO HAVE THE STOCK REGISTERED IN YOUR NAME REPRESENTED AND
VOTED AT THE MEETING, PLEASE FILL IN, SIGN, DATE AND PROMPTLY RETURN THE PROXY
IN THE ACCOMPANYING ENVELOPE, TO WHICH POSTAGE NEED NOT BE ADDED IF MAILED IN
THE UNITED STATES. If you attend the meeting, you may revoke your proxy and
vote in person.
By Order of the Board of Directors
Dated: March 21, 1994 JOSEPH R. SEIDERS, Secretary
Philadelphia, Pennsylvania
<PAGE>
[LOGO]
CDI CORP.
1717 ARCH STREET, 35TH FLOOR
PHILADELPHIA, PENNSYLVANIA 19103-2768
------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 3, 1994
------------------------------
GENERAL INFORMATION
This Proxy Statement and the accompanying form of proxy are furnished in
connection with the solicitation of proxies by the Board of Directors (the
"Board") of CDI Corp. (the "Company") to be used at the Annual Meeting of
Shareholders to be held on Tuesday, May 3, 1994 at 10:00 A.M. in the Forum
Room on the 8th Floor of Mellon Bank Center, 1735 Market Street, Philadelphia,
Pennsylvania and at any and all adjournments or postponements of that meeting.
The date of mailing of this Proxy Statement and the form of proxy to the
Company's shareholders is on or about March 21, 1994.
The solicitation of proxies is being handled by the Company at its cost,
principally through the use of the mails. If it appears desirable to do so in
order to assure adequate representation of shareholders at the meeting,
officers and regular employees of the Company may communicate with
shareholders, banks, brokerage firms or nominees by telephone or in person to
request that proxies be furnished in time for the meeting. No solicitation is
being made by specially engaged employees of the Company or paid solicitors.
If the enclosed form of proxy is executed and returned, it may,
nevertheless, be revoked by giving written notice of such revocation to the
Secretary of the Company at any time prior to the voting thereof. The proxy is
in such a form that authority to vote for the election of all or any one of
the directors can be withheld and that separate approval or disapproval can be
indicated with respect to Proposal Two, which is identified in the proxy and
the accompanying Notice of Annual Meeting of Shareholders and set forth and
commented upon in this Proxy Statement. The shares represented by the proxy
will be voted for the election of the directors unless authority to do so is
withheld and will be voted for approval of the proposal to increase the number
of shares of Common Stock which may be issued under the Company's Non-
Qualified Stock Option and Stock Appreciation Rights Plan unless a contrary
choice is specified.
ANNUAL REPORT
The Company's Annual Report to Shareholders for the year ended December
31, 1993 is being mailed to all shareholders together with this Proxy
Statement. That report is not to be regarded as proxy solicitation material or
as a part of this Proxy Statement.
1
<PAGE>
VOTING RIGHTS
There were issued and entitled to vote, as of March 3, 1994, 19,714,828
shares of the common stock, par value $.10 per share, of the Company ("Common
Stock"), the only class of stock of the Company now issued and outstanding.
Shareholders are entitled to one vote for each share of stock held. The
presence, in person and by proxy, of a majority in the number of the
outstanding shares of stock entitled to vote at the Annual Meeting will
constitute a quorum for the transaction of business. A quorum being present,
proposals will be decided by a majority of the votes cast, in person and by
proxy, at the Annual Meeting by all shareholders entitled to vote thereon.
Shares represented by proxies that reflect abstentions and shares referred to
as "broker nonvotes" (i.e., shares held by brokers or nominees as to which
instructions have not been received from beneficial owners and as to which the
broker or nominee does not have discretionary voting power on a particular
matter, such as Proposal Two described below) will be treated as being present
for purposes of determining the presence of a quorum but will not constitute a
vote cast with respect to any matter. Only shareholders of record at the close
of business on March 3, 1994 will be entitled to vote at the meeting.
PRINCIPAL SHAREHOLDERS AND MANAGEMENT STOCK OWNERSHIP
The following table shows, as of January 31, 1994, as to each person known
to the Company who on such date owned beneficially more than 5% of the
outstanding Common Stock of the Company, as to each executive officer of the
Company and as to all of the Company's officers and directors as a group, (i)
the number of shares of Common Stock so owned and (ii) the percentage of
outstanding Common Stock represented by the number of shares so owned.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
NAME AND ADDRESS OF OF COMMON STOCK OUTSTANDING COMMON
BENEFICIAL OWNER OWNED BENEFICIALLY* STOCK
------------------- ------------------ ------------------
<S> <C> <C>
Walter R. Garrison 2,039,408 10.3%
1717 Arch Street, 35th Floor (1)
Philadelphia, PA 19103-2768
Donald W. Garrison, Christian M. Hoechst, Allen I. Rosenberg 6,423,952 32.6%
and Barton J. Winokur, as Co-Trustees, or Messrs. Rosenberg and (2)
Winokur, as Co-Trustees, of various trusts for the benefit of
members of Walter R. Garrison's family
c/o Robert L. Freedman, Esquire
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Variety Wholesalers, Inc. 1,046,300 5.3%
3401 Greshams Lake Road
Raleigh, NC 27615
Christian M. Hoechst 415,338 2.1%
1717 Arch Street, 35th Floor (3)
Philadelphia, PA 19103-2768
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
NAME AND ADDRESS OF OF COMMON STOCK OUTSTANDING COMMON
BENEFICIAL OWNER OWNED BENEFICIALLY* STOCK
------------------- ------------------ ------------------
<S> <C> <C>
Edgar D. Landis 375,000 1.9%
1717 Arch Street, 35th Floor
Philadelphia, PA 19103-2768
All directors and officers as a group (11 persons) 4,272,914 21.7%
(1)(4)(5)
<FN>
- ---------
* Except as indicated below, the Company is informed that the respective
beneficial owners have sole voting power and sole investment power with
respect to the shares shown opposite their names.
(1) Includes 28,000 shares held by Mr. Garrison's wife and 67,000 shares held
by a trust for the benefit of Mr. Garrison's wife (of which Mr. Garrison
is a trustee). Does not include the shares held by the various family
trusts referred to in the table above or the 175,000 shares held by The
Garrison Foundation. The Garrison Foundation is a charitable trust
established for the benefit of the Pennsylvania Institute of Technology.
Certain of the trustees of such family trusts and foundation are either
directors or both directors and officers of the Company, and the
beneficiary of certain of such family trusts is Mark R. Garrison, a Vice
President of the Company. Walter R. Garrison is one of five trustees of
The Garrison Foundation. However, the trustees of such family trusts and
foundation disclaim beneficial ownership of all such shares except as
fiduciaries. See footnotes (1) and (2) on page 6. If the 6,423,952 shares
held in those family trusts and the 175,000 shares held by The Garrison
Foundation were combined with the 4,272,914 shares shown in the table
above as held by directors and officers as a group (after deducting the
12,150 shares described in footnote 4 below, which are included in both
the 6,423,952 shares held in the family trusts and the 4,272,914 shares
held by all directors and officers as a group), the total would be
10,859,716 shares or 55.1% of the outstanding Common Stock.
(2) The trustees under these family trusts share voting and investment power
with respect to these shares with the other trustees but disclaim any
beneficial interest except as fiduciaries. These trustees own of record
and beneficially the number of shares of stock, if any, shown opposite
their names on the table beginning on page 4, with respect to which they
have sole voting and investment power.
(3) Does not include the 6,423,952 shares of Common Stock held in the various
trusts for the benefit of members of Walter R. Garrison's family which are
referenced in the above table. Mr. Hoechst is a co-trustee of some of
those trusts but he disclaims beneficial ownership of those shares except
as a fiduciary. Also does not include 175,000 shares held by The Garrison
Foundation. Mr. Hoechst is one of five trustees of the Foundation but he
disclaims beneficial ownership of those shares except as a fiduciary.
(4) Includes 12,150 shares which are also included in the 6,423,952 shares
owned by the family trusts shown in the table above. These 12,150 shares
are deemed to be beneficially owned by Mark R. Garrison, a Vice President
of the Company, who is also a beneficiary of certain of those family
trusts. Mark Garrison also directly owns additional shares of Common
Stock.
(5) See footnotes (1), (2), (3), (4) and (5) on page 6.
</TABLE>
3
<PAGE>
PROPOSAL ONE
------------
ELECTION OF DIRECTORS
Eight directors are to be elected at the Annual Meeting of Shareholders,
to hold office until the next Annual Meeting of Shareholders or until their
successors are elected and qualified. The persons named in the enclosed form
of proxy (Joseph R. Seiders and Craig H. Lewis) have advised the Company that
they intend to vote FOR the eight nominees below unless authority to do so is
withheld. Each of these nominees has been designated by, and each is currently
a member of, the Board of Directors. The Board is not aware of any reason why
any nominee will be unable to stand for election as a director or serve if
elected, but if any such nominee should become unavailable, the Board may
nominate, and the persons named in the accompanying form of proxy may vote
for, a substitute nominee.
INFORMATION ABOUT THE NOMINEES
The following table sets forth information about the nominees for election
to the Board of Directors.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
NAME, OTHER POSITIONS BUSINESS EXPERIENCE OF COMMON STOCK OUTSTANDING
WITH COMPANY, PERIOD DURING PAST FIVE YEARS OWNED BENEFICIALLY COMMON
SERVED AS DIRECTOR** AGE AND OTHER DIRECTORSHIPS AS OF JANUARY 31, 1994*** STOCK
--------------------- ----- ----------------------- ------------------------- --------------
<S> <C> <C> <C> <C>
Walter R. Garrison *#(S)................ 67 Chairman of the Board, 2,039,408 10.3%
Chairman of the Board, Presi- President and Chief Executive (1)(2)
dent and Chief Executive Offi- Officer of the Company
cer; Director since 1958
Christian M. Hoechst *.................. 57 Executive Vice President of 415,338 2.1%
Executive Vice President; the Company (1)(2)
Director since 1974
Lawrence C. Karlson +#.................. 51 Chairman of the Board and 21,000 .1%
Director since 1989 Chief Executive Officer of
Karlson Corporation
(consulting services) since
April 1993; Chairman of the
Board (January 1990-April
1993), and President, Chief
Executive Officer and
Director (1986-1989), of
Spectra-Physics AB,
Stockholm, Sweden
(instrumentations
manufacturer); Director,
Meridian Bancorp Inc. (bank
holding company)
Edgar D. Landis *....................... 62 Executive Vice President, 375,000 1.9%
Executive Vice President, Finance of the Company
Finance; Director since 1975
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
NAME, OTHER POSITIONS BUSINESS EXPERIENCE OF COMMON STOCK OUTSTANDING
WITH COMPANY, PERIOD DURING PAST FIVE YEARS OWNED BENEFICIALLY COMMON
SERVED AS DIRECTOR** AGE AND OTHER DIRECTORSHIPS AS OF JANUARY 31, 1994*** STOCK
--------------------- ----- ----------------------- ------------------------- --------------
<S> <C> <C> <C> <C>
Allen M. Levantin +#(S)................. 61 Retired; President and Chief 8,667 Less
Director since 1989 Executive Officer of CDI (3) than
Temporary Services, Inc., a .1%
subsidiary of the Company
(July 1991-December 1992);
Vice President-Corporate
Development of Rohm and Haas
Company, Philadelphia, PA
(maker of chemicals and
plastics) (1985-1990)
John W. Pope +#......................... 69 Chairman of the Board, 1,059,800 5.4%
Director since 1989 President and Chief Executive (2)(4)
Officer of Variety
Wholesalers, Inc., Raleigh,
NC (operator of variety
retail stores)
Allen I. Rosenberg +.................... 67 Of Counsel to the law firm of 0 0%
Director since 1967 Abrahams, Loewenstein, (1)
Bushman & Kauffman, P.C.,
Philadelphia, PA
Barton J. Winokur *+(S)................. 54 Partner in the law firm of 220,128 1.1%
Director since 1968 Dechert Price & Rhoads, (1)(2)(5)
Philadelphia, PA; Director,
Alco Health Services
Corporation, Malvern, PA
(wholesale distributor of
ethical pharmaceuticals);
Director, The Bibb Company,
Macon, GA (manufacturer of
home textiles); Director,
Farm Fresh, Inc. (supermarket
chain); Director, DavCo
Restaurants, Inc.
<FN>
- ---------
* Member of Executive Committee
+ Member of Audit Committee
# Member of Compensation Committee
(S) Member of Stock Option Committee
** References to periods served as a director of the Company include periods
served as a director of CDI Corporation, the Company's predecessor
registrant under the Securities Exchange Act of 1934.
5
<PAGE>
*** Except as indicated below, the Company is informed that the respective
beneficial owners have sole voting power and sole investment power with
respect to the shares shown opposite their names.
(1) Does not include 6,423,952 shares of Common Stock held in various trusts
created by Walter R. Garrison for the benefit of members of his family.
These shares are referenced in the Principal Shareholders table under the
names of the co-trustees of the various trusts. The co-trustees of some of
the trusts are Messrs. Donald W. Garrison, Hoechst, Rosenberg and Winokur.
The co-trustees of the remainder of these trusts are Messrs. Rosenberg and
Winokur. Except for Donald W. Garrison, who is Walter R. Garrison's
brother, each trustee of these trusts is either a director or both an
officer and director of the Company. Walter R. Garrison disclaims
beneficial ownership of these shares, as do the trustees except as
fiduciaries. Walter R. Garrison's share total includes 28,000 shares held
by his wife and 67,000 shares held by a trust for the benefit of his wife
(of which Walter R. Garrison is a trustee).
(2) Does not include 175,000 shares held by The Garrison Foundation. The
trustees of the Foundation are Messrs. Hoechst, Pope, Winokur, Walter R.
Garrison and Joseph L. Carboni. Except for Mr. Carboni, each trustee is
either a director or both an officer and director of the Company. The
trustees disclaim beneficial ownership of these shares except as
fiduciaries.
(3) Includes 6,667 shares which Mr. Levantin has the right to acquire within
the 60-day period after January 31, 1994 through the exercise of options.
(4) Consists of 1,046,300 shares held by Variety Wholesalers, Inc. (of which
Mr. Pope is Chairman of the Board, President and Chief Executive Officer)
and 13,500 shares held by Mr. Pope's wife. Does not include 74,200 shares
held by the John William Pope Foundation, a non-profit foundation of which
Mr. Pope is a non-voting Director Emeritus. Mr. Pope disclaims beneficial
ownership of the shares held by the foundation.
(5) Does not include 13,500 shares held by an irrevocable trust of which Mr.
Winokur is the sole trustee. Mr. Winokur has no beneficial interest in the
income or corpus of this trust and disclaims beneficial ownership of these
shares except as a fiduciary.
</TABLE>
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
The Board of Directors of the Company held five meetings during 1993 and
acted once by unanimous written consent. The Board of Directors has four
standing committees: an Executive Committee, an Audit Committee, a
Compensation Committee and a Stock Option Committee.
The Executive Committee has the general authority of the Board, subject to
certain limitations, to act on behalf of the Board. This Committee held no
meetings during 1993, but acted on six occasions by unanimous written consent.
The Audit Committee reviews with KPMG Peat Marwick, the Company's
independent auditors, the proposed scope of their examination and their
subsequent report on each annual audit, preliminary to the consideration
thereof by the full Board of Directors. This Committee held four meetings
during 1993.
6
<PAGE>
The Compensation Committee advises the Company on executive compensation
matters. This Committee held two meetings during 1993.
The Stock Option Committee administers the Company's Non-Qualified Stock
Option and Stock Appreciation Rights Plan. This Committee held no meetings
during 1993, but acted once by unanimous written consent.
Mr. Pope attended fewer than seventy-five percent of the total number of
meetings held during 1993 of the Board and the committees of the Board on
which he served during the year.
COMPENSATION OF DIRECTORS
Directors currently receive the following compensation for their
participation on the Board: each director who is not an officer of the Company
or one of its subsidiaries is paid a fee of $5,000 per quarter for service on
the Board and meeting attendance fees of $1,000 for each Board meeting
attended plus $500 for each Audit Committee meeting attended. Any director who
is also an officer of the Company or one of its subsidiaries does not receive
any fees for service on the Board or any of its committees.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding the
compensation for services to the Company and its subsidiaries during each of
the last three fiscal years which was earned by the three executive officers
of the Company, constituting the only three key policy-making members of
management. These officers are elected annually by the Board of Directors.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION ALL OTHER
--------------------------------- COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (1)
- --------------------------- ------- ------ ------------- -----------------
<S> <C> <C> <C> <C>
Walter R. Garrison, 1993 $ 65,000 $352,683 $20,641
Chairman of the Board, President and 1992 65,000 162,212 6,347
Chief Executive Officer 1991 65,000 -0-
Christian M. Hoechst, 1993 80,000 261,648 18,476
Executive Vice President 1992 80,000 307,891 20,410
1991 80,000 195,434
Edgar D. Landis, 1993 200,000 50,000 10,148
Executive Vice President, 1992 185,000 -0- 9,445
Finance 1991 185,000 -0-
<FN>
- ---------
(1) All Other Compensation in 1993 and 1992 consisted entirely of Company
contributions and allocations to the following employee benefit plans: the
Company's qualified Retirement Plan ($11,072 to the account of each of Mr.
Garrison and Mr. Hoechst and $9,748 to the account of Mr. Landis in 1993),
the Company's qualified 401(k) plan ($400 to the account of each of
Messrs. Garrison, Hoechst and Landis in 1993) and the Company's non-
qualified excess benefits plan ($9,169 to the account of Mr. Garrison and
$7,004 to the account of Mr. Hoechst in 1993). Disclosure of All Other
Compensation is not required or provided for 1991.
</TABLE>
7
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has employment agreements with all three of the executive
officers included in the above Summary Compensation Table.
Mr. Garrison's current employment agreement, which was entered into in
1973, provides for a base salary of $65,000 and a bonus based on a percentage
of the Company's pre-tax earnings. The bonus is 2% of the first $500,000 of
pre-tax earnings and 2-3/4% of pre-tax earnings in excess of $500,000. The
agreement is automatically renewed on an annual basis unless terminated by
either party at the end of any fiscal year on two months' notice. The
agreement contains certain noncompetition and nonsolicitation covenants of Mr.
Garrison which are effective for a period of two years after termination of
employment for any reason.
Mr. Hoechst's current employment agreement, which was entered into in
1986, provides for a base salary of $80,000 and a bonus made up of three
components. The first component is 2-1/2% of the pre-tax earnings of those
operations under his direct supervision. The second component is 1/2% of the
pre-tax earnings of the remaining operations of the Company, with the bonus
relating to this second component capped at $70,000 per year. The third
component is also based on a percentage of the pre-tax earnings of those
operations under his direct supervision, with the applicable percentage
depending on the pre-tax earnings return on the net working assets used in
those operations. Mr. Hoechst's employment agreement is automatically renewed
on an annual basis unless terminated by either party on at least 60 days'
notice prior to the end of a contract year. The agreement contains certain
noncompetition and nonsolicitation covenants of Mr. Hoechst which are
effective for a period of two years after termination of employment for any
reason so long as the Company makes monthly payments of $5,000 to Mr. Hoechst
during that two-year period.
Mr. Landis' employment agreement, which was entered into in 1973, provides
for a salary which has since been increased to the level indicated in the
Summary Compensation Table above. The agreement can be terminated by either
party on two weeks' notice. The agreement contains certain noncompetition and
nonsolicitation covenants of Mr. Landis which are effective for a period of
six months after termination of employment for any reason.
SUPPLEMENTAL PENSION AGREEMENT
Under a 1978 supplemental pension agreement with Mr. Garrison, the Company
will, upon his retirement, pay him an additional pension of $35,000 per year
for 15 years. If Mr. Garrison dies prior to receiving all such payments, his
beneficiaries will receive the balance remaining in a lump-sum payment. The
Company's obligation to make such payments is conditioned upon the
satisfactory performance by Mr. Garrison of his duties until retirement.
8
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
It is the policy of the Committee that a substantial portion of the annual
compensation of each of the Company's executive officers should be dependent
upon the Company's performance, as measured principally by its pre-tax
earnings. Accordingly, the Employment Agreements with Walter R. Garrison and
Christian M. Hoechst, which were described in more detail previously in this
Proxy Statement, provide for modest salaries of $65,000 and $80,000,
respectively, and a bonus based upon the Company's pre-tax earnings. The base
salaries of Messrs. Garrison and Hoechst and the formulas for their bonuses
have remained unchanged since their current Employment Agreements were signed
in 1973 and 1986, respectively. While the Committee has considered increasing
the base salaries of Mr. Garrison and Mr. Hoechst, the Committee and the
executives have agreed that keeping salaries low and making compensation
largely dependent on the Company's financial performance is in the Company's
best interests and sets the proper example for compensation arrangements with
other Company managers. Mr. Landis' salary of $200,000 in 1993 reflects an
increase from the $185,000 salary paid to him during the previous three years.
The Committee desires Mr. Landis' salary to be roughly comparable to the
average salary paid to chief financial officers of the other staffing
companies identified in the peer group index in the stock performance chart on
the following page, though the Committee does not seek to rigidly adhere to
this comparison in setting Mr. Landis' salary. Bonuses to Mr. Landis are
determined in the sole discretion of the Committee. In the past, in
determining Mr. Landis' bonus, the Committee has examined factors such as the
level of the Company's earnings, the average total compensation given to chief
financial officers of peer group staffing companies and of other companies
with similar levels of revenues as the Company, and Mr. Landis' performance
during the year. The Committee does not assign any particular priority or
relative weight to these factors, and acknowledges that the determination of
Mr. Landis' compensation is subjective. In 1993, the Committee awarded a
$50,000 bonus to Mr. Landis. Prior to the Committee's consideration of Mr.
Landis' bonus in 1991 and 1992, Mr. Landis requested that he not be considered
for a bonus in those years in light of the financial performance of the
Company. The Committee agreed to those requests.
The Committee believes that these long-standing compensation arrangements
for the three executive officers have served the Company well.
COMPENSATION COMMITTEE:
Lawrence C. Karlson, Chairman
Walter R. Garrison
Allen M. Levantin
John W. Pope
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Walter R. Garrison, who served on the Compensation Committee during 1993
and who has continued to serve on the Committee, was and is the Chairman of
the Board, President and Chief Executive Officer of the Company. Allen M.
Levantin, who became a member of the Compensation Committee during 1994, is a
former officer of a subsidiary of the Company.
9
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The following graph sets forth the cumulative total shareholder return
(assuming an investment of $100 on December 31, 1988 and the reinvestment of
any dividends) for the last five fiscal years on (a) the Common Stock of the
Company, (b) the Standard & Poor's (S&P) 500 Index, and (c) a peer group
index. The peer group selected by the Company consists of the following
companies: (i) Adia Services, Inc., Butler International Inc., Kelly Services,
Inc., Manpower Inc., Olsten Corporation, Robert Half International Inc.,
Uniforce Temporary Personnel, Inc. and Volt Information Sciences, Inc., all of
which are in the staffing business (temporary placement of office and
technical personnel and permanent placement), and (ii) CRSS Inc., Foster
Wheeler Corporation, Jacobs Engineering Group, Inc. and Stone & Webster, Inc.,
all of which are in the engineering, design and construction business. While
the latter four companies often work on projects significantly larger in size
than does the Company in its engineering and design business and only
occasionally compete directly with the Company, the Company believes that it
and these four companies share various important business characteristics. One
company, Raycomm Transworld Industries, Inc., was included in the Company's
peer group index in last year's Proxy Statement but not in the peer group
index in this year's Proxy Statement, because that company's stock ceased to
be publicly traded in 1993.
LINE GRAPH SHOWING COMPARISON BETWEEN CDI CORP, PEER GROUP AND S&P 500
IS IN THIS POSITION ON THE PRINTED PROXY; COPIES FILED WITH FORM SE
YEAR ENDED DECEMBER 31
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
CDI $100 $145.00 $ 67.50 $ 71.25 $ 83.75 $125.00
PEER GROUP 100 116.00 98.70 121.66 138.66 151.19
S&P 500 100 131.69 127.60 166.47 179.15 197.21
10
<PAGE>
CERTAIN BUSINESS RELATIONSHIPS
Dechert Price & Rhoads performed legal services for the Company during
1993. Barton J. Winokur, a director of the Company, is a partner of Dechert
Price & Rhoads.
PROPOSAL TWO
------------
PROPOSED INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK
WHICH MAY BE ISSUED UNDER THE COMPANY'S
NON-QUALIFIED STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
FROM 300,000 TO 800,000
The Company maintains a Non-Qualified Stock Option and Stock Appreciation
Rights Plan (the "Plan") under which the Company may grant options ("Options")
to purchase shares of its Common Stock or stock appreciation rights ("SARs"),
either alone or in tandem with Options. On March 2, 1994, the Board of
Directors of the Company approved an amendment to the Plan, increasing the
number of shares of Common Stock which may be issued under the Plan from
300,000 to 800,000. Under the Plan, an amendment to increase the number of
shares which may be delivered pursuant to the Plan requires the approval of
the shareholders of the Company.
DESCRIPTION OF THE PLAN
The Plan provides for two incentive elements, Options and SARs. An Option
gives the holder the right to purchase from the Company a specified number of
shares of Common Stock for a specified price during a specified period. An SAR
gives the holder the right, without payment to the Company, to receive its
"value", one-half in cash and one-half in shares of Common Stock. The "value"
of an SAR which is attached to an Option (see the description below of when an
SAR is attached to an Option) is the excess, if any, of the market price of
one share of Common Stock of the Company on the date the SAR is exercised over
the option price of one share under the attached Option. The "value" of an SAR
which is not attached to an Option is the excess, if any, of the market price
of the Common Stock on the date the SAR is exercised over the amount fixed by
the committee which administers the Plan on the date the SAR was granted (the
"SAR Reference Price").
The Plan is administered by a committee (the "Committee") composed of not
less than three directors of the Company appointed by the full Board of
Directors. Committee members are not eligible to receive Options or SARs under
the Plan. Under the Plan, the Committee may grant SARs and Options (either
with or without SARs attached) to salaried employees (including executive
officers), consultants and directors of the Company and certain of its
subsidiaries. As of December 31, 1993 there were approximately 1,200 eligible
participants, approximately ten of whom were consultants, twelve of whom were
non-employee directors and the remainder were salaried employees. Subject to
the provisions of the Plan, the Committee has full authority to determine
which eligible participants shall be granted Options and SARs and the amounts
and other terms of such Options and SARs. However, any Options or SARs granted
to a member of the Board of Directors must be approved by a majority of the
Board not including the recipient.
11
<PAGE>
The option price for Options granted under the Plan is determined by the
Committee, but may not be less than 50% of the fair market value of the shares
subject to the Option on the date of grant of such Option. The option price
may be paid in cash, in shares of Common Stock which have an aggregate fair
market value equal to the option price or in any combination of cash and
shares with an aggregate value equal to the option price. Upon exercise of an
Option, any SAR attached to such Option automatically expires.
The Committee may grant Options to eligible participants with or without
SARs attached. When SARs are granted in conjunction with Options each SAR will
attach to an Option to purchase one share of Common Stock. Upon exercise of an
SAR attached to an Option, the related Option automatically expires. The
Committee may also grant SARs which are not attached to Options. With respect
to SARs not attached to Options, the SAR Reference Price is determined by the
Committee, but may not be less than 50% of the fair market value of one share
of Common Stock on the date of grant of the SAR.
Options and SARs granted under the Plan are not exercisable after five
years from the date of grant unless the Committee otherwise provides. Options
and SARs are not transferable except by will or the laws of descent and
distribution, and during the lifetime of the participant are exercisable only
by him or her. Options and SARs terminate upon the death of the participant
or, unless otherwise determined by the Committee, on the termination of his or
her qualifying relationship with the Company or its subsidiaries. However, if
a participant dies, to the extent provided in his or her Option or SAR
agreement, the participant's estate or the participant's heirs or
beneficiaries may exercise the unexercised portion of his or her Option or SAR
within six months after the participant's death. In no event, however, may an
Option or SAR be exercised after its stated date of expiration.
The Board of Directors may terminate or amend the Plan at any time, but
any amendment which (i) increases the number of shares that may be issued
under the Plan, (ii) changes the class of persons eligible to receive Options
or SARs, (iii) deprives the Committee of authority to administer the Plan, or
(iv) otherwise requires the approval of the shareholders of the Company in
order to maintain the exemption available under Rule 16b-3 of the Securities
Exchange Act of 1934 will require the prior approval of the shareholders of
the Company.
The Company has been advised by its counsel that under present federal
income tax laws, the federal income tax consequences of the grant or exercise
of Options and SARs are as follows:
Non-Qualified Stock Options. A participant will recognize no income
and the Company will receive no deduction for federal income tax purposes
when an Option is granted. Upon exercise of an Option, a participant will
recognize ordinary income in an amount measured by the excess of the fair
market value of the shares on the date of exercise over the option price,
and the Company will be entitled to a deduction in the same amount. The
participant's holding period for shares received upon exercise of an
Option will begin to run from the date of exercise of the Option.
Upon the sale of the Option shares, the participant will recognize
short-term or long-term capital gain (or loss), depending upon whether the
shares have been held for more than one year. Such gain (or loss) will be
measured by the difference between the sale price of the shares and the
fair market value of the shares on the date that the Option was exercised.
12
<PAGE>
If a participant pays the Option price with previously owned shares of
Common Stock he or she will be treated as having exchanged the number of
shares surrendered for an equal number of shares received upon the
exercise of the Option in a tax-free exchange. However, he or she will
recognize income, and the Company will be entitled to a corresponding
deduction, in an amount equal to the fair market value of the number of
shares received in excess of the fair market value of the number of shares
surrendered. The participant's tax basis in the shares received in the
tax-free exchange will be equal to his or her tax basis in the shares
surrendered in the exchange. The tax basis in the remaining shares
received will be equal to the amount included in the participant's income.
Stock Appreciation Rights. A participant who is granted an SAR
(whether or not attached to an Option) under the Plan will not recognize
income at the time of the grant, nor will the Company be entitled to a
deduction at that time. In general, when a participant exercises an SAR,
he or she will recognize ordinary income, and the Company will be entitled
to a corresponding deduction, in an amount equal to the sum of the cash
plus the fair market value of the stock received. The participant's
holding period for the stock received will begin to run from the date of
exercise of the SAR.
Upon the sale of the shares received on exercise of an SAR, the
participant will recognize short-term or long-term capital gain (or loss),
depending upon whether the shares have been held for more than one year.
Such gain (or loss) will be measured by the difference between the sale
price of the shares and the fair market value of the shares on the date
that the SAR was exercised.
The closing price per share of the Company's Common Stock on the New York
Stock Exchange on March 14, 1994 was $13.25.
DESCRIPTION OF AND REASON FOR THE PROPOSED AMENDMENT OF THE PLAN
The Board believes that the Plan provides an important means to attract,
motivate and retain valuable personnel. Of the 300,000 shares which may be
issued under the Plan, 11,250 Option shares have previously been exercised and
252,000 Options are presently outstanding (only 106,667 of which are currently
exercisable). If all of the presently outstanding Options were exercised,
there would remain only 36,750 shares available for future grants of Options.
The Board believes it would be desirable and in the best interest of the
Company to increase the number of shares available for future grants of
Options in order to continue the benefits inuring to the Company under the
Plan. The proposed amendment would increase the number of shares still
available for grants by 500,000 and bring the total number of shares which may
be issued under the Plan to 800,000. Neither the Board nor the Committee has
any immediate plans to grant any additional Options. The number of Options and
SARs which may be granted in the future, and the related prices, will depend
on contingent and variable factors and cannot be estimated at this time.
THE BOARD OF DIRECTORS HAS APPROVED THE PROPOSAL AND RECOMMENDS THAT YOU VOTE
"FOR" THE PROPOSAL.
The persons named in the enclosed form of proxy (Joseph R. Seiders and
Craig H. Lewis) have advised the Company that they intend to vote FOR approval
of Proposal Two unless a contrary choice is specified.
13
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountants have been KPMG Peat Marwick
and it is expected that they will continue in that capacity for the current
year. A representative of KPMG Peat Marwick will be present at the meeting and
will have the opportunity to make a statement, if he or she so desires, and to
respond to appropriate questions.
OTHER MATTERS
The Board of Directors knows of no other matters which may come before the
meeting. However, if any such matter should properly come before the meeting,
it is the intention of the persons named in the enclosed proxy to vote such
proxy in accordance with their best judgment on such matter.
SHAREHOLDER PROPOSALS
Shareholders of the Company are entitled to submit proposals for inclusion
in the Company's 1995 Proxy Statement to be considered for action at the 1995
Annual Meeting of Shareholders. Proposals so submitted must be received by the
Company at its principal executive offices no later than November 21, 1994 and
must comply in all other respects with applicable rules and regulations of the
Securities and Exchange Commission relating to such inclusion.
By Order of the Board of Directors
JOSEPH R. SEIDERS, Secretary
Dated: March 21, 1994
Philadelphia, Pennsylvania
14
<PAGE>
PROXY
CDI CORP.
1717 ARCH STREET, 35TH FLOOR
PHILADELPHIA, PA 19103-2768
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Joseph R. Seiders and Craig H. Lewis, or
either of them, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares
of common stock of CDI Corp. held of record by the undersigned on March 3,
1994, at CDI Corp.'s annual meeting of shareholders to be held on May 3, 1994,
or any adjournments or postponements thereof. The undersigned acknowledges
receipt of the Proxy Statement dated March 21, 1994 and hereby expressly
revokes any and all proxies heretofore given or executed by the undersigned
with respect to the shares of stock represented by this proxy and by filing
this proxy with the Secretary of CDI Corp. gives notice of such revocation.
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 ELECTION TO THE BOARD OF DIRECTORS OF ALL NOMINEES LISTED IN
PROPOSAL ONE ON THE REVERSE SIDE HEREOF AND FOR APPROVAL OF THE INCREASE IN
THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UNDER THE CDI CORP. NON-
QUALIFIED STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN, AS DESCRIBED IN
PROPOSAL TWO. WITH RESPECT TO OTHER MATTERS OF BUSINESS PROPERLY BEFORE THE
MEETING, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS THE PROXIES
SHALL DECIDE.
FOLD AND DETACH HERE
<PAGE>
<TABLE>
1. PROPOSAL ONE -- ELECTION OF DIRECTORS -- The nominees are Walter R. Garrison, Christian M. Hoechst, Lawrence C.
Karlson, Edgar D. Landis, Allen M. Levantin, John W. Pope, Allen I. Rosenberg and Barton J. Winokur.
<C> <C> <C>
VOTE FOR WITHHOLD
all nominees AUTHORITY
listed to vote for
above (except all nominees INSTRUCTION: To withhold authority to vote for any individual nominee or
as indicated to listed above nominees, write the name of that nominee or nominees on the line
the contrary) provided below.
------------------------------------------------------------------------
[ ] [ ]
</TABLE>
2. PROPOSAL TWO -- increase
the number of shares of 3. In their discretion, the proxies are
common stock which may be authorized to vote upon such other
issued under the Non- business as may properly come
Qualified Stock Option and before the meeting or any
Stock Appreciation Rights adjournments or postponements
Plan from 300,000 to 800,000. thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
DATED: -------------------- , 1994
----------------------------------
Signature of Shareholder(s)
----------------------------------
Signature of Shareholder(s)
Please sign exactly as your name
appears hereon. 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.
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"
FOLD AND DETACH HERE
<PAGE>
In connection with Proposal Two in the above Proxy Statement and in accordance
with Instruction 3 to Item 10 of Schedule 14A, below is the text of the CDI
Corp. Non-Qualified Stock Option and Stock Appreciation Rights Plan. The text
of this Plan is not a part of the Proxy Statement and is not being distributed
to the Company's shareholders.
CDI CORP.
NON-QUALIFIED STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
1. Purpose. The purpose of this plan ("Plan") is to provide a more
effective method of compensating employees, consultants and directors of the
Company than is currently available and to complement the other incentive
plans of the Company, thus encouraging greater personal interest in the
success of the Company on the part of such personnel and furnishing them with
a further incentive to remain with the Company and to increase their efforts
on its behalf.
2. Definitions:
(a) "Board" means the board of directors of the Parent Company.
(b) "Committee" means the committee described in Paragraph 5.
(c) "Company" means CDI Corp. and each of its Subsidiary Companies.
(d) "Date of Exercise" means the date on which notice of exercise of
an Option or SAR is delivered to the Parent Company.
(e) "Date of Grant" means the date on which an Option or SAR is
granted.
(f) "Holder" means a person to whom an SAR not attached to an Option
has been granted under the Plan, which SAR has not been exercised and has
not expired or terminated.
(g) "Option" means a non-qualified stock option granted under the Plan
and described in Paragraph 4(a).
(h) "Optionee" means a person to whom an Option or an Option with an
SAR attached has been granted under the Plan, which Option or SAR has not
been exercised and has not expired or terminated.
(i) "Parent Company" means CDI Corp.
(j) "SAR" means a stock appreciation right granted under the Plan and
described in Paragraphs 4(b) or 4(c).
(k) "Shares" means shares of common stock, par value $.10 per share,
of the Parent Company.
(l) "Subsidiary Company" means any corporation controlled by the
Parent Company or by an subsidiary controlled by the Parent Company
("control" having the meaning set forth in Section 368(c) of the Internal
Revenue Code or corresponding provisions of successor laws), provided that
if the corporation is controlled by a subsidiary of the Parent Company,
either the Parent Company must own 100% of the stock of the subsidiary or
the subsidiary must own 100% of the stock of the corporation.
(m) "Fair Market Value" means the closing price of actual sales of
Shares on the New York Stock Exchange on a given date or, if there are no
such sales on such date, the closing price of the Shares on such Exchange
on the last date on which there was a sale.
(n) "Value" of an SAR shall mean the excess of the Fair Market Value
of a Share on the Date of Exercise over an amount fixed by the Committee
on the Date of Grant (the "SAR Reference Price"); provided that the SAR
Reference Price may not be less than 50% of the Fair Market Value of a
Share on the Date of Grant. Where an SAR is attached to an Option, the SAR
Reference Price shall be equal to the option price of one Share under the
attached Option.
3. Shares Subject to the Plan. On and after April 30, 1991, not more
than 300,000 Shares may be delivered pursuant to the exercise of Options or
SARs under the Plan. The Shares so delivered may, at the election of the
Company, be either treasury Shares or Shares originally issued for the
purpose. When an Option is granted (whether or not attached to an SAR), the
number of Shares subject to such Option shall be reserved for issuance out of
the Shares remaining available for grant under the Plan. When SARs not
attached to an Option are granted, there shall be reserved for issuance
thereunder Shares in an amount equal to one-half of the number of SARs
granted. If Options or SARs granted under the Plan terminate or expire without
being exercised in whole or in part, other Options or SARs may be granted
covering the Shares not delivered.
4. Rights to be Granted. Rights which may be granted under the Plan are:
(a) Options, which give the Optionee the right for a specified time
period to purchase a specified number of Shares at a specified price;
(b) SARs, which are attached to Options and which give the Optionee
the right for a specified time period, without payment to the Company, to
receive the Value of such SARs, to be paid in cash and Shares in
accordance with Paragraph 8 below, in lieu of purchasing Shares under the
related Option; and
(c) SARs, which are not attached to Options and which give the Holder
the right for a specified time period, without payment to the Company, to
receive the Value of such SARs, to be paid in cash and Shares in
accordance with Paragraph 8 below.
5. Administration. The Plan shall be administered by the Stock Option
Committee, which shall be composed of not less than three directors of the
Parent Company, appointed by the Board, none of whom shall be eligible (or
shall have been eligible within one year prior to the date of their
appointments) to be granted Options or SARs under the Plan or to be selected
as a participant under any other discretionary plan of the Company or any of
its affiliates entitling them to acquire stock, stock options or stock
appreciation rights of the Company or any of its affiliates. The Committee may
determine from time to time which eligible participants shall be granted
Options or SARs under the Plan, the number of Shares to be subject to the
Option in each case, the number and type of SARs, if any, to be awarded in
each case, and the other substantive provisions of each Option and SAR
agreement. However, any Options or SARs granted to a member of the Board must
also be approved by a majority of the Board not including the recipient.
6. Eligibility. Eligible participants under the Plan shall be all
salaried employees, consultants and directors of the Parent Company (except
Committee members) or any Subsidiary Company.
7. Option Price.
(a) The price at which Shares may be purchased on exercise of an
Option shall be determined in each case by the Committee, but may not be
less than 50% of the Fair Market Value of the Shares on the Date of Grant.
(b) Upon exercise of any Option granted pursuant to this Plan, the
Optionee shall pay to the Parent Company the full Option price:
(i) By certified check or bank draft; or
(ii) By delivering to the Parent Company certificates for Shares
owned by the Optionee and endorsed to the Parent Company
representing a number of Shares having a then current Fair
Market Value equal to the Option price; or
(iii) Any combination of the above.
Upon payment of the Option price the appropriate accounts of the Parent
Company shall then be credited accordingly.
8. Issuance of Certificates; Payment of Cash.
(a) Upon payment of the Option price, a certificate for the number of
whole Shares and a check for the Fair Market Value on the Date of Exercise
of the fractional Share, if any, to which the Optionee is entitled shall
be delivered to such Optionee by the Parent Company, provided that the
Optionee has remitted to his employer an amount, determined by such
employer, sufficient to satisfy the applicable requirements to withhold
federal, state, and local taxes, or made other arrangements with his
employer for the satisfaction of such withholding requirements.
(b) Upon exercise of SARs, the Value of such SARs shall be paid one-
half in cash and one-half in Shares. The number of Shares to be delivered
by the Parent Company shall be an amount equal to 50% of the Value of such
SARs divided by the Fair Market Value of a Share on the Date of Exercise
of such SARs. Any right to a fractional Share shall be satisfied by the
Parent Company in cash. The employer of the Optionee or Holder shall
deduct from the amount of cash payable any amount necessary to satisfy
applicable federal, state, or local withholding requirements.
9. Term. Unless otherwise determined by the Committee, Options or SARs
granted under the Plan shall not be exercisable after five years from the Date
of Grant.
10. Exercise of Options and SARs. Unless otherwise determined by the
Committee and subject to the provisions of Paragraphs 11 and 13, an Option or
SAR may be exercised in whole or in part during its term, provided that an
Option or SAR shall be exercisable only by the Optionee or Holder during his
lifetime and, unless otherwise determined by the Committee, only while he is a
salaried employee, consultant or director of the Parent Company or of a
Subsidiary Company.
11. Death or Termination of Employment. Options and SARs shall terminate
on the death of the Optionee or Holder, or, unless otherwise determined by the
Committee, on the termination for any reason of his qualifying relationship
with the Company, except that, to the extent provided in his Option or SAR
agreement, if an Optionee or Holder dies while holding an Option or SAR not
fully exercised or expired, the unexercised portion may be exercised by his
estate or his heirs or beneficiaries within the period of six months following
the date of death. In no event, however, may an Option or SAR be exercised
after its stated date of expiration. For purposes of this Plan, a transfer of
a participant between two employers, each of which is a part of the Company,
shall not be deemed a termination of employment.
12. Relationship Between Options and SARs. Upon exercise of an Option,
any SAR attached to such Option shall automatically expire. Upon exercise of
an SAR attached to an Option, the related Option shall automatically expire.
tion of any Option granted to an Optionee or Holder shall have no effect upon
any SAR held by such Optionee or Holder, and the grant, exercise, termination
or expiration of an SAR granted to any Optionee or Holder shall have no effect
upon any Option held by such Optionee or Holder.
13. Transferability of Options and SARs. No Option or SAR may be
transferred except by will or the applicable laws of descent and distribution.
14. Adjustment on Change in Capitalization. In case the number of
outstanding Shares is changed as a result of a stock dividend, stock split,
recapitalization, combination, subdivision, issuance of rights or other
similar corporate change, the Board shall make an appropriate adjustment in
the aggregate number of Shares which may be issued under the Plan and in the
number of Shares subject to, and the Option price or Value of, any then
outstanding Options or SARs.
15. Certain Corporate Transactions. If during the term of any Option or
SAR the Parent Company or any of the Subsidiary Companies shall be merged into
or consolidated with or otherwise combined with or acquired by another person
or entity, or there is a divisive reorganization or a liquidation or partial
liquidation of the Parent Company, the Parent Company may (but shall not be
required to) take any of the following courses of action with regard to the
Options or SARs outstanding:
(a) Not less than 10 days nor more than 60 days prior to any such
transaction, all Optionees and Holders shall be notified that their
Options and SARs shall expire on the 10th day after the date of such
notice, in which event all Optionees and Holders shall have the right to
exercise all of their Options and SARs prior to such new expiration date;
or
(b) The Parent Company shall provide in any agreement with respect to
any such merger, consolidation, combination or acquisition that the
surviving, new or acquiring corporation shall grant options and stock
appreciation rights to the Optionees and Holders to acquire shares, or
stock appreciation rights in shares, in such corporation provided that the
excess of the fair market value of the shares of such corporation
immediately after the consummation of such merger, consolidation,
combination or acquisition over the option price, or the value of such
stock appreciation rights at the time of grant, shall not be greater than
the excess of the Fair Market Value of the Shares over the Option price of
Options, or the Value of the SARs as determined under Paragraph 2(n),
immediately prior to the consummation of such merger, consolidation,
combination or acquisition; or
(c) The Parent Company shall take such other action as the Board shall
determine to be reasonable under the circumstances in order to permit
Optionees and Holders to realize the value of rights granted to them under
the Plan.
16. Plan Not to Affect Relationship With the Company. Neither the Plan
nor any Option or SAR shall confer upon any participant any right to continue
in the service of the Company.
17. Amendment. The Board may at any time terminate the Plan or make such
changes therein as it shall deem advisable. The Board may not, however,
without the approval of the voting shareholders of the Parent Company, (i)
increase the total number of Shares which may be delivered under the Plan,
(ii) change the class of persons eligible to receive Options or SARs, (iii)
withdraw the authority to administer the Plan from a committee consisting of
directors or (iv) otherwise amend the Plan in a manner which would require the
approval of the shareholders of the Parent Company in order to maintain the
exemption available under Rule 16b-3 (or any similar rule) of the Securities
and Exchange Commission. No outstanding Option or SAR shall be affected by any
such amendment without the written consent of the Optionee, Holder or other
person then entitled to exercise such Option or SAR.
18. Effective Date. The Plan shall be effective as of the date of
shareholder approval in the manner required under the rules of the American
Stock Exchange.
19. Securities Laws. The Committee shall make each grant under the Plan
subject to such conditions as shall cause both the grant and exercise of any
Option or SAR to comply with the then-existing requirements of Rule 16b-3 (or
any similar rule) of the Securities and Exchange Commission.
Unless otherwise permitted by the Committee, the date of any exercise of
an SAR by a Holder or an Optionee who is an officer, director or beneficial
owner of ten percent or more of any class of any registered equity security of
the Parent Company shall be required to occur within the period beginning with
the third and ending with the twelfth business day after the date of the
release of the Parent Company's quarterly or annual sales and earnings
information to the public.
20. General. Each Option or SAR granted shall be evidenced by a written
instrument containing such terms and conditions not inconsistent with the Plan
as the Committee may determine. The issuance of Shares on the exercise of an
Option or SAR shall be subject to all of the applicable requirements of the
Pennsylvania Business Corporation Law and other applicable laws. Among other
things the Optionee or Holder may be required to deliver an investment
representation to the Company in connection with any exercise of an Option or
SAR or to agree to refrain from selling or otherwise disposing of the Shares
acquired for a specified period of time.
