CDI CORP.
1998 NON-QUALIFIED STOCK OPTION PLAN
1. Purpose. The purpose of this Plan is to provide an effective method of
compensating employees, consultants and directors of the Company, to align the
interests of such individuals with the interests of the Company's shareholders
and, accordingly, to provide financial rewards which will allow the Company to
(i) attract and retain management personnel of outstanding ability, (ii)
strengthen the Company's capability to develop, maintain and direct a highly
skilled and motivated management team, (iii) provide an effective means for
selected management personnel to acquire and maintain ownership of CDI Stock,
(iv) motivate selected management personnel to achieve long-range performance
goals and objectives, and (v) provide incentive compensation opportunities
competitive with those of other major corporations.
2. Definitions.
(a) "Agreement" means a Stock Option Agreement, which is a written
confirmation furnished to an Optionee of the grant of an Option under the Plan.
(b) "Board" means the board of directors of CDI Corp.
(c) "Cause" shall be deemed to exist, with respect to Independent
Directors, only if the Board determines, in accordance with CDI Corp.'s by-laws,
that grounds exist for the removal of the director. With respect to Eligible
Employees and Eligible Consultants, Cause shall have the same meaning as is set
forth in his or her engagement or employment agreement with the Company. If
there is no such agreement, then Cause shall mean any of the following:
(i) rendering services while under the influence of alcohol or
illegal drugs;
(ii) performing any act of dishonesty in rendering services to
the Company, including falsification of records, expense
accounts or other reports;
(iii)conviction, whether by judgment or plea, of any crime which
constitutes a felony or which constitutes a misdemeanor
involving violence, fraud, embezzlement, or theft;
(iv) violation of any law or agreement which results in the entry
of a judgment or order enjoining or preventing Optionee from
such activities as are essential for Optionee to perform
services for the Company;
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(v) violation of any of the Company's policies which provide for
termination of employment as a possible consequence of such
violation;
(vi) engaging in conduct which is injurious (other than to an
immaterial extent) to the Company;
(vii)the Company's receipt of reliable information from any
source of an Optionee's entering into or intending to enter
into competition with the Company; or
(viii) refusal to perform such duties as may be delegated or
assigned to the Optionee, consistent with the Optionee's
position, by his or her supervisor.
(d) "CDI Stock" means common stock, par value at $0.10 per share, of CDI
Corp.
(e) "Committee" means the CDI Corp. Compensation Committee or its
successor.
(f) "Company", as the context requires, means CDI Corp., CDI Corp. and its
Subsidiary Companies or the individual Subsidiary Company which employs or
retains an Optionee.
(g) "Date of Exercise" means the date on which notice of exercise of an
Option is delivered to the Treasurer of CDI Corp.
(h) "Date of Grant" means the date on which an Option is granted.
(i) "Effective Date" means January 1, 1998.
(j) "Eligible Consultant" means an individual who performs consulting
services for the Company as an independent contractor or through a corporation
of which the individual is the sole owner, and who is designated as eligible to
participate in the Plan by the Committee.
(k) "Eligible Employee" means an employee or a group of employees
identified by job classification of the Company who has been designated as
eligible to participate in the Plan by the Committee.
(l) "Eligible Director" means any Independent Director.
(m) "Fair Market Value" means the closing price of actual sales of CDI
Stock on the New York Stock Exchange composite tape on a given date or, if there
are no such sales on such date, the closing price of CDI Stock on such Exchange
on the last preceding date on which there was a sale.
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(n) "Independent Director" means any director of CDI Corp. who is not an
employee of the Company.
(o) "Option" means a non-qualified stock option to purchase CDI Stock
granted under the Plan.
(p) "Optionee" means a person to whom an Option has been granted under the
Plan.
(q) "Personal Representative" means the person or persons who, upon the
death or Total and Permanent Disability of an Optionee, shall have acquired by
will or by the laws of descent and distribution or by other legal proceedings
the right to exercise an Option granted to such Optionee.
(r) "Plan" means the CDI Corp. 1998 Non-Qualified Stock Option Plan.
(s) "Retainer Fee" means the annual retainer fee payable to Independent
Directors for their service as directors of CDI Corp. during a Retainer Fee
Year. A Retainer Fee does not include attendance or committee fees.
(t) "Retainer Fee Option" means an Option granted to an Eligible Director
in full or partial payment of such Eligible Director's Retainer Fee pursuant to
Paragraph 6.
(u) "Retainer Fee Year" means the one year period between consecutive
annual meetings of the shareholders of CDI Corp.
(v) "Retirement" means an Optionee's leaving the employ of the Company:
(i) on or after the date that the Optionee satisfies one of the
following combinations of age and years of service with the
Company:
- 60 years of age and 20 years of service;
- 62 years of age and 15 years of service; or
- 65 years of age and 5 years of service.
(ii) at such earlier date as may be approved by the Committee, in
its sole discretion.
(w) "Subsidiary Company" means any corporation controlled by CDI Corp. or
by a subsidiary controlled by CDI Corp. ("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 CDI Corp., either CDI Corp. must own 100% of the stock of the subsidiary or
the subsidiary must own 100% of the stock of the corporation.
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(x) "Termination Date" means, unless otherwise determined by the Committee,
the earliest of the following:
(i) ten years following the Date of Grant;
(ii) in the event an Optionee's employment or engagement with the
Company is terminated by the Company for Cause, the date of
such termination;
(iii)in the event an Optionee's employment or engagement with
the Company is terminated through the Optionee's resignation
or by the Company for reasons other than for Cause, two
weeks following the date of such termination; or
(iv) in the event an Optionee's employment or engagement with the
Company is terminated as a result of the Optionee's death,
Total and Permanent Disability or Retirement, six months
following such event.
(y) "Total and Permanent Disability" means a medically determinable disability
of a permanent nature as a result of which an Optionee is entitled to receive
and is receiving disability benefits under the Social Security Act.
3. CDI Stock Subject to the Plan. Not more than 1,600,000 shares of CDI
Stock may be delivered, in the aggregate, pursuant to the exercise of Options
under the Plan and the exercise of options under the CDI Corp. Non-Qualified
Stock Option and Stock Appreciation Rights Plan. The CDI Stock delivered under
the Plan may, at the election of the Company, be either treasury shares or
shares originally issued for the purpose. When an Option is granted, the number
of shares of CDI Stock subject to such Option shall be reserved for issuance out
of the shares of CDI Stock remaining available for issuance under the Plan. If
Options granted under the Plan terminate or expire without being exercised in
whole or in part, other Options may be granted covering the shares of CDI Stock
not delivered. No individual shall be eligible to receive, in any one calendar
year, Options with respect to more than 400,000 shares of CDI Stock (which
number is subject to adjustment as provided in Paragraph 14 hereof).
4. Rights to be Granted. Non-qualified stock options, which give the
Optionee the right for a specified time period to purchase a specified number of
shares of CDI Stock at a specified price shall be granted under the Plan,
subject to the discretion of the Committee.
5. Administration. The Plan shall be administered by the Committee. The
Committee shall have all necessary powers to administer the Plan, including,
without limitation, the authority to determine the term and vesting schedule of
Options or holding period, if any, applicable to shares of CDI Stock received
pursuant to the exercise of an
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Option. The Committee will be composed entirely of persons who are both an
"Outside Director" (as such term is defined or interpreted for purposes of
Section 162(m) of the Internal Revenue Code of 1986, as amended) and an
"Independent Director" (as such term is defined or interpreted for purposes of
Rule 16b-3 under the Securities Exchange Act of 1934, as amended). Except with
respect to Retainer Fee Options, the Committee may determine from time to time
which eligible persons shall be granted Options under the Plan, the number of
shares of CDI Stock to be subject to the Option in each case and the other
substantive provisions of each Option. However, any Options, other than Retainer
Fee Options, granted to a member of the Board must also be approved by a
majority of the Board not including the recipient.
6. Retainer Fee Options.
(a) All or a portion of the Retainer Fee payable to Eligible Directors
may, at the election of the Director, be paid in the form of Options. Prior to
the beginning of each Retainer Fee Year, each Eligible Director may elect to
receive Options in lieu of all or a portion of the cash Retainer Fee that such
Director would otherwise be paid for his/her service as a Director during such
Retainer Fee Year. On the first business day of each Retainer Fee Year each
Director who has made such an election will be granted an Option for that number
of shares of CDI Stock which will result in the Option having the value chosen
by the Director, using a Black-Scholes valuation as of such date of grant. Such
number of shares will be subject to adjustment as provided in Paragraph 14.
(b) The Committee may determine from time to time the terms of the
Retainer Fee Options, provided such terms are consistent with the terms of the
Plan. Unless otherwise determined by the Committee, (i) Retainer Fee Options
shall vest (and therefore will be exercisable) upon the completion of the
Retainer Fee Year for which the Retainer Fee Options have been granted, (ii) if
an Eligible Director ceases to be a member of the Board for any reason, unvested
Retainer Fee Options shall expire and be unexercisable and the portion of the
Eligible Director's Retainer Fee earned as of the date of cessation that is
represented by such unvested Retainer Fee Options shall be paid in cash and
(iii) vested Retainer Fee Options will not terminate until the expiration of the
options' full terms notwithstanding an earlier termination of a Director's
service as a Director of the Company.
7. Eligibility. The Committee may, from time to time, subject to the
provisions of the Plan and such terms and conditions as the Committee may
prescribe, award Options to any Eligible Employee or Eligible Consultant. Only
Eligible Directors shall be eligible to receive Retainer Fee Options pursuant to
Paragraph 6.
8. Option Exercise Price.
(a) The price at which CDI Stock may be purchased on exercise of an
Option shall be determined in each case by the Committee, but may not be less
than 100% of the Fair Market Value of the CDI Stock on the last trading date
immediately preceding the Date of Grant; provided, however, that the price at
which CDI Stock may
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be purchased on exercise of a Retainer Fee Option shall be the Fair Market Value
of CDI Stock on the last trading day immediately preceding the Date of Grant.
(b) Upon exercise of any Option granted pursuant to the Plan, the
Optionee shall pay the Option price in cash or, in whole or in part, through the
transfer to the Company of shares of CDI Stock that have been held by the
Optionee for at least six months. In the event such Option price is paid in
whole or in part with shares of CDI Stock, the portion of the Option price so
paid shall be equal to the Fair Market Value of CDI Stock on the last trading
day immediately preceding such date of exercise.
9. Issuance of Certificates; Payment of Cash.
(a) Upon payment of the Option price and satisfaction of the tax
payment obligation set forth in Paragraph 9(b), a certificate for the number of
whole shares of CDI Stock to which the Optionee is entitled shall be delivered
to such Optionee by CDI Corp.
(b) The Company shall not issue or transfer CDI Stock upon exercise of
an Option until the Option price is fully paid and the tax withholding
obligations with respect to the exercise of the Option have been satisfied. The
Optionee may satisfy any statutory amounts required to be withheld under
applicable federal, state and local income, payroll, social security and similar
tax laws in effect from time to time by remitting the required amount of cash to
the Company or by electing to have the Company withhold that number of shares of
CDI Stock being purchased through the exercise of the Option which have a Fair
Market Value equal to the amount of tax to be paid.
10. Term. Unless otherwise determined by the Committee, Options granted
under the Plan shall not be exercisable after the Termination Date.
11. Vesting. Unless otherwise determined by the Committee, Options granted
under the Plan will vest as follows:
(a) Subject to the accelerated vesting provision of Paragraph 11(b),
Options will vest at the rate of 20% per year on each of the first five
anniversaries of the Date of Grant;
(b) If an Optionee's employment with the Company terminates as a
result of the Optionee's Retirement, death or Total and Permanent Disability,
the Option will vest as to all unvested shares as of the date of such event.
12. Exercise of Options. Unless otherwise determined by the Committee, the
vested portion of an Option may be exercised in whole or in part during its
term, but only as to whole shares, provided that an Option shall be exercisable
only by an Optionee during his lifetime, by his Personal Representative in the
event of the Optionee's death or Total and Permanent Disability, or by any
permitted transferee under Paragraph 13.
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13. Transferability of Options. No Option may be transferred, in whole or
in part, unless the Option is transferred (i) by will or the applicable laws of
descent and distribution, or (ii) to the extent allowed under the terms of the
Agreement, to the spouse or descendant of an Optionee or to a trust for the
benefit of the spouse or descendant of an Optionee.
14. Adjustment on Change in Capitalization. In case the number of
outstanding shares of CDI Stock is changed as a result of a stock dividend,
stock split, recapitalization, combination, subdivision, issuance of rights or
other similar corporate change, and unless the Board determines otherwise, there
shall be an automatic adjustment in (a) the aggregate number of shares of CDI
Stock which may be issued under the Plan, (b) the per individual annual
limitation set forth in Paragraph 3 above, and (c) the number of shares of CDI
Stock subject to, and the Option price of, any then outstanding Options.
15. Certain Corporate Transactions. If during the term of any Option, CDI
Corp. or any Subsidiary Company 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 CDI Corp.,
CDI Corp. may (but shall not be required to) take any of the following courses
of action:
(a) Not less than 10 days nor more than 60 days prior to any such
transaction, all Optionees shall be notified that their Options shall expire on
the 10th day after the date of such notice, in which event all Optionees shall
have the right to exercise all of their Options prior to such new expiration
date; or
(b) CDI Corp. 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 to the Optionees to acquire 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, shall not be
less than the excess of the Fair Market Value of CDI Stock over the exercise
price of Options, immediately prior to the consummation of such merger,
consolidation, combination or acquisition; or
(c) CDI Corp. shall take such other action as the Board shall
determine to be reasonable under the circumstances in order to permit Optionees
and Eligible Directors 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 shall confer upon any person any right to continue in the service of
the Company.
17. Cancellation of Options and Repayment of Gains. Notwithstanding any
other provision of this Plan, the Board may, in its sole discretion and to the
extent allowed in an Optionee's Agreement, cancel the outstanding Options held
by such Optionee and/or require the Optionee to pay to the Company an amount
equal to any
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gains derived from the exercise of any Options previously granted to and
exercised by such Optionee if the Board, in its sole discretion, determines that
such Optionee has entered into or intends to enter into competition with any
member of the Company.
18. Shareholder Rights and Privileges. An Optionee shall have no rights as
a shareholder with respect to any shares of CDI Stock covered by an Option until
the issuance of a stock certificate to the Optionee representing such shares.
19. Amendment. The Board may at any time terminate the Plan or make such
changes therein as it shall deem advisable. No outstanding Option shall be
affected by any such amendment without the written consent of the Optionee or
other person then entitled to exercise such Option.
20. Securities Laws. The Committee shall make each grant under the Plan
subject to such conditions as shall cause both the grant and exercise of an
Option to comply with the then-existing requirements of Rule 16b-3 (or any
similar rule) of the Securities and Exchange Commission.
21. Performance-Based Compensation. Unless otherwise provided by the
Committee in its discretion, it is intended that all compensation income
recognized by Eligible Employees as the result of the exercise of Options, or
the disposition of CDI Stock acquired on exercise of Options, shall be
considered performance-based compensation excludable from such Eligible
Employee's "applicable employee remuneration" pursuant to section 162(m)(4)(C)
of the Internal Revenue Code of 1986, as amended.
22. General. Each Option granted shall be evidenced by an Agreement
containing such terms and conditions not inconsistent with the Plan as the
Committee may determine. The issuance of CDI Stock on the exercise of an Option
shall be subject to all of the applicable requirements of the Pennsylvania
Business Corporation Law and other applicable laws. Among other things, an
Optionee may be required to deliver an investment representation to the Company
in connection with any exercise of an Option or to agree to refrain from selling
or otherwise disposing of the CDI Stock acquired for a specified period of time.
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