<PAGE>
 
   
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 4, 1998     
                                                   
                                                REGISTRATION NO. 333-61697     
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                
                             AMENDMENT NO. 1     
                                       
                                    TO     
                                   FORM S-1
                            REGISTRATION STATEMENT
                                     UNDER
                          THE SECURITIES ACT OF 1933
 
                                ---------------
 
                           KORN/FERRY INTERNATIONAL
              (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
 

<TABLE>
<S>                                <C>                                <C>
           CALIFORNIA                             7361                            95-2623879
 (STATE OR OTHER JURISDICTION OF      (PRIMARY STANDARD INDUSTRIAL             (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)        CLASSIFICATION CODE NUMBER)            IDENTIFICATION NO.)
</TABLE>

 
                       1800 CENTURY PARK EAST, SUITE 900
                         LOS ANGELES, CALIFORNIA 90067
                                (310) 552-1834
  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                   REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
 
                                 PETER L. DUNN
                       1800 CENTURY PARK EAST, SUITE 900
                         LOS ANGELES, CALIFORNIA 90067
                                (310) 843-4100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
                             OF AGENT FOR SERVICE)
 
                                  COPIES TO:

<TABLE>   
<S>                                                <C>
             JAMES R. UKROPINA, ESQ.                            ALISON S. RESSLER, ESQ.
              O'MELVENY & MYERS LLP                               SULLIVAN & CROMWELL
        400 SOUTH HOPE STREET, SUITE 1500                        1888 CENTURY PARK EAST
          LOS ANGELES, CALIFORNIA 90071                      LOS ANGELES, CALIFORNIA 90067
                  (213) 430-6000                                     (310) 712-6600
</TABLE>
    
 
                                ---------------
 
       APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
  As soon as practicable after this Registration Statement becomes effective.
 
                                ---------------
 
  If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
 
  If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
 
  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
 
  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
       
       
                                ---------------
 
  THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

<PAGE>
 

                                    PART II
 
                    INFORMATION NOT REQUIRED IN PROSPECTUS
 

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
 
  The following table sets forth the expenses, other than underwriting
discounts and commissions, payable by the Company in connection with the
issuance and distribution of the Common Stock being registered. All amounts
are estimates except the SEC registration fee, the NASD filing fee and the
NYSE listing fee.
 

<TABLE>
   <S>                                                                  <C>
   Securities and Exchange Commission registration fee................. $67,850
   NASD filing fee.....................................................  23,500
   NYSE listing fee....................................................      *
   Accounting fees and expenses........................................      *
   Legal fees and expenses.............................................      *
   Blue Sky qualification fees and expenses............................      *
   Printing and engraving expenses.....................................      *
   Transfer agent and registrar fees...................................      *
   Miscellaneous.......................................................      *
                                                                        -------
     Total............................................................. $    *
                                                                        =======
</TABLE>

- --------
* To be completed by amendment.
 

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
  The Company has adopted provisions in its Amended and Restated Articles of
Incorporation that limit the liability of directors in certain instances. As
permitted by the California General Corporation Law ("CGCL"), directors will
not be liable to the Company for monetary damages arising from a breach of
their fiduciary duty as directors in certain circumstances. Such limitation
does not affect liability for any breach of a director's duty to the Company
or its shareholders (i) with respect to approval by the director of any
transaction from which he derives an improper personal benefit, (ii) with
respect to acts or omissions involving an absence of good faith, that he
believes to be contrary to the best interests of the Company or its
shareholders, that involve intentional misconduct or a knowing and culpable
violation of law, that constitute an unexcused pattern of inattention that
amounts to an abdication of his duty to the Company or its shareholders, or
that show a reckless disregard for his duty to the Company or its shareholders
in circumstances in which he was, or should have been, aware, in the ordinary
course of performing his duties, of a risk of serious injury to the Company or
its shareholders, or (iii) based on transactions between the Company and its
directors or another corporation with interrelated directors or on improper
distributions, loans or guarantees under applicable sections of the CGCL. Such
limitation of liability also does not affect the availability of equitable
remedies such as injunctive relief or rescission, although in certain
circumstances equitable relief may not be available as a practical matter. The
limitation may relieve the directors of monetary liability to the Company for
grossly negligent conduct. No claim or litigation is currently pending against
the Company's directors that would be affected by the limitations of
liability.
 
  The Company's Amended and Restated Bylaws (the "Bylaws"), as amended,
provide for the indemnification of directors and executive officers from any
threatened, pending or completed action, suit or proceeding, whether formal or
informal, by reason of their current or past service to the Company, and the
reimbursement of any and all costs incurred by any such director or executive
officer in regards thereto. The Bylaws also provide for the indemnification by
the Company of any director of the Company, for any monetary damages arising
from the imposition of joint and several liability upon such director for
actions taken by other directors of the Company, except as not permitted by
the CGCL.
 
                                     II-1

<PAGE>
 
  The Company has entered, or plans to enter, into agreements (the
"Indemnification Agreements") with each of the directors and executive
officers of the Company pursuant to which the Company has agreed to indemnify
such director or executive officer from claims, liabilities, damages,
expenses, losses, costs, penalties or amounts paid in settlement incurred by
such director or executive officer in or arising out of such person's capacity
as a director or executive officer of the Company or any other corporation of
which such person is a director at the request of the Company to the maximum
extent provided by applicable law. In addition, such director or executive
officer is entitled to an advance of expenses to the maximum extent authorized
or permitted by law.
 
  To the extent that the Board of Directors or the shareholders of the Company
may in the future wish to limit or repeal the ability of the Company to
provide indemnification as set forth in the Articles, such repeal or
limitation may not be effective as to directors and executive officers who are
parties to the Indemnification Agreements, because their rights to full
protection would be contractually assured by the Indemnification Agreements.
It is anticipated that similar contracts may be entered into, from time to
time, with future directors of the Company.
 
  The Form of Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the Underwriters of the Company and
its directors and officers for certain liabilities arising under the
Securities Act of 1933 (the "Securities Act") or otherwise.
 

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
 
  Set forth below is certain information concerning all sales of securities by
the Company during the past three years that were not registered under the
Securities Act.
 
  During the three years preceding the filing of this Registration Statement,
the Registrant sold shares of Common Stock to its officers without
registration under the Securities Act. Exemption from registration under the
Securities Act for these sales is claimed under Rule 701 promulgated under
Section 3(b) of the Securities Act, Regulation D promulgated under Section
4(2) of the Securities Act and Regulation S under the Securities Act. Each
recipient of such securities represented in each transaction such recipient's
intention to acquire the securities for investment only and not with a view to
or for sale in connection with any distribution thereof and appropriate
legends were affixed to the share certificates issued in such transactions.
 
  Under the Registrant's Executive Participation Program (the "EPP"), the
Registrant offered shares of Common Stock from the EPP's inception through
January 31, 1996 at a purchase price equal to the book value of such share as
of the end of the fiscal year immediately preceding such sale. During the
three years preceding the filing of this Registration Statement, the following
sales were made to officers pursuant to such annual offers: 20,072 shares on
September 1, 1995, October 6, 1995, November 15, 1995 and January 15, 1996,
respectively, each for an aggregate of $39,993; 18,372 shares on January 1,
1996 for an aggregate of $36,606; 99,840 shares on April 16, 1996 for an
aggregate of $198,931; 241,644 shares on May 1, 1996 for an aggregate of
$546,115; 97,336 shares on July 1, 1996 for an aggregate of $219,979; 60,224
shares on November 1, 1996 for an aggregate of $119,996; 17,696 shares on
April 1, 1997 for an aggregate of $39,993; 76,920 shares on May 1, 1997 for an
aggregate of $199,992; 30,768 shares on June 1, 1997 for an aggregate of
$79,997; 30,768 shares on July 1, 1997 for an aggregate of $79,997; 15,384
shares on August 1, 1997, April 1, 1998, and April 30, 1998, respectively,
each for an aggregate of $39,998; and 62,524 shares on August 1, 1998 for an
aggregate of $174,286.
 
  Since the beginning of the fiscal quarter ended January 31, 1996, the
Registrant has offered and sold shares of Common Stock quarterly to officers
under the EPP at a purchase price equal to the book value of such share
determined as a ratio of the book value as of the end of the fiscal year
immediately preceding such sale and the book value as of the end of the fiscal
year immediately following such sale, which ratio reflected the date during
the fiscal year on which such sale was made. The Company has made the
following quarterly offers and sales: For the fiscal quarter ended January 31,
1996, the Company sold an aggregate of 58,752 shares for an aggregate purchase
price of $124,995. For the fiscal quarter ended April 30, 1996, the Company
sold an aggregate of 57,012 shares for an aggregate purchase price of
$124,999. For the fiscal quarter ended July 31, 1996, the Company sold an
aggregate of 1,789,728 shares for an aggregate purchase price of $4,044,785.
For the fiscal quarter ended October 31, 1996, the Company sold an aggregate
of 351,800 shares for an aggregate purchase price of $824,971.
 
                                     II-2

<PAGE>
 
  For the fiscal quarter ended January 31, 1997, the Company sold an aggregate
of 111,504 shares for an aggregate purchase price of $270,955. For the fiscal
quarter ended April 30, 1997, the Company sold an aggregate of 387,736 shares
for an aggregate purchase price of $975,156. For the fiscal quarter ended
July 31, 1997, the Company sold an aggregate of 1,519,220 shares for an
aggregate purchase price of $3,949,972. For the fiscal quarter ended October
31, 1997, the Company sold an aggregate of 330,492 shares for an aggregate
purchase price of $874,978.
 
  For the fiscal quarter ended January 31, 1998, the Company sold an aggregate
of 371,040 shares for an aggregate purchase price of $999,953. For the fiscal
quarter ended April 30, 1998, the Company sold an aggregate of 766,416 shares
for an aggregate purchase price of $2,099,980. For the fiscal quarter ended
July 31, 1998, the Company sold an aggregate of 2,215,104 shares for an
aggregate purchase price of $6,174,602. For the fiscal quarter ended October
31, 1998 (through August 14), the Company sold an aggregate of 159,408 shares
for an aggregate purchase price of $1,749,901.
 
  As of August 1, 1998, the Company issued 1,521,240 shares of Common Stock
upon conversion of 380,310 phantom stock units and stock appreciation rights
in connection with the termination of the Company's Phantom Stock Plan and
Amended and Restated Stock Right Plan. Exemption from registration under the
Securities Act for this issuance is claimed under Section 3(a)(9) of the
Securities Act.
 
  On August 11, 1998, the Company sold 105,728 shares of its Common Stock for
an aggregate purchase price of $294,717 upon exercise by Didier Vuchot &
Associates executives of their put option received in connection with the
Company's acquisition of that firm in June 1998. Exemption from registration
under the Securities Act for this issuance is claimed under Section 4(2) of
the Securities Act.
 
                                     II-3

<PAGE>
 

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
  (a) EXHIBITS.
 

<TABLE>   
<CAPTION>
 EXHIBIT
 NUMBER                          DESCRIPTION OF EXHIBIT
 -------                         ----------------------
 <C>     <S>
  1.1*   Form of Underwriting Agreement
  3.1*   Amended and Restated Articles of Incorporation of the Company
  3.2*   Amended and Restated Bylaws of the Company
  4.1*   Specimen Common Stock certificate
  5.1*   Opinion of O'Melveny & Myers LLP
 10.1*   Form of Indemnification Agreement between the Company and each of its
          executive officers and directors
 10.2    Performance Award Plan
 10.3    Form of U.S. and International Worldwide Executive Benefit Retirement Plan
 10.4    Form of U.S. and International Worldwide Executive Benefit Life
          Insurance Plan
 10.5    Worldwide Executive Benefit Disability Plan (in the form of Long-Term
          Disability Insurance Policy)
 10.6    Form of U.S. and International Enhanced Executive Benefit and Wealth
          Accumulation Plan
 10.7    Form of U.S. and International Senior Executive Incentive Plan
 10.8    Executive Salary Continuation Plan
 10.9    Form of Stock Repurchase Agreement
 10.10   Form of Amended and Restated Stock Repurchase Agreement
 10.11   Form of Standard Employment Agreement
 10.12   Form of Deferred Compensation Election Form for Fiscal 1998
 10.13   Stock Purchase Agreement between the Company, bill gross' idealab!,
          Mr. Singh and Korn/Ferry International Futurestep, Inc. dated
          December 1, 1997
 10.14   Shareholders Agreement between the Company, bill gross' idealab!, Mr.
          Singh and Korn/Ferry International Futurestep, Inc. dated December 1, 1997
 10.15   Employment Agreement between Mr. Singh and Korn/Ferry International
          Futurestep, Inc. dated December 1, 1997
 10.16   KFI/Singh Agreement between the Company and Mr. Singh dated December 1, 1997
 10.17   Stock Repurchase Agreement between the Company and Mr. Singh dated
          December 1, 1997
 10.18   License Agreement between Self Discovery Dynamics LLC and Korn/Ferry
          International Futurestep, Inc. dated May 15, 1998
 10.19*  Trademark License and Promotion Agreement between Dow Jones & Company,
          the Company and Korn/Ferry International Futurestep, Inc. dated June 8, 1998
 10.20   Stock Purchase Agreement between the Company, Mr. Ferry, Henry B.
          Turner and Peter W. Mullin (as trustees of the Richard M. Ferry and
          Maude M. Ferry 1972 Children's Trust), the California Community
          Foundation and Richard M. Ferry Co-trustees, and the California
          Community Foundation dated June 2, 1995
 10.21*  Purchase Agreement dated December 31, 1994 between the Company and the
          parties named therein
 10.22   Revolving Line Agreement dated January 31, 1997 between the Company
          and Mellon 1st Business Bank, as successor to 1st Business Bank, as
          amended June 19, 1998
 10.23   Revolving Credit and Term Loan Agreement dated January 31, 1997
          between the Company and Mellon 1st Business Bank, as successor to 1st
          Business Bank
</TABLE>
    
 
                                      II-4

<PAGE>
 

<TABLE>   
<CAPTION>
 EXHIBIT
 NUMBER                          DESCRIPTION OF EXHIBIT
 -------                         ----------------------
 <C>     <S>
 10.24   Promissory Note executed by the Company dated January 28, 1998 as co-
          obligor payable to Mellon 1st Business Bank, as successor to 1st
          Business Bank
 10.25*  Form of Additional Redemption Agreement
 10.26   Amended and Restated Stock Right Plan
 10.27   Form of U.S. and Foreign Executive Participation Program
 10.28   Form of Supplemental Executive Equity Participation Program
 10.29   Phantom Stock Plan
 10.30*  Form of Termination and Conversion Agreement for Stock Right Plan
 10.31*  Form of Termination and Conversion Agreement for Phantom Stock Plan
 21.1*   Subsidiaries of the Company
 23.1**  Consent of Arthur Andersen LLP
 23.3*   Consent of O'Melveny & Myers LLP (included in Exhibit 5.1)
 24.1**  Power of Attorney (contained on page II-6)
 27.1**  Financial Data Schedule
</TABLE>
    
- --------
 * To be filed by amendment
   
**  Previously filed.     
 
  (b) FINANCIAL STATEMENT SCHEDULES
 
  Schedule II--Korn/Ferry International Allowance for Doubtful Accounts
 

ITEM 17. UNDERTAKINGS
 
  (a) The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the Underwriting Agreement
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser.
 
  (b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. If a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act, and will be governed by the
final adjudication of such issue.
 
                                     II-5

<PAGE>
 
  (c) The undersigned Registrant hereby undertakes that:
 
    (1) For purposes of determining any liability under the Securities Act,
  the information omitted from the form of prospectus filed as part of a
  registration statement in reliance upon Rule 430A and contained in a form
  of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
  497(h) under the Securities Act shall be deemed to be part of the
  registration statement as of the time it was declared effective.
 
    (2) For purposes of determining any liability under the Securities Act,
  each post-effective amendment that contains a form of prospectus shall be
  deemed to be a new registration statement relating to the securities
  offered therein, and the offering of such securities at that time shall be
  deemed to be the initial bona fide offering thereof.

                                     II-6

<PAGE>
 

                                  SIGNATURES
   
  Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Los Angeles, State of California, on September 4, 1998.     
 
                                          KORN/FERRY INTERNATIONAL
 
                                          By:  /s/ Elizabeth S.C.S. Murray
                                             ----------------------------------
                                                  Elizabeth S.C.S. Murray
                                                Chief Financial Officer and
                                                  Executive Vice President
       
   
  Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.     
 

<TABLE>   
<CAPTION>
             SIGNATURE                           TITLE                   DATE
             ---------                           -----                   ----
 
<S>                                  <C>                           <C>
                 *                   Chair of the Board             September 4, 1998
____________________________________
          Richard M. Ferry
 
                 *                   President, Chief Executive     September 4, 1998
____________________________________  Officer and Director
        Michael D. Boxberger
 
   /s/  Elizabeth S.C.S. Murray      Chief Financial Officer and    September 4, 1998
____________________________________  Executive Vice President
      Elizabeth S.C.S. Murray
 
       /s/ Donald E. Jordan          Vice President of Finance      September 4, 1998
____________________________________  (Principal Accounting
          Donald E. Jordan            Officer)
 
                 *                   Director                       September 4, 1998
____________________________________
        Paul Buchanan-Barrow
 
        /s/ Peter L. Dunn            Director                       September 4, 1998
____________________________________
           Peter L. Dunn
 
                 *                   Director                       September 4, 1998
____________________________________
          Timothy K. Friar
 
                 *                   Director                       September 4, 1998
____________________________________
         Sakie T. Fukushima
 
                 *                   Director                       September 4, 1998
____________________________________
             Hans Jorda

                 *                   Director                       September 4, 1998
____________________________________
          Scott E. Kingdom
</TABLE>
    
 
                                     II-7

<PAGE>
 

<TABLE>   
<CAPTION>
             SIGNATURE                           TITLE                   DATE
             ---------                           -----                   ----
 
<S>                                  <C>                           <C>
                 *                             Director             September 4, 1998
____________________________________
          Young Kuan-Sing
 
                 *                             Director             September 4, 1998
____________________________________
           Raimondo Nider
 
                 *                             Director             September 4, 1998
____________________________________
      Manuel A. Papayanopulos
 
                 *                             Director             September 4, 1998
____________________________________
          Windle B. Priem
 
                 *                             Director             September 4, 1998
____________________________________
         Michael A. Wellman
</TABLE>
    
   
* By /s/ Peter L. Dunn
  _______________________
      Peter L. Dunn 
     Attorney-in-Fact      
 
                                      II-8

<PAGE>
 

                               INDEX TO EXHIBITS
 

<TABLE>   
<CAPTION>
 EXHIBIT
 NUMBER                          DESCRIPTION OF EXHIBIT
 -------                         ----------------------
 <C>     <S>
  1.1*   Form of Underwriting Agreement
  3.1*   Amended and Restated Articles of Incorporation of the Company
  3.2*   Amended and Restated Bylaws of the Company
  4.1*   Specimen Common Stock certificate
  5.1*   Opinion of O'Melveny & Myers LLP
 10.1*   Form of Indemnification Agreement between the Company and each of its
          executive officers and directors
 10.2    Performance Award Plan
 10.3    Form of U.S. and International Worldwide Executive Benefit Retirement
         Plan                                                                  
 10.4    Form of U.S. and International Worldwide Executive Benefit Life
         Insurance Plan
 10.5    Worldwide Executive Benefit Disability Plan (in the form of Long-Term
         Disability Insurance Policy)
 10.6    Form of U.S. and International Enhanced Executive Benefit and Wealth
         Accumulation Plan
 10.7    Form of U.S. and International Senior Executive Incentive Plan
 10.8    Executive Salary Continuation Plan
 10.9    Form of Stock Repurchase Agreement
 10.10   Form of Amended and Restated Stock Repurchase Agreement
 10.11   Form of Standard Employment Agreement
 10.12   Form of Deferred Compensation Election Form for Fiscal 1998
 10.13   Stock Purchase Agreement between the Company, bill gross' idealab!,
          Mr. Singh and Korn/Ferry International Futurestep, Inc. dated
          December 1, 1997
 10.14   Shareholders Agreement between the Company, bill gross' idealab!, Mr.
          Singh and Korn/Ferry International Futurestep, Inc. dated December 1, 1997
 10.15   Employment Agreement between Mr. Singh and Korn/Ferry International
          Futurestep, Inc. dated December 1, 1997
 10.16   KFI/Singh Agreement between the Company and Mr. Singh dated December 1, 1997
 10.17   Stock Repurchase Agreement between the Company and Mr. Singh dated
          December 1, 1997
 10.18   License Agreement between Self Discovery Dynamics LLC and Korn/Ferry
          International Futurestep, Inc. dated May 15, 1998
 10.19*  Trademark License and Promotion Agreement between Dow Jones & Company,
          the Company and Korn/Ferry International Futurestep, Inc. dated June 8, 1998
 10.20   Stock Purchase Agreement between the Company, Mr. Ferry, Henry B. Turner 
          and Peter W. Mullin (as trustees of the Richard M. Ferry and
          Maude M. Ferry 1972 Children's Trust), the California Community
          Foundation and Richard M. Ferry Co-trustees, and the California
          Community Foundation dated June 2, 1995
 10.21*  Purchase Agreement dated December 31, 1994 between the Company and the
          parties named therein
</TABLE>
    


<PAGE>
 

<TABLE>   
<CAPTION>
 EXHIBIT
 NUMBER                          DESCRIPTION OF EXHIBIT
 -------                         ----------------------
 <C>     <S>
 10.22   Revolving Line Agreement dated January 31, 1997 between the Company
          and Mellon 1st Business Bank, as successor to 1st Business Bank, as
          amended June 19, 1998
 10.23   Revolving Credit and Term Loan Agreement dated January 31, 1997
          between the Company and Mellon 1st Business Bank, as successor to 1st
          Business Bank
 10.24   Promissory Note executed by the Company dated January 28, 1998 as co-
          obligor payable to Mellon 1st Business Bank, as successor to 1st
          Business Bank
 10.25*  Form of Additional Redemption Agreement
 10.26   Amended and Restated Stock Right Plan
 10.27   Form of U.S. and Foreign Executive Participation Program
 10.28   Form of Supplemental Executive Equity Participation Program
 10.29   Phantom Stock Plan
 10.30*  Form of Termination and Conversion Agreement for Stock Right Plan
 10.31*  Form of Termination and Conversion Agreement for Phantom Stock Plan
 21.1*   Subsidiaries of the Company
 23.1**  Consent of Arthur Andersen LLP
 23.3*   Consent of O'Melveny & Myers LLP (included in Exhibit 5.1)
 24.1**  Power of Attorney (contained on page II-6)
 27.1**  Financial Data Schedule
</TABLE>
    
- --------
 * To be filed by amendment
   
** Previously filed.     





<PAGE>
 
                                                                    EXHIBIT 10.2


                            KORN/FERRY INTERNATIONAL
                                        

                             PERFORMANCE AWARD PLAN
                                        

<PAGE>
 
                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
                                                                                           PAGE
<S>                                                                                         <C>
1.   The Plan.............................................................................   1
     1.1   Purpose........................................................................   1
     1.2   Administration and Authorization; Power and Procedure..........................   1
     1.3   Participation..................................................................   2
     1.4   Shares Available for Awards; Share Limits......................................   3
     1.5   Grant of Awards................................................................   3
     1.6   Award Period...................................................................   4
     1.7   Limitations on Exercise and Vesting of Awards..................................   4
     1.8   Acceptance of Promissory Notes to Finance Exercise.............................   4
     1.9   Transfer Restrictions and Exceptions...........................................   5

2.   Options..............................................................................   6
     2.1   Grants.........................................................................   6
     2.2   Option Price...................................................................   6
     2.3   Limitations on Grant and Terms of Incentive Stock Options......................   7
     2.4   Limits on 10% Holders..........................................................   8
     2.5   Effects of Termination of Employment/Service; Termination of Subsidiary Status;
            Discretionary Provisions......................................................   8

3.   Stock Appreciation Rights............................................................   9
     3.1   Grants.........................................................................   9
     3.2   Pricing Limits.................................................................   9
     3.3   Exercise of Stock Appreciation Rights..........................................   9
     3.4   Payment........................................................................  10
     3.5   Limited Stock Appreciation Rights..............................................  10

4.   Restricted Stock Awards..............................................................  10
     4.1   Grants.........................................................................  10
     4.2   Restrictions...................................................................  11
     4.3   Limit on Number of Restricted Shares...........................................  11
     4.4   Return to the Company..........................................................  11

5.   Performance Share Awards and Stock Bonuses...........................................  12
     5.1   Grants of Performance Share Awards.............................................  12
</TABLE>
 

                                       i

<PAGE>
 
                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
                                                                                           PAGE
<S>                                                                                         <C>
     5.2   Special (Section 162(m)) Performance-Based Share Awards........................  12
     5.3   Other Stock
 Bonuses............................................................  13
     5.4   Deferred Payments..............................................................  14
     5.5   Cash Bonuses...................................................................  14
     5.6   Alternative Payments...........................................................  14

6.   Other Provisions.....................................................................  14
     6.1    Rights of Eligible Persons, Participants and Beneficiaries....................  14
     6.2    Adjustments; Acceleration.....................................................  15
     6.3    Effect of Termination of Service on Awards....................................  17
     6.4    Compliance with Laws..........................................................  17
     6.5    Tax Matters...................................................................  18
     6.6    Plan Amendment, Termination and Suspension....................................  18
     6.7    Privileges of Stock Ownership.................................................  19
     6.8    Effective Date of the Plan....................................................  19
     6.9    Term of the Plan..............................................................  19
     6.10   Governing Law/Construction/Severability.......................................  19
     6.11   Captions......................................................................  20
     6.12   Stock-Based Awards in Substitution for Stock Options or Awards Granted
             by Other Corporations........................................................  20
     6.13   Non-Exclusivity of Plan.......................................................  20

7.   Definitions..........................................................................  20

8.   Non-Employee Director Options........................................................  26
     8.1   Participation..................................................................  26
     8.2   Option Grants..................................................................  26
     8.3   Option Price...................................................................  26
     8.4   Option Period and Exercisability...............................................  27
     8.5   Termination of Directorship....................................................  27
     8.6   Adjustments; Acceleration Upon a Change in Control Event; Termination..........  27
</TABLE>


                                       ii

<PAGE>
 
                           KORN/FERRY INTERNATIONAL
                           ------------------------
                            PERFORMANCE AWARD PLAN
                            ----------------------

                                 1.   THE PLAN
                                      --------

1.1  PURPOSE.  The purpose of this Plan is to promote the success of the Company
     -------                                                                    
     and the interests of its shareholders by attracting, motivating, retaining
     and rewarding directors, officers, employees and other eligible persons
     with awards and incentives for high levels of individual performance and
     improved financial performance of the Company; to attract, motivate and
     retain experienced and knowledgeable independent directors through the
     benefits provided under Section 8; and to further align their respective
     interests with those of shareholders generally through awards of stock-
     based incentives. Capitalized terms are defined in Section 7.

1.2  ADMINISTRATION AND AUTHORIZATION; POWER AND PROCEDURE.
     ----------------------------------------------------- 

     1.2.1  COMMITTEE. This Plan will be administered by the Committee. All
            ---------
     Awards to Eligible Persons will be authorized by the Committee except that
     all discretionary Awards to Non-Employee Directors must be approved or
     ratified by the Board. All Awards to Other Eligible Persons will be subject
     to approval by the Committee and ratification by the Board, unless the
     Board expressly (by resolution or amendment to this Plan) provides
     otherwise. Action of the Committee with respect to the administration of
     this Plan will be taken pursuant to a majority vote or by written consent
     of its members.

     1.2.2  PLAN AWARDS; INTERPRETATION; POWERS OF COMMITTEE. Subject to the
            ------------------------------------------------
     express provisions of this Plan, and any express limitations on the
     delegated authority of a Committee, the Committee will have the authority
     to determine eligibility and the particular Eligible Persons who will
     receive Awards;

     (a)  grant Awards to Eligible Persons, determine the effective date of
          grant (which may be a date after but not before the Committee's
          authorization of the Award), determine the price at which securities
          will be offered or awarded and the amount of securities to be offered
          or awarded to any of such persons, determine the other specific terms
          and conditions of such Awards consistent with the express limits of
          this Plan, establish the installments (if any) in which such Awards
          will become exercisable or will vest, or determine that no delayed
          exercisability or vesting is required, and establish the events of
          termination or reversion of such Awards, all consistent with the
          express limits of this Plan;

     (b)  approve the forms of Award (which need not necessarily be identical
          either as to type of Award or among Participants);

     (c)  construe and interpret this Plan and any agreements defining the
          rights and obligations of the Company and Eligible Persons under this
          Plan, further define the terms used in this Plan, and prescribe, amend
          and rescind rules and regulations relating to the administration of
          this Plan;

                                       1

<PAGE>
 
     (d)  cancel, modify, or waive the Company's rights with respect to, or
          modify, discontinue, suspend, or terminate any or all outstanding
          Awards held by Eligible Persons, subject to any required consent under
          Section 6.6;

     (e)  accelerate or extend the exercisability or extend the term of any or
          all such outstanding Awards within the limitations under Section 1.6;
          and

     (f)  make all other determinations and take such other action as
          contemplated by this Plan or as may be necessary or advisable for the
          administration of this Plan and the effectuation of its purposes.

Notwithstanding the foregoing, the provisions of Section 8 relating to Non-
Employee Director Awards will be automatic and, to the maximum extent possible,
self-effectuating.  To the extent required, any interpretation or administration
of this Plan in respect of Awards under Section 8 shall be the responsibility of
the Board.

     1.2.3  BINDING DETERMINATIONS.  Any action taken by, or inaction of, the
            ----------------------                                           
     Company, the Board or the Committee relating or pursuant to this Plan will
     be within the absolute discretion of that entity or body and will be
     conclusive and binding upon all persons. No member of the Board or
     Committee, or any officer of the Company, will be liable for any action or
     inaction of the entity or body, of another person or of the member or
     officer, except in circumstances involving his or her bad faith. Subject
     only to compliance with the express provisions hereof, the Board and
     Committee may act in their absolute discretion in matters within their
     authority related to this Plan.

     1.2.4  RELIANCE ON EXPERTS. In making any determination or in taking or not
            -------------------  
     taking any action under this Plan, the Committee or the Board, as the case
     may be, may obtain and may rely upon the advice of experts, including
     professional advisors to the Company. No director, officer or agent of the
     Company will be liable for any such action or determination taken or made
     or omitted in good faith.

     1.2.5  DELEGATION. The Committee may delegate ministerial, non-
            ----------
     discretionary functions to individuals who are officers or employees of the
     Company.

1.3  PARTICIPATION. Discretionary Awards may be granted by the Committee only to
     -------------
     those persons that the Committee determines to be Eligible Persons. An
     Eligible Person who has been granted an Award may, if otherwise eligible,
     be granted additional Awards if the Committee so determines.

1.4  SHARES AVAILABLE FOR AWARDS; SHARE LIMITS.
     ------------------------------------------

     1.4.1  SHARES AVAILABLE.  Subject to the provisions of Section 6.2, the
            ----------------
     capital stock that may be delivered under this Plan will be shares of the
     Company's authorized but unissued Common Stock and any shares of its Common
     Stock held as treasury shares. The shares may be delivered for any lawful
     consideration.

                                       2

<PAGE>
 
     1.4.2  SHARE LIMITS. The maximum number of shares of Common Stock that may
            ------------
     be delivered pursuant to Awards granted to Eligible Persons under this Plan
     will not exceed 7,000,000 shares (the "Share Limit"). The number of shares
     subject to Awards outstanding at any time will not exceed the number of
     shares remaining available for issuance under the Plan. The maximum number
     of shares subject to those options and Stock Appreciation Rights that are
     granted during any calendar year to any one individual will be limited to
     700,000 shares covered by the Plan, and the maximum individual limit on the
     number of shares in the aggregate subject to all Awards that during any
     calendar year are granted under this Plan to any one individual will be
     1,050,000 shares covered by the Plan. The maximum individual limit for any
     Non-Employee Director, including any Option granted or to be granted
     (assuming continued eligibility during the year of grant) pursuant to
     Section 8 of this Plan, will be 50,000 shares covered by the Plan during
     any twelve month period. Each of the foregoing numerical limits will be
     subject to adjustment as contemplated by this Section 1.4 and Section 6.2.

     1.4.3  SHARE RESERVATION; REPLENISHMENT AND REISSUE OF UNVESTED AWARDS.  No
            ---------------------------------------------------------------     
     Award may be granted under this Plan unless, on the date of grant, the sum
     of (a) the maximum number of shares issuable at any time pursuant to such
     Award, plus (b) the number of shares that have previously been issued
     pursuant to Awards granted under this Plan, other than reacquired shares
     available for reissue consistent with any applicable legal limitations,
     plus (c) the maximum number of shares that may be issued at any time after
     such date of grant pursuant to Awards that are outstanding on such date,
     does not exceed the Share Limit. Shares that are subject to or underlie
     Awards that expire or for any reason are cancelled or terminated, are
     forfeited, fail to vest, or for any other reason are not paid or delivered
     under this Plan, as well as reacquired shares, will again, except to the
     extent prohibited by law (including Section 162(m)), be available for
     subsequent Awards under the Plan. Except as limited by law (including
     Section 162(m)), if an Award is or may be settled only in cash, such Award
     need not be counted against any of the limits under this Section 1.4.

1.5  GRANT OF AWARDS.  Subject to the express provisions of this Plan, the
     ---------------                                                      
     Committee will determine the number of shares of Common Stock subject to
     each Award, the price (if any) to be paid for the shares or the Award and,
     in the case of Performance Share Awards, in addition to matters addressed
     in Section 1.2.2, the specific objectives, goals and performance criteria
     (such as an increase in sales, market value, earnings or book value over a
     base period, the years of service before vesting, the relevant job
     classification or level of responsibility or other factors) that further
     define the terms of the Performance Share Award. Each Award will be
     evidenced by an Award Agreement signed by the Company and, if required by
     the Committee, by the Participant.

1.6  AWARD PERIOD.  Any Option, SAR, warrant or similar right shall expire and
     ------------                                                             
     any other Award shall either vest or be forfeited not more than 10 years
     after the date of grant; provided, however, that a payment of cash or
     delivery of shares pursuant to an Award may be delayed until a future date
     under and in accordance with the specific terms of a non-qualified deferred
     compensation plan sponsored by the Company.

1.7  LIMITATIONS ON EXERCISE AND VESTING OF AWARDS.
     --------------------------------------------- 

                                       3

<PAGE>
 
     1.7.1  PROVISIONS FOR EXERCISE.  Unless the Committee otherwise expressly
            -----------------------                                           
     provides, once exercisable an Award will remain exercisable until the
     expiration or earlier termination of the Award.

     1.7.2  PROCEDURE. Any exercisable Award will be deemed to be exercised when
            ---------
     the Company receives written notice of such exercise from the Participant,
     together with any required payment made in accordance with Section 2.2.2 or
     8.4, as the case may be, and any other requirements of exercise, including
     any documents required by Section 6.4, are satisfied.

     1.7.3  FRACTIONAL SHARES/MINIMUM ISSUE.  Fractional share interests will be
            -------------------------------                                     
     disregarded, but may be accumulated. The Committee, however, may determine
     in the case of Eligible Persons that cash, other securities, or other
     property will be paid or transferred in lieu of any fractional share
     interests. No fewer than 100 shares, irrespective of any Adjustments under
     Sections 6.2 or 8.6 of this Plan, may be purchased on exercise of any Award
     at one time unless the number purchased is the total number at the time
     available for purchase under the Award.

1.8  ACCEPTANCE OF PROMISSORY NOTES TO FINANCE EXERCISE.  The Company, in its
     --------------------------------------------------                      
     sole discretion, may, with the Committee's express approval, accept one or
     more promissory notes from any Eligible Person in connection with the
     exercise or receipt of any outstanding Award; but any such note will be
     subject to at least the following terms and conditions:

     1.8.1  PRINCIPAL. The principal of the note will not exceed the amount
            ---------
     required to be paid to the Company upon the exercise or receipt of one or
     more Awards under the Plan and the note will be delivered directly to the
     Company in consideration of such exercise or receipt.

     1.8.2  TERM. The initial term of the note will be determined by the
            ----
     Committee; but the term of the note, including extensions, will not exceed
     a period of five years.

     1.8.3  RECOURSE; SECURITY.  The note will provide for full recourse to the
            ------------------                                                 
     Participant and will bear interest at a rate determined by the Committee
     but not less than the interest rate necessary to avoid the imputation of
     interest under the Code. If required by the Committee or by applicable law,
     the note will be secured by a pledge of any shares or rights financed
     thereby in compliance with applicable law. The terms, repayment provisions,
     and collateral release provisions of the note and the pledge securing the
     note will conform with applicable rules and regulations of the Federal
     Reserve Board as then in effect.

     1.8.4  TERMINATION OF EMPLOYMENT.  If the employment or service of the
            -------------------------                                      
     Participant terminates, the unpaid principal balance of the note will
     become due and payable no later than the 10th business day after such
     termination unless the Committee at the time expressly authorized an
     extension.

     1.8.5  OTHER CONDITIONS. Participants who are not employees or directors of
            ----------------
     the Company will not be entitled to purchase shares of Common Stock with a
     promissory

                                       4

<PAGE>
 
     note unless the note is adequately secured by collateral other than the
     shares of Common Stock. The portion of the exercise price for (or purchase
     price of) shares of Common Stock equal to the par value, if any, of any
     newly issued shares under this Plan must be paid in cash, for services
     rendered or other valid consideration.

1.9  TRANSFER RESTRICTIONS AND EXCEPTIONS.
     -------------------------------------

     1.9.1 LIMIT ON EXERCISE AND TRANSFER. Unless otherwise expressly provided
           ------------------------------
     in (or pursuant to) this Section 1.9, by applicable law and by the Award
     Agreement, as the same may be amended, (a) all Awards are non-transferable
     and will not be subject in any manner to sale, transfer, anticipation,
     alienation, assignment, pledge, encumbrance or charge; (b) Awards may be
     exercised only by the Participant; and (c) amounts payable or shares
     issuable pursuant to an Award will be delivered only to (or for the account
     of) the Participant.

     1.9.2 EXCEPTIONS. The Committee may permit Awards to be exercised by and
           ----------
     paid only to certain persons or entities related to the Participant
     pursuant to such conditions and procedures as the Committee may establish.
     Any permitted transfer will be subject to the conditions that the transfer
     is consistent with applicable requirements for registration of the shares
     with the Securities Exchange Commission, and that the Committee receive
     evidence satisfactory to it that the transfer is being made to related
     persons for estate and/or tax planning purposes and without consideration
     (other than nominal consideration). ISOs and Restricted Stock Awards,
     however, will be subject to any and all additional transfer restrictions
     under the Code.

     1.9.3  FURTHER EXCEPTIONS TO LIMITS ON TRANSFER.  The exercise and transfer
            ----------------------------------------                            
     restrictions in Section 1.9.1 will not apply to:

     (a)  transfers to the Company,

     (b)  the designation of a beneficiary to receive benefits if the
          Participant dies or, if the Participant has died, transfers to or
          exercise by the Participant's beneficiary, or, in the absence of a
          validly designated beneficiary, transfers by will or the laws of
          descent and distribution,

     (c)  except in the case of ISOs, transfers pursuant to a qualified domestic
          relations order if approved or ratified by the Committee,

     (d)  if the Participant has suffered a disability that renders the
          Participant unable to legally act on his or her own behalf, permitted
          transfers or exercises on behalf of the Participant by the
          Participant's legal representative, or

     (e)  the authorization by the Committee of "cashless exercise" procedures
          with third parties who provide financing for the purpose of (or who
          otherwise facilitate) the exercise of Awards consistent with
          applicable laws and the express authorization of the Committee.

                                       5

<PAGE>
 
     (f)  REPRICING/CANCELLATION AND REGRANT/WAIVER OF RESTRICTIONS.  Subject to
          ---------------------------------------------------------             
          Section 1.4 and Section 6.6 and the specific limitations on Awards
          contained in this Plan, the Committee from time to time may authorize,
          generally or in specific cases only, for the benefit of any Eligible
          Person any adjustment in the exercise or purchase price, the vesting
          schedule, the number of shares subject to, the restrictions upon or
          the term of, an Option, SAR or other Award granted under this Plan by
          cancellation of an outstanding Award and a subsequent regranting of an
          Award, by amendment, by substitution of an outstanding Award, by
          waiver or by other legally valid means. Such amendment or other action
          may result among other changes in an exercise or purchase price that
          is higher or lower than the exercise, base or purchase price of the
          original or prior Award, provide for a greater or lesser number of
          shares subject to the Award, or provide for a longer or shorter
          vesting or exercise period.

                                 2.   OPTIONS
                                      -------

2.1  GRANTS.  One or more Options may be granted under this Section to any
     ------                                                               
     Eligible Person. Each Option granted will be designated by the Committee,
     in the applicable Award Agreement, as either an Incentive Stock Option
     (subject to Section 2.3) or a Nonqualified Stock Option.

2.2  OPTION PRICE.
     -------------

     2.2.1  PRICING LIMITS. The purchase price per share of the Common Stock
            --------------
     covered by each Option will be determined by the Committee at the time of
     the Award, but in no event will the purchase price per share of shares
     covered by an Incentive Stock Option be less than 100% (110% in the case of
     a Participant described in Section 2.4) of the Fair Market Value of the
     Common Stock on the date of grant (or date of amendment in the case of an
     amendment to the exercise price).

     2.2.2  PAYMENT PROVISIONS.  The purchase price of any shares purchased on
            ------------------                                                
     exercise of an Option granted under this Section will be paid in full at
     the time of each purchase in one or a combination of the following methods:

     (a)  in cash or by electronic funds transfer;

     (b)  by certified or cashier's check payable to the order of the Company;

     (c)  if authorized by the Committee or specified in the applicable Award
          Agreement, by a promissory note of the Participant consistent with the
          requirements of Section 1.8 and 6.4;

     (d)  by notice and third party payment in such manner as may be authorized
          by the Committee; or

     (e)  by the delivery of shares of Common Stock of the Company already owned
          by the Participant; provided that the Committee may in its absolute
          discretion limit the Participant's ability to exercise an Award by
          delivering such shares, and any

                                       6

<PAGE>
 
          shares delivered that were initially acquired from the Company must
          have been owned by the Participant at least six months as of the date
          of delivery. Shares of Common Stock used to satisfy the exercise price
          of an Option will be valued at their Fair Market Value on the date of
          exercise.

       2.2.3  "CASHLESS EXERCISE" PROVISIONS. Without limiting the generality of
              ------------------------------
       the foregoing, the Committee may provide that the Option can be exercised
       and payment made by delivering a properly executed exercise notice
       together with irrevocable instructions to a broker to promptly deliver to
       the Company the amount of sale proceeds necessary to pay the exercise
       price and, unless otherwise prohibited by the Committee or applicable
       law, any applicable tax withholding under Section 6.5.

       2.2.4  DELIVERY CONDITION.  The Company will not be obligated to deliver
              ------------------                                               
       certificates for any shares of Common Stock on exercise of an Option
       unless and until it receives full payment of the exercise price and any
       related withholding obligations have been satisfied.

2.3  LIMITATIONS ON GRANT AND TERMS OF INCENTIVE STOCK OPTIONS.
     --------------------------------------------------------- 

     2.3.1 $100,000 LIMIT. To the extent that the aggregate Fair Market Value of
           --------------
     stock with respect to which incentive stock options first become
     exercisable by a Participant in any calendar year exceeds $100,000, taking
     into account both Common Stock subject to Incentive Stock Options under
     this Plan and Common Stock subject to incentive stock options under all
     other plans of the Company or any other includable parent or subsidiary
     corporations (as these terms are used under Section 422(d) and defined in
     Section 424(e) and (f) of the Code), such options will be treated as
     Nonqualified Stock Options. For this purpose, the Fair Market Value of the
     stock subject to options will be determined as of the date the options were
     awarded. In reducing the number of options treated as incentive stock
     options to meet the $100,000 limit, the most recently granted options will
     be reduced first. To the extent a reduction of simultaneously granted
     options is necessary to meet the $100,000 limit, the Committee may, in the
     manner and to the extent permitted by law, designate which shares of Common
     Stock are to be treated as shares acquired pursuant to the exercise of an
     Incentive Stock Option.

     2.3.2  OPTION PERIOD.  Subject to Section 1.6, each Option and all rights
            -------------                                                     
     thereunder will expire no later than 10 years after the Award Date.

     2.3.3  OTHER CODE LIMITS.  Incentive Stock Options may only be granted to
            -----------------                                                 
     Eligible Employees of the Company that meet the other eligibility
     requirements of the Code. There will be imposed in any Award Agreement
     relating to Incentive Stock Options such other terms and conditions as from
     time to time are required in order that the Option be an "incentive stock
     option" as that term is defined in Section 422 of the Code.

2.4  LIMITS ON 10% HOLDERS.  No Incentive Stock Option may be granted to any
     ---------------------                                                  
     person who, at the time the Option is granted, owns (or is deemed to own
     under Section 424(d) of the Code) shares of outstanding Common Stock
     possessing more than 10% of the total combined voting power of all classes
     of stock of the Company, unless the exercise price of such Option is at
     least 110% of the Fair Market Value of the stock subject to the

                                       7

<PAGE>
 
     Option and such Option by its terms is not exercisable after the expiration
     of five years from the date such Option is granted.

2.5  EFFECTS OF TERMINATION OF EMPLOYMENT/SERVICE; TERMINATION OF SUBSIDIARY
     -----------------------------------------------------------------------
     STATUS; DISCRETIONARY PROVISIONS.
     ---------------------------------

     2.5.1  OPTIONS - RESIGNATION OR DISMISSAL.  Unless the Committee otherwise
            ----------------------------------                                 
     provides, if the Participant's employment by (or other service specified in
     the Award Agreement to) the Company terminates for any reason (the date of
     such termination being referred to as the "Severance Date") other than
     Retirement, Total Disability or death, or a "Termination For Cause" (as
     determined in the discretion of the Committee), the Participant will have,
     subject to earlier expiration or termination pursuant to or as contemplated
     by Section 1.6 or 6.2, until three (3) months after the Severance Date to
     exercise any Option to the extent it has become exercisable on or before
     the Severance Date. In the case of a Termination For Cause, the Option will
     terminate on the Severance Date. To the extent not exercisable on the
     Severance Date, the Option will terminate on the Severance Date.

     2.5.2  OPTIONS - DEATH OR TOTAL DISABILITY.  Unless the Committee otherwise
            -----------------------------------                                 
     provides, if the Participant's employment by (or specified service to) the
     Company terminates as a result of Total Disability or death, the
     Participant, Participant's Personal Representative or the Participant's
     Beneficiary, as the case may be, will have, subject to earlier expiration
     or termination pursuant to or as contemplated by Section 1.6 or 6.2, until
     twelve (12) months after the Severance Date to exercise any Option to the
     extent it has become exercisable on or prior to the Severance Date. To the
     extent not exercisable on the Severance Date, the Option will terminate on
     the Severance Date.

     2.5.3  OPTIONS - RETIREMENT. Unless the Committee otherwise provides, if
            --------------------
     the Participant's employment by (or specified service to) the Company
     terminates as a result of Retirement, the Participant, Participant's
     Personal Representative or the Participant's Beneficiary, as the case may
     be, will have, subject to earlier termination pursuant to or as
     contemplated by Section 1.6 or 6.2, until twelve (12) months after the
     Severance Date to exercise any Nonqualified Stock Option (three (3) months
     after the Severance Date in the case of an Incentive Stock Option) to the
     extent it has become exercisable on or prior to the Severance Date. To the
     extent not exercisable on the Severance Date, the Option will terminate on
     the Severance Date.

     2.5.4 CERTAIN SARS. Any SAR granted concurrently or in tandem with an
           ------------
     Option will have the same post-termination provisions and exercisability
     periods as the Option to which it relates, unless the Committee otherwise
     provides.

     2.5.5 COMMITTEE DISCRETION. Notwithstanding the foregoing provisions of
           --------------------
     this Section 2.5, in the event of, or in anticipation of, a termination of
     employment or service with the Company for any reason, other than
     Termination For Cause, the Committee may increase the portion of the
     Participant's Award available to the Participant, or Participant's
     Beneficiary or Personal Representative, as the case may be, or, subject to
     the provisions of Section 1.6, extend the exercisability period, upon such
     terms as the Committee expressly approves by resolution or by amendment to
     the Award Agreement.

                                       8

<PAGE>
 
                        3.   STOCK APPRECIATION RIGHTS
                             ------------------------- 

                 (INCLUDING LIMITED STOCK APPRECIATION RIGHTS)
                 ---------------------------------------------

3.1  GRANTS.  The Committee may grant to any Eligible Person Stock Appreciation
     ------                                                                    
     Rights either concurrently with the grant of another Award or in respect of
     an outstanding Award, in whole or in part, or independently of any other
     Award. Any Stock Appreciation Right granted in connection with an Incentive
     Stock Option will contain such terms as may be required to comply with the
     provisions of Section 422 of the Code and the regulations promulgated
     thereunder, unless the holder otherwise agrees.

3.2  PRICING LIMITS.  The pricing restrictions applicable to Options under
     --------------                                                       
     Section 2.2.1 of this Plan shall apply as well to the base or reference
     price of SARs granted under this Plan.

3.3  EXERCISE OF STOCK APPRECIATION RIGHTS.
     ------------------------------------- 

     3.3.1 EXERCISABILITY. Unless the Award Agreement or the Committee otherwise
           --------------
     provides, a Stock Appreciation Right related to another Award will be
     exercisable at such time or times, and to the extent, that the related
     Award will be exercisable.

     3.3.2  EFFECT ON AVAILABLE SHARES.  To the extent that a Stock Appreciation
            --------------------------                                          
     Right is exercised, only the actual number of delivered shares of Common
     Stock will be charged against the maximum amount of Common Stock that may
     be delivered pursuant to Awards under this Plan. The number of shares
     subject to the Stock Appreciation Right and the related Option of the
     Participant will, however, be reduced by the number of underlying shares as
     to which the exercise related, unless the Award Agreement otherwise
     provides.

     3.3.3 STAND-ALONE SARS. A Stock Appreciation Right granted independently of
           ---------------- 
     any other Award will be exercisable pursuant to the terms of the Award
     Agreement.

     3.3.4 PROPORTIONATE REDUCTION If an SAR extends to less than all the shares
           ----------------------- 
     covered by the related Award and if a portion of the related Award is
     thereafter exercised, the number of shares subject to the unexercised SAR
     shall be reduced only if and to the extent that the remaining number of
     shares covered by such related Award is less than the remaining number of
     shares subject to such SAR.

3.4  PAYMENT.
     --------

     3.4.1  AMOUNT.  Unless the Committee otherwise provides, upon exercise of a
            ------                                                              
     Stock Appreciation Right and the attendant surrender of an exercisable
     portion of any related Award, the Participant will be entitled to receive
     subject to Section 6.5 payment of an amount determined by multiplying

     (a)  the difference obtained by subtracting the exercise or base reference
          price per share of Common Stock under the related Award (if
          applicable) or the initial share value specified in the Award, from
          the Fair Market Value of a share of Common Stock on the date of
          exercise of the Stock Appreciation Right, by

                                       9

<PAGE>
 
     (b)  the number of shares with respect to which the Stock Appreciation
          Right has been exercised.

     3.4.2  FORM OF PAYMENT. The Committee, in its sole discretion, will
            ---------------
     determine the form in which payment will be made of the amount determined
     under Section 3.4.1 above, either solely in cash, solely in shares of
     Common Stock (valued at Fair Market Value on the date of exercise of the
     Stock Appreciation Right), or partly in such shares and partly in cash,
     provided that the Committee has determined that such exercise and payment
     are consistent with applicable law. If the Committee permits the
     Participant to elect to receive cash or shares (or a combination thereof)
     upon such exercise, the election will be subject to any further conditions
     that the Committee may impose.

3.5  LIMITED STOCK APPRECIATION RIGHTS.  The Committee may grant to any Eligible
     ---------------------------------                                          
     Person Stock Appreciation Rights exercisable only upon or in respect of a
     change in control or any other specified event ("Limited SARs") and such
     Limited SARs may relate to or operate in tandem or combination with or
     substitution for Options, other SARs or other Awards (or any combination
     thereof), and may be payable in cash or shares based on the spread between
     the base price of the SAR and a price based upon or equal to the Fair
     Market Value of the Shares during a specified period or at a specified time
     within a specified period before, after or including the date of such
     event.

                         4.   RESTRICTED STOCK AWARDS
                              -----------------------

4.1  GRANTS.  Subject to Section 4.2.4, the Committee may grant one or more
     ------                                                                
     Restricted Stock Awards to any Eligible Person. Each Restricted Stock Award
     Agreement will specify the number of shares of Common Stock to be issued to
     the Participant, the date of such issuance, the consideration for such
     shares (but not less than the minimum lawful consideration under applicable
     state law) to be paid by the Participant, the extent (if any) to which and
     the time (if ever) at which the Participant will be entitled to dividends,
     voting and other rights in respect of the shares prior to vesting, and the
     restrictions (which may be based on performance criteria, passage of time
     or other factors or any combination thereof) imposed on such shares and the
     conditions of release or lapse of such restrictions. Unless the Committee
     otherwise provides, such restrictions will lapse in respect of 20% of the
     shares subject to the Award on the first anniversary of the Award Date and
     in respect of an additional 20% of the shares subject to the Award on the
     second, third, fourth and fifth anniversaries of the Award Date. Stock
     certificates evidencing shares of Restricted Stock pending the lapse of the
     restrictions ("Restricted Shares") will bear a legend making appropriate
     reference to the restrictions imposed hereunder and will be held by the
     Company or by a third party designated by the Committee until the
     restrictions on the shares have lapsed and the shares have vested in
     accordance with the provisions of the Award and Section 1.7. Upon issuance
     of the Restricted Stock Award, the Participant may be required to provide
     such further assurance and documents as the Committee may require to
     enforce the restrictions.

4.2  RESTRICTIONS.
     -------------

     4.2.1 PRE-VESTING RESTRAINTS.  Except as provided in Sections 4.1 and 1.9,
           ----------------------                                              
     Restricted Shares comprising any Restricted Stock Award may not be sold,
     assigned, transferred,

                                       10

<PAGE>
 
     pledged or otherwise disposed of or encumbered, either voluntarily or
     involuntarily, until the restrictions on such shares have lapsed and the
     shares have become vested.

     4.2.2  DIVIDEND AND VOTING RIGHTS. Unless otherwise provided in the
            --------------------------
     applicable Award Agreement:

     (a)  a Participant receiving a Restricted Stock Award shall be entitled to
          vote such shares but shall not be entitled to dividends on any of the
          shares until the shares have vested; and

     (b)  all dividends shall be retained in a restricted account until the
          shares have vested and shall revert to the Company to the extent that
          they fail to vest.

     (c)  CASH PAYMENTS.  If the Participant has been paid or received cash
          -------------                                                    
          (including any dividends) in connection with the Restricted Stock
          Award, the Award Agreement will specify whether and to what extent
          such cash will be returned (with or without an earnings factor) as to
          any Restricted Shares that cease to be eligible for vesting.

4.3  LIMIT ON NUMBER OF RESTRICTED SHARES.  In no event shall more than 350,000
     ------------------------------------                                      
     shares of Common Stock covered by the Plan be available for Awards issued
     (or reissued) under this Plan as time-based Restricted Stock Awards for
     nominal or no consideration other than the par value. This limit on
     Restricted Shares does not apply to shares issued principally for past
     services, to shares issued in respect of compensation earned but deferred,
     or to shares issued in respect of Performance-Based Awards under Section
     5.2.

4.4  RETURN TO THE COMPANY.  Unless the Committee otherwise expressly provides,
     ---------------------                                                     
     Restricted Shares that remain subject to restrictions at the time of
     termination of employment or service, or are subject to other conditions to
     vesting that have not been satisfied by the time specified in the
     applicable Award Agreement, will not vest and will be returned to the
     Company in such manner and on such terms as the Committee provides.

                5.   PERFORMANCE SHARE AWARDS AND STOCK BONUSES
                     ------------------------------------------

5.1  GRANTS OF PERFORMANCE SHARE AWARDS.  The Committee may grant Performance
     ----------------------------------                                      
     Share Awards to Eligible Employees based upon such factors as the Committee
     deems relevant in light of the specific type and terms of the award. An
     Award Agreement will specify the maximum number of shares of Common Stock
     (if any) subject to the Performance Share Award, the consideration (but not
     less than the minimum lawful consideration) to be paid for any such shares
     as may be issuable to the Participant, the duration of the Award and the
     conditions upon which delivery of any shares or cash to the Participant
     will be based. The amount of cash or shares or other property that may be
     deliverable pursuant to such Award will be based upon the degree of
     attainment over a specified period of not more than 10 years (a
     "performance cycle") as may be established by the Committee of such
     measure(s) of the performance of the Company (or any part thereof) or the
     Participant as may be established by the Committee. The Committee may
     provide for full or partial credit, prior to completion of such performance
     cycle or the attainment

                                       11

<PAGE>
 
     of the performance achievement specified in the Award, in the event of the
     Participant's death, Retirement, or Total Disability, a Change in Control
     Event or in such other circumstances as the Committee (consistent with
     Section 6.10.3(b), if applicable) may determine.

5.2  SPECIAL (SECTION 162(m)) PERFORMANCE-BASED SHARE AWARDS.  Options or SAR's
     -------------------------------------------------------                   
     granted with an exercise price not less than Fair Market Value at the
     applicable date of grant for Section 162(m) purposes to Eligible Employees
     which otherwise satisfy the conditions to deductibility under Section
     162(m) of the Code are deemed "Qualifying Awards". Such awards are intended
     and will be deemed performance-based awards under Section 162(m). Without
     limiting the generality of the foregoing, and in addition to Qualifying
     Awards granted under other provisions of this Plan, other performance-based
     awards within the meaning of Section 162(m) of the Code ("Performance-Based
     Awards"), whether initially in the form of bonus stock, stock units,
     restricted stock, performance stock, phantom stock or other rights,
     including cash-only bonuses or other incentives, the vesting of which
     depends on the performance of the Company on a consolidated, segment,
     subsidiary, or division basis, with reference to revenue growth, net
     earnings (before or after taxes or before or after taxes, interest,
     depreciation, extra-ordinary items and/or amortization), cash flow, return
     on equity, return on assets or return on net investment, cost containment
     or reduction, or any combination thereof (the "business criteria") relative
     to preestablished performance goals, may be granted under this Section 5.2.
     These terms are used as applied under generally accepted accounting
     principles and in the Company's financial reporting. The applicable
     business criterion or criteria, the specific performance goals and, if
     applicable, the objective formula or standard for computing the amount
     payable or the number of shares to be delivered if the performance goal is
     (or the performance goals are) attained, must be approved by the Committee
     in advance of applicable deadlines under the Code and while the performance
     relating to such goals remains substantially uncertain. The applicable
     performance measurement period may be not less than one (except as provided
     in Section 1.6) nor more than 10 years. No more than one performance cycle
     for awards payable only in cash and not related to shares, shall begin in
     any year. Other types of performance and non-performance awards may also be
     granted under the other provisions of this Plan. The following provisions
     relate to all Performance-Based Awards (other than Qualifying Awards)
     granted under this Plan:

     5.2.1  ELIGIBLE CLASS.  The eligible class of persons for Awards under this
            --------------                                                      
     Section is officers of the Company.

     5.2.2  MAXIMUM AWARD. Grants or awards under this Section 5.2 may be paid
            -------------
     in cash or shares or any combination thereof. In no event shall grants of
     share-based Awards made in any calendar year to any Eligible Employee under
     this Section 5.2 relate to more than 700,000 shares covered by the Plan. In
     no event shall grants to any Eligible Employee under this Plan of Awards
     payable only in cash and not related to shares provide for payment of more
     than $2.5 million, times the number of years (not more than five), in the
     applicable performance period.

                                       12

<PAGE>
 
     5.2.3  COMMITTEE CERTIFICATION.  To the extent required by Section 162(m),
            -----------------------                                            
     before any Performance-Based Award under this Section 5.2 is paid, the
     Committee must certify that the specific performance goals and any other
     material terms of the Performance-Based Award were satisfied.

     5.2.4  TERMS AND CONDITIONS OF AWARDS. The Committee will have discretion
            ------------------------------
     to determine the restrictions or other limitations of the individual Awards
     under this Section 5.2 (including the authority to reduce Awards, payouts
     or vesting or to pay no Awards, in its sole discretion, if the Committee
     preserves such authority at the time of grant by language to this effect in
     its authorizing resolutions or otherwise). Notwithstanding anything
     contained in this Plan to the contrary, the Committee shall have no
     discretion to increase the amount of cash or number of shares to be
     delivered upon attainment of the performance goals set forth in the
     Performance Award Agreement.

     5.2.5 ADJUSTMENTS FOR MATERIAL CHANGES. Performance goals or other features
           --------------------------------
     of an Award under this Section 5.2 may provide that they (a) shall be
     adjusted to reflect a change in corporate capitalization, a corporate
     transaction (such as a reorganization, combination, separation, or merger)
     or a complete or partial corporate liquidation, or (b) shall be calculated
     either without regard for or to reflect any change in accounting policies
     or practices affecting the Company and/or the business criteria or
     performance goals or targets, or (c) shall be adjusted for any other
     circumstance or event, or (d) any combination of (a) through (c), but only
     to the extent in each case that such adjustment or determination in respect
     of Performance-Based Awards would be consistent with the requirements of
     Section 162(m) to qualify as performance-based compensation.

5.3  OTHER STOCK BONUSES. The Committee may grant a Stock Bonus to any Eligible
     -------------------
     Person to reward exceptional or special services, contributions or
     achievements in the manner and on such terms and conditions (including any
     restrictions on such shares) as determined from time to time by the
     Committee. The number of shares so awarded will be determined by the
     Committee. The Award may be granted independently or in lieu of a cash
     bonus and may be paid in the form of Common Stock, Restricted Shares, an
     Option, Stock Units (payable in Common Stock or cash) or other Award.

5.4  DEFERRED PAYMENTS.  The Committee may provide for the deferral of payment
     -----------------                                                        
     of any Qualifying Award, Performance Share Award or Stock Bonus under and
     in accordance with the specific terms of a non-qualified deferred
     compensation plan sponsored by the Company, provided that in the case of
     Qualifying Awards and Performance-Based Awards, the amount deferred shall
     be credited with earnings or dividend equivalents in accordance with
     Section 162(m).

5.5  CASH BONUSES.  The Committee may establish a program of annual incentive
     ------------                                                            
     awards that are payable in cash to Eligible Persons based upon the extent
     to which performance goals are met during the performance period. The
     performance goals may depend upon the performance of the Company on a
     consolidated, subsidiary or division basis with reference to any one or
     more of the business criteria set forth in Section 5.2 or such other

                                       13

<PAGE>
 
     strategic goals or individual factors (or any combination of such criteria,
     goals, or factors).

5.6  ALTERNATIVE PAYMENTS.  In lieu of a cash payment of an Award payable in
     --------------------                                                   
     cash, the Committee may require or allow all or a portion of the Award to
     be paid or credited in the form of shares of Common Stock, Restricted
     Shares, Stock Units, an Option or other Award.

                             6.   OTHER PROVISIONS
                                  ----------------

6.1  RIGHTS OF ELIGIBLE PERSONS, PARTICIPANTS AND BENEFICIARIES.
     -----------------------------------------------------------

     6.1.1  EMPLOYMENT STATUS. Status as an Eligible Person will not be
            -----------------
     construed as a commitment that any Award will be made under this Plan to an
     Eligible Person or to Eligible Persons generally.

     6.1.2 NO EMPLOYMENT CONTRACT. Nothing contained in this Plan (or in any
           ----------------------
     other documents related to this Plan or to any Award) will confer upon any
     Eligible Person or other Participant any right to continue in the employ or
     other service of the Company or constitute any contract or agreement of
     employment or other service, nor will interfere in any way with the right
     of the Company to otherwise change such person's compensation or other
     benefits or to terminate the employment or other service of such person,
     with or without cause, but nothing contained in this Plan or any related
     document will adversely affect any independent contractual right of such
     person without the Participant's consent.

     6.1.3  PLAN NOT FUNDED.  Awards payable under this Plan will be payable in
            ---------------                                                    
     shares or from the general assets of the Company, and (except as provided
     in Section 1.4.3) no special or separate reserve, fund or deposit will be
     made to assure payment of such Awards. No Participant, Beneficiary or other
     person will have any right, title or interest in any fund or in any
     specific asset (including shares of Common Stock, except as expressly
     otherwise provided) of the Company by reason of any Award hereunder.
     Neither the provisions of this Plan (or of any related documents), nor the
     creation or adoption of this Plan, nor any action taken pursuant to the
     provisions of this Plan will create, or be construed to create, a trust of
     any kind or a fiduciary relationship between the Company and any
     Participant, Beneficiary or other person. To the extent that a Participant,
     Beneficiary or other person acquires a right to receive payment pursuant to
     any Award hereunder, such right will be no greater than the right of any
     unsecured general creditor of the Company.

6.2  ADJUSTMENTS; ACCELERATION.
     ------------------------- 

     6.2.1  ADJUSTMENTS.  Upon or in contemplation of any reclassification,
            -----------                                                    
     recapitalization, stock split (including a stock split in the form of a
     stock dividend) or reverse stock split; any merger, combination,
     consolidation, or other reorganization; any spin-off, split-up, or similar
     extraordinary dividend distribution ("spin-off") in respect of the Common
     Stock (whether in the form of securities or property); any exchange of
     Common Stock or other securities of the Company, or any similar, unusual or
     extraordinary corporate transaction in respect of the Common Stock; or a
     sale of all or substantially all the assets of the

                                       14

<PAGE>
 
     Company as an entirety ("asset sale"); then the Committee shall, in such
     manner, to such extent (if any) and at such time as it deems appropriate
     and equitable in the circumstances:

     (a)  in any of such events, proportionately adjust any or all of (1) the
          number and type of shares of Common Stock (or other securities) that
          thereafter may be made the subject of Awards (including the specific
          maxima and numbers of shares set forth elsewhere in this Plan), (2)
          the number, amount and type of shares of Common Stock (or other
          securities or property) subject to any or all outstanding Awards, (3)
          the grant, purchase, or exercise price of any or all outstanding
          Awards, (4) the securities, cash or other property deliverable upon
          exercise of any outstanding Awards, or (5) (subject to limitations
          under Section 6.10.3(b)) the performance standards appropriate to any
          outstanding Awards, or

     (b)  in the case of a reclassification, recapitalization, merger,
          consolidation, combination, or other reorganization, spin off or asset
          sale, make provision for a cash payment or for the substitution or
          exchange of any or all outstanding share-based Awards or the cash,
          securities or property deliverable to the holder of any or all
          outstanding share-based Awards, based upon the distribution or
          consideration payable to holders of the Common Stock upon or in
          respect of such event.

          In each case, with respect to Awards of Incentive Stock Options, no
          adjustment will be made that would cause the Plan to violate Section
          424(a) of the Code or any successor provisions without the written
          consent of holders materially adversely affected thereby.

          In any of such events, the Committee may take such action prior to
          such event to the extent that the Committee deems the action necessary
          to permit the Participant to realize the benefits intended to be
          conveyed with respect to the underlying shares in the same manner as
          is or will be available to shareholders generally.

          6.2.2 ACCELERATION OF AWARDS UPON CHANGE IN CONTROL. Unless prior to a
                ---------------------------------------------
          Change in Control Event the Committee determines that, upon its
          occurrence, benefits under any or all Awards will not be accelerated
          or determines that only certain or limited benefits under any or all
          Awards will be accelerated and the extent to which they will be
          accelerated, and/or establishes a different time in respect of such
          Event for such acceleration, then upon the occurrence of a Change in
          Control Event:

          (a)  each Option and Stock Appreciation Right will become immediately
               exercisable,

          (b)  Restricted Stock will immediately vest free of restrictions, and

          (c)  each Performance Share Award will become payable to the
               Participant.

               Any discretion with respect to these events shall be limited to
               the extent required by applicable accounting requirements in the
               case of a transaction intended to be accounted for as a pooling
               of interests transaction.

                                       15

<PAGE>
 
               The Committee may override the limitations on acceleration in
               this Section 6.2.2 by express provision in the Award Agreement
               and may accord any Eligible Person a right to refuse any
               acceleration, whether pursuant to the Award Agreement or
               otherwise, in such circumstances as the Committee may approve.
               Any acceleration of Awards will comply with applicable legal
               requirements and, if necessary to accomplish the purposes of the
               acceleration or if the circumstances require, may be deemed by
               the Committee to occur (subject to Section 6.2.4) a limited
               period of time not greater than 30 days before the event.

     6.2.3 POSSIBLE EARLY TERMINATION OF ACCELERATED AWARDS. If any Option or
           ------------------------------------------------
     other right to acquire Common Stock under this Plan has been fully
     accelerated as required or permitted by Section 6.2.2 but is not exercised
     prior to (a) a dissolution of the Company, or (b) an event described in
     Section 6.2.1 that the Company does not survive, or (c) the consummation of
     an event described in Section 6.1 involving a Change of Control approved by
     the Board, such Option or right will terminate, subject to any provision
     that has been expressly made by the Board, the Committee through a plan of
     reorganization approved by the Board or otherwise for the survival,
     substitution, assumption, exchange or other settlement of such Option or
     right.

     6.2.4 POSSIBLE RECISION OF ACCELERATION. If the vesting of an Award has
           ---------------------------------
     been accelerated expressly in anticipation of an event or subject to
     shareholder approval of an event and the Committee or the Board later
     determines that the event will not occur, the Committee may rescind the
     effect of the acceleration as to any then outstanding and unexercised or
     otherwise unvested Awards.

     6.2.5 ACCELERATION UPON TERMINATION OF SERVICE IN ANTICIPATION OF, OR
           ---------------------------------------------------------------
     FOLLOWING A CHANGE IN CONTROL. Unless the Committee otherwise provides
     -----------------------------
     prior to a Change in Control, if any Participant's employment is terminated
     by the Company for any reason other than For Cause either in express
     anticipation of and within three months of, or within one year after a
     Change of Control, then all Options/Awards held by the Participant shall be
     deemed fully vested immediately prior to the date of termination,
     irrespective of the vesting provisions of the Participant's Award
     Agreement.

6.3  EFFECT OF TERMINATION OF SERVICE ON AWARDS.  The Committee will establish
     ------------------------------------------                               
     the effect of a termination of employment or service on the rights and
     benefits for each Award under this Plan and in so doing may make
     distinctions based upon the cause of termination.

     6.3.1 TERMINATION OF CONSULTING OR AFFILIATE SERVICES. If the Participant
           -----------------------------------------------
     is not an Eligible Employee or director and provides services as an Other
     Eligible Person, the Committee shall be the sole judge of whether the
     Participant continues to render services to the Company, unless a contract
     or the Award otherwise provides. If in these circumstances the Committee
     notifies the Participant in writing that a termination of services of the
     Participant for purposes of this Plan has occurred, then (unless the
     contract or Award otherwise expressly provides), the Participant's
     termination of services for purposes of Section 2.6, 3, 4.3 or 5 shall be
     the date which is 10 days after the

                                       16

<PAGE>
 
     Committee's mailing of the notice or, in the case of a Termination For
     Cause, the date of the mailing of the notice.

     6.3.2 EVENTS NOT DEEMED TERMINATIONS OF SERVICE. Unless Company policy or
           -----------------------------------------
     the Committee otherwise provides, the employment or service relationship
     shall not be considered terminated in the case of (i) sick leave, (ii)
     military leave, or (iii) any other leave of absence authorized by the
     Company or the Committee; provided that unless reemployment upon the
     expiration of such leave is guaranteed by contract or law, such leave is
     for a period of not more than 90 days. In the case of any Eligible Employee
     on an approved leave of absence, continued vesting of the Award while on
     leave from the employ of the Company shall be suspended, unless the
     Committee otherwise provides or applicable law otherwise requires. In no
     event shall an Award be exercised after the expiration of the term set
     forth in the Award Agreement.

     6.3.3 EFFECT OF CHANGE OF SUBSIDIARY STATUS. For purposes of this Plan and
           -------------------------------------
     any Award, if an entity ceases to be a Subsidiary a termination of
     employment or service will be deemed to have occurred with respect to each
     Eligible Person in respect of the Subsidiary who does not continue as an
     Eligible Person in respect of another entity within the Company.

6.4  COMPLIANCE WITH LAWS.  This Plan, the granting and vesting of Awards under
     --------------------                                                      
     this Plan, the offer, issuance and delivery of shares of Common Stock, the
     acceptance of promissory notes and/or the payment of money under this Plan
     or under Awards are subject to compliance with all applicable federal and
     state laws, rules and regulations (including but not limited to state and
     federal securities law, federal margin requirements) and to such approvals
     by any listing, regulatory or governmental authority as may, in the opinion
     of counsel for the Company, be necessary or advisable in connection
     therewith. In addition, any securities delivered under this Plan may be
     subject to any special restrictions that the Committee may require to
     preserve a pooling of interests under generally accepted accounting
     principles. The person acquiring any securities under this Plan will, if
     requested by the Company, provide such assurances and representations to
     the Company as the Committee may deem necessary or desirable to assure
     compliance with all applicable legal and accounting requirements.

6.5  TAX MATTERS.
     ----------- 

     6.5.1 PROVISION FOR TAX WITHHOLDING OR OFFSET. Upon any exercise, vesting,
           ---------------------------------------
     or payment of any Award or upon the disposition of shares of Common Stock
     acquired pursuant to the exercise of an Incentive Stock Option prior to
     satisfaction of the holding period requirements of Section 422 of the Code,
     the Company shall have the right at its option to (a) require the
     Participant (or Personal Representative or Beneficiary, as the case may be)
     to pay or provide for payment of the amount of any taxes which the Company
     may be required to withhold with respect to such Award event or payment or
     (b) deduct from any amount payable in cash the amount of any taxes which
     the Company may be required to withhold with respect to such cash payment.
     In any case where a tax is required to be withheld in connection with the
     delivery of shares of Common Stock under this Plan, the Committee may in
     its sole discretion (subject to Section 6.4) grant

                                       17

<PAGE>
 
     (either at the time of the Award or thereafter) to the Participant the
     right to elect, pursuant to such rules and subject to such conditions as
     the Committee may establish, to have the Company reduce the number of
     shares to be delivered by (or otherwise reacquire) the appropriate number
     of shares valued at their Fair Market Value, to satisfy such withholding
     obligation, determined in each case as of the trading day next preceding
     the applicable date of exercise, vesting or payment.

     6.5.2 TAX LOANS. If so provided in the Award Agreement, the Company may, to
           ---------
     the extent permitted by law, authorize a short-term loan of not more than
     nine (9) months to an Eligible Person in the amount of any taxes that the
     Company may be required to withhold with respect to shares of Common Stock
     received (or disposed of, as the case may be) pursuant to a transaction
     described in Section 6.5.1. Such a loan will be for a term, at a rate of
     interest and pursuant to such other terms and conditions as the Committee,
     under applicable law, may establish and such loan need not comply with the
     other provisions of Section 1.8.

6.6  PLAN AMENDMENT, TERMINATION AND SUSPENSION.
     ------------------------------------------ 

     6.6.1 BOARD AUTHORIZATION. The Board may, at any time, terminate or, from
           -------------------
     time to time, amend, modify or suspend this Plan, in whole or in part. No
     Awards may be granted during any suspension of this Plan or after
     termination of this Plan, but the Committee will retain jurisdiction as to
     Awards then outstanding in accordance with the terms of this Plan.

     6.6.2 SHAREHOLDER APPROVAL. To the extent then required under Sections
           --------------------
     162(m), 422 and 424 of the Code or any other applicable law, or deemed
     necessary or advisable by the Board, any amendment to this Plan shall be
     subject to shareholder approval.

     6.6.3 AMENDMENTS TO AWARDS. Without limiting any other express authority of
           --------------------
     the Committee under (but subject to) the express limits of this Plan, the
     Committee by agreement or resolution may waive conditions of or limitations
     on Awards to Participants that the Committee in the prior exercise of its
     discretion has imposed, without the consent of a Participant, and may make
     other changes to the terms and conditions of Awards that do not affect in
     any manner materially adverse to the Participant, the Participant's rights
     and benefits under an Award.

     6.6.4 LIMITATIONS ON AMENDMENTS TO PLAN AND AWARDS. No amendment,
           --------------------------------------------
     suspension or termination of this Plan or change of or affecting any
     outstanding Award will, without written consent of the Participant, affect
     in any manner materially adverse to the Participant any rights or benefits
     of the Participant or obligations of the Company under any Award granted
     under this Plan prior to the effective date of such change. Changes
     contemplated by Section 6.2 will not be deemed to constitute changes or
     amendments for purposes of this Section 6.6.

6.7  PRIVILEGES OF STOCK OWNERSHIP.  Except as otherwise expressly authorized by
     -----------------------------                                              
     the Committee or this Plan, a Participant will not be entitled to any
     privilege of stock ownership as to any shares of Common Stock not actually
     delivered to and held of record

                                       18

<PAGE>
 
     by the Participant. No adjustment will be made for dividends or other
     rights as a shareholder for which a record date is prior to such date of
     delivery.

6.8  EFFECTIVE DATE OF THE PLAN.  This Plan is effective as of August 5, 1998,
     --------------------------                                               
     the date of approval by the Board. The Plan shall be submitted for and
     subject to shareholder approval.

6.9  TERM OF THE PLAN.  No Award will be granted under this Plan after August 4,
     ----------------                                                           
     2008 (the "termination date"). Unless otherwise expressly provided in this
     Plan or in an applicable Award Agreement, any Award granted prior to the
     termination date may extend beyond such date, and all authority of the
     Committee with respect to Awards hereunder, including the authority to
     amend an Award, will continue during any suspension of this Plan and in
     respect of Awards outstanding on the termination date.

6.10  GOVERNING LAW/CONSTRUCTION/SEVERABILITY.
      --------------------------------------- 

      6.10.1 CHOICE OF LAW. This Plan, the Awards, all documents evidencing
             -------------
      Awards and all other related documents will be governed by, and construed
      in accordance with the laws of the State of California.

      6.10.2 SEVERABILITY. If a court of competent jurisdiction holds any
             ------------
      provision invalid and unenforceable, the remaining provisions of this Plan
      will continue in effect.

      6.10.3  Plan Construction.

      (a)  RULE 16B-3.  It is the intent of the Company that the Awards and
           ----------                                                      
           transactions permitted by Awards generally satisfy and be interpreted
           in a manner that, in the case of Participants who are or may be
           subject to Section 16 of the Exchange Act, satisfies the applicable
           requirements of Rule 16b-3 so that such persons (unless they
           otherwise agree) will be entitled to the benefits of Rule 16b-3 or
           other exemptive rules under Section 16 of the Exchange Act in respect
           of those transactions and will not be subjected to avoidable
           liability.

      (b)  SECTION 162(M).  It is the further intent of the Company that (to the
           --------------                                                       
           extent the Company or Awards under this Plan may be or become subject
           to limitations on deductibility under Section 162(m) of the Code),
           the Initial Options and Options or SARs subsequently granted with an
           exercise or base price not less than Fair Market Value on the date of
           grant and Performance-Based Awards under Section 5.2 of this Plan
           that are granted to or held by a person subject to Section 162(m) of
           the Code will qualify as performance-based compensation or otherwise
           be exempt from deductibility limitations under Section 162(m) of the
           Code, to the extent that the Committee authorizing the Award (or the
           payment thereof, as the case may be) satisfies any applicable
           administrative requirements thereof. This Plan will be interpreted
           consistent with such intent.

6.11  CAPTIONS.  Captions and headings are given to the sections and subsections
      --------                                                                  
      of this Plan solely as a convenience to facilitate reference. Such
      headings will not be deemed in any

                                       19

<PAGE>
 
      way material or relevant to the construction or interpretation of this
      Plan or any provision thereof.

6.12  STOCK-BASED AWARDS IN SUBSTITUTION FOR STOCK OPTIONS OR AWARDS GRANTED BY
      -------------------------------------------------------------------------
      OTHER CORPORATIONS. Awards may be granted to Eligible Persons under this
      ------------------
      Plan in substitution for employee stock options, SARs, restricted stock or
      other stock-based awards granted by other entities to persons who are or
      who will become Eligible Persons in respect of the Company, in connection
      with a distribution, merger or reorganization by or with the granting
      entity or an affiliated entity, or the acquisition by the Company,
      directly or indirectly, of all or a substantial part of the stock or
      assets of the employing entity.

6.13  NON-EXCLUSIVITY OF PLAN.  Nothing in this Plan will limit or be deemed to
      -----------------------                                                  
      limit the authority of the Board or the Committee to grant awards or
      authorize any other compensation, with or without reference to the Common
      Stock, under any other plan or authority.

                               7.   DEFINITIONS
                                    -----------

     "Award" means an award of any Option, Stock Appreciation Right, Restricted
Stock, Stock Bonus, performance share award, dividend equivalent or deferred
payment right or other right or security that would constitute a "derivative
security" under Rule 16a-1(c) of the Exchange Act, or any combination thereof,
whether alternative or cumulative, authorized by and granted under this Plan.

     "Award Agreement" means any writing setting forth the terms of an Award
that has been authorized by the Committee.

     "Award Date" means the date upon which the Committee took the action
granting an Award or such later date as the Committee designates as the grant or
award date at the time of the Award or, in the case of Awards under Section 8,
the applicable dates set forth therein.

     "Award Period" means the period beginning on an Award Date and ending on
the expiration date of such Award.

     "Beneficiary" means the person, persons, trust or trusts designated by a
Participant or, in the absence of a designation, entitled by will or the laws of
descent and distribution, to receive the benefits specified in the Award
Agreement and under this Plan if the Participant dies, and means the
Participant's executor or administrator if no other Beneficiary is designated
and able to act under the circumstances.

     "Board" means the Board of Directors of Korn/Ferry International.

     "Change in Control Event" means any of the following:

     (a) An acquisition by any Person (excluding one or more Excluded Persons)
     of beneficial ownership (within the meaning of Rule 13d 3 under Exchange
     Act or a pecuniary interest in (either comprising "ownership of") more than
                                                        ------------            
     30% of the Common Stock or voting securities entitled to then vote
     generally in the election of directors of

                                       20

<PAGE>
 
     Korn/Ferry International ("Voting Stock"), after giving effect to any new
                                ------ -----
     issue in the case of an acquisition from Korn/Ferry International; or

     (b) Approval by the shareholders of Korn/Ferry International of a plan of
     merger, consolidation, or reorganization of Korn/Ferry International or of
     a sale or other disposition of all or substantially all of Korn/Ferry
     International's consolidated assets as an entirety (collectively, a
     "Business Combination"), other than a Business Combination (1) in which all
     ---------------------                                                      
     or substantially all of the holders of Voting Stock hold or receive
     directly or indirectly 70% or more of the voting stock of the entity
     resulting from the Business Combination (or a parent company), and (2)
     after which no Person (other than any one or more of the Excluded Persons)
     owns more than 30% of the voting stock of the resulting entity (or a parent
     company) who did not own directly or indirectly at least that amount of
     Voting Stock immediately before the Business Combination, and (3) after
     which one or more Excluded Persons own an aggregate number of shares of the
     voting stock at least equal to the aggregate number of shares of voting
     stock owned by any other Person who is not an Excluded Person (except for
     any person described in and satisfying the conditions of Rule 13d-1(b)(1)
     under the Exchange Act), if any, and who owns more than 30% of the voting
     stock.

     (c) Approval by the Board and (if required by law) by shareholders of
     Korn/Ferry International of a plan to consummate the dissolution or
     complete liquidation of Korn/Ferry International; or

     (d) during any period of two consecutive years, individuals who at the
     beginning of such period constituted the Board and any new director (other
     than a director designated by a person who has entered into an agreement or
     arrangement with Korn/Ferry International to effect a transaction described
     in clause (a) or (b) of this definition) whose appointment, election, or
     nomination for election was approved by a vote of at least two-thirds (2/3)
     of the directors then still in office who either were directors at the
     beginning of the period or whose appointment, election or nomination for
     election was previously so approved, cease for any reason to constitute a
     majority of the Board;

For purposes of determining whether a Change in Control Event has occurred, a
transaction includes all transactions in a series of related transactions.

     "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

     "Commission" means the Securities and Exchange Commission.

     "Committee" means the Board or a committee appointed by the Board to
administer this Plan, provided that any committee shall be comprised only of two
or more directors subject to the following restrictions:

     (a) In respect of any decision of the Committee made at a time when the
     Participant affected by the decision may be subject to Section 162(m) of
     the Code, and the Awards subject to such decision are intended to satisfy
     the requirements for exemption therefrom,

                                       21

<PAGE>
 
     the decision shall be approved by a committee comprised of "outside
     directors" (as this term is defined in Section 162(m)) to the extent
     required by Section 162(m).

     (b) In respect of any decision of the Committee made at a time when the
     Participant affected by the decision may be subject to Section 16(b) of the
     Exchange Act, and the Awards subject to such decision are intended to
     satisfy the requirements for exemption therefrom, the decision shall be
     approved by the Board or by a committee comprised of Non-Employee Directors
     (as this term is as defined in Rule 16(b)-3 of the Exchange Act) to the
     extent required by Rule 16(b)-3.

     "Common Stock" means the Common Stock of Korn/Ferry International and such
other securities or property as may become the subject of Awards, or become
subject to Awards, pursuant to an adjustment made under Section 6.2 of this
Plan.

     "Company" means Korn/Ferry International, a California Corporation, its
successors, and/or its Subsidiaries, as the context requires, provided that with
respect to the Common Stock, or the grant, exercise, or disposition of an Award
or the provisions of Sections 1.8, 5.2.1, 6.2.1, 6.2.3, 6.4 and 6.10, Company
means only Korn/Ferry International.

     "Eligible Employee" means an officer (whether or not a director) or
employee of the Company.

     "Eligible Person" means an Eligible Employee, or any Other Eligible Person,
as determined by the Committee.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.

     "Excluded Person" means

     (a)  the Company

     (b) any person described in and satisfying the conditions of Rule 13d-
     1(b)(1) under the Exchange Act);

     (c) any employee benefit plan of Korn/Ferry International;

     (d) any affiliates (within the meaning of the Exchange Act), successors, or
     heirs, descendants or members of the immediate families of the individuals
     identified in part (b) of this definition.

     "Fair Market Value" on any date means

     (a) if the stock is listed or admitted to trade on a national securities
     exchange, the closing price of the stock on the Composite Tape of the
     principal national securities exchange on which the stock is so listed or
     admitted to trade, on such date, or, if there is no trading of the stock on
     such date, then the closing price of the stock as quoted on such Composite
     Tape on the next preceding date on which there was trading in such shares;

     (b) if the stock is not listed or admitted to trade on a national
     securities exchange, the closing price for the stock on such date, as
     furnished by the National Association of

                                       22

<PAGE>
 
     Securities Dealers, Inc. ("NASD") through the NASDAQ National Market
     Reporting System or a similar organization if the NASD is no longer
     reporting such information;

     (c) if the stock is not listed or admitted to trade on a national
     securities exchange and is not reported on the National Market Reporting
     System, the mean between the bid and asked price for the stock on such
     date, as furnished by the NASD or a similar organization; or

     (d) if the stock is not listed or admitted to trade on a national
     securities exchange, is not reported on the National Market Reporting
     System and if bid and asked prices for the stock are not furnished by the
     NASD or a similar organization, the value as established by the Committee
     at such time for purposes of this Plan.

Notwithstanding the foregoing, the Fair Market Value of the Common Stock for
purposes of determining the exercise price of the Initial Options granted to
employees under this Plan will be deemed to be the initial price at which the
Common Stock is offered to the public in the IPO.

     "Incentive Stock Option" or "ISO" means an Option that is designated and
intended as an incentive stock option within the meaning of Section 422 of the
Code, the award of that contains such provisions (including but not limited to
the receipt of shareholder approval of this Plan, if the award is made prior to
such approval) and is made under such circumstances and to such persons as may
be necessary to comply with that section.

     "Initial Options" means Options granted during or at the completion of an
IPO.

     "IPO" means a bona fide, firm commitment underwritten public offering of
the Common Stock pursuant to a registration statement on Form S-1 (or other
applicable form) that is declared effective under the Securities Act that
results in Korn/Ferry International becoming a registered company in respect of
the Common Stock under the Exchange Act.

     "Korn/Ferry International" means Korn/Ferry International, a California
Corporation, and its successors (if any).

     "Nonqualified Stock Option" means an Option that is designated as a
Nonqualified Stock Option and will include any Option intended as an Incentive
Stock Option that fails to meet the applicable legal requirements thereof.  Any
Option granted hereunder that is not designated as an incentive stock option
will be deemed to be designated a nonqualified stock option under this Plan and
not an incentive stock option under the Code.

     "Non-Employee Director" for purposes of Section 8 means a member of the
Board of Directors of Korn/Ferry International who is not an officer or employee
of the Company or any 50% or greater parent corporation.

     "Non-Employee Director Participant" means a Non-Employee Director who holds
an outstanding Award under the provisions of Section 8.

     "Option" means an option to purchase Common Stock granted under this Plan.
The Committee will designate any Option granted to an Eligible Person as a
Nonqualified Stock Option or an Incentive Stock Option.

                                       23

<PAGE>
 
     "Other Eligible Person" means (a) any director, or (b) any individual
consultant or advisor or agent who renders or has rendered bona fide services
                                                           ---- ----         
(other than services in connection with the offering or sale of securities of
the Company in a capital raising transaction) to the Company, and who (to the
extent provided in the next sentence) is selected to participate in this Plan by
the Committee.  A person who is neither an employee nor officer who provides
bona fide services to the Company may be selected as an Other Eligible Person
- ---- ----                                                                    
only if such person's participation in this Plan would not adversely affect (a)
Korn/Ferry International's eligibility to use Form S-8 to register under the
Securities Act of 1933, as amended, the offering and sale of shares issuable
under this Plan by Korn/Ferry International or (b) Korn/Ferry International's
compliance with any other applicable laws.

     "Performance Share Award" means an Award of a right to receive shares of
Common Stock under Section 5.1, or to receive shares of Common Stock or other
compensation (including cash) under Section 5.2, the issuance or payment of that
is contingent upon, among other conditions, the attainment of performance
objectives specified by the Committee.

     "Person" means an association, a corporation, an individual, a partnership,
a trust or any other entity or organization, including a governmental entity and
a "person" as that term is used under Section 13(d) or 14(d) of the Exchange
Act.

     "Personal Representative" means the person or persons who, upon the
disability or legal incompetence of a Participant, has acquired on behalf of the
Participant, by legal proceeding or otherwise, the power to exercise the rights
or receive benefits under this Plan by virtue of having become the legal
representative of the Participant.

     "Plan" means this Performance Award Plan, as may be amended from time to
time.

     "Restricted Shares" or "Restricted Stock" means shares of Common Stock
awarded to a Participant under this Plan, subject to payment of such
consideration, if any, and such conditions on vesting (which may include, among
others, the passage of time, specified performance objectives or other factors)
and such transfer and other restrictions as are established in or pursuant to
this Plan and the related Award Agreement, for so long as such shares remain
unvested or restricted under the terms of the applicable Award Agreement.

     "Retirement" means retirement from active service as an employee or officer
of the Company after age 65.

     "Rule 16b-3" means Rule 16b-3 as promulgated by the Commission pursuant to
the Exchange Act, as amended from time to time.

     "Section 16 Person" means a person subject to Section 16(a) of the Exchange
Act.

     "Section 162(m)" means Section 162(m) of the Code and the regulations
promulgated thereunder.

     "Securities Act" means the Securities Act of 1933, as amended from time to
time.

                                       24

<PAGE>
 
     "Stock Appreciation Right" or "SAR" means a right authorized under this
Plan to receive a number of shares of Common Stock or an amount of cash, or a
combination of shares and cash, the aggregate amount or value of which is
determined by reference to a change in the Fair Market Value of the Common
Stock.

     "Stock Bonus" means an Award of shares of Common Stock granted under this
Plan for no consideration other than past services and without restriction other
than such transfer or other restrictions as the Committee may deem advisable to
assure compliance with law.

     "Stock Unit" means a bookkeeping entry which serves as a unit of
measurement relative to a share of Common Stock for purposes of determining the
payment of a deferred benefit or right under the Plan.

     "Subsidiary" means any corporation or other entity a majority of whose
outstanding voting stock or voting power is beneficially owned directly or
indirectly by Korn/Ferry International.

     "Termination For Cause" means (unless otherwise expressly provided in the
Award Agreement or another contract) a termination of service, based upon a
finding by the Company, acting in good faith and based on its reasonable belief
at the time, that the Participant:

     (a) is or has been dishonest, incompetent, or negligent in the discharge of
     his or her duties to the Company; or has refused to perform stated or
     assigned duties; or

     (b) has committed a theft or embezzlement, or a breach of confidentiality
     or unauthorized disclosure or use of inside information, customer lists,
     trade secrets or other confidential information, or a breach of fiduciary
     duty involving personal profit, or a willful or negligent violation of any
     law, rule or regulation or of Company rules or policy, in any material
     respect; or has been convicted of a felony or misdemeanor (other than minor
     traffic violations or similar offenses); or

     (c) has materially breached any of the provisions of any agreement with the
     Company or a parent corporation; or

     (d) has engaged in unfair competition with, or otherwise acted
     intentionally in a manner injurious to the reputation, business or assets
     of the Company; or has induced a customer to break or terminate any
     contract with the Company or an affiliate; or has induced any principal for
     whom the Company (or an affiliate) acts as agent to terminate such agency
     relationship.

A Termination For Cause shall be deemed to occur (subject to reinstatement upon
a contrary final determination by the Board or Committee) on the date when the
Company first delivers notice to the Participant of a finding of Termination For
Cause and shall be final in all respects on the date following the opportunity
to be heard and written notice to the Participant that his or her service is
terminated.

     "Total Disability" means any medically determinable physical or mental
condition or impairment which prevents the Participant from performing the
essential functions of his or her

                                       25

<PAGE>
 
job with the Company that can be expected to result in death or that has lasted
or can be expected to last for a period of 90 consecutive days or for shorter
periods aggregating 180 days in any consecutive 12 month period.

                      8.   NON-EMPLOYEE DIRECTOR OPTIONS
                           -----------------------------

8.1  PARTICIPATION.  Awards under this Section 8 will be made only to Non-
     -------------                                                       
     Employee Directors and will be evidenced by Award Agreements substantially
     in the form of Exhibit A or the form approved by the Board.

8.2  OPTION GRANTS.
     ------------- 

     8.2.1  INITIAL AWARD.  Any person who is not an officer or employee of the
            -------------                                                      
     Company and who is or who thereafter becomes a director of Korn/Ferry
             ---                                                          
     International upon completion of an IPO and the registration of the Common
     Stock of Korn/Ferry International under the Exchange Act, will
     automatically be granted (without any action by the Board or Committee) a
     Nonqualified Stock Option (the Award Date of which will be the tenth (10th)
     trading day after the date of such registration or the time such person
     takes office, as the case may be) to purchase 1,500 shares of Common Stock.

     8.2.2  SUBSEQUENT ANNUAL AWARDS.  Subject to Section 8.2.3, at the close of
            ------------------------                                            
     trading on the day of the annual shareholders meeting in each year during
     the term of the Plan commencing in 1999, there will be granted
     automatically (without any action by the Committee or the Board) a
     Nonqualified Stock Option (the Award Date of which will be such date) to
     each Non-Employee Director then continuing in office to purchase 1,500
     shares of Common Stock.

     8.2.3  MAXIMUM NUMBER OF OPTIONS/SHARES. Annual grants that would otherwise
            --------------------------------   
     exceed the maximum number of shares under Section 1.4.1 will be prorated
     within such limitation. A Non-Employee Director will not receive more than
     one Nonqualified Stock Option under this Section 8.2 in any calendar year.

8.3  OPTION PRICE.  The purchase price per share of the Common Stock covered by
     ------------                                                              
     each Option granted pursuant to Section 8.2 will be 100% of the Fair Market
     Value of the Common Stock on the Award Date. The exercise price of any
     Option granted under this Section will be paid in full at the time of each
     (i) purchase in cash or by check, (ii) in shares of Common Stock valued at
     their Fair Market Value on the date of exercise of the Option and, if the
     shares were acquired from the Company, owned by the Participant at least
     six months prior to the date of exercise, (iii) delivery of a properly
     executed exercise notice together with irrevocable instructions to a broker
     to promptly deliver to the Company the amount of sale or loan proceeds
     required to pay the exercise price, or (iv) any combination of the
     foregoing methods of payment.

8.4  OPTION PERIOD AND EXERCISABILITY.  Each Option granted under this Section 8
     --------------------------------                                           
     and all rights or obligations thereunder will expire on the day before the
     10th anniversary of the Award Date and will be subject to earlier
     termination as provided below. Unless the Committee provides otherwise, an
     Option granted under Section 8.2 will become exercisable on the Award Date.

                                       26

<PAGE>
 
8.5  TERMINATION OF DIRECTORSHIP.  If a Non-Employee Director's services as a
     ---------------------------                                             
     member of the Board terminate for any reason, an Option granted pursuant to
     this Section 8 and then held by the director, to the extent the Option is
     then exercisable, will remain exercisable for 12 months after the date of
     termination or until the expiration of the stated term of the Option,
     whichever first occurs. Any portion of an Option granted pursuant to this
     Section 8 that is not exercisable at the time of the termination of service
     will terminate upon the termination of service.

8.6  ADJUSTMENTS; ACCELERATION UPON A CHANGE IN CONTROL EVENT; TERMINATION.
     ---------------------------------------------------------------------  
     Options granted under this Section 8 will be subject to adjustment,
     assumption, conversion, substitution or exchange, termination and
     acceleration as provided in Section 6.2, but in the case of a Change in
     Control Event only to the extent that the changes and any Board or
     Committee action in respect thereof (i) are effected pursuant to the terms
     of a reorganization agreement approved by shareholders of Korn/Ferry
     International or otherwise consistent with the effect of the event on
     Options held by persons other than executive officers or directors of
     Korn/Ferry International and (ii) are consistent in respect of the
     underlying shares with the effect on shareholders generally.

                                       27



<PAGE>
 
                                                                    Exhibit 10.3

                                                             (domestic version,
                                                             which is the same
                                                             in all material
                                                             respects as the
                                                             international
                                                             version)






                           KORN/FERRY INTERNATIONAL
                           ------------------------

                          WORLDWIDE EXECUTIVE BENEFIT
                          ---------------------------

                               RETIREMENT PLAN
                               ---------------

                             FOR U.S. EXECUTIVES
                             -------------------   

<PAGE>
 
                           KORN/FERRY INTERNATIONAL
                           ------------------------ 

                          WORLDWIDE EXECUTIVE BENEFIT
                          ---------------------------

                                RETIREMENT PLAN
                                ---------------

                              FOR U.S. EXECUTIVES
                              -------------------


                                   PREAMBLE
                                   --------

     The purpose of this Korn/Ferry International Worldwide Executive Benefit
("WEB") Retirement Plan for U.S. Executives (the "Plan") is to provide 
supplemental retirement benefits for eligible individuals who are Vice 
Presidents or above and shareholders of Korn/Ferry International (the 
"Company") and its Affiliates and are covered under the Company's Employee Tax-
Deferred Savings (401(k)) Plan. In general, this Plan will cover eligible 
individuals who are United States citizens, permanent legal residents and 
taxpayers. The Plan will be effective as of January 1, 1997. Individuals who
retired or terminated employment with the Company and its Affiliates prior to
January 1, 1997 will not be eligible to participate in or receive benefits under
the Plan.


                                   ARTICLE I  

                                  DEFINITIONS
                                  ----------- 
 
     When used herein, the following words shall have the following meanings 
unless the content clearly indicates otherwise:


<PAGE>
 
     1.1  Actuarial
 Equivalent.  "Actuarial Equivalent" means a benefit which is
          --------------------
actuarially equivalent to the normal form of retirement benefit commencing at
age 65, using actuarial factors determined by the Committee pursuant to Section
3.6.

     1.2  Affiliates.  "Affiliates" means subsidiary and affiliated companies of
          ----------
Korn/Ferry International.

     1.3  Annual Benefits Schedule.  "Annual Benefits Schedule" means a written 
          ------------------------
schedule in the form attached to this Plan which will be issued annually by the 
Company to notify Participants of the retirement benefits available under this 
Plan and may be changed by the Company from time to time in is complete and sole
discretion.
 
     1.4  Annual Benefit Statement. "Annual Benefit Statement" means an annual
          ------------------------
written statement which will be issued by the Company to notify each Participant
of the Participant's annual and cumulative accrual percentage of his or her
retirement benefit under the Plan for the applicable Plan Year.

     1.5  Base Salary.  "Base Salary" means a Participant's base salary prior to
          -----------
deductions for deferrals under any Company sponsored qualified or non-qualified 
plans. Base salary excludes all bonuses, incentive and supplemental 
compensation and other payments and benefits, except fixed base salary.

     1.6  Beneficiary.  "Beneficiary" means the person or persons designated as 
          -----------
such in accordance with Article IV. 

     1.7  Board.  "Board" means the Board of Directors of Korn/Ferry 
          -----
International or any committee thereof acting within the scope of its authority.
          
                                      -2-
   

<PAGE>
 
          1.8  Code. "Code" means the Internal Revenue Code of 1986, as amended 
               ----
from time to time.

          1.9  Committee. "Committee" means the administrative committee 
               ---------
appointed by the Board to administer the Plan pursuant to Article V.

          1.10 Company. "Company" means Korn/Ferry International and, Whenever 
               -------
applicable, its Affiliates.

          1.11 Effective Date. "Effective Date" means January 1, 1997.
               --------------

          1.12 ERISA. "ERISA" means the Employee Retirement Income Security Act 
               -----
of 1974, as amended from time to time. 

          1.13 Final Average Salary. "Final Average Salary" means the 
               --------------------  
participant's highest average monthly Base Salary during the 36 consecutive 
months out of the final 72 months of active, full-time (at least 30 hours per 
week) employment with the Company or its Affiliates.

          1.14 Participant. "Participant" means an eligible Vice 
               -----------
President/Shareholder who has completed the eligibility requirements to 
participate in the Plan in accordance with the provisions of Article II and has 
been notified in writing that his or her participation has been approved by the 
Company.

          1.15 Plan. "Plan" means this Worldwide Executive Benefit Retirement 
               ----
Plan for U.S. Executives as set forth in this document and as the same may be 
amended, administered or interpreted from time to time. 

          1.16 Plan Year. "Plan Year" means the fiscal year of the Company which
               ---------
begins on May 1 and ends on April 30.

                                      -3-


<PAGE>
 
          1.17 Vice President/Shareholder. "Vice President/Shareholder" means 
               --------------------------
any Vice President or more senior officer of the Company or its Affiliates who
is or becomes a shareholder of the Company at the next subscription offering
under the Company's Equity Participation Program and abides by the provisions of
such program as determined by the Committee.

                                  ARTICLE II

                                 PARTICIPATION
                                 -------------  


          2.1  Participation. Any Vice President/Shareholder who is actively 
               -------------   
employed on a full-time basis (at least 30 hours per week) and who is eligible 
for retirement benefits in accordance with the Annual Benefits Schedule for this
Plan, which will be issued and updated by the Company from time to time, may 
enroll in the Plan by completing the underwriting requirements and any other 
enrollment steps required by the Company for coverage to begin. An eligible Vice
President/Shareholder shall become a Participant in the Plan upon being notified
in writing that his or her participation has been approved by the Company.

          2.2  Commencement of Coverage. Subject to the limitations of Section
               ------------------------ 
2.1, (i) a Vice President/Shareholder who is eligible for coverage on January 1,
1997 will be covered under the Plan as of January 1, 1997, and (ii) any other 
eligible Vice President/Shareholder will be covered under the Plan on May 1 
after his or her participation is approved by the Company.

                                      -4-

<PAGE>
 
                                  ARTICLE III

                              RETIREMENT BENEFITS
                              -------------------

          3.1  Eligibility for Retirement Benefits. A Participant who is not 
               -----------------------------------
terminated for "Cause" (as defined in Section 3.10) and who does not violate the
non-compete provisions of Section 3.11 will be eligible to receive retirement 
benefits under this Plan.

          3.2  Determination of Amount of Retirement Benefits.
               ----------------------------------------------

          (a) The amount of the monthly retirement benefit payable to a
Participant commencing at age 65 will be a specific percentage (determined as
set forth below) of the Participant's Final Average Salary. The specific
percentage will be the cumulative accrual percentage earned by the Participant,
which will be the sum of the annual accrual percentages awarded to the
Participant for each complete Plan Year of service, up to a maximum of 20 years
of service.

          (b) A Participant will only earn benefits under the Plan for service
after the Effective Date (or service after May 1, 1994, as provided below) while
actively employed on a full-time basis (at least 30 hours per week). No annual
accrual percentage will be awarded to a Participant for any Plan Year (or any
portion of a Plan Year) during which the Participant was not in active, full-
time employment (at least 30 hours per week) with the Company or its Affiliates
during the entire Plan Year.

          (c) Annual accrual percentages will be awarded retroactively to a
Participant commencing with the later of the Plan Year which began on May 1,
1995, or the first Plan Year in

                                      -5-



<PAGE>
 
which the Participant met the eligibility requirements to participate in the 
Plan. A Participant's cumulative accrual percentage will be the sum of the 
annual accrual percentages awarded to the Participant during the first 20 years 
of full-time service as a Participant in the Plan. A Participant will not accrue
any additional annual accrual percentages under the Plan after the first 20 
years of full-time service while participating in the Plan.

          (d) The target annual accrual percentages will be one-twentieth 
(1/20) of the target retirement percentages for each Plan Year, as set forth in 
the Annual Benefits Schedule for this Plan which will be issued by the Company 
and is subject to change by the Company from time to time in its complete and 
sole discretion. Actual awards for each Plan Year will be determined by the 
Board and may vary from the target awards. Annual accrual percentages awarded 
under the Plan for each Plan Year will be based on the Company's success in 
meeting its profitability goals for the Plan Year. If the Company does not meet 
the profitability goals which are established by the Board for a particular Plan
Year, a reduced annual accrual percentage (which may be zero) may be awarded 
under the Plan for that Plan Year. In a Plan Year when the Company exceeds its 
profitability goals, the Board, in its sole discretion, may determine to award 
annual accrual percentages which exceed the target awards. Any increase or 
decrease in the actual awards from the target awards for a Plan Year will be 
made ratably on the same proportionate basis for all Participants in the Plan. 
There is no guarantee by the Company of any total retirement benefit under the 
Plan.

                                      -6-


<PAGE>
 
          (e)  The Participant's annual accrual percentage and cumulative 
accrual percentage will be reported for each Plan Year in an Annual Benefit
Statement issued by the Company to the Participant. In the event of any
difference between the annual or cumulative accrual percentages set forth in the
most recent Annual Benefit Statement issued to the Participant and the
percentages determined from the Annual Benefits Schedule, the annual and
cumulative accrual percentages determined from the Annual Benefits Schedules
issued by the Company shall be controlling.

          (f)  A Participant will be 100% vested at all times in the annual and 
cumulative accrual percentages which have been earned by the Participant under 
the Plan, except as provided in Sections 3.10 and 3.11.

          3.3  Definition of Retirement.     
               ------------------------

          (a)  Early retirement means termination of service with the Company 
and its Affiliates after a Participant attains age 55, but before attaining age
65.

          (b)  Normal retirement means termination of service with the Company 
and its Affiliates when a Participant attains age 65.

          (c)  Late retirement means termination of service with the Company and
its Affiliates when a Participant continues in employment after age 65.

          3.4  Form of Retirement Benefit Payments.  The normal form of payment
               -----------------------------------
of retirement benefits will be a single life annuity payable at age 65 for
unmarried Participants and a joint and 50% survivor annuity payable at age 65
for married

                                      -7-

<PAGE>
 
Participants. A Participant may, however, elect payment in one of the following 
forms:

          (1)  Single life annuity

          (2)  Single life annuity with 10 year certain

          (3)  Joint & 50% survivor annuity

          (4)  Joint & 100% survivor annuity

Spousal consent is required for all elections by married Participants.

          3.5  Commencement of Retirement Benefit Payments.  Retirement benefit
               -------------------------------------------
payments will commence on the May 1 or November 1 following a Participant's
retirement, unless the Participant has elected a later commencement date.
Participants may elect to have retirement benefits commence a certain number of
years after retirement. In such event retirement benefits will commence on May 1
or November 1 following the number of years elected. Notwithstanding any
election made by a Participant or any other provision of the Plan, if a
Participant retires prior to age 65, retirement benefits will not commence until
the May 1 or November 1 following two years after termination of service or the
Participant's attainment of age 65, whichever is sooner.

          Retirement benefits must commence no later than May 1 or November 1
following the month in which a Participant attains age 70, even if the
Participant is still employed with the Company or its Affiliates. If a
Participant is actively employed on a full-time basis past age 65, the
Participant will continue to earn additional annual accrual percentages up to
the maximum of the first 20 years of full-time service while participating in

                                      -8-

<PAGE>
 
the Plan. If the Participant is still working at the time when retirement
benefit payments commence, the initial retirement benefit payments will be based
on the Participant's accrued retirement benefit on the date when payments
commence. If the Participant continues to accrue additional retirement benefits,
the retirement benefit payments will be adjusted each year to reflect the
additional accrual, if any. No adjustment shall be made for past retirement
benefit payments.

          All payments of retirement benefits are subject to the limitations of 
Sections 3.10 and 3.11.

          3.6  Actuarial Adjustment for Early or Late Commencement of Retirement
               -----------------------------------------------------------------
Benefit Payments.  Retirement benefit payments which commence prior to or after
- ----------------
the date when a Participant attains age 65 will be adjusted actuarially using
Actuarial Equivalent factors determined by the Committee. Initially, the
Actuarial Equivalent factors will be 80% of the 1983 GAM Mortality Table and a
discount rate not greater than 120% of the long-term "applicable federal rate"
(as defined in Section 1274(d) of the Code). In the future the Committee may use
such mortality tables and discount rates as the Committee may determine, in its
sole discretion.

          3.7  Election of Form and Commencement of Retirement Benefit Payments.
               ----------------------------------------------------------------
When a Participant becomes eligible to accrue a benefit in accordance with the
Annual Benefits Schedule, the Participant will be required to make an election
of form and commencement date of retirement benefit payments during the initial
enrollment under the Plan.

                                      -9-

<PAGE>
 
          A Participant may change the election of form and commencement date of
retirement benefit payments at any time prior to 12 months before the 
Participant's early, normal or late retirement without a penalty, but in no 
event later than age 65, except as provided below. A Participant may make a 
subsequent change in the election of form and commencement date of retirement 
benefit payments within 12 months prior to early, normal or late retirement or 
after age 65 with a 10% penalty.

          In the event of a change in a Participant's marital status or the
death of a Participant's designated Beneficiary after a Participant attains age
65, the Participant may change the election of form and commencement date or
retirement benefit payments without a penalty at any time prior to 12 months
before retirement benefit payments commence.

          In no event may a Participant change the form or commencement date of
retirement benefit payments (or the Beneficiary designated to receive any
survivor benefits following the Participant's death) after retirement benefit
payments have commenced, either with or without a penalty.

          3.8  Disability.  A Participant who becomes disabled while employed
               ----------
with the Company or its Affiliates will not accrue additional benefits under the
Plan during any Plan Year when the Participant is not an active, full-time 
employee during the entire Plan Year. A disabled Participant will not be 
eligible to receive retirement benefits before the earliest date when the 
Participant would have been eligible to retire under the Plan. Retirement 
benefit payments to a disabled Participant will be made in accordance with the 
Participant's election of form and

                                     -10-

<PAGE>
 
commencement date of retirement benefits in the same manner as for any other 
Participant.

          3.9  Termination of Employment Before Age 55.  A Participant who
               ---------------------------------------
terminates employment with the Company and its Affiliates before attaining age
55 will not be eligible to receive retirement benefits until age 55 or two years
after termination of service, whichever is later. Subject to the foregoing
limitation and Sections 3.10 and 3.11, retirement benefit payments to a
terminated Participant will be made in accordance with the Participant's
election of form and commencement date of retirement benefits. Retirement
benefits will commence after the same number of years the Participant elected to
have retirement benefits commence following retirement, but measured from the
date when the Participant terminated employment, or two years after termination
of service or when the Participant attains age 55, whichever is latest. For
example, if the Participant terminates service at age 54 and had elected to have
retirement benefits commence two years after retirement, retirement benefits
will commence when the Participant attains age 56 (which will be two years after
termination of service). If the Participant terminates service at age 51 and had
elected to have retirement benefits commence two years after retirement,
retirement benefits will commence when the Participant attains age 55.

          3.10 Termination for Cause.  Notwithstanding any other provision of 
               ---------------------
the Plan, any Participant whose employment is terminated for "cause" and the
Beneficiaries of any such Participant will not be entitled to receive any
benefits under

                                     -11-

<PAGE>
 
the Plan. For purposes of this Plan, "cause" means the Participant's (i)
commission of a crime, (ii) refusal to follow, without good cause, directions of
the Board, (iii) misappropriation of property or money from the Company or its
Affiliates, (iv) commission of any act resulting in material harm to the
financial condition or reputation of the Company or its Affiliates, or (v)
commission of any fraudulent act relating to or arising out of the Participant's
employment. Notwithstanding any date of retirement or voluntary termination of
employment by the Participant, if the Company or any of its Affiliates notifies
the Participant that he or she is being terminated for cause within 90 days of
such date of retirement or voluntary termination by the Participant, the
Participant shall be considered terminated for cause for purposes of this Plan.

          3.11 Non-Compete Provisions.  If a Participant becomes employed as an
               ----------------------
executive search consultant or obtains employment in any capacity for any other
executive search firm within two years after the date of his termination of
service (including early, normal or late retirement) with the Company or its
Affiliates, the Participant (or his or her Beneficiary following the
Participant's death) will not be entitled to receive any benefits under the
Plan.

          3.12 Small Payments.  If the monthly payments under the Plan to a 
               --------------
Participant (or his or her Beneficiary following the Participant's death) are
$500 or less, the Company, in its sole discretion, may convert the benefit to a
lump sum payment, notwithstanding any other provision of the Plan.

                                     -12-

<PAGE>
 
                                  ARTICLE IV

               SURVIVOR BENEFITS AND DESIGNATION OF BENEFICIARY
               ------------------------------------------------

          4.1  Survivor Benefits.
               -----------------

          (a)  Post-Retirement After Retirement Benefits Have Commenced. If the 
               --------------------------------------------------------
Participant dies after retirement benefits have commenced, the Beneficiary will 
receive the continuation of the survivor portion, if any, of the annuity the 
Participant elected. If the Participant elected a single life only annuity, no 
survivor benefit will be payable.

          (b)  After Eligible for Retirement or Post-Retirement Before 
               -------------------------------------------------------
Retirement Benefits Commence. If the Participant dies after becoming eligible 
- ----------------------------
for retirement, but before retirement benefits have commenced, the Beneficiary 
will receive the survivor portion, if any, of the annuity the Participant 
elected. Survivor benefits will commence after the same number of years the 
Participant elected to have retirement benefits commence following retirement, 
but measured from the Participant's death. For example, if the Participant had 
elected to have retirement benefits commence two years after retirement, 
survivor benefits will commence two years after the Participant's death.

          (c)  Pre-Retirement. If the Participant dies before eligibility for 
               --------------
retirement, the Beneficiary will receive the survivor portion, if any, of the 
annuity the Participant elected. Survivor benefits will commence on the May 1 or
November 1 following the month in which the Participant would have attained age 
55 if the Participant had lived.

                                     -13-

<PAGE>
 
          (d)  Hardship. In the event of a financial hardship (including 
               --------                                                         
payment of estate taxes) due to the delay in commencement of survivor benefits,
the Beneficiary may submit a written petition to the Committee asking to have
survivor benefits commence on an earlier date. The Committee may grant or deny
the petition in its sole discretion.

          (e)  Actuarial Adjustment of Survivor Benefits. When retirement
               -----------------------------------------                 
benefits have not commenced during the Participant's lifetime, survivor benefits
which commence before or after the Participant attained or would have attained
age 65 will be actuarially adjusted in the manner described in Section 3.6.

          4.2  Designation of Beneficiary. Each Participant shall have the
               --------------------------
right to designate a Beneficiary to whom payment of survivor benefits under a
joint and survivor annuity elected by the Participant under this Plan shall be
made in the event of the Participant's death. Such designation shall be made on
a form prescribed by and delivered to the Company. The Participant shall have
the right to change or revoke any such designation of a Beneficiary from time to
time prior to commencement of retirement benefit payments by filing a new
designation or notice of revocation with the Company, and no notice to any
Beneficiary nor consent by any Beneficiary shall be required to effect any such
change or revocation except as provided below. The spouse of a married
Participant must consent in writing to any designation of a Beneficiary other
than the spouse, and any designation of a Beneficiary by a married Participant
other than the spouse of such Participant will be null and void without the
written consent of the spouse in the form required by the

                                     -14-


<PAGE>
 
Company.  A subsequent marriage or divorce of the Participant prior to 
commencement of retirement benefit payments shall revoke all prior designations 
of a Beneficiary.  A Participant may not change his or her Beneficiary after 
retirement benefit payments commence.

          4.3   Failure to Designate Beneficiary.  If a Participant shall fail 
                --------------------------------
to designate a Beneficiary, or if no designated Beneficiary survives the 
Participant, no survivor benefits will be payable after the Participant's death 
except as provided in the following sentence.  If the Participant is married at 
the time of death and has not designated a Beneficiary, the survivor benefits, 
if any, will be paid to the Participant's spouse, unless the Participant elected
a single life annuity.



                                   ARTICLE V

                                ADMINISTRATION
                                --------------

          5.1   Administrator.  The Board shall appoint a Committee consisting 
                -------------
of three or more persons to administer the Plan and shall have authority to 
appoint and remove members from the Committee.  The Committee shall have the 
administrative responsibilities hereinafter described with respect to the Plan. 
Whenever any action is required or permitted to be taken in the administration 
of the Plan, such action shall be taken by the Committee unless the Committee's 
power is expressly limited herein or by operation of law.  The Committee shall 
be the Plan "Administrator" (as such term is defined in Section 3(16) (A) of 

                                     -15-

<PAGE>
 
ERISA).  The Committee may delegate its duties and responsibilities as it, in 
its sole discretion, deems necessary or appropriate to the execution of such 
duties and responsibilities.  The Committee as a whole or any of its members may
serve in more than one capacity with respect to the Plan.  A member of the 
Committee shall not vote or act upon any matter which relates solely to the 
member in his or her individual capacity as a Participant.

          5.2   Powers and Duties.  The Committee, or its delegates, shall 
                -----------------
maintain and keep (or cause to be maintained and kept) such records as are 
necessary for the efficient operation of the Plan or as may be required by any 
applicable law, regulation or ruling and shall provide for the preparation and 
filing of such forms, reports, information, and documents as may be required to 
be filed with any governmental agency or department and furnished to 
Participants and/or Beneficiaries.

          Except to the extent expressly reserved to the Company or the Board, 
the Committee shall have all powers necessary to administer the Plan and to 
satisfy the requirements of any applicable laws.  These powers shall include, by
way of illustration and not limitation, the exclusive powers and discretionary 
authority necessary to:

          (a)  construe and interpret the Plan; declare and amend the Annual 
Benefits Schedule; decide all questions of eligibility, including whether a 
person shall participate in the Plan for U.S. or International Executives; 
decide all questions of fact relating to claims for benefits; and determine the 

                                     -16-

<PAGE>
 
amount, time, manner, method, and mode of payment of any benefits hereunder;

          (b) direct the Company and/or the trustee of any trust established at
the discretion of the Company to provide for the payment of benefits under the
Plan, including the amount, time, manner, method, and mode of payment of any
benefits hereunder;

          (c) prescribe procedures to be followed and forms to be used by
Participants and/or other persons in filing applications or elections;

          (d) prepare and distribute, in such manner as may be required by law
or as the Committee deems appropriate, information explaining the Plan;
provided, however, that no such explanation shall contravene the terms of this
Plan or increase the rights of any Participant or Beneficiary or the liabilities
of the Company; and

          (e) perform all functions otherwise imposed upon a plan administrator
by ERISA which are not expressly reserved to the Company or the Board.

          5.3    Claims Procedure. The right of any Participant or Beneficiary
                 ----------------                                             
to receive a benefit hereunder and the amount of such benefit shall be
determined in accordance with the procedures for determination of benefit claims
established and maintained by the Committee in compliance with the requirements
of Section 503 of ERISA.

                                      -17-

<PAGE>
 
                                   ARTICLE VI

                       AMENDMENT AND TERMINATION OF PLAN
                       ---------------------------------



          Subject to the limitations of Article VII, the Board may, at any time
in its complete and sole discretion, amend or terminate the Plan in whole or in
part, change the benefits under the Plan, or otherwise modify the Annual
Benefits Schedule for the Plan, provided that no such action may deprive
Participants or Beneficiaries of benefits which have accrued prior to such
action. Written notice of any amendment or termination of the Plan shall be
given to each affected Participant in the Plan.


                                  ARTICLE VII

                               CHANGE OF CONTROL
                               -----------------


          In the event of a "Change of Control" of the Company (as defined
below), the Plan may not be amended or terminated, and the Annual Benefits
Schedule and benefits under the Plan may not be modified or changed, during the
two year period after the Change of Control. All Participants who remain in
employment with the Company or its Affiliates shall continue to accrue benefits
under the Plan for the Plan Years which commence during such two year period in
accordance with the provisions of the Plan.

          For purposes of this Plan, a "Change of Control" shall mean (i) the
sale or other transfer of 50% or more of the voting stock of the Company, other
than to (a) shareholders of the Company, (b) a pension, profit-sharing, stock
bonus or similar

                                      -18-

<PAGE>
 
plan established for the benefit of employees of the Company or its Affiliates
or (c) an entity in which the former shareholders of the Company hold 50% or
more of the value of the outstanding stock; (ii) a merger, consolidation,
business combination or other reorganization of the Company in which the former
shareholders of the Company hold 50% or more of the value of the outstanding
stock; or (iii) the sale or other transfer of all or substantially all of the
assets of the Company, other than to (a) shareholders of the Company, (b) a
pension, profit-sharing, stock bonus or similar plan established for the benefit
of employees of the Company or its Affiliates or (c) an entity in which the
former shareholders of the Company hold 50% or more of the value of the
outstanding stock.


                                 ARTICLE VIII

                                 MISCELLANEOUS
                                 -------------

          8.1  ERISA Plan. This Plan is covered by Title I of the Employee 
               ----------                                                  
Retirement Income Security Act of 1974 ("ERISA") as a "top hat" pension benefit
plan. The Company is the "named fiduciary" of the Plan for purposes of Section
402(a) (2) of ERISA. The Plan is intended to be "unfunded" and maintained
"primarily for the purpose of providing deferred compensation for a select group
of management of highly compensated employees" for purposes of ERISA, and as
such is intended not to be covered by Parts 2 through 4 of Subtitle B of Title I
of ERISA (relating to participation and vesting, funding and fiduciary
responsibility).

                                      -19-

<PAGE>
 
          8.2  Employment Not Guaranteed. Nothing contained in this Plan nor any
               -------------------------                                        
action taken hereunder shall be construed as a contract of employment or as
giving any Participant any right to be retained in employment with the Company
or its Affiliates.

          8.3  Protective Provisions. Each Participant shall cooperate with
               ---------------------                                       
the Company by furnishing any and all information requested by the Company in
order to facilitate the payment of benefits hereunder, taking such physical
examinations as the Company may deem necessary and taking such other relevant
action as may be requested by the Company. If a Participant refuses so to
cooperate, the Company shall have no further obligation to the Participant or
his or her Beneficiary under the Plan. If a Participant makes any material
misstatement of information or nondisclosure of medical history or commits
suicide within two years after becoming a Participant in the Plan, then no
benefits will be payable hereunder to such Participant's Beneficiary, provided,
that in the Company's sole discretion, benefits may be payable in an amount
reduced to compensate the Company for any loss, cost, damage or expense suffered
or incurred by the Company as a result in any way of any such action,
misstatement or nondisclosure.

          8.4    Arbitration. Any controversy or claim arising out of or
                 -----------                                            
relating to this Plan, or the breach thereof, shall be settled by arbitration in
accordance with the Employment Dispute Resolution Rules of the American
Arbitration Association, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. The
arbitration shall occur in Los Angeles, California. The fees and

                                      -20-

<PAGE>
 
expenses of any arbitration shall be awarded by the arbitrator(s).

          8.5  Gender, Singular & Plural. All pronouns and any variations
               -------------------------
thereof shall be deemed to refer to the masculine, feminine, or neuter, as the
identity of the person or persons may require. As the context may require, the
singular may be read as the plural and the plural as the singular.

          8.6  Captions. The captions of the articles, sections and paragraphs
               --------       
of this Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.

          8.7  Validity. In the event any provision of this Plan is held
               --------   
invalid, void or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provisions of this Plan, and this Plan
shall be deemed to be modified to the least extent possible to make it valid and
enforceable in its entirety.

          8.8  Notices and Elections. Any notice or election required or
               ---------------------                                    
permitted to be given to the Company or the Committee under the Plan shall be
sufficient if in writing and hand delivered, or sent by registered or certified
mail, to the principal office of the Company, directed to the attention of the
President. Such notice or election shall be deemed given as of the date of
delivery or, if delivery is made by mail, as of the date shown on the postmark
on the receipt for registration or certification.

          8.9  Withholding; Employment Taxes. To the extent required by the law
               -----------------------------                                   
in effect at the time payments are made, the

                                      -21-

<PAGE>
 
Company shall withhold any taxes required to be withheld by the federal or any
state or local government from payments made hereunder.

          8.10  Applicable Law. This Plan shall be construed, regulated and
                --------------                                             
administered in accordance with the laws of the State of California, except
insofar as state law is preempted by ERISA.

          8.11  Waiver of Breach. The waiver by the Company of any provision of
                ----------------                                               
this Plan shall not operate or be construed as a waiver of any subsequent breach
by the Participant.

          8.12  Benefit. The rights and obligations of the Company under this
                -------                                                      
Plan shall inure to the benefit of, and shall be binding upon, the successors
and assigns of the Company.

          8.13  No Right to Company Assets. Neither the Participant nor any
                ---------------------------                                 
other person shall acquire by reason of the Plan any right in or title to any
assets, funds or property of the Company whatsoever including, without limiting
the generality of the foregoing, any specific funds or assets which the Company,
in its sole discretion, may set aside in anticipation of a liability hereunder,
nor in or to any policy or policies of insurance on the life of the Participant
owned by the Company. No trust shall be created in connection with or by the
execution or adoption of this Plan, and any benefits which become payable
hereunder shall be paid from the general assets of the Company. The Participant
shall have only a contractual right to the amounts, if any, payable hereunder
unsecured by any asset of the Company.

                                      -22-

<PAGE>
 
          8.14   Offset. If at the time payments or installments of payments are
                 ------                                                         
to be made hereunder the Participant or the Beneficiary or both are indebted or
obligated to the Company, then the payments remaining to be made to the
Participant or the Beneficiary or both may, at the discretion of the Company, be
reduced by the amount of such indebtedness or obligation, provided, however,
that an election by the Company not to reduce any such payment or payments shall
not constitute a waiver of its claim for such indebtedness or obligations.

          8.15   Nonassignability. Neither the Participant nor any other person
                 ----------------
shall have any right to commute, sell, assign, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate or convey in advance of actual receipt
the amounts, if any, payable hereunder, or any part thereof, which are, and all
rights to which are, expressly declared to be unassignable and non-transferable.
No part of the amounts payable shall, prior to actual payment, be subject to
seizure or sequestration for the payment of any debts, judgments, alimony or
separate maintenance owed by the Executive or any other person, or be
transferable by operation of law in the event of the Participant's or any other
person's bankruptcy or insolvency.

          8.16   Trust Fund. The Company shall be responsible for the payment of
                 ----------                                                     
all benefits provided under the Plan. At its discretion, the Company may
establish one or more trusts, with such trustees as the Board or the Committee
may approve, for the purpose of providing for the payment of such benefits. Such
trust or trusts may be irrevocable, but the assets thereof shall be subject to
the claims of the Company's creditors. To the

                                      -23-

<PAGE>
 
extent any benefits provided under the Plan are actually paid from any such
trust, the Company shall have no further obligation with respect thereto, but to
the extent not so paid, such benefits shall remain the obligation of, and shall
be paid by, the Company.

                                  ARTICLE IX

              DISCLAIMER OF RESPONSIBILITIES FOR TAX CONSEQUENCES
              ---------------------------------------------------


          The Company and its Affiliates assume no responsibility, and do not
purport to provide any tax or legal advice or counsel, with respect to any tax
consequences or liabilities which result from the benefits which are provided
under this Plan. Participants and Beneficiaries must look solely to their own
tax and legal advisers for such advice and counsel.

          IN WITNESS WHEREOF, the Company has caused this Worldwide Executive
Benefit Retirement Plan for U.S. Executives to be executed this 1st day of
                                                                ---       
January, 1997, effective as of January 1, 1997.
- -------                                        

                               KORN/FERRY INTERNATIONAL


                               By: /s/ Peter L. Dunn
                                 -----------------------------------------
                                 Title:

Attest:                          
                                 


By: /s/ Kristine E. Key         
    -------------------------------
    Title:
   
     

                                      -24-

<PAGE>
 
                           KORN/FERRY INTERNATIONAL
                          WORLDWIDE EXECUTIVE BENEFIT
                                RETIREMENT PLAN
                              FOR U.S. EXECUTIVES

                           ANNUAL BENEFITS SCHEDULE
                           ------------------------

================================================================================
The retirement benefit for each Participant is subject to all of the terms of
the Korn/Ferry International Worldwide Executive Benefit Retirement Plan for
U.S. Executives. The Company will furnish an Annual Benefit Statement to each
Participant which will set forth the annual and cumulative accrual percentage
for calculating the Participant's retirement benefit under the Plan for the
applicable Plan Year. The target annual accrual percentage for each Plan Year
will be based on this Annual Benefits Schedule, as modified from time to time.
The actual annual accrual percentage for each Plan Year will be determined by
the Board of Directors based on the profitability of the Company for the Plan
Year. In the event of any difference between the annual or cumulative accrual
percentages set forth in the most recent Annual Benefit Statement issued to the
Participant and the percentages determined from the Annual Benefits Schedules,
the annual and cumulative accrual percentages determined from the Annual
Benefits Schedules issued by the Company shall be controlling, subject to the
limitations set forth in the Plan. The Company reserves the right, at any time
except during the two year period after a Change of Control, in its complete and
sole discretion, to amend or terminate the Plan in whole or in part, change the
normal retirement benefit or annual accrual percentage under the Plan or
otherwise modify this Annual Benefits Schedule, provided that no such action may
deprive Participants or Beneficiaries of benefits which have accrued prior to
such action.
================================================================================

<PAGE>
 
                            KORN/FERRY INTERNATIONAL
                          WORLDWIDE EXECUTIVE BENEFIT
                                RETIREMENT PLAN
                              FOR U.S. EXECUTIVES


                           ANNUAL BENEFITS SCHEDULE

                         May 1, 1994 to April 30, 1995
- --------------------------------------------------------------------------------

                       WEB TARGET                            WEB TARGET
 COUNTRY        NORMAL RETIREMENT BENEFIT*          ANNUAL ACCRUAL PERCENTAGE**
- --------------------------------------------------------------------------------
United        .25% of Final Average Salary         .00% of Final Average Salary
States
- --------------------------------------------------------------------------------

*    After 20 Plan Years of full-time service as a Participant in the Plan.
**   For each full Plan Year of full-time service (to a maximum of 20) as a
     Participant in the Plan.

A supplemental contribution was made to the 401(k) plan for the 1994 Plan Year
on behalf of eligible participants.



    1/1/97                                /s/ Peter L. Dunn
- -------------------------------          --------------------------------------
Date                                     Signature    

<PAGE>
 
                           KORN/FERRY INTERNATIONAL
                          WORLDWIDE EXECUTIVE BENEFIT
                                RETIREMENT PLAN
                              FOR U.S. EXECUTIVES

                           ANNUAL BENEFITS SCHEDULE


                         MAY 1, 1995 TO APRIL 30, 1996
- --------------------------------------------------------------------------------

                         WEB TARGET                        WEB TARGET
COUNTRY          NORMAL RETIREMENT BENEFIT*       ANNUAL ACCRUAL PERCENTAGE**
- --------------------------------------------------------------------------------

United States  9.25% of Final Average Salary   0.4625% of Final Average Salary

- --------------------------------------------------------------------------------

*  After 20 Plan Years of full-time service as a Participant in the Plan.
** For each full Plan Year of full-time service (to a maximum of 20) as a 
Participant in the Plan.




     1/1/97                              /s/ Peter L. Dunn
- -------------------------------         -------------------------------
Date                                    Signature



<PAGE>
 
                           KORN/FERRY INTERNATIONAL
                          WORLDWIDE EXECUTIVE BENEFIT
                                RETIREMENT PLAN
                              FOR U.S. EXECUTIVES

                           ANNUAL BENEFITS SCHEDULE


                         MAY 1, 1996 TO APRIL 30, 1997
- --------------------------------------------------------------------------------

                         WEB TARGET                        WEB TARGET
COUNTRY          NORMAL RETIREMENT BENEFIT*       ANNUAL ACCRUAL PERCENTAGE**
- --------------------------------------------------------------------------------

United States  9.25% of Final Average Salary    .4625% of Final Average Salary

- --------------------------------------------------------------------------------

     *  After 20 Plan Years of full-time service as a Participant in Plan.
     ** For each full Plan Year of full-time service (to a maximum of 20) as a 
     Participant in the Plan.




          4/30/97                              /s/ Peter L. Dunn
     -------------------------------         -------------------------------
     Date                                    Signature




<PAGE>
 
                                                                    Exhibit 10.4


                                                              (domestic version,
                                                              which is the same
                                                              in all material
                                                              respects as the
                                                              international
                                                              version)



                           KORN/FERRY INTERNATIONAL
                           ------------------------

                          WORLDWIDE EXECUTIVE BENEFIT
                          ---------------------------

                              LIFE INSURANCE PLAN
                              -------------------

                              FOR U.S. EXECUTIVES
                              -------------------

<PAGE>
 
                           KORN/FERRY INTERNATIONAL
                           ------------------------

                          WORLDWIDE EXECUTIVE BENEFIT
                          ---------------------------

                              LIFE INSURANCE PLAN
                              -------------------

                              FOR U.S. EXECUTIVES
                              -------------------



                                   PREAMBLE
                                   --------

          The purpose of this Korn/Ferry International Worldwide Executive
Benefit ("WEB") Life Insurance Plan for U.S. Executives (the "Plan") is to
provide life insurance coverage for eligible individuals who are Vice Presidents
or above and shareholders of Korn/Ferry International (the "Company") and its
Affiliates and are eligible under the Company's U.S. group life insurance plan.
In general, this Plan will cover eligible individuals who are United States
citizens, permanent legal residents and taxpayers. The Plan will be effective as
of January 1, 1997.



                                   ARTICLE I

                                  DEFINITIONS
                                  -----------



          When used herein, the following words shall have the following
meanings unless the content clearly indicates otherwise:

           1.1   Affiliates. "Affiliates" means subsidiary and affiliated
                 ----------                                              
companies of Korn/Ferry International.

           1.2   Annual Benefits Schedule. "Annual Benefits Schedule" means a
                 ------------------------
written schedule in the form attached to this
 Plan which will be issued annually
by the Company to notify Participants of the amount of their life insurance
coverage

<PAGE>
 
available under this Plan and may be changed by the Company from time to time in
its complete and sole discretion.

          1.3    Annual Benefit Statement. "Annual Benefit Statement" means an
                 ------------------------                                     
annual written statement which will be issued by the Company to notify each
Participant of the amount (in U.S. dollars) of his or her life insurance
coverage under the Plan for the applicable year.

          1.4    Base Salary. "Base Salary" means a Participant's annual base
                 -----------                                                 
salary as of the first day of the month in which he or she is enrolled in the
Plan and thereafter as of May 1 preceding the last Coverage Adjustment Date
preceding his or her death, prior to deductions for deferrals under any Company
sponsored qualified or non-qualified plans. Base salary excludes all bonuses,
incentive and supplemental compensation and other payments and benefits, except
fixed base salary.

          1.5    Beneficiary. "Beneficiary" means the person or persons
                 -----------                                           
designated as such in accordance with Article VI.

          1.6    Board. "Board" means the Board of Directors of Korn/Ferry
                 -----                                                    
International or any committee thereof acting within the scope of its authority.

          1.7    Code. "Code" means the Internal Revenue Code of 1986, as
                 ----
amended from time to time.

          1.8    Committee. "Committee" means the administrative committee
                 ---------                                                
appointed by the Board to administer the Plan pursuant to Article VII.

          1.9    Company. "Company" means Korn/Ferry International and, whenever
                 -------                                                        
applicable, its Affiliates.

                                      -2-

<PAGE>
 
          1.10  Coverage Adjustment Date.  "Coverage Adjustment Date" means June
                ------------------------
1 of each year (or any other date selected by the Committee from time to time in
its discretion), on which changes or increases in life insurance coverage will 
take effect.

          1.11  Economic Benefit.  "Economic Benefit" means the value of the 
                ----------------
economic benefit of life insurance coverage under this Plan for income tax 
purposes, determined based on the Code, revenue rulings issued by the Internal 
Revenue Service and other applicable authorities.

          1.12  Effective Date.  "Effective Date" means January 1, 1997.
                --------------

          1.13  ERISA.  "ERISA" means the Employee Retirement Income Security 
                -----
Act of 1974, as amended from time to time.

          1.14  Insurance Company.  "Insurance Company" means an insurance 
                -----------------
company selected by the Company to provide life insurance coverage for 
Participants pursuant to the terms of the Plan.

          1.15  Net Cumulative Premiums.  "Net Cumulative Premiums" means 
                -----------------------
premiums paid by the Company on a Policy net of any withdrawals or loans from 
cash value of the Policy made to the Company.

          1.16  Participant.  "Participant" means an eligible Vice 
                -----------
President/Shareholder who has completed the underwriting requirements of the 
Insurance Company, has elected to participate in the Plan in accordance with the
provisions of Article II, and has been notified in writing that his or her 
participation has been approved by the Company.

                                      -3-

<PAGE>
 
          1.17  Plan.  "Plan" means this Worldwide Executive Benefit Life 
                ----
Insurance Plan for U.S. Executives as set forth in this document and as the same
may be amended, administered or interpreted from time to time.

          1.18  Plan Year.  "Plan Year" means May 1 through April 30.
                ---------

          1.19  Policy.  "Policy" means a life insurance policy providing life 
                ------
insurance coverage under this Plan.

          1.20  Vice President/Shareholder. "Vice President/Shareholder" means 
                --------------------------
any Vice President or more senior officer of the Company (or a subsidiary or 
affiliated company) who is or becomes a shareholder of the Company at the next 
subscription offering under the Company's Equity Participation Program and 
abides by the provisions of such program as determined by the Committee.


                                  ARTICLE II

                                 PARTICIPATION
                                 -------------

          2.1   Participation.  Any Vice President who becomes a shareholder of 
                -------------
the Company and is actively employed on a full-time basis (at least 30 hours per
week) and who is eligible for life insurance benefits in accordance with the 
Annual Benefits Schedule for this Plan, which will be issued and updated by the 
Company from time to time, may enroll in the Plan by electing to participate and
completing the underwriting requirements of the Insurance Company and any other 
enrollment steps required by the Company for coverage to begin.  An eligible 
Vice President/Shareholder shall become a Participant in the Plan upon

                                      -4-

<PAGE>
 
being notified in writing that his or her participation has been approved by the
Company.

          2.2   Insurability.  Eligible Vice President/Shareholders are not 
                ------------
automatically entitled to all insurance coverage offered under the Plan. Each 
eligible Vice President/Shareholder must satisfy the Insurance Company's 
requirements for obtaining insurance before he or she becomes covered under the 
Plan. Notwithstanding any other provision of the Plan, a Participant's life 
insurance coverage under the Plan will be limited to the insurance coverage 
approved and issued by the Insurance Company on the Participant's life under 
this Plan less the Net Cumulative Premiums paid by the Company.

          2.3   Commencement of Coverage.  Subject to the limitations of 
                ------------------------
Sections 2.1 and 2.2, (i) a Vice President/Shareholder who is eligible for 
coverage on January 1, 1997 will be covered under the Plan as of January 1, 
1997, and (ii) any other eligible Vice President/Shareholder will be covered 
under the Plan when coverage is approved and issued by the Insurance Company.

          2.4   Increases or Changes in Coverage.  When a Participant's Base 
                --------------------------------
Salary is increased, the amount of his or her life insurance coverage under this
Plan will increase on the next Coverage Adjustment Date, except as provided in 
this Section 2.4.  Any increase in coverage will not take effect until such 
additional coverage is approved and issued by the Insurance Company, and a 
Participant may be required to satisfy the Insurance Company's requirements for 
obtaining additional insurance before he or she becomes covered for an 
additional

                                      -5-

<PAGE>
 
amount of life insurance coverage under the Plan.  A Participant's coverage 
under the Plan will be limited to the coverage issued by the Insurance Company. 
If a Participant's Base Salary is reduced, the amount of his or her life 
insurance coverage under this Plan will decrease on the next Coverage Adjustment
Date.

          2.5   Declining Coverage.  An eligible Vice President/Shareholder may 
                ------------------
decline coverage under the Plan. However, any such person will be required to 
satisfy the Insurance Company's requirements for obtaining insurance before he 
or she may become covered under the Plan at a later date.

                                  ARTICLE III

                            LIFE INSURANCE COVERAGE
                            -----------------------

          3.1   Amount of Insurance.  A Participant who is employed by the 
                -------------------
Company at the time of his or her death will have life insurance coverage under 
this Plan.  The amount of the life insurance benefit which will be payable to 
the Beneficiary designated by the Participant will be the amount (in U.S. 
dollars) set forth in the most recent Annual Benefit Statement issued by the 
Company to the Participant.  This amount will be based on the Annual Benefits 
Schedule for this Plan, which will be issued by the Company and is subject to 
change by the Company from time to time in its complete and sole discretion.  In
the event of any difference between the amount set forth in the most recent 
Annual Benefit Statement issued to the Participant and the amount determined 
from the Annual Benefits Schedule, the amount determined from the most recent 
Annual Benefits Schedule issued

                                      -6-

<PAGE>
 
by the Company shall be controlling, subject to the limitations set forth below.

               (a)  Limitations on Amount of Coverage. Notwithstanding any other
                    ---------------------------------
provision of the Plan, the amount of the Participant's life insurance coverage 
under the Plan will be limited to the amount of coverage issued by the Insurance
Company on the Participant under this Plan less the Net Cumulative Premiums paid
by the Company. If a Participant commits suicide, the Participant's life
insurance benefit will be limited to the amount of the death benefits paid by
the Insurance Company on Policies issued on the Participant under this Plan less
the Net Cumulative Premiums paid by the Company.

               (b)  Coverage After Termination of Employment. After termination 
                    ----------------------------------------
of employment with the Company for any reason, a Participant will have no life 
insurance coverage under this Plan. However, when a Participant terminates 
employment, the Participant will have an opportunity to purchase the policy 
insuring the Participant under this Plan pursuant to Article IV.

          3.2  Insurance Policy. To provide the life insurance coverage under 
               ----------------
the Plan, the Company shall acquire one or more insurance policies ("Policy" or
"Policies") on the life of each Participant. Except as otherwise specifically 
provided, the Company will be the owner and hold all the incidents of ownership 
in these Policies, including the rights to borrow and make withdrawals from any 
Policies, and the entire interest in the cash value with respect to these 
Policies shall belong to the Company. The Company may withdraw cash value from a
Policy up to the Net Cumulative Premiums paid by the Company on the Policy at

                                      -7-

<PAGE>
 
or after a Participant's retirement or termination of employment. The
Participant will have no right to borrow or withdraw cash value from a Policy.

          The Participant may specify in writing to the Company the Beneficiary 
or Beneficiaries for his or her life insurance coverage under this Plan. Upon 
receipt of a written request from the Participant, the Company will immediately 
take such action as shall be necessary to implement such Beneficiary 
designation. Any death benefits under Policies on the life of the Participant 
that exceed the amount payable to the Participant's Beneficiary under this Plan 
shall be payable to the Company. Notwithstanding any other provision of this 
Plan, the Company shall be entitled to receive death benefits under each Policy 
issued under this Plan of not less than the Net Cumulative Premiums paid by the 
Company on such Policy.

          3.3  Assignment. A Participant may assign, revocably or irrevocably, 
               ----------
to one or more individuals or trustees all or any part of the right, title, 
claim, interest, benefit and all other incidents of ownership which he or she 
may have in any Policies providing his or her life insurance coverage under this
Plan. Such assignee shall then have all rights and obligations which have been 
assigned and otherwise are the Participant's under this Plan. In the event that 
there has been such an assignment, the term Participant shall mean the
Participant's assignee (or any subsequent assignee) as the context requires, in 
connection with ownership, actions, elections, or other events concerning life 
insurance coverage on the Participant.

                                      -8-

<PAGE>
 
          3.4   Payment of Premiums and Contributions. All premiums for life
                -------------------------------------
insurance coverage under this Plan while a Participant is employed with the
Company will be paid by the Company. The Participant will be required each year
to reimburse to the Company an amount equivalent to the Economic Benefit of this
coverage.

          3.5   Lump Sum Death Benefit.  The Company will provide all life 
                ----------------------
insurance benefits payable under the Plan through a lump sum life insurance 
benefit paid directly from the Insurance Company to the Participant's 
Beneficiary under a split dollar life insurance program.

          The Company shall notify the Insurance Company of the portion of the 
death benefit under each Policy to which the Participant is entitled under the 
Plan.  The Participant's interest in the Policy shall be subject to the terms 
and conditions of the Plan.


                                  ARTICLE IV

       OPTION TO PURCHASE INSURANCE POLICY ON TERMINATION OF EMPLOYMENT
       ----------------------------------------------------------------


          When a Participant terminates employment with the Company for any 
reason, the Participant may elect to purchase the Policy providing the 
Participant's coverage under the Plan for a lump sum cash payment equal to the 
cash value of the Policy.  A Participant who purchases a Policy will thereafter 
be required to pay all future premiums on the Policy.

          A Participant must notify the Company in writing of his or her 
interest in purchasing a Policy within thirty (30) days

                                      -9-

<PAGE>
 
after termination of employment.  Upon receipt of such notification, the Company
will provide information about the Policy to the Participant, including 
premiums, cash value and a Policy illustration.  The Participant must elect in 
writing to purchase the Policy and make a lump sum cash payment of the full 
purchase price for the Policy to the Company within thirty (30) days after 
receipt of information about the Policy from the Company.  A Participant's life 
insurance coverage under this Plan will remain in effect after termination of 
employment during the period when the Participant is entitled to purchase the 
Policy providing his or her life insurance coverage under the Plan.  Any 
Participant who dies during the period while he or she is entitled to purchase 
the Policy will automatically be deemed to have elected to purchase the Policy.

          If the Participant does not timely elect to purchase the Policy, the 
Participant's life insurance coverage under the Plan will automatically cease, 
and all incidents of ownership of the Policy (if any) held by the Participant 
shall automatically be transferred to the Company.  After the Participant 
purchases the Policy, or the Participant's incidents of ownership of the Policy 
are transferred to the Company, the Company shall have no further legal or 
equitable obligations of any kind to the Participant under this Plan.

                                     -10-

<PAGE>
 
                                   ARTICLE V

       OPTION TO PURCHASE INSURANCE POLICY UPON ELIMINATION OF COVERAGE
       ----------------------------------------------------------------


          Any Participant whose life insurance coverage has been in force at 
least two years and is eliminated pursuant to Article VIII of this Plan (without
being replaced with an equivalent amount of coverage under another plan of the 
Company) shall have the option to purchase the Policy providing his or her life 
insurance coverage under this Plan immediately prior to the elimination of such 
coverage. The purchase price and terms and procedures for purchase shall be the 
same as under Article IV, except that the applicable time periods shall 
commence upon elimination of coverage, rather than termination of employment.


                                  ARTICLE VI

                            BENEFICIARY DESIGNATION
                            -----------------------

          6.1  Designation of Beneficiary. Each Participant (or his or her 
               --------------------------
assignee in the case of an assignment of the Participant's life insurance 
coverage pursuant to Section 3.3 of this Plan) shall have the right to designate
a Beneficiary or Beneficiaries to whom payment of the Participant's life 
insurance benefit under this Plan shall be made in the event of the 
Participant's death. Such designation shall be made on a form prescribed by and 
delivered to the Company. Except where such designation is irrevocable, the 
Participant shall have the right to change or revoke any such designation from 
time to time by filing a new designation or notice of revocation with the 

                                     -11-



<PAGE>
 
Company, and no notice to any Beneficiary nor consent by any Beneficiary shall 
be required to effect any such change or revocation except as provided below. 
The spouse of a married Participant must consent in writing to any designation 
of a Beneficiary other than the spouse. Any designation of a Beneficiary for a 
married Participant other than the spouse of such Participant will be null and 
void without the written consent of the spouse in the form required by the 
Company. A subsequent marriage or divorce of the Participant shall revoke all 
prior designations of a Beneficiary, except for any prior designation which was 
irrevocable.

          6.2  Failure to Designate Beneficiary. If a Participant shall fail to 
               --------------------------------
designate a Beneficiary before his or her demise, or if no designated 
Beneficiary survives the Participant, the Committee shall direct the Insurance 
Company to make payment under this Plan to the Participant's spouse, if the 
Participant was married at the time of death, or otherwise to the executor or 
administrator for the Participant's estate.

                                  ARTICLE VII

                                ADMINISTRATION
                                --------------

          7.1  Administrator. The Board shall appoint a Committee consisting of 
               -------------
three or more persons to administer the Plan and shall have authority to appoint
and remove members from the Committee. The Committee shall have the
administrative responsibilities hereinafter described with respect to the Plan.
Whenever any action is required or permitted to be taken in the

                                     -12-

<PAGE>
 
administration of the Plan, such action shall be taken by the Committee unless 
the Committee's power is expressly limited herein or by operation of the law. 
The Committee shall be the Plan "Administrator" (as such term is defined in 
Section  3(16)(A) of ERISA). The Committee may delegate its duties and 
responsibilities as it, in its sole discretion, deems necessary or appropriate 
to the execution of such duties and responsibilities. The Committee as a whole 
or any of its members may serve in more than one capacity with respect to the 
Plan. A member of the Committee shall not vote or act upon any matter which 
relates solely to the member in his or her individual capacity as a Participant.

     7.2  Powers and Duties. The Committee, or its delegates, shall maintain and
          -----------------
keep (or cause to be maintained and kept) such records as are necessary for the 
efficient operation of the Plan or as may be required by any applicable law, 
regulation or ruling and shall provide for the preparation and filing of such 
forms, reports, information, and documents as may be required to be filed with 
any governmental agency or department and furnished to Participants and/or 
Beneficiaries.

          Except to the extent expressly reserved to the Company or the Board, 
the Committee shall have all powers necessary to administer the Plan and to 
satisfy the requirements of any applicable laws. These powers shall include, by 
way of illustration and not limitation, the exclusive powers and discretionary 
authority necessary to:

               (a) construe and interpret the Plan; declare and amend the Annual
Benefits Schedule; decide all questions of

                                     -13-

<PAGE>
 
eligibility, including whether a person shall participate in the Plan for U.S. 
or International Executives; decide all questions of fact relating to claims 
for benefits; and determine the amount, time, manner, method, and mode of 
payment of any benefits hereunder;

               (b)  direct the Company and/or the trustee or custodian of any 
trust or custodial account established at the discretion of the Company to 
provide for the payment of benefits under the Plan, including the amount, time, 
manner, method, and mode of payment of any benefits hereunder;

               (c)  prescribe procedures to be followed and forms to be used by 
Participants and/or other persons in filing applications or elections;

               (d)  prepare and distribute, in such manner as may be required by
law or as the Committee deems appropriate, information explaining the Plan; 
provided, however, that no such explanation shall contravene the terms of this 
Plan or increase the rights of any Participant or Beneficiary or the liabilities
of the Company; and

               (e)  perform all functions otherwise imposed upon a plan 
administrator by ERISA which are not expressly reserved to the Company or the 
Board.

          7.3  Claims Procedure.   The right of any Participant or Beneficiary 
               ----------------
to receive a benefit hereunder and the amount of such benefit shall be 
determined in accordance with the procedures for determination of benefit claims
established and maintained by the Committee in compliance with the requirements 
of Section 503 of ERISA.

                                     -14-

<PAGE>
 
                                 ARTICLE VIII

                       AMENDMENT AND TERMINATION OF PLAN
                       ---------------------------------

          Subject to the limitations of Article V, the Board may, at any time in
its complete and sole discretion, amend or terminate the Plan in whole or in 
part, change the amount of coverage under the Plan, or otherwise modify the 
Annual Benefits Schedule for the Plan. Except as provided in Article V, the 
Company is not obligated to continue any life insurance benefit, any insurance 
coverage or any insurance policy after such action. Written notice of any 
amendment or termination of the Plan shall be given to each affected Participant
in the Plan.

                                  ARTICLE IX

                                 MISCELLANEOUS
                                 -------------

          9.1  ERISA Plan. This Plan is covered by Title I of the Employee 
               ----------
Retirement Income Security Act of 1974 ("ERISA") as a welfare benefit plan. The 
Company is the "named fiduciary" of the Plan for purposes of Section 402(a) (2) 
of ERISA.

          9.2  Employment Not Guaranteed. Nothing contained in this Plan nor any
               -------------------------
action taken hereunder shall be construed as a contract of employment or as 
giving any Participant any right to be retained in employment with the Company
or its Affiliates.

          9.3  Protective Provisions. Each Participant shall cooperate with the
               ---------------------
Company by furnishing any and all information requested by the Company in order 
to facilitate the payment of benefits hereunder, taking such physical 
examinations as the 

                                     -15-


<PAGE>
 
Company may deem necessary and taking such other relevant action as may be
requested by the Company. If a Participant refuses so to cooperate, the Company
shall have no further obligation to the Participant or his or her Beneficiary
under the Plan. If a Participant makes any material misstatement of information
or nondisclosure of medical history or commits suicide within two years after
becoming a Participant in the Plan, then no benefits will be payable hereunder
to such Participant's Beneficiary, provided, that in the Company's sole
discretion benefits may be payable in an amount reduced to compensate the
Company for any loss, cost, damage or expense suffered or incurred by the
Company as a result in any way of any such action, misstatement or
nondisclosure.

          9.4  Arbitration. Any controversy or claim arising out of or relating
               -----------  
to this Plan, or the breach thereof, shall be settled by arbitration in
accordance with the Employment Dispute Resolution Rules of the American
Arbitration Association, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. The
arbitration shall occur in Los Angeles, California. The fees and expenses of any
arbitration shall be awarded by the arbitrator(s).

          9.5  Gender, Singular & Plural. All pronouns and any variations 
               -------------------------
thereof shall be deemed to refer to the masculine, feminine, or neuter, as the  
identity of the person or persons may require. As the context may require, the 
singular may be read as the plural and the plural as the singular.

                                     -16-

<PAGE>
 
     9.6   Captions.  The captions of the articles, sections and paragraphs of 
           --------
this Plan are for convenience only and shall not control or affect the meaning
or construction of any of its provisions.

    9.7    Validity.  In the event any provision of this Plan is held invalid,
           --------
void or unenforceable, the same shall not affect, in any respect whatsoever,
the validity of any other provisions of this Plan, and this Plan shall be deemed
to be modified to the least extent possible to make it valid and enforceable in
its entirety.

     9.8   Notices and Elections.  Any notice or election required or permitted
           ---------------------
to be given to the Company or the Committee under the Plan shall be sufficient
if in writing and hand delivered, or sent by registered or certified mail, to
the principal office of the Company, directed to the attention of the President.
Such notice or election shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the receipt
for registration or certification.

     9.9   Notice to Insurance Company.  The Company shall be responsible for 
           ---------------------------
notifying the Insurance Company which issues any Policy or Policies under this 
Plan of any changes in the ownership rights and interests of the Participant 
and the Company and of any changes in the Beneficiaries to receive death 
benefits under the Plan, and the Insurance Company shall be entitled to rely 
upon such notification received from the Company.

     9.10  Applicable Law.  This Plan shall be construed, regulated and 
           --------------- 
administered in accordance with the laws of the

                                     -17-

<PAGE>
 
State of California, except insofar as state law is preempted by ERISA.

          9.11 Waiver of Breach. The waiver by the Company of any provision of 
               ----------------
this Plan shall not operate or be construed as a waiver of any subsequent breach
by the Participant.

          9.12 Benefit. The rights and obligations of the Company under this 
               -------
Plan shall inure to the benefit of, and shall be binding upon, the successors 
and assigns of the Company.

                                   ARTICLE X

              DISCLAIMER OF RESPONSIBILITIES FOR TAX CONSEQUENCES
              ---------------------------------------------------

          The Company and its Affiliates assume no responsibility, and do not 
purport to provide any tax or legal advice or counsel, with respect to any tax 
consequences or liabilities which result from the life insurance coverage and 
benefits which are provided under this Plan. Participants and Beneficiaries must
look solely to their own tax and legal advisers for such advice and counsel.

                                     -18-

<PAGE>
 
     IN WITNESS WHEREOF, the Company has caused this Worldwide Executive Benefit
Life Insurance Plan for U.S. Executives to be executed this 31st day of 
December, 1996, effective as of January 1, 1997.


                                             KORN/FERRY INTERNATIONAL 
               
                                             By /s/ Peter L. Dunn
                                                -------------------------  
                                                Title:

Attest:

By /s/ Kristine E. Key
   -------------------------
   Title:  

                                     -19-


<PAGE>
 
                           KORN/FERRY INTERNATIONAL 
                         WORLDWIDE EXECUTIVE BENEFIT 
                             LIFE INSURANCE PLAN 
                             FOR U.S. EXECUTIVES 

                           ANNUAL BENEFITS SCHEDULE
                           ------------------------


================================================================================

     The life insurance coverage for each Participant is subject to all of the
terms of the Korn/Ferry International Worldwide Executive Benefit Life Insurance
Plan for U.S. Executives. The Company will furnish an Annual Benefit Statement
to each Participant which will set forth the actual amount (in U.S. dollars) of
his or her life insurance coverage under the Plan for the applicable year. The
amount of life insurance coverage will be based on this Annual Benefits
Schedule. In the event of any difference between the amount set forth in the
most recent Annual Benefit Statement issued to the Participant and the amount
determined from this Annual Benefits Schedule, the amount determined from the
most recent Annual Benefits Schedule issued by the Company shall be controlling,
subject to the limitations set forth in the Plan. In particular, the amount of
life insurance coverage will in all events be limited to the amount of coverage
issued by the Insurance Company on the Participant under the Plan less the Net
Cumulative Premiums paid by the Company. The Company reserves the right, at any
time in its complete and sole discretion, to amend or terminate the Plan in
whole or in part, change the amount of coverage under the Plan or otherwise
modify this Annual Benefits Schedule.

================================================================================

                                                                          Page 1

<PAGE>
 

                           KORN/FERRY INTERNATIONAL
                          WORLDWIDE EXECUTIVE BENEFIT
                              LIFE INSURANCE PLAN
                              FOR U.S. EXECUTIVES
                           ANNUAL BENEFITS SCHEDULE
                           ------------------------


                       JANUARY 1, 1997 TO APRIL 30, 1997
       --------------------------------------------------------------------

            COUNTRY         GOVERNMENT & KF       WEB - LIFE INSURANCE
                            PROGRAM OFFSET             PLAN BENEFIT
       --------------------------------------------------------------------

          United States          $50,000       3x Base Salary less $50,000    

       --------------------------------------------------------------------

     a.   Effective January 1, 1997
     b.   Rounded to the nearest $10,000


          4/30/97                             /s/ Peter L. Dunn
     -------------------------                -----------------------------
     Date                                     Signature    

                                                                          Page 2







<PAGE>
 

                           KORN/FERRY INTERNATIONAL
                          WORLDWIDE EXECUTIVE BENEFIT
                              LIFE INSURANCE PLAN
                              FOR U.S. EXECUTIVES

                           ANNUAL BENEFITS SCHEDULE


                         MAY 1, 1997 TO APRIL 30, 1998
          ----------------------------------------------------------------

             COUNTRY         GOVERNMENT & KF          WEB - LIFE INSURANCE 
                             PROGRAM OFFSET               PLAN BENEFIT
          ----------------------------------------------------------------

           United States        $50,000       3x Base Salary less $50,000

          ----------------------------------------------------------------

        a.   Coverage increases effective June 1


                4/30/98                           /s/ Peter L. Dunn   
          -----------------------------           -------------------------  
          Date                                    Signature 




<PAGE>
 
DELAMLIFE                     DELAWARE AMERICAN                     Exhibit 10.5
                            LIFE INSURANCE COMPANY
                    P.O BOX 667, WILMINGTON, DELAWARE 19899
                            A CAPITAL STOCK COMPANY



              ACCEPTANCE - LONG TERM DISABILITY INSURANCE POLICY

Policy GLTD-3201 issued to Korn/Ferry International (the Policyholder) is hereby
                                   accepted.

                         Signed for the Policyholder:


                          /s/ Kristine E. Key
                   ----------------------------------------
                                   Signature

                    Vice President Administrative Services
                   ----------------------------------------
                                    Title

                                April 14, 1997
                   ----------------------------------------
                                     Date


             Signed for Delaware American Life Insurance Company:

                          /s/ Michael F. McGarrity


                                  REGISTRAR
                   ----------------------------------------
                                    Title

                              December 31, 1996
                   ----------------------------------------
                                     Date 

<PAGE>
 
DELAMLIFE                     DELAWARE AMERICAN
                            LIFE INSURANCE COMPANY
                   P.O. BOX 667, WILIMINGTON, DELAWARE 19899
                            A CAPITAL STOCK COMPANY
                       (hereinafter called the Company)



                                     GROUP

                        LONG TERM DISABILITY INSURANCE

                             ADMINISTRATION MANUAL

                                      FOR

                           KORN/FERRY INTERNATIONAL

<PAGE>
 
                                PROGRAM SUMMARY
                                ---------------

A.  Policy Number:  GLTD-3201

B.  Program Effective:  January 1,1997

C.  Program Anniversary Date:  January 1, 1998 and January 1 of each year 
                               thereafter.

D.  Employees eligible are:  All active, full-time executive employees who are 
                             classified as vice presidents who become
                             shareholders and who (a) reside outside of the USA
                             and (b) normally work at least 30 hours per week

E.  Waiting Period for new employees (the period of employment required before

    an employee is eligible to join this program):
        None

F.  Insurance for new employees is effective on the date the Waiting Period has
    been completed.


G.  Schedule of Benefits - Below - subject to a maximum monthly benefit of
    $10,000

     LOCATION                              AMOUNT OF INSURANCE
     --------                              -------------------

1.   Austria                            54% of Basic Monthly Earnings  
2.   Brazil                             40% of Basic Monthly Earnings  
3.   Canada                             31% of Basic Monthly Earnings 
4.   Germany                            18% of Basic Monthly Earnings  
5.   Hong Kong                          35% of Basic Monthly Earnings  
6.   Hungary                            25% of Basic Monthly Earnings  
7.   Luxembourg                         15% of Basic Monthly Earnings  
8.   Mexico                             10% of Basic Monthly Earnings  
9.   Norway                             30% of Basic Monthly Earnings  
10.  Singapore                          40% of Basic Monthly Earnings  
11.  Spain                              40% of Basic Monthly Earnings 
12.  Switzerland                        30% of Basic Monthly Earnings  
  
 
                              *****IMPORTANT*****

          Subject to all other provisions of the Group Policy, no change in an
          employee's Amount of Insurance due to a change in location will become
          effective until the Company is notified of such change.

H.  Rate: 1.61% of Total Covered Benefit per month

<PAGE>
 
I.  EliminationPeriod: 180 days

     A period of consecutive days of total disability commencing with the first
     day for which no monthly benefit is payable. Premiums must be paid for the
     insured during the Qualifying Period.

J.  Date Premium is due and Premium Accounting Period:

    Due Date: First of the Month

    Premium Accounting Period: Monthly

K.  Insurance is terminated at: Retirement.

L.  Enrollment cards, application cards, change forms, termination information
    and premium should be sent to:

                    Delaware American Life Insurance Company
                    P.O. Box 667
                    Wilmington, DE 19899
                    U.S.A.

                    ATTN:  GMD Administration

M.  Claim forms and claim related questions should be directed to:

                    Delaware American Life Insurance Company
                    P.O. Box 667
                    Wilmington, DE 19899
                    U.S.A.

                    ATTN:  GMD Claims - 7th Floor

While this manual describes certain features of your program in general terms,
it is not to be considered part of the master policy. The conditions,
limitations and exclusions of the master policy determine the program and govern
the contents of this administration manual.

<PAGE>
 
                             ENROLLMENT PROCEDURES
                             ---------------------

NEW EMPLOYEES
- -------------

1)  All employees eligible (D of the Summary) will be furnished an enrollment
    form together with whatever announcement material you are using to describe
    your plan (if any).

2)  All enrollment forms should be checked to confirm they are complete, legible
    and signed by the employee. Much unnecessary extra work can be avoided if
    all forms can be easily read by everyone. Enrollment forms should be
    processed as follows:

    a) All information should be typed or printed.

    b) The full name of the employee must be shown. A married woman's name
       should be stated as "Mary A. Doe" not "Mrs. John A. Doe".

3)  When completed enrollment forms are returned, enter your Policy Number (A of
    the Summary) in the space provided and forward the forms to the Insurance
    Company. This should be done in advance of the effective date when possible.
    Be sure the employee has signed and dated the form.

EFFECTIVE DATE
- --------------

Insurance for employees eligible on or prior to the original effective date of
the program who enroll on or prior to such effective date will become effective
on the program's effective date.

For employees who enroll after the effective date of the program and within 30
days of becoming eligible, insurance will be effective in accordance with F of
the Summary.

For employees who must submit an application with answers to health questions,
insurance will become effective upon approval of the application by the
Insurance Company.

However, eligible employees absent from work by reason of injury or sickness on
the date insurance would otherwise become effective will become insured when
they have returned to work on a full-time basis.

CERTIFICATES OF INSURANCE
- -------------------------

After each employee's enrollment form has been processed, he or she is to
receive a Certificate of Insurance.

Lost Certificate- 

An insured employee who loses his or her Certificate of Insurance may secure a
duplicate from his or her employer.

<PAGE>
 
                               PREMIUM PAYMENTS
                               ----------------

Changes (additions and deletions) are to be listed on the census and submitted
along with new enrollment cards; beneficiary changes, etc.

Premium payments should be sent to:

                   Delaware American Life Insurance Company
                   P.O. Box 667
                   Wilmington, DE 19899
                   U.S.A.

                   ATTN:   GMD Administration

The changes indicated on the Census will be reflected on the next bill

The remittance, any Group Adjustment Reports, new enrollment cards, beneficiary
changes, etc. should be attached to the Group Premium Statement and forwarded to
the location shown in Section L. of this Summary.

                    TERMINATION OF AN EMPLOYEE'S INSURANCE
                    --------------------------------------

Termination Date
- ----------------

The insurance of an insured employee will immediately terminate on the earliest
of the following dates:

     1)   On the date the employee is no longer an eligible employee (D and K of
          the summary), withdraws from the program, or takes a leave of absence
          or furlough in excess of 30 days (for reasons other than disability);

     2)   As of any premium due date, if the employer fails to pay the required
          premium for the employee except as the result of an inadvertent error,
          subject to the grace period provided in the Policy;

     3)   On the date the employee ceases to be eligible by reason of attained
          age (K of the Summary); or

     4)   On the date the Master Policy is terminated.

Termination of the Master Policy or of an employee's coverage for any reason
will not affect any claims originating prior to termination.

<PAGE>
 
Processing Termination
- ----------------------

When an employee's insurance terminates, cross the employee's name off the next
billing statement.

                               CLAIM PROCEDURES
                               ----------------

Naturally, this is one of the most important phases of this program. So that our
best service may be provided to your employees, please follow the claim
procedures described below carefully.

How to File a Claim
- -------------------

A Preliminary Statement of Disability must be completed for every claim about
one (1) month prior to the completion of the Qualifying Period (defined in the
Summary of Benefits section).

     1.   Have the employee complete the EMPLOYEE section of the claim form.

     2.   We suggest that the Administrator indicate the Policy Number in the
          Employer section and forward the form to the attending physician
          noting to him or her that the form should be returned to you. (You are
          then certain that the form is submitted properly.)

          NOTE:     Any and all medical or other personal information obtained
                    from an applicant, insured or physician on behalf of the
                    Insurance Company is to be held in the strictest confidence
                    by the policyholder and will not be used for any purpose
                    other than insurance administration. Such information will
                    be used solely by the Insurance Company for insurance
                    purposes.

     3.   Once returned by the physician, you (the policyholder) should complete
          the EMPLOYER section.

     4.   Attach a copy of the claimant's job description to the claim form.

          NOTE:     If the disabled employee is over age 55 when the claim is
                    originally submitted, also forward a copy of his or her
                    birth certificate.

Supplementary Claim forms to be completed by the employee and his or her
physician will be provided periodically.

WAIVER OF PREMIUM (discontinuing employee premium payments to the Insurance
Company)

<PAGE>
 
Upon the start of benefit payments and only upon notification from the Insurance
Company premium payments for the claimant should be discontinued. Report this as
a termination. (Refer to the EMPLOYEE TERMINATION section.)

When the claimant returns to work, report this as an addition on your next
report.

<PAGE>
 
                               DELAWARE AMERICAN
                            LIFE INSURANCE COMPANY
                   P.O. BOX 667, WILMINGTON, DELAWARE 19899
                            A CAPITAL STOCK COMPANY
                       (hereinafter called the Company)

POLICYHOLDER: Korn/Ferry International

GROUP POLICY NUMBER: GLTD-3201

EFFECTIVE DATE: January 1, 1997

POLICY ANNIVERSARIES: January 1, 1998 and each succeeding January 1

INITIAL MONTHLY PREMIUM: 1.61% of Total Covered Benefit per month.

DELAWARE AMERICAN LIFE INSURANCE COMPANY (herein called the Company) in
consideration of the application for this GROUP POLICY, attached to and made a
part of this Group Policy, and of the payment of premiums as provided in the
Group Policy, hereby

                                 AGREES TO PAY

benefits in accordance with and subject to the terms of the Group Policy.

The Group Policy takes effect on the Effective Date.

Premiums are payable by the policyholder in amounts determined as hereinafter
provided. The first premium is due on the Effective Date, and subsequent
premiums are, during the continuation of the Group Policy due monthly.

The Sections set forth on the following pages are part of the Group Policy.

IN WITNESS WHEREOF, Delaware American Life Insurance Company has caused the
Group Policy to be executed as of the Effective Date.

                              /s/ Robert E. Tully
                            ----------------------
                                   Registrar

                          GROUP LONG TERM DISABILITY
                               INSURANCE POLICY


    /s/ Elizabeth M. Tuck                    /s/ RJ O'Connell         
    ----------------------------             ---------------------------

              Secretary                                President

<PAGE>
 
This policy is divided into sections as follows:


Section I              SCHEDULE OF BENEFITS

Section II             DEFINITIONS

Section III            ELIGIBILITY AND EFFECTIVE DATES

Section IV             BENEFITS

Section IV             TERMINATION PROVISIONS

Section VI             GENERAL POLICY PROVISIONS

Section VII            PREMIUMS

<PAGE>
 
                       SECTION I - SCHEDULE OF BENEFITS


Eligible Classes of Employees

All active, full-time executive employees who are classified as vice presidents
who become shareholders and who (a) reside outside of the USA and (b) normally
work at least 30 hours per week

Walting Period
  Present Employees....................................  None
  New Employees........................................  None

Amount of Insurance....................As shown in the attached Schedule
                                       of Locations and benefit amounts.

Maximum Monthly Benefit..........................................$10,000

Elimination Period...............................................180 Days

Pre-Existing Conditions Limitation...............................6/12/24

Benefit Duration:

            ----------------------------------------------------------
                 Age at Disability            Benefit Duration
                 -----------------            ----------------
                   Less than 60          To Age 65 but not less than    
                                                60 months                      
                       60                       60 months                      
                       61                       48 months               
                       62                       42 months               
                       63                       36 months               
                       64                       30 months               
                       65                       24 months               
                       66                       21 months               
                       67                       18 months               
                       68                       15 months               
                   69 and over                  12 months                
            ----------------------------------------------------------

<PAGE>
 
                  SCHEDULE OF LOCATIONS AND BENEFIT AMOUNTS


<TABLE>
<CAPTION>
    Location                                          Amount of Insurance
    --------                                          -------------------
<S>                                            <C>
1.  Austria................................... 54% of Basic Monthly Earnings
2.  Brazil.................................... 40% of Basic Monthly Earnings
3.  Canada.................................... 31% of Basic Monthly Earnings
4.  Germany................................... 18% of Basic Monthly Earnings
5.  Hong Kong................................. 35% of Basic Monthly Earnings
6.  Hungary................................... 25% of Basic Monthly Earnings
7.  Luxembourg................................ 15% of Basic Monthly Earnings
8.  Mexico.................................... 10% of Basic Monthly Earnings
9.  Norway.................................... 30% of Basic Monthly Earnings
10. Singapore................................. 40% of Basic Monthly Earnings
11. Spain..................................... 40% of Basic Monthly Earnings
12. Switzerland............................... 30% of Basic Monthly Earnings
</TABLE>


                              *****IMPORTANT*****

     Subject to all other provisions of the Group Policy, no change in an
     employee's Amount of Insurance due to a change in location will become
     effective until the Company is notified of such change.
                
                                                                               2

<PAGE>
 
                            SECTION II - DEFINITIONS
                
For the purposes of this policy:

"ACTIVE EMPLOYMENT" means the employee must be working:

1.  for the employer on a full-time basis and paid regular earnings (temporary
    or seasonal employees are excluded);

2.  at least 30 hours per week; and either

3.  at the employer's usual place of business; or
                
4.  at a location to which the employer's business requires the employee to
    travel.

"ACQUIRED IMMUNE DEFICIENCY SYNDROME" (AIDS) shall have the meanings assigned to
it by the World Health Organization. The term opportunistic infection shall
include but not be limited to Pneumocystis carini pneumonia, organism of chronic
enteritis, virus and/or disseminated fungi infection. The term malignant
neoplasm shall include but not be limited to Karposi's sarcoma, central nervous
system lymphoma and/or other malignancies now known or which become known as
immediate causes of death in the presence of acquired immune deficiency.
Acquired immune deficiency syndrome shall include H.I.V. (Human Immune
Deficiency Virus), encephalopathy (dementia) and H.I.V. (Human Immune Deficiency
Virus) wasting syndrome.

"CERTIFICATE" means a written statement prepared by the Company including all
riders and supplements, if any, setting forth a summary of:
                
1.  the insurance benefits to which an employee is entitled;

2.  to whom the benefits are payable; and

3.  limitations or requirements that may apply.

"DISABILITY" OR "DISABLED" - see last page of this Section.

"ELIGIBILITY DATE" means the date an employee becomes eligible for insurance
under this policy. Classes eligible are shown in the Schedule of Benefits.

"ELIMINATION PERIOD" means a period of consecutive days of disability for which
no benefit is payable. The elimination period is shown in the Schedule of
Benefits and begins on the first day of disability.

For accumulating the elimination period, the following will apply:

1.  The disability will be treated as continuous if disability stops during the
    elimination period for a total number of accumulated days which is not more
    than 14 days or less.

2.  But days that the insured is not disabled will not count toward the
    elimination period. 

"EMPLOYEE" means a person in active employment with the employer. 

"EMPLOYER" means the policyholder and includes any division, any subsidiary or
any affiliated company named in the application.

"EVIDENCE OF INSURABILITY" means a statement or proof of an employee's medical
history upon which acceptance for insurance will be determined by the Company.

                                                                               3

<PAGE>
 
                      SECTION II- DEFINITIONS (CONTINUED)

"GRACE PERIOD" is the 31 days following a premium due date during which premium
payment may be made.
                
"INJURY" means bodily injury resulting directly from an accident and
independently of all other causes. The injury must occur and disability must
begin while the employee is insured under this policy. 

"INSURED" means an employee insured under this policy.
                
Male pronoun whenever used includes the female.

"MONTHLY BENEFIT" means the amount payable by the Company to the disabled
insured.               

"PHYSICIAN" means a person who is:
                
1.   operating within the scope of his license; and either
                
2.   licensed to practice medicine and prescribe and administer drugs or to
     perform surgery; or
               
3.   legally qualified as a medical practitioner and required to be recognized,
     under this policy for insurance purposes, according to the insurance
     statutes or the insurance regulations of the governing jurisdiction.

It will not include an employee or his spouse, daughter, son, father, mother,
sister or brother.

"SICKNESS" means illness or disease. It will include pregnancy. The disability
must begin while the employee is insured under this policy.

"WAITING PERIOD" shown in the Schedule of Benefits, means the continuous length
of time an employee must serve in an eligible class to reach his eligibility
date.           
                
"TOTAL DISABILITY" AND "TOTALLY DISABLED" mean that because of injury or
sickness:                

1.   the insured cannot perform each of the material duties of his regular
     occupation; and 
2.   after benefits have been paid for 24 months, the insured cannot perform
     each of the material duties of any gainful occupation for which he is
     reasonably fitted by training, education or experience.

"PARTIAL DISABILITY" AND "PARTIALLY DISABLED" mean that because of injury or
sickness, the insured, while unable to perform all of the material duties of his
regular occupation on a full-time basis, is:
          
1.   performing at least one of the material duties of his regular occupation or
     another occupation on a part-time or full-time basis; and
2.   earning currently at least 20% less per month than his indexed 
     pre-disability earnings due to that same injury or sickness.
                
"DISABILITY" means total or partial disability. 

For employees employed as airplane pilots, copilots and crew members:

"DISABILITY" AND "DISABLED" mean that because of injury or sickness the insured
cannot perform each of the material duties of any gainful occupation for which
he is reasonably fitted by training, education or experience. The loss of a
pilot's license for any reason does not, in itself, constitute disability.

                                                                               4

<PAGE>
 
                  SECTION III-ELIGIBILITY AND EFFECTIVE DATES

A    ELIGIBLE CLASSES

     The classes eligible for insurance are shown in the Schedule of Benefits.

B.   ELIGIBILITY DATE

     An employee in an eligible class will be eligible for insurance on the
     later of:

     1.   the policy effective date; or
     2.   the day after the employee completes the waiting period.

     If a former employee is rehired within one year of the date his employment
     terminated, his previous service in an eligible class will apply toward the
     waiting period to determine that employee's eligibility date.

C.   EFFECTIVE DATES OF INSURANCE

     1.   Insurance will be effective at 12:01 a.m. on the day determined as
          follows, but only if the employee's written application for insurance
          is:

          a.   made with the Company through his employer; and
          b.   on a form satisfactory to the Company.

     2.   An employee will be insured for non contributory insurance on his
          eligibility date.

     3.   An employee will be insured for contributory insurance on the latest
          of these dates:

          a.   the employee's eligibility date, if he has made written
               application for insurance on or before this date.
          b.   the date the employee makes written application for insurance, if
               he does it on or before the 31st day after his eligibility date.
          c.   the date the Company gives its approval, if the employee:

               i.   makes written application for insurance more than 31 days
                    after his eligibility date; or
               ii.  terminated his insurance while continuing to be eligible.

          In the case of i. and ii. above, the employee must submit an
          application and evidence of insurability to the Company for approval.
          This will be at the employee's expense.

     4.   Delayed Effective Date for Insurance - The effective date of any
          initial, increased or additional insurance will be delayed for an
          employee if he is not in active employment because of a disability.
          The initial, increased or additional insurance will start on the date
          that employee returns to active employment.

                                                                               5

<PAGE>
 
                             SECTION IV - BENEFITS

TOTAL DISABILITY

When the Company receives proof that an insured is totally disabled due to
sickness or injury and requires the regular attendance of a physician, the
Company will pay the insured a monthly benefit after the end of the elimination
period. The benefit will be paid for the period of disability if the insured
gives to the Company proof of continued:

1.   disability; and
2.   regular attendance of a physician.

PARTIAL DISABILITY

When the Company receives proof that an insured is partially disabled due to the
same sickness or injury for which a total disability benefit has been payable
and within 31 days of the end of the period for which such total disability
benefit was payable, the Company will pay the insured a monthly benefit.

All proof must be given upon request and at the insured's expense.

The monthly benefit will not:

1.   exceed the insured's amount of insurance; nor
2.   be paid for longer than the maximum benefit period.

The amount of insurance and the maximum benefit period are shown in the Schedule
of Benefits.

MONTHLY BENEFIT

The monthly benefit for each insured will be the amount shown in the attached
Schedule of Locations and Benefit Amounts. This amount will be adjusted annually
on the anniversary of the date benefit payments began. Each adjustment will be
based on the lesser of (a) 10% or (b) the current annual percentage increase to
the Consumer Price Index.

MINIMUM MONTHLY BENEFIT

The benefit payable will never be less than $100.00 or 10% of the gross monthly
benefit, whichever is greater.

TERMINATION OF DISABILITY BENEFITS

Disability benefits will cease on the earliest of:

1.   the date the insured is no longer disabled;
2.   the date the insured dies;
3.   the end of the maximum benefit period.

RECURRENT DISABILITY

"Recurrent disability" means a disability which is related to or due to the same
cause(s) of a prior disability for which a monthly benefit was payable.

A recurrent disability will be treated as part of the prior disability if, after
receiving disability benefits under this policy, an insured:

1.   returns to his regular occupation on a full-time basis for less than six
     months; and
2.   performs all the material duties of his occupation.

Benefit payments will be subject to the terms of this policy for the prior
disability.

                                                                               6

<PAGE>
 
                       SECTION IV - BENEFITS (CONTINUED)

If an insured returns to his regular occupation on a full-time basis for six
months or more, a recurrent disability will be treated as a new period of
disability. The insured must complete another elimination period.

In order to prevent overinsurance because of duplication of benefits, benefits
payable under this Recurrent Disability provision will cease if benefits are
payable to the insured under any other group long term disability policy.

SURVIVOR BENEFIT

The Company will pay a benefit to the eligible survivor when proof is received
that an insured died:

1.   after disability had continued for 180 or more consecutive days; and
2.   while receiving a monthly benefit.

The benefit will be an amount equal to three times the insured's gross monthly
benefit. 

If payment becomes due to the insured's children, payment will be made to:

1.   the children; or
2.   a person named by the Company to receive payments on the children's behalf.
     This payment will be valid and effective against all claims by others
     representing or claiming to represent the children.

"Eligible survivor" means the insured's spouse, if living, otherwise the
insured's children under age 25. But, if there are no eligible survivors,
payment will be made to the insured's estate.

GENERAL EXCLUSIONS

This policy does not cover any disability due to:

1.   war, declared or undeclared, or any act of war;
2.   intentionally self-inflicted injuries;
3.   active participation in a riot;
4.   Acquired Immune Deficiency Syndrome (AIDS).

PRE-EXISTING CONDITIONS EXCLUSIONS

This policy will not cover any disability:

a.   caused by, contributed to by, or resulting from a pre-existing condition;
     and

b.   which begins before:

     (1)  a period of 12 consecutive months starting on or after the insured's
          effective date of coverage, during which the insured has not received
          medical treatment, consultation, care or services including diagnostic
          measures, or taken prescribed drugs or medicines; or
     (2)  24 months after the insured's effective date of insurance.

A "pre-existing condition" means any sickness or injury for which the insured
received medical treatment, consultation, care or services including diagnostic
measures or took prescribed drugs or medicines within six months prior to the
insured's effective date of insurance.

                                                                               7

<PAGE>
 
                       SECTION IV - BENEFITS (CONTINUED)

MENTAL ILLNESS, ALCOHOLISM AND DRUG ADDICTION LIMITATION

Benefits for disability due to mental illness, alcoholism or drug addiction will
not exceed 24 months of monthly benefit payments unless the insured meets one
of these situations.

1.   The insured is in a hospital or institution at the end of the 24 month
     period. The monthly benefit will be paid during the confinement.

     If the insured is still disabled when he is discharged, the monthly benefit
     will be paid for a recovery period of up to 90 days.

     If the insured becomes reconfined during the recovery period for at least
     14 days in a row, benefits will be paid for the confinement and another
     recovery period up to 90 more days.

2.   The insured continues to be disabled and becomes confined:

     a. after the 24 month period; and
     b. for at least 14 days in a row.

     The monthly benefit will be payable during the confinement.

The monthly benefit will not be payable beyond the maximum benefit period.

"Hospital" or "institution" means facilities licensed to provide care and
treatment for the condition causing the insured's disability.

"Mental illness" means disability due to or resulting from psychiatric or
psychological conditions, regardless of cause, such as:

1.   schizophrenia,
2.   depression,
3.   manic depressive or bipolar illness,
4.   anxiety,
5.   personality disorders; and/or
6.   adjustment disorders or other conditions, usually treated by a mental
     health provider or other qualified provider using psychotherapy,
     psychotropic drugs or other similar modalities used in the treatment of the
     above conditions.

This limitation does not apply to dementia, if due to:

1.   stroke,
2.   trauma,
3.   viral infection,
4.   Alzheimer's disease, or
5.   other such conditions not listed above which are not usually treated by a
     mental health provider using psychotherapy, psychotropic drugs, or other
     similar modalities.

                                                                               8

<PAGE>
 
                      SECTION V - TERMINATION PROVISIONS

A.   TERMINATION OF EMPLOYEE'S INSURANCE

     An employee will cease to be insured on the earliest of the following
     dates:

     1.   the date this policy terminates;
     2.   the date the employee is no longer in an eligible class;
     3.   the date the employee's class is no longer included for insurance;
     4.   the last day for which any required employee contribution has been
          made;
     5.   the date employment terminates. Cessation of active employment will be
          deemed termination of employment, except:

          a.   the insurance will be continued for a disabled employee during:

               i.   the elimination period; and
               ii.  the period during which premium is being waived.

          b.   the employer may continue the employee's insurance by paying the
               required premiums, subject to the following:

               i.   insurance may be continued to the end of the policy month
                    following the policy month in which the layoff or leave of
                    absence begins for an employee who is:

                    (a)  temporarily laid off, or
                    (b)  given leave of absence.

               ii.  The employer must act so as not to discriminate unfairly
                    among employees in similar situations.

B.   TERMINATION OF POLICY

     1.   Termination of this policy under any conditions will not prejudice any
          payable claim which occurs while this policy is in force.
     2.   If the policyholder fails to pay any premium within the grace period,
          this policy will automatically terminate at 12:00 midnight of the last
          day of the grace period. The policyholder may terminate this policy by
          advance written notice delivered to the Company at least 31 days
          prior to the termination date. But, this policy will not terminate
          during any period for which premium has been paid. The policyholder
          will be liable to the Company for all premiums due and unpaid for the
          full period for which this policy is in force.
     3.   The Company may terminate this policy on any premium due date by
          giving written notice to the policyholder at least 31 days in advance
          if:

          a.   the number of employees insured is less than 10; or
          b.   less than 100% of the employees eligible for any noncontributory
               insurance are insured for it; or
          c.   less than 75% of the employees eligible for any contributory
               insurance are insured for it; or
          d.   the policyholder fails to furnish promptly any information which
               the Company may reasonably require; or fails to perform any other
               obligations pertaining to this policy.

     4.   The Company may discontinue this policy or for any class of employees
          on a premium due date after it has been in force for a year. The
          Company will send written notice of discontinuance to the policyholder
          at least 31 days before it is effective.
     5.   Termination may take effect on an earlier date when both the
          policyholder and the Company agree.

                                                                               9

<PAGE>
 
                     SECTION VI - GENERAL POLICY PROVISIONS

A.  STATEMENTS
                     
     In the absence of fraud, all statements made in any application are
     considered representations and not warranties (absolute guarantees). No
     representation by:

     1.   the policyholder in applying for this policy will make it void unless
          the representation is contained in the application; or

     2.   any employee in applying for insurance under this policy will be used
          to reduce or deny a claim unless a copy of the application for
          insurance is or has been given to the employee.

B.   COMPLETE CONTRACT - POLICY CHANGES

     1.   This policy is the complete contract. It consists of:

          a.   all of the pages;

          b.   the attached application of the policyholder;

          c.   each employee's application for insurance (employee retains his
               own copy).

     2.   This policy may be changed in whole or in part. Only an officer or a
          registrar of the Company may approve a change. The approval must be in
          writing and endorsed on or attached to this policy.

     3.   Any other person, including an agent, may not change this policy or
          waive any part of it.

C.   EMPLOYEE'S CERTIFICATE

     The Company will provide a certificate to the policyholder for delivery to
     each insured. If the terms of a certificate and this policy differ, this
     policy will govern.

D.   FURNISHING OF INFORMATION - ACCESS TO RECORDS

     1.   The employer will furnish at regular intervals to the Company:

          a.   information relative to employees:

               i.   who qualify to become insured;
               ii.  whose amounts of insurance change; and/or
               iii. whose insurance terminates.

          b.   any other information about this policy that may be reasonably
               required.

          The employer's records which, in the opinion of the Company, have a
          bearing on the insurance will be opened for inspection by the Company
          at any reasonable time.

     2.   Clerical error or omission will not:

          a.   deprive an employee of insurance;

          b.   affect an employee's amount of insurance; or

          c.   affect or continue an employee's insurance which otherwise would
               not be in force.

                                                                              10

<PAGE>
 
              SECTION VI - GENERAL POLICY PROVISIONS (CONTINUED)

E.   MISSTATEMENT OF FACTS

     If relevant facts about any employee were not accurate:

     1.   a fair adjustment of premium will be made; and

     2.   the true facts will decide if and in what amount insurance is valid
          under this policy.

F.   NOTICE AND PROOF OF CLAIM

     1.   Notice

          a.   Written notice of claim must be given to the Company within 30
               days of the date disability starts, if that is possible. If that
               is not possible, the Company must be notified as soon as it is
               reasonably possible to do so.
          b.   When the Company has the written notice of claim, the Company
               will send the insured its claim forms. If the forms are not
               received within 15 days after written notice of claim is sent,
               the insured can send the Company written proof of claim without
               waiting for the form.

     2.   Proof

          a.   Proof of claim must be given to the Company. This must be done no
               later than 90 days after the end of the elimination period.
          b.   If it is not possible to give proof within these time limits, it
               must be given as soon as reasonably possible. But proof of claim
               may not be given later than one year after the time proof is
               otherwise required.
          c.   Proof of continued disability and regular attendance of a
               physician must be given to the Company within 30 days of the
               request for the proof.
          d.   The proof must cover:

          i.   the date disability started;
          ii.  the cause of disability; and
          iii. how serious the disability is.

G.   EXAMINATION

     The Company, at its own expense, will have the right and opportunity to
     have an employee, whose injury or sickness is the basis of a claim:

     1.   examined by a physician, other health professional or vocational
          expert of its choice; and/or

     2.   interviewed by an authorized Company representative.

     This right may be used as often as reasonably required.

H.   LEGAL PROCEEDINGS

     A claimant or the claimant's authorized representative cannot start any
     legal action:

     1.   until 60 days after proof of claim has been given; nor

     2.   more than 3 years after the time proof of claim is required.


                                                                              11

<PAGE>
 
               SECTION VI - GENERAL POLICY PROVISIONS (CONTINUED)

I.   TIME OF PAYMENT OF CLAIMS

     When the Company receives proof of claim, benefits payable under this
     policy will be paid monthly during any period for which the Company is
     liable.

J.   PAYMENT OF CLAIMS

     All benefits are payable to the employee. But if a benefit is payable to an
     employee's estate, an employee who is a minor, or an employee who is not
     competent, the Company has the right to pay up to $1,000 to any of the
     employee's relatives whom the Company considers entitled. If the Company
     pays benefits in good faith to a relative, the Company will not have to pay
     such benefits again.

K.   WORKERS' OR WORKMEN'S COMPENSATION

     This policy is not in lieu of, and does not affect, any requirement for
     coverage by workers' or workmen's compensation insurance.

L.   AGENCY

     For all purposes of this policy, the policyholder acts on its own behalf or
     as agent of the employee. Under no circumstances will the policyholder be
     deemed the agent of the Company.

                                                                              12

<PAGE>
 
                             SECTION VII- PREMIUMS

A.   PREMIUM RATES

     The initial premium is determined on the basis of the rates shown on the
     face page of this policy.

     The Company may establish new rates for the computation of all future
     premiums as well as the one then due:

     1.   when the terms of this policy are changed;

     2.   when a division, subsidiary, or affiliated company is added to this
          policy; or

     3.   for reasons other than 1. and 2. above, such as, but not limited to a
          change in factors bearing on the risk assumed. But, the rates may not
          be changed within the first 12 months following the policy effective
          date.

     No premium may be increased unless the Company notifies the employer at
     least 31 days in advance of the increase. Premium increases may take effect
     on an earlier date when both the Company and the employer agree.

B.   PAYMENT OF PREMIUMS

     1.   Premium payment calculations:

          a. will be based on the coverage provided under this policy; and
          b. are determined by the covered payroll.

     2.   All premiums due under this policy, including adjustments, if any, are
          payable by the employer on or before their respective due dates at the
          Company's home office. The due dates are specified on the first page
          of this policy.

     3.   Premiums payable to the Company will be paid in United States dollars
          and Canadian dollars.

     4.   If premiums are payable on a monthly basis, premiums for additional or
          increased insurance becoming effective during a policy month will be
          charged from the next premium due date.

     5.   The premium charge for insurance terminated during a policy month will
          cease at the end of the policy month in which such insurance
          terminates. This manner of charging premium is for accounting purposes
          only and will not extend insurance coverage beyond a date it would
          have otherwise terminated as shown in the "Termination of Employee's
          Insurance" section of this policy.

     6.   If premiums are payable on other than a monthly basis, premiums for
          additional, increased, reduced or terminated insurance will cause a
          pro rata adjustment on the next premium due date.

     7.   Except for fraud, premium adjustments, refunds or charges will be made
          for only:

          a.      the current policy year; and
          b.      the prior policy year.

C.   WAIVER OF PREMIUM

     Premium payments for an employee are waived during any period for which
     benefits are payable. 
     Premium payments may be resumed following a period during which they were
     waived.
                                                                              13

<PAGE>
 
DELAMLIFE
                               DELAWARE AMERICAN
                             LIFE INSURANCE COMPANY
                    P.O. BOX 667, WILMINGTON, DELAWARE 19899
                            A CAPITAL STOCK COMPANY

          Final Application for Group Long Term Disability Insurance

________________________________________________________________________________

1. Legal Name of Policyholder   KORN/FERRY INTERNATIONAL
                             ---------------------------------------------------

2. Address of Policyholder  1800 Century Park East, Ste. 900, Los Angeles CA 90
                            ---------------------------------------------------

3. Name of Subsidiaries, Divisions or Affiliates to be covered  N/A
                                                               ----------------
   _____________________________________________________________________________

4. Nature of Business    Executive Search Consulting
                     -----------------------------------------------------------

                                                       
5. Effective Date 12:01 A.M. Month     January       Day  1     Year  1997
                                   -----------------   -------     -----------

6.  Deposit of                      6A. Employee application must 
    $ 11,210.45 to apply on             include Medical data.
      ---------                         [_] Yes [XX] No
    the first premium.
    
________________________________________________________________________________

EMPLOYEE ELIGIBILITY

________________________________________________________________________________

7.  Eligible Classes  Executives who are Vice Presidents and Shareholders.
                    ------------------------------------------------------------

8.  Employees will remain           9.  Waiting Period 
    Eligible                            Present Employees  0   
    [--]  No Age Limit                                   -----------------------
    [XX]  To Age 65                     ________________________________________
    [--]  To Age 7O                     New Employees  0
                                                      --------------------------

10.  Number of Employees            11. Will Employees Contribute 
     A.   37     Eligible               Towards Cost?
       ---------                        [XX]  Yes [--]  No
     B._________ Enrolled                
     
12.  Prior Employment to count for people rehired within 12 months. 
     [XX]  Yes
     [--]  No
________________________________________________________________________________

<PAGE>
 
- --------------------------------------------------------------------------------

POLICY FEATURES

- --------------------------------------------------------------------------------

13.  Amount of Insurance  Stated percentage for each participant per attached
                          schedule (census).

     [ ]  _____% of Basic Monthly Earnings not to exceed a maximum monthly
          benefit of $________
     [ ]  ______% of the first $__________of Basic Monthly Earnings plus
          ______% of the next $__________of Basic Monthly Earnings not to
          exceed a maximum monthly benefit of $____________

14.  Mental Illness Limitation               15. Elimination Period

     [XX] 24 Months                                   180     Days
                                                 ----------- 
     [  ] None

16.  Minimum Monthly Benefit     $50
                             ---------------------------------------------------
                              
17.  Two Year Survivor Income                18.  Pre-existing Conditions
     Benefit to be Included                       Exclusion

     [__] Yes                                     [XX] Option A - (3/12)

     [XX] No                                      [__] Option B - (5 Day)

19.  Basic Monthly Earnings to Include

     Commissions   [__] Yes  [XX] No
     Bonuses       [__] Yes  [XX] No

20.  Minimum Indemnity for Accidental Dismemberment and Loss of Sight to be
     Included

     [__] YES
     [XX] NO

- --------------------------------------------------------------------------------

<PAGE>
 
- --------------------------------------------------------------------------------

BENEFIT DURATION (Make only one selection from either box 21, 22 or 23.)

- --------------------------------------------------------------------------------

21.  [XX] Reducing Benefit Duration

22.  [--] 65/5/70

  AGE AT           BENEFIT         AGE AT          BENEFIT                    
DISABILITY         DURATION      DISABILITY        DURATION                   
- ----------         --------      ----------        --------                   
Less than 60       To age 65     Less than 60      To age 65                  
60                 60 Months        60-64           5 Years                    
61                 48 Months        65-69          To age 70, but 
62                 42 Months                       not less than   
63                 36 Months                       1 Year                      
64                 30 Months     70 and over       1 Year
65                 24 Months
66                 21 Months
67                 18 Months
68                 15 Months
69 and over        12 Months 

23.  Other
     [--]  To age 70 
     [--]  5 Years or age 70, whichever first occurs 
     [--]  10 Years or age 70, whichever first occurs 
     [--]  To age 65 
     [--]  5 Years or age 65, whichever first occurs 
     [--]  10 Years or age 65, whichever first occurs 
     [--]  Other, specify below 


     None of the above options extend the maximum benefit period beyond the age
     selected except for a minimum one year benefit.

- --------------------------------------------------------------------------------

SOCIAL SECURITY INTEGRATION

- --------------------------------------------------------------------------------

24.  Other Income Benefits Include   N/A 
     [--]  Primary Social Security
     [--]  Primary & Family Social Security

<PAGE>
 
25.  70%   All Sources Limitation to be included
     [  ]  Yes
     [XX]  No

- --------------------------------------------------------------------------------

CONTINUITY OF COVERAGE

- --------------------------------------------------------------------------------

 26. Is this a replacement of       27.  Continuity of coverage is to be
     similar coverage?                   included
     [  ] Yes                            [  ]  Yes   Mandatory on
     [XX] No                             [  ]  No    takeover cases

28.  Termination Date of Prior Plan_____________________________________________

29.  Previous Company___________________________________________________________

- --------------------------------------------------------------------------------

          It is understood and agreed that this Application shall be made a part
          of the Policy applied for and that no insurance shall be effective
          until approved by the Insurance Company at its Home Office.

- --------------------------------------------------------------------------------

/s/ Marcia A. Kostos                    /s/ Kristine E. Key
- ---------------------------------       --------------------------------      
    SIGNATURE OF WITNESS                       SIGNATURE AND TITLE             
                                        Kristine E. Key for Korn/Ferry Interna-
                                        tional, Vice President Administration 
                                        and Human Resources  

/s/ Peter W. Mullin                           PENDING                
- ---------------------------------       -------------------------------- 
   AGENT OR BROKER                            LICENSE NUMBER          
Peter W. Mullin

FOR:    KORN /FERRY INTERNATIONAL
    ----------------------------------------------------------------------------
                              (NAME OF APPLICANT)

 Los Angeles, CA                              12/20/96            
- -----------------------------           --------------------------------
         DATED AT                               DATE



<PAGE>
 
                                                                    EXHIBIT 10.6

                                                         (international version,
                                                         which is the same as
                                                         the domestic version in
                                                         all material respects)

                           KORN/FERRY INTERNATIONAL

            ENHANCED EXECUTIVE BENEFIT AND WEALTH ACCUMULATION PLAN

                         FOR INTERNATIONAL EXECUTIVES


     The purpose of this KORN/FERRY INTERNATIONAL ENHANCED EXECUTIVE BENEFIT 
AND WEALTH ACCUMULATION PLAN FOR INTERNATIONAL EXECUTIVES (the "Plan") is to 
provide a further means whereby KORN/FERRY INTERNATIONAL and its subsidiary and 
affiliated companies (the "Company") may afford financial security to certain 
international executives/shareholders who are not covered under the Company's 
Employee Tax-Deferred Savings (401 (k)) Plan, but who have rendered and 
continue to render valuable service to the Company, constituting an important 
contribution toward its continued growth and success, by providing for 
additional future compensation so that they may be retained and their productive
efforts encouraged. In general, this Plan will cover eligible individuals who 
are permanent legal residents and taxpayers of a country other than the United 
States.

                                       I

                      DEFINITIONS AND CERTAIN PROVISIONS

     1.1  "Agreement" means the written agreement (substantially in the form 
attached to this Plan)
 entered into between the Company and the Executive for 
each Contribution Unit to carry out the Plan with respect to such Executive.

<PAGE>
 
     1.2  An "Executive" means (i) any Vice President or other officer of the 
Company (or a subsidiary or affiliated company) who is designated as eligible to
participate in the Plan by the Company, (ii) who is or becomes a shareholder of 
the Company at the next subscription offering under the Company's Equity 
Participation Program effective December 1991 and abides by the provisions of 
such program as determined by the Committee and (iii) who is not eligible for 
the Company's Employee Tax-Deferred Savings (401(K)) Plan. In addition, an 
"Executive" means an employee of the Company who is currently a participant in
the KORN/FERRY EXECUTIVE BENEFIT AND WEALTH ACCUMULATION PLAN (the "WAP") who
elects to rollover his WAP participation and WAP contributions into this Plan.

     1.3  "Service" means continuous full-time or substantially full-time 
service with the Company as an employee.

     1.4  A "year of service" means a complete year of continuous, full-time 
service with the Company. A "year of participation" means a year of service in 
which an Executive is enrolled in the Plan and in which an Executive makes or 
has made required contributions of compensation. A "year" is a period of 12 
consecutive calendar months.

     1.5  A "Contribution Unit" is an eight year period of participation, 
including an Initial Contribution Unit, during which an Executive elects to 
contribute compensation pursuant to Article II and for which an Agreement has 
been submitted by the Executive to the Committee.

                                      -2-

















<PAGE>
 
          1.6  An "Initial Contribution Unit" means an Executive's first 
Contribution Unit created pursuant to Article II by (i) an election to enroll in
the Plan, or (ii) a rollover of participation and contributions from the WAP. It
is the only Contribution Unit to which Disability Benefits attach.

          1.7  A "Completed Contribution Unit" means a Contribution Unit in
which an Executive has completed eight full years of service while enrolled in
that Contribution Unit and made all required contributions of compensation for
that Contribution Unit.

          1.8  "Normal Retirement Date" for a Contribution Unit means the date
of termination of service of the Executive after he attains age 65 or, if 
later, completes eight years of service with the Company while enrolled in that
Contribution Unit.

          1.9  "Early Retirement Date" for a Contribution Unit means the date of
termination of service of the Executive for reasons other than death or 
Disability prior to attainment of age 65 but after he (i) attains age 55, (ii)
completes fifteen years of service with the Company, and (iii) completes eight 
years of service with the Company while enrolled in that Contribution Unit.

          1.10 "Termination for cause" means (i) the commission of a crime, (ii)
the refusal to follow, without good cause, the directions of the Company's Board
of Directors, (iii) the misappropriation of property or money from the Company,
(iv) the commission of any act resulting in material harm to the financial
condition or reputation of the Company, or (v) the commission of

                                      -3-

<PAGE>
 
any fraudulent act relating to or arising out of the Executive's employment. 
Notwithstanding any date of retirement or voluntary termination by the 
Executive, if the Company notifies the Executive that he is being terminated for
cause within 90 days of such date of retirement or voluntary termination by the 
Executive, the Executive shall be considered terminated for cause for purposes 
of this Plan.

     1.11 "Termination of service" means the Executive's ceasing his service 
with the Company for any reason whatsoever, whether voluntarily or 
involuntarily, including by reason of death or Disability.

     1.12 "Disability" means a condition that totally and continuously prevents 
the Executive, for at least six consecutive months, from engaging in an 
"occupation" for compensation or profit. During the first 24 months of total 
disability, "occupation" means the Executive's occupation at the time the 
disability began. After that period, "occupation" means any occupation for which
the Executive is or becomes reasonably fitted by education, training or 
experience. Disability may also include any other condition which qualifies as a
total disability under a long term disability insurance policy which is in 
effect to provide disability insurance coverage for the Executive under this 
Plan. Notwithstanding the foregoing, a Disability shall not exist for purposes 
of this Plan if the Executive fails to qualify for disability benefits under the
Social Security Act, unless the Committee determines, in its sole discretion
that a Disability exists.

                                      -4-


<PAGE>
 
          1.13 "Committee" means the Administrative Committee appointed to
manage and administer the Plan pursuant to Section 4.1.

          1.14 "Beneficiary" means the person or persons designated by an 
Executive pursuant to Section 3.12.

          1.15 A "Plan Year" means the calendar year, except as provided in 
Section 2.2.

          1.16 References to an Executive's, Beneficiary's, or spouse's age are
to his or her chronological age.

                                      II

                         ELIGIBILITY AND PARTICIPATION


          2.1  Eligibility to Participate. Any Executive is eligible to 
               --------------------------
participate in the Plan after entering into an Agreement with the Company and 
after completing the enrollment steps required by the Company.

          2.2  Participation in the Plan.
               -------------------------

               (a)  Executives who are hired or promoted after October 1, 1993
and who are selected by the Committee and notified in writing that their
participation has been approved by the Company may participate in this Plan. The
Initial Contribution Unit of an eligible Executive is the first eight year
period of participation for which the Executive elects to contribute
compensation under this Plan. The Executive's Initial Contribution Unit shall
begin on January 1 and have a calendar Plan Year. After completing five or more
years of participation

                                      -5-

<PAGE>
 
in an Initial Contribution Unit, the Executive may elect a new additional 
Contribution Unit. Thereafter, the Executive may enroll in an additional 
Contribution Unit for each additional five year period that he has 
actively participated in the Plan. All additional Contribution Units shall also
begin on January 1 and have a calendar Plan Year.

          (b)  If an Executive is currently a participant in the WAP, in order
to participate in this Plan such Executive must rollover his WAP participation
and WAP contributions into this Plan. The rollover of WAP contributions will
become the Executive's Initial Contribution Unit and all years of participation
in the WAP will be counted as years of participation in this Plan. Thus, the
Executive's Initial Contribution Unit will be measured from the date the
Executive began participation in the WAP. After an Executive has rolled over to
this Plan, an Executive may for each five years of participation in the WAP
and/or this Plan (or any combination thereof), elect to participate in a new
Contribution Unit, which shall begin on January 1 and have a calendar Plan Year.
However, if, at rollover, an Executive has been a participant in the WAP for
five or more years, he may immediately enroll in a new additional Contribution
Unit as of October 1, 1993 and his Plan Year for that new additional
Contribution Unit shall be from October 1 to September 30. Thereafter, all new
additional Contribution Units shall begin on January 1 and have a calendar 
Plan Year.

                                      -6-


<PAGE>
 
     2.3  Executive Contribution. For each Contribution Unit, an Executive shall
          ----------------------
execute an Agreement and irrevocably elect to make regular specified
contributions payable in the manner and times at which the Company, in its
discretion, may determine, and in the amounts and with respect to the years
specified in Paragraph 3 of the Agreement, in order to participate in the Plan.

     Participation in a Contribution Unit for any Executive, whether enrolled by
election or by rollover, shall commence after (i) the Executive and the Company 
have executed an Agreement, and (ii) the Executive has made his first 
contribution.

     Although an Executive must have completed eight years of service with the 
Company while enrolled in a Contribution Unit and have completed all of his 
contributions by the eighth anniversary of the date a Contribution Unit began in
order to complete a Contribution Unit, an Executive may elect to accelerate his
contributions for a Contribution Unit into a shorter period of time. However, an
Executive may not increase his total contribution amount. Any such acceleration
of contributions shall not result in any change in the benefits payable under
the Plan. Any election to accelerate contributions shall be irrevocable and
shall only reduce the amount of compensation earned and payable on or after the
date on which the election is made.

     2.4  Failure to Make Timely Contribution. Failure of the Executive to 
          -----------------------------------
make a timely contribution, as specified in Section 3 of the Agreement, within
sixty (60) days of the due

                                      -7-

<PAGE>
 
date as determined by the Committee pursuant to Section 2.3, will operate as an
effective termination of participation in the applicable Contribution Unit under
the Plan. Upon such termination the Executive shall be entitled to the
Termination Benefit for such Contribution Unit as specified in Section 3.8.

                                      III

                                   BENEFITS


          3.1  Normal Retirement Benefit. If the Executive has a termination of 
               -------------------------
service on a Normal Retirement Date, for each Completed Contribution Unit the
Company shall pay, subject to the provisions of Sections 3.10, 3.11 and 3.13, to
the Executive in equal monthly installments commencing on the first day of the
month following his Normal Retirement Date, as compensation earned for services
rendered prior to such date, one-twelfth of the amount per annum specified as
the Normal Retirement Benefit in his Agreement for the Contribution Unit for
fifteen years (the "Normal Retirement Benefit").

          If the Executive continues in service with the Company after he
attains age 65 or, if later, completes eight years of service with the Company
while enrolled in a Contribution Unit, his monthly Normal Retirement Benefit
payments for the Contribution Unit shall commence on the first day of the month
following his termination of service and shall be adjusted upward to reflect the
later date of commencement of his Normal Retirement Benefit payments. Such
upward adjustment of his

                                      -8-

<PAGE>
 
Normal Retirement Benefit shall be made for the period from the date that the 
Executive attains age 65 or, if later, completes eight years of service with the
Company while enrolled in the Contribution Unit to the date such Executive 
terminates service at a rate equal to (i) six percent (6%) per annum (i.e., a 
                                                                      - -
0.5 percent (0.5%) increase per month), or (ii) such other per annum rate as may
be determined by the Committee from time to time, but not to exceed 120 percent 
(120%) of the long-term Applicable Federal Rate (as determined under Section 
1274(d) of the Internal Revenue Code).

          If an Executive dies before he has received all of his monthly Normal
Retirement Benefit payments, his Normal Retirement Benefit payments shall cease,
and the Company shall pay to the Executive's Beneficiary a Survivor's Benefit
pursuant to Section 3.5(a).

          3.2  Early Retirement Benefit. If the Executive has a termination of 
               -------------------------
service on an Early Retirement Date, for each Completed Contribution Unit the
Company shall pay, subject to the provisions of Sections 3.10, 3.11 and 3.13, to
the Executive in equal monthly installments commencing on the first day of the
month after he attains age 65, as compensation earned for services rendered
prior to such time, one-twelfth of the amount per annum specified as the Normal
Retirement Benefit in his Agreement for the Contribution Unit for fifteen years
(the "Early Retirement Benefit").

          Any time prior to twelve months prior to such termination of service, 
the Executive may instead elect to

                                      -9-

<PAGE>
 
commence payment of his Early Retirement Benefit, subject to the provisions of 
Sections 3.10, 3.11 and 3.13, as early as the first day of the month after he 
attains age 55. In this event, the Company shall pay, subject to the provisions 
of Sections 3.10, 3.11 and 3.13, to the Executive in equal monthly installments,
as compensation earned for services rendered prior to such time, one-twelfth of 
a reduced equivalent of the amount per annum specified as the Normal Retirement 
Benefit in his Agreement for the Contribution Unit for fifteen years. Such 
reduced equivalent shall be equal to the Executive's Normal Retirement Benefit 
specified in his Agreement for the Contribution Unit for the period from the 
date that the Executive terminates service to the date the Executive attains age
65 at a rate equal to (i) six percent (6%) per annum (i.e., a 0.5 percent 
                                                      - -
(0.5%) reduction per month), or (ii) such other per annum rate as may be
determined by the Committee from time to time, but not to exceed 120 percent
(120%) of the long-term Applicable Federal Rate.

          If an Executive dies before he has received all of his monthly Early
Retirement Benefit payments, his Early Retirement Benefit payments shall cease,
and the Company shall pay to the Executive's Beneficiary a Survivor's Benefit
pursuant to Section 3.5(b).

          3.3  Incentive Benefit.  If an Executive has a termination of service
               -----------------
after five or more years of participation in a Contribution Unit (i.e.,
                                                                  - -
completion of five or more years of service with the Company while enrolled in
the Contribution
                                     -10-

<PAGE>
 
Unit), but prior to his Normal or Early Retirement Date for the Contribution
Unit, the Executive will be eligible for an Incentive Benefit for that
Contribution Unit, subject to the provisions of Sections 3.10, 3.11 and 3.13.
For each such Contribution Unit in which the Executive has participated for at
least five years, the Company shall pay, subject to the provisions of Sections
3.10, 3.11 and 3.13, to the Executive in equal monthly installments commencing
on the first day of the month following the day he reaches age 65, as
compensation earned for services rendered prior to such date, one-twelfth of the
amount per annum specified as the Normal Retirement Benefit in his Agreement for
the Contribution Unit for the same number of years that the Executive has
participated in the Contribution Unit up to a maximum of fifteen years (the
"Incentive Benefit").

          Any time prior to twelve months prior to termination of service, the 
Executive may instead elect to commence his Incentive Benefit as early as the
first day of the month after he attains age 55. In this event, for each
Contribution Unit in which the Executive has participated for at least five
years when he has a termination of service prior to his Early Retirement Date
for the Contribution Unit, the Company shall pay, subject to the provisions of
Sections 3.10, 3.11 and 3.13, to the Executive in equal monthly installments, as
compensation earned for services rendered prior to such time, one-twelfth of a
reduced equivalent of the amount per annum specified as the Normal Retirement
Benefit in his Agreement for the Contribution Unit for the same number of years
that the Executive has participated in

                                     -11-

<PAGE>
 
the Contribution Unit up to a maximum of fifteen years. Such reduced equivalent
shall be equal to the Executive's Normal Retirement Benefit specified in his
Agreement for the Contribution Unit reduced for the period from the date that
the Executive terminates service to the date the Executive attains age 65 at a
rate equal to (i) six percent (6%) per annum (i.e., a 0.5 percent (0.5%)   
                                              - -
reduction per month), or (ii) such other per annum rate as may be determined by
the Committee from time to time, but not to exceed 120 percent (120%) of the
long-term Applicable Federal Rate.

          If an Executive dies before he has received all of his monthly
Incentive Benefit payments, his Incentive Benefit payments shall cease, and the
Company shall pay to the Executive's Beneficiary a Survivor's Benefit pursuant
to Section 3.6.

          As a second alternative, any time prior to twelve months prior to 
termination of service the Executive may instead elect to receive, subject to
the provisions of Sections 3.10, 3.11 and 3.13, a lump sum termination benefit
instead of an Incentive Benefit for a Contribution Unit within thirty (30) days
following his termination of service. If an Executive so elects, for each
Contribution Unit in which the Executive has participated for at least five
years the Company shall pay, subject to the provisions of Sections 3.10, 3.11
and 3.13, to the Executive, within thirty (30) days following his termination of
service, a lump sum equal to the amounts of his prior contributions pursuant to
Schedule A of his Agreement, plus

                                     -12-

<PAGE>
 
interest thereon credited at the rate of six percent (6%) per annum from the 
date each contribution was made and compounded annually. 

          If the Executive dies before he has received his lump sum termination 
benefit, the Executive's right to a lump sum benefit will cease, and the Company
shall pay to the Executive's Beneficiary a lump sum Survivor's Benefit pursuant
to Section 3.6.

          3.4  Survivor's Benefit.  If the Executive dies while in service with 
               ------------------
the Company and a participant in the Plan before reaching age 50, for each
Contribution Unit of the Executive the Company shall pay to the Executive's
Beneficiary in equal monthly installments commencing on the first day of the
month after the Executive's death and receipt of required documentation, one-
twelfth of the amount per annum specified as the Survivor's Benefit in the
Executive's Agreement for the Contribution Unit (the "Survivor's Benefit") until
the Executive would have attained age 65. If the Executive dies while in service
with the Company and a participant in the Plan after reaching age 50, for each
Contribution Unit of the Executive the Company shall pay to the Executive's
Beneficiary in equal monthly installments commencing on the first day of the
month after the Executive's death and receipt of required documentation, one-
twelfth of the amount per annum specified as the Survivor's Benefit in the
Executive's Agreement for the Contribution Unit (the "Survivor's Benefit") for
180 months. In lieu of such monthly payments, the Committee may determine, in
its sole discretion, to make an

                                     -13-

<PAGE>
 
equivalent present-value lump sum payment to the Beneficiary. In such case, the 
Committee shall determine the present-value lump sum payment using such discount
rate as the Committee may determine, provided that such rate will not be greater
than 120 percent (120%) of the long-term Applicable Federal Rate.

          3.5  Post-Retirement Survivor's Benefit.
               ----------------------------------

               (a)  If an Executive who is receiving or is entitled to receive a
Normal Retirement Benefit for a Completed Contribution Unit dies after his 
Normal Retirement Date, the Company shall pay, subject to the provisions of 
Sections 3.10 and 3.11, to his Beneficiary, for each such Completed Contribution
Unit of the Executive, the remaining monthly Normal Retirement Benefit payments,
if any, that would have been paid to the Executive if the Executive had survived
until he received 180 monthly Normal Retirement Benefit payments. The 
Beneficiary's monthly benefit payments will commence on the first day of the 
month following the date of the Executive's death and receipt of required 
documentation. After completion of the remainder of 180 monthly Normal 
Retirement Benefit payments to the Executive's Beneficiary, the Executive's 
spouse at the time of the Executive's death, if any, shall be entitled, subject 
to the provisions of Sections 3.10 and 3.11, to receive fifty percent (50%) of 
the monthly Normal Retirement Benefit payments, which were payable to the 
Executive commencing on the first day of the month after the Executive's death, 
payable monthly during the remaining lifetime of the spouse, subject to an 
actuarial adjustment (based on annuity rates selected by the Committee) if 

                                     -14-

<PAGE>
 
the spouse is more than three years younger than the Executive. In lieu of such 
monthly benefit payments, the Committee may determine, in its sole discretion, 
to make an equivalent present-value lump sum payment to the Beneficiary and/or 
an actuarially determined equivalent lump sum payment to the spouse. The 
Committee shall determine the present-value lump sum payment to the Beneficiary 
using such discount rate as the Committee may determine, provided that such rate
will not be greater than 120 percent (120%) of the long-term Applicable Federal 
Rate and shall determine the actuarial equivalent lump sum payment to the spouse
using mortality tables and annuity rates selected by the Committee.

               (b)  If an Executive who is receiving or is entitled to receive 
an Early Retirement Benefit for a Completed Contribution Unit dies after his 
Early Retirement Date, the Company shall pay, subject to the provisions of 
Sections 3.10 and 3.11, to his Beneficiary, for each such Completed Contribution
Unit of the Executive, the remaining monthly Early Retirement Benefit payments, 
if any, that would have been paid to the Executive if the Executive had survived
until he received 180 monthly Early Retirement Benefit payments. The 
Beneficiary's monthly benefit payments will commence on the first day of the 
month following the date of the Executive's death and receipt of required 
documentation. In lieu of such monthly payments, the Committee may determine, in
its sole discretion, to make an equivalent present-value lump sum payment to the
Beneficiary. In such case, the Committee shall determine the present-value lump

                                     -15-

<PAGE>
 
sum payment using such discount rate as the Committee may determine, provided 
that such rate will not be greater than 120 percent (120%) of the long-term 
Applicable Federal Rate.

          3.6  Post-Termination Survivor Benefits. If an Executive is eligible 
               ----------------------------------
for an Incentive Benefit for a Contribution Unit at the time of his death 
following termination of service, the Company shall pay, subject to the 
provisions of Sections 3.10 and 3.11, to his Beneficiary, for each such 
Contribution Unit of the Executive, the same benefits that the Executive would 
have received had he lived. Unless the Executive made an election prior to 
termination of service under Section 3.3 to receive a lump sum termination 
benefit in lieu of an Incentive Benefit, the Beneficiary's monthly payments will
commence on the first day of the month following the date of the Executive's 
death and receipt of required documentation. In lieu of such monthly payments, 
the Committee may determine, in its sole discretion, to make an equivalent 
present-value lump sum payment to the Beneficiary. In such case, the Committee 
shall determine the present-value lump sum payment using such discount rate as 
the Committee may determine, provided that such rate will not be greater than 
120 percent (120%) of the long-term Applicable Federal Rate. 

          If the Executive made an election prior to termination of service to 
receive a lump sum termination benefit in lieu of an Incentive Benefit for a 
Contribution Unit, the Company shall pay, subject to the provisions of Sections 
3.10 and 3.11, to the Beneficiary, within thirty (30) days following the 
Executive's death and receipt of required documentation, a lump sum equal to 

                                     -16-

<PAGE>
 
the amounts of the Executive's prior contributions pursuant to Schedule A of the
Executive's Agreement, plus interest thereon credited at the rate of six percent
(6%) per annum commencing from the date each contribution was made and
compounded annually.

          If an Executive is not at least eligible for an Incentive Benefit for 
a Contribution Unit under Section 3.3 at the time of his death following 
termination of service, his Beneficiary will not receive a Survivor's Benefit 
for such Contribution Unit, except pursuant to Section 3.8.

          3.7  Disability Benefit. If the Company is able to obtain a long term
               -------------------
disability insurance policy which is in effect to provide Disability Benefits
for the Executive under the Plan, Disability Benefits will be payable to the
Executive. However, Disability Benefits are only payable with respect to an
Executive's Initial Contribution Unit. There are no Disability Benefits
associated with additional Contribution Units. Under the Initial Contribution
Unit, if an Executive has a termination of service due to a Disability (as
defined in Section 1.12) which results from a bodily injury sustained or
sickness which first manifests itself while his Agreement is in effect, the
Company shall pay to the Executive in equal monthly installments, commencing on
the first day of the month after the Executive has been disabled for a period of
six consecutive months, an amount equal to one-twelfth of the amount per annum
specified as the Disability Benefit in his Agreement for the Initial
Contribution Unit (the "Disability Benefit") until the Executive ceases to be
                                     -17-

<PAGE>
 
totally and continuously disabled, or if earlier, reaches the later of (i) age 
of sixty-five, or (ii) as follows:


Total Disability Starting                                   Payment 
- -------------------------                                   -------
Before age 61                                              To age 65
At age 61 but before age 62                                48 months
At age 62 but before age 63                                42 months
At age 63 but before age 64                                36 months
At age 64 but before age 65                                30 months
After age 65 but before age 75                             24 months
At or after age 75                                         12 months


          However, the Disability Benefits described above for the Initial 
Contribution Unit will only be payable if the Company obtains a long term 
disability insurance policy which is in effect to provide such Disability 
Benefits, and any Disability Benefits payable under this Plan will be limited to
the disability benefits payable under such a long term disability insurance 
policy which covers the Executive.

          An Executive will continue to be eligible for all Normal Retirement 
Benefits and Survivor Benefits, pursuant to Sections 3.1, 3.4 and 3.5, for all
Completed Contribution Units during the period of the Executive's Disability. If
the Executive's Disability occurs before he completes eight years of
participation in a Contribution Unit, he may continue to make contributions
equal to the amount specified in Schedule A of the Agreement for the remainder
of such eight years to complete the

                                     -18-















<PAGE>
 
Contribution Unit. For the purposes of completing the eight year participation 
(service with the Company) requirement for a Contribution Unit, years of 
Disability will count as years of participation in a Contribution Unit. An 
Executive will continue to be eligible for Survivor Benefits pursuant to 
Sections 3.4 and 3.5 with respect to a Contribution Unit if the Executive is in
the process of continuing to make contributions to complete the Contribution
Unit at the time of his death.

          Retirement benefits for Completed Contribution Units will commence at 
age 65 or when Disability Benefits cease, if later. For purposes of this Section
3.7, eligibility for retirement and survivor benefits for incomplete 
Contribution Units will terminate when the Executive ceases to be disabled, 
unless the Executive returns to service with the Company within 60 days after 
ceasing to be disabled. If an Executive does not return to active employment
with the Company within 60 days after ceasing to be disabled, his Contribution
Units shall be paid out as of the date his Disability ceases under the Incentive
Benefit or Termination Benefit provisions, pursuant to Sections 3.3 and 3.8,
respectively. In its sole discretion, the Committee may reinstate an Executive's
eligibility for retirement or survivor benefits for an Executive who does not
return to service with the Company within 60 days after his Disability ceases.

          Any incomplete Contribution Units will be paid out, depending on the 
Executive's years of participation in such Contribution Unit, under the 
Incentive Benefit or Termination Benefit provisions, pursuant to Section 3.3 
and 3.8,

                                     -19-


























<PAGE>
 
respectively, beginning when the Incentive Benefit or Termination Benefit would 
normally commence or when the Executive ceases to continue to make contributions
for the Contribution Unit, if later. Survivor benefits for incomplete 
Contribution Units will be limited to the post-termination survivor benefits, if
any, which are payable pursuant to Sections 3.6 and 3.8, except for an Executive
who is in the process of continuing to make contributions to complete a 
Contribution Unit at the time of his death.

     3.8  Termination Benefit. Except as provided in Sections 3.2, 3.3, 3.4, 
          -------------------
3.5, 3.6, and 3.7, following any termination of service of the Executive before 
he attains age 65 or, if later, completes eight years of service with the 
Company while enrolled in a Contribution Unit, for each such Contribution Unit 
the Company shall pay,  subject to the provisions of Section 3.13, to the 
Executive, depending on the Executive's years of participation in each 
Contribution Unit, a lump sum equal to the amount set forth below (the 
"Termination Benefit"):

     (i)  If an Executive terminates service during the first year of a
          Contribution Unit, his lump sum payment will be an amount equal to the
          amounts of his contributions pursuant to Schedule A of his Agreement,
          without interest.

     (ii) If an Executive terminates service during the second or third year of
          participation in a Contribution Unit, his lump sum payment will be an
          amount equal to the amounts of his contributions

                                     -20-

<PAGE>
 
             pursuant to Schedule A of his Agreement, plus interest thereon
             credited at the rate of six percent (6%) per annum commencing from
             the date each contribution was made after the beginning of the
             second year of the Contribution Unit and compounded annually, to
             the date of termination.

     (iii)   If an Executive terminates service during the fourth or fifth year
             of participation in a Contribution Unit, his lump sum payment will
             be an amount equal to the amounts of his contributions pursuant to
             Schedule A of his Agreement, plus interest thereon credited at the
             rate of six percent (6%) per annum commencing from the date each
             contribution was made and compounded annually, to the date of
             termination.

     (iv)    If an Executive terminates service after the fifth year of
             participation in a Contribution Unit, he is eligible for an
             Incentive Benefit as provided in Section 3.3 of this Plan.

     For purposes of this Section 3.8, all payments shall be made within ninety 
(90) days following the Executive's termination of service, except as otherwise 
provided in Section 3.13. If the Executive dies prior to receiving such 
payments, such payments will be made to the Executive's Beneficiary.

     Notwithstanding any other provision of the Plan, upon any termination of 
the Executive's participation in a Contribution Unit under the Plan while the 
Executive continues in 

                                     -21-

<PAGE>
 
the service of the Company, the Executive shall immediately cease to be eligible
for any other benefits under the Plan with respect to the Contribution Unit and 
shall only be entitled to receive his Termination Benefit following his 
termination of service with the Company. In its sole discretion, the Committee 
may pay the Termination Benefit to the Executive on an earlier date at any time 
subsequent to his termination of participation in the Contribution Unit.

     3.9  Emergency Benefit.  In the event that the Committee, upon the written 
          -----------------
petition of the Executive, determines, in its sole discretion, that the 
Executive has suffered an unforeseeable financial emergency, the Company shall 
pay to the Executive, as soon as practicable following such determination, an 
amount necessary to meet the emergency not in excess of the Termination Benefit
for one or more Contribution Units to which the Executive would have been
entitled pursuant to Section 3.8 if he had a termination of service on the date
of such determination (the "Emergency Benefit"). For purposes of this Plan, an
unforeseeable financial emergency is an unexpected need for cash arising from an
illness, casualty loss, sudden financial reversal, or other such unforeseeable
occurrence. Cash needs arising from foreseeable events such as the purchase of a
house or education expenses for children shall not be considered to be the
result of an unforeseeable financial emergency. The amount of the Executive's
benefit for a Contribution Unit otherwise payable under Section 3.1, 3.2, 3.3,
3.4, 3.5, 3.6, 3.7

                                     -22-

<PAGE>
 
or 3.8 shall thereafter be reduced, as determined by the Committee, to reflect 
the early payment of the Emergency Benefit. 

     3.10  Non-Compete Provisions.  If an Executive becomes employed as an 
           ----------------------
executive search consultant or obtains employment in any capacity for any other 
executive search firm within two years after the date of his termination of 
service with the Company, the Executive (or his Beneficiary following the
Executive's death) will forfeit any Early Retirement Benefit or Incentive
Benefit to which he is entitled to under the Plan (and any post-retirement or
post-termination survivor benefit, except pursuant to Section 3.8, which would
otherwise be payable to his Beneficiary, if applicable), and no interest will be
credited to his account balance for Contribution Units after the Executive's
termination of service. The Executive (or his Beneficiary following the
Executive's death) will be reimbursed within three years from the date payments
would otherwise have been made in a lump sum payment for his contributions for
each Contribution Unit for which he was otherwise entitled to receive an Early
Retirement Benefit or Incentive Benefit under this Plan, plus interest thereon
credited at the rate of six percent (6%) per annum through the date of the
Executive's termination of service less any Early Retirement Benefit or
Incentive Benefit payments that may have been paid to the Executive prior to his
violation of the non-compete provisions of this Section 3.10. In addition, any
excess Early Retirement Benefit or Incentive Benefit

                                     -23-

<PAGE>
 
payments that may have been paid to the Executive for a Contribution Unit prior 
to such violation may be subtracted from the remaining amounts payable to the 
Executive for any of his Contribution Units.

          3.11 Termination For Cause. If an Executive is terminated for cause,
               ---------------------
the Executive (or his Beneficiary or his spouse, if applicable, following the
Executive's death) will forfeit any Normal Retirement Benefit, Early Retirement
Benefit or Incentive Benefit to which he is entitled to under the Plan (and any
post-retirement or post-termination survivor benefit, except pursuant to Section
3.8, which would otherwise be payable to his Beneficiary or his spouse, if
applicable), and no interest will be credited to his account balance for
Contribution Units after the Executive's termination for cause. Notwithstanding
any date of retirement or voluntary termination by the Executive, if the Company
notifies the Executive that he is being terminated for cause within 90 days of
such date of retirement or voluntary termination by the Executive, the Executive
shall be considered terminated for cause for purposes of this Plan. The
Executive (or his Beneficiary following the Executive's death) will be
reimbursed within three years from the date payments would otherwise have been
made in a lump sum payment for his contributions for each Contribution Unit for
which he was otherwise entitled to receive a Normal Retirement Benefit, Early
Retirement Benefit or Incentive Benefit under this Plan, plus interest thereon
credited at the rate of six percent (6%) per annum through the date of the
Executive's termination for cause.

                                     -24-

<PAGE>
 
          3.12  Recipients of Payments; Designation of Beneficiary.   All 
                --------------------------------------------------
payments to be made under the Plan shall be made to the Executive during his
lifetime, provided that if the Executive dies prior to the completion of such
payments, then all subsequent payments under the Plan (other than any payment to
the Executive's spouse under Section 3.5 (a)) shall be made by the Company to
the Beneficiary or Beneficiaries determined in accordance with this Section
3.12. The Executive may designate a Beneficiary or Beneficiaries by filing a
written notice of such designation with the Committee. The Executive may from
time to time change the designated Beneficiary or Beneficiaries without the
consent of such Beneficiary or Beneficiaries by filing a new designation in
writing with the Committee. The spouse of a married Executive must consent in
writing to any designation of a Beneficiary or Beneficiaries other than the
spouse, and any designation of a Beneficiary by a married Executive other than
the spouse of such Executive will be null and void without the written consent
of the spouse in the form required by the Company. A subsequent marriage or
divorce of the Executive prior to commencement of any benefit payments shall
revoke all prior designations of a Beneficiary. If no designation shall be in
effect at the time when any benefits payable under this Plan shall become due,
the Beneficiary shall be the spouse of the Executive, or if no spouse is then
living, the representatives of the Executive's estate.

          3.13  Deferral of Payment.    The Committee may, in its sole 
                -------------------
discretion, defer the payment of any benefit provided for by

                                     -25-



<PAGE>
 
Sections 3.1, 3.2, 3.3, and 3.8 to a date other than those provided for in such 
Sections, provided, however, that any such payment shall be made, in all events,
          --------  -------
no later than three (3) years following the date of payment otherwise provided 
for in such Sections unless the Executive consents to a later payment. In the 
event that a payment is deferred pursuant to this Section 3.13, the amount 
payable shall be increased by an amount equal to interest on such amount from 
the date otherwise payable to the date of payment, compounded annually, at an 
annual rate equal to the lowest rate of interest charged from time to time by 
Bank of America (i.e., the lowest rate of interest charged to its most 
creditworthy commercial borrowers on unsecured loans maturing in ninety (90) 
days or less).

          This Section 3.13 shall not apply, and no payments shall be deferred 
hereunder, in the event of termination of the Plan or termination of service of 
an Executive within three (3) years following a "Change of Control" of the 
Parent Company. For this purpose a "Change of Control" shall mean (i) the sale 
or other transfer of 50% or more of the voting stock of the Parent Company,
other than to (a) shareholders of the Parent Company, (b) a pension, profit-
sharing, stock bonus or similar plan established for the benefit of employees of
the Company or (c) an entity in which the former shareholders of the Parent
Company hold 50% or more of the value of the outstanding stock; (ii) a merger,
consolidation, business combination or other reorganization of the Company in
which the former shareholders of the Parent Company hold less than 50% of the
value of the

                                     -26-


<PAGE>
 
outstanding stock of the surviving corporation; or (iii) the sale or other 
transfer of all or substantially all of the assets of the Parent Company, other 
than to (a) shareholders of the Parent Company, (b) a pension, profit-sharing, 
stock bonus or similar plan established for the benefit of employees of the 
Company or (c) an entity in which the former shareholders of the Parent Company 
hold 50% or more of the value of the outstanding stock. For the purposes of this
Section 3.13, the "Parent Company" shall mean Korn/Ferry International.

          3.14 Election to Defer Payment. With the consent of the Committee, in 
               -------------------------
its sole discretion, an Executive may elect any time prior to twelve months 
prior to his termination of service to defer payment of any benefits provided 
for by the Plan, with payments to be increased, as determined by the Committee, 
to reflect the later commencement date.

          3.15 Withholding; Employment Taxes. To the extent required by the law 
               -----------------------------
in effect at the time payments are made, the Company shall withhold any taxes 
required to be withheld by the federal or any state, local or foreign government
from payments made hereunder.

          3.16 Approved Leave of Absence. If an Executive is absent from service
               -------------------------
by reason of a leave of absence for a specified period of time which is formally
approved in writing by the Committee, no contributions shall be made by the 
Executive during the approved leave of absence. If an Executive returns to 
service with the Company within thirty (30) days following the end of the 
specified period of the approved leave of absence, the

                                     -27-

<PAGE>
 
Executive shall resume making contributions in the annual amounts which the 
Executive previously elected until contributions are completed.

          During any approved leave of absence, interest shall continue to be 
credited for purposes of computing any Termination Benefit payable pursuant to 
Section 3.8, and the Executive shall continue to be eligible for the Survivor's 
Benefit payable pursuant to Section 3.4. An approved leave of absence shall not 
constitute a termination of service or break in continuous service unless the 
Executive fails to return to service with the Company within thirty (30) days 
following the end of the specified period of the approved leave of absence.

          The period of such approved leave of absence shall normally not be 
counted as years of service with the Company or years of participation in the 
Plan, but shall not cause a break in consecutive years of participation in the 
Plan; however, the Committee, in its sole discretion, may determine to count 
such period as years of service with the Company and years of participation in 
the Plan, provided all contributions have been completed prior to commencement 
of the approved leave of absence.

                                        IV

                           CONDITIONS RELATED TO BENEFITS

          4.1  Administration of Plan.
               ----------------------

               (a)  The Board of Directors of the Company (the "Board") shall 
appoint an Administrative Committee consisting of

                                       -28-

<PAGE>
 
three or more persons to administer the Plan and to interpret and apply its 
provisions in accordance with its terms.  The Committee shall select the 
Executives who are eligible to participate in the Plan.  A member of the 
Committee shall not vote or act upon any matter which relates solely to such 
member as an Executive.  In the absence of the appointment of an Administrative 
Committee, references herein to the Committee shall mean the Board of Directors 
of the Company.  If the Employee Retirement Income Security Act of 1974 
("ERISA") applies to this Plan, the Committee shall be the Plan "Administrator" 
(as such term is defined in Section 3(16)(A) of ERISA).

          (b)  The right of any Executive or Beneficiary to receive a benefit 
hereunder and the amount of such benefit shall be determined in accordance with 
the procedures for determination of benefit claims established and maintained by
the Committee, which shall be in compliance with requirements of Section 503 of 
ERISA if ERISA applies to this Plan.

     4.2  Rights on Termination of Service.  Except as expressly provided in 
          --------------------------------
this Plan, the Company shall not be required or be liable to make any payment 
under this Plan subsequent to the termination of service of the Executive.

     4.3  No Right to Company Assets.  Neither the Executive nor any other 
          --------------------------
person shall acquire by reason of the Plan or an Agreement any right in or title
to any assets, funds or property of the Company whatsoever including, without 
limiting the generality of the foregoing, any specific funds or assets which the
Company, in its sole discretion, may set aside in

                                     -29-

<PAGE>
 
anticipation of a liability hereunder, nor in or to any policy or policies of 
insurance on the life of the Executive owned by the Company.  No trust shall be 
created in connection with or by the execution or adoption of this Plan or an 
Agreement, and any benefits which become payable hereunder, if payable by the 
Company, shall be paid from the general assets of the Company.  The Executive 
shall have only a contractual right to the amounts, if any, payable hereunder 
unsecured by any asset of the Company.

     4.4  No Employment Rights.  Nothing herein shall constitute a contract of 
          --------------------
continuing service or in any manner obligate the Company to continue the 
services of the Executive, or obligate the Executive to continue in the service 
of the Company, and nothing herein shall be construed as fixing or regulating 
the bonuses or other compensation payable to the Executive.

     4.5  Company's Right to Terminate.  The Board reserves the sole right to 
          ----------------------------
terminate the Plan and/or any Agreement pertaining to the Executive at any time 
prior to the commencement of payment of his benefits.  In the event of any such 
termination, the Executive shall be entitled to the amount specified in Section 
3.8 of this Plan at the time of termination of the Plan and/or his Agreement.  
In addition, the Board may, at any time in its complete and sole discretion 
amend the Plan or an Agreement in whole or in part, provided that no such 
amendment may deprive Executives or Beneficiaries of benefits which have accrued
prior to such amendment.

                                     -30-

<PAGE>
 
          4.6  Protective Provisions. The Executive will cooperate with the 
               ---------------------
Company by furnishing any and all information requested by the Company, in order
to facilitate the payment of benefits hereunder, taking such physical
examinations as the Company may deem necessary and taking such other actions as
may be requested by the Company. If the Executive refuses to cooperate, the
Company shall have no further obligation to the Executive or his Beneficiary
under the Plan or his Agreement. In the event of the Executive's suicide during
the first two years of his Agreement for a Contribution Unit or if the Executive
makes any material misstatement of information or nondisclosure of medical
history, then no benefits will be payable to the Executive under the Plan or his
Agreement for the Contribution Unit, or in the Company's sole discretion,
benefits may be payable in a reduced amount.

          4.7  Offset. If at the time payments or installments of payments are
               ------
to be made hereunder the Executive or the Beneficiary or both are indebted or
obligated to the Company, then the payments remaining to be made to the
Executive or the Beneficiary or both may, at the discretion of the Company, be
reduced by the amount of such indebtedness or obligation, provided, however,
that an election by the Company not to reduce any such payment or payments shall
not constitute a waiver of its claim for such indebtedness or obligation.

          4.8  Arbitration. Any controversy or claim arising out of or relating 
               -----------
to this Plan or an Agreement, or the breach thereof, shall be settled by 
arbitration in accordance with the 

                                     -31-








<PAGE>
 
Employment Dispute Resolution Rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator(s) may be entered in any 
court having jurisdiction thereof. The arbitration shall occur in Los Angeles, 
California. The fees and expenses of any arbitration shall be awarded by the 
arbitrator(s).

                                       V

                                 MISCELLANEOUS

          5.1  Nonassignability. Neither the Executive nor any other person 
               ----------------
shall have any right to commute, sell, assign, pledge, anticipate, mortgage or 
otherwise encumber, transfer, hypothecate or convey in advance of actual receipt
the amounts, if any, payable hereunder, or any part thereof, which are, and all
rights to which are, expressly declared to be unassignable and non-transferable.
No part of the amounts payable shall, prior to actual payment, be subject to 
seizure or sequestration for the payment of any debts, judgments, alimony or 
separate maintenance owed by the Executive or any other person, or be 
transferable by operation of law in the event of the Executive's or any other 
person's bankruptcy or insolvency.

          5.2  Gender and Number. Wherever appropriate herein, the masculine may
               -----------------
mean the feminine and the singular may mean the plural or vice versa.

          5.3  Trust Fund. The Company shall be responsible for the payment of 
               ----------
all benefits provided under the Plan. At its

                                     -32-

<PAGE>
 
discretion, the Company may establish one or more trusts, with such trustees as
the Board of Directors or the Committee may approve, for the purpose of
providing for the payment of such benefits. Such trust or trusts may be
irrevocable, but the assets thereof shall be subject to the claims of the
Company's creditors. To the extent any benefits provided under the Plan are
actually paid from any such trust, the Company shall have no further obligation
with respect thereto, but to the extent not so paid, such benefits shall remain
the obligation of, and shall be paid by, the Company.

          5.4  Notice. Any notice or election required or permitted to be given 
               ------
under the Plan shall be sufficient if in writing and hand delivered, or sent by 
registered or certified mail, and if given to the Company, delivered to the 
principal office of the Company, directed to the attention of the President of 
the Company. Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark or the receipt 
for registration or certification. 

          5.5  Not ERISA Plan. The Company intends that this Plan is not covered
               --------------
by Title I of the Employee Retirement Income Security Act of 1974 ("ERISA") 
because the Plan is maintained outside of the United States primarily for the 
benefit of persons substantially all of whom are nonresident aliens of the 
United States. However, if ERISA applies to the Plan, the Company is the "named 
fiduciary" of the Plan for purposes of Section 402(a)(2) of ERISA, and the 
Plan is intended to be "unfunded" and maintained "primarily for the purpose of 
providing deferred 

                                     -33-

<PAGE>
 
compensation for a select group of management of highly compensated employees" 
for purposes of ERISA, and as such is intended not to be covered by Parts 2 
through 4 of Subtitle B of Title I of ERISA (relating to participation and 
vesting, funding and fiduciary responsibility).

          5.6  Applicable Law. This Plan shall be construed, regulated and 
               --------------
administered in accordance with the laws of the State of California, except 
insofar as state law is preempted by ERISA if ERISA applies.

                                       VI

               DISCLAIMER OF RESPONSIBILITY FOR TAX CONSEQUENCES

          The Company assumes no responsibility, and does not purport to in any 
way advise or counsel as to the tax consequences and/or liabilities, if any, or 
the effect on any benefits similar to United States Social Security benefits, if
any, as a result of the provisions of this Plan. Executives and Beneficiaries 
must look solely to their own tax and legal advisers for such advice and 
counsel.

                                      -34-

<PAGE>
 
          IN WITNESS WHEREOF, the Company has adopted this KORN/FERRY
INTERNATIONAL ENHANCED EXECUTIVE BENEFIT AND WEALTH ACCUMULATION PLAN FOR
INTERNATIONAL EXECUTIVES on January 1st, 1994, effective as of January 1st,
1994.
                                             KORN/FERRY INTERNATIONAL

                                             By /s/ Peter L. Dunn 
                                                -----------------

                                             Its_________________

Attest:

/s/ Kristine E. Key
- -------------------
Title:

                                     -35-



<PAGE>
 
                                                        Exhibit 10.7
                                                        (domestic version, which
                                                        is the same as the
                                                        international version in
                                                        all material respects)




                           KORN/FERRY INTERNATIONAL

                        SENIOR EXECUTIVE INCENTIVE PLAN

                             FOR U.S. EXECUTIVES

<PAGE>
 
                                  KORN/FERRY

                        SENIOR EXECUTIVE INCENTIVE PLAN

                              FOR U.S. EXECUTIVES

          The purpose of this KORN/FERRY SENIOR EXECUTIVE INCENTIVE PLAN FOR
U.S. EXECUTIVES (the "Plan") is to provide a further means whereby
KORN/FERRY INTERNATIONAL (the "Parent Company") and its subsidiary and
affiliated companies (together the "Company") may afford additional financial
security to a select group of senior Executives who have been selected to
participate in the Plan by the Parent Company's Board of Directors and who have
rendered and continue to render valuable service to the Company, constituting an
important contribution toward its continued growth and success. The Plan is
designed to provide additional future compensation to the selected Executives so
that they may be retained and their productive efforts encouraged.


                                       I

                      DEFINITIONS AND CERTAIN PROVISIONS


          1.1  "Agreement" means the written agreement (substantially in the
form attached to this Plan) entered into between the Company and the Executive
to carry out the Plan with respect
 to such Executive.

          1.2  An "Executive" means any corporate Vice President or other
officer of the Company (or a subsidiary or affiliated

<PAGE>
 
company) who is designated as an "Executive" by the Company and has been
selected to participate in the Plan by the Parent Company's Board of Directors
and enters into an Agreement.

          1.3  "Service" means continuous full-time or substantially full-time
service with the Company as an employee.

          1.4  A "year of service" means a complete year of continuous, full-
time service with the Company. A "year" is a period of 12 consecutive calendar
months.

          1.5  A "Benefit Unit" means a unit enrolled in by an Executive
pursuant to Article II providing the benefits described in Article III.

          1.6  "Normal Benefit Date" means the January 1st which is ten (10)
years after the commencement of deferrals by the Executive with respect to a
Benefit Unit.

          1.7  "Termination of service" means the Executive's ceasing his
service with the Company for any reason whatsoever, whether voluntarily or
involuntarily, including by reason of death or disability.

          1.8  "Disability" means a condition that totally and continuously
prevents the Executive, for at least six consecutive

                                      -2-

<PAGE>
 
months, from engaging in an "occupation" for compensation or profit. During the
first 24 months of total disability, "occupation" means the Executive's
occupation at the time the disability began. After that period, "occupation"
means any occupation for which the Executive is or becomes reasonably fitted by
education, training or experience. Notwithstanding the foregoing, a disability
shall not exist for purposes of this Plan if the Executive fails to qualify for
disability benefits under the Social Security Act, unless the Committee
determines, in its sole discretion, that a disability exists.

          1.9   "Committee" means the Administrative Committee appointed to
manage and administer the Plan pursuant to Section 4.1.

          1.10  "Beneficiary" means the person or persons designated by an
Executive pursuant to Section 3.7.

          1.11  "Moody's" means with respect to any Plan Year the Moody's Long
Term Corporate Bond Index-Monthly Average Corporates as published by Moody's
Investor's Service, Inc. (or any successor thereto) for the month of July before
the Plan Year in question, or, if such yield is no longer published, a
substantially similar average selected by the Committee. Whenever the Moody's
rate is applicable in crediting interest,

                                      -3-

<PAGE>
 
interest shall be credited for each Plan Year using the separate Moody's rates
which are applicable for each Plan Year.

          1.12 "Plan Year" means the calendar year.

          1.13 References to an Executive's or Beneficiary's age are to his or
her chronological age.


                                      II

        ELIGIBILITY TO PARTICIPATE AND EXECUTIVE COMPENSATION REDUCTION


          2.1  Eligibility to Participate. Eligibility to participate in this
               --------------------------                                    
Plan will be at the sole discretion of the Parent Company's Board of Directors.
The Board of Directors will select the Executives who are eligible to
participate in the Plan and determine the number of Benefit Units (or fraction
of a Benefit Unit) which each Executive is eligible to receive. In order to
participate in this Plan, an Executive must now be participating in or have
elected to participate in the Company's Executive Benefit and Wealth
Accumulation Plan, unless waived by the Committee in its sole discretion.

          2.2  Executive's Compensation Reduction. Each Executive shall execute 
               --------------------------------
an Agreement with respect to his Benefit Unit(s) (and/or fraction of a Benefit
Unit) and irrevocably elect to reduce the amount of his compensation otherwise 
earned and

                                      -4-

<PAGE>
 
payable on or after the date on which his election is made, in the amounts and
with respect to the years specified in Paragraph 3 of the Agreement, in order to
participate in the Plan. An Executive may elect to accelerate his deferrals at
such times and in such manner as the Committee may permit in its sole
discretion, but may not increase his total deferrals. Any such acceleration
shall not result in any change in the benefits payable under the Plan. Any
election to accelerate deferrals shall be irrevocable and shall only reduce the
amount of compensation earned and payable on or after the date on which the
election is made.


                                      III

                                   BENEFITS


     3.1  Incentive Benefit.
          ----------------- 

          (a) Payment Commencing on Normal Benefit Date. Subject to the
              -----------------------------------------                
Executive's continuation of service until his Normal Benefit Date, the Company
shall pay to the Executive in equal monthly installments commencing on his
Normal Benefit Date, as compensation earned for services rendered prior to such
date, one-twelfth of the amount per annum specified in Paragraph 4 of the
Agreement for fifteen years (the "Incentive Benefit").

          (b) Deferred Payment of Incentive Benefit. With the consent of the
              -------------------------------------                         
Committee, an Executive may elect to have his Incentive Benefit payments
commence on any January 1st subsequent 

                                      -5-

<PAGE>
 
to his Normal Benefit Date, but not later than his retirement or attainment of
age 65, whichever is later. Such election may be made at such time and in such
manner as the Committee may permit in its sole discretion. In such event the
Incentive Benefit payments (and continuation of Incentive Benefits) shall be
actuarially increased as determined by the Committee to reflect the later date
of commencement of the Incentive Benefit payments.

          (c) Early Payment of Incentive Benefit. With the consent of the
              ----------------------------------                         
Committee, an Executive may elect to have his Incentive Benefit payments with
respect to a Benefit Unit commence prior to his Normal Benefit Date if he has
(1) retired from the Company after attaining age 65, (2) completed deferrals for
such Benefit Unit and (3) completed at least four years of service after
enrolling in such Benefit Unit. Such election may be made at such time and in
such manner as the Committee may permit in its sole discretion.

          All payments of Incentive Benefits (and continuation of Incentive
Benefits) which commence prior to the Normal Benefit Date shall be reduced on
account of such early payment. Such payments shall be reduced by one-half of one
percent (0.50%) for each month between the date when such payments commence and
the Normal Benefit Date. However, the Committee may adjust this reduction
factor, in its sole discretion, at any time when the prime rate of interest
charged by Security Pacific National Bank (i.e., the lowest rate of 

                                      -6-

<PAGE>
 
interest charged to its most creditworthy commercial borrowers on unsecured
loans maturing in ninety (90) days or less) exceeds twelve percent (12%) per
annum.

          3.2   Continuation of Incentive Benefit. If an Executive who is
                ---------------------------------                        
entitled to the Incentive Benefit dies after his Normal Benefit Date, his
Beneficiary shall be entitled to receive the remaining Incentive Benefit
payments, if any, that would have been paid to the Executive if the Executive
had survived until he received 180 monthly Incentive Benefit payments. In lieu
of such monthly payments, the Committee may determine, in its sole discretion,
to make an actuarially determined equivalent lump sum payment to the
Beneficiary.

          3.3  Disability. If the Executive has a termination of service before
               ----------                                                      
his Normal Benefit Date due to a Disability (as defined in Section 1.8), the
Executive shall be entitled to receive the Incentive Benefit for the Benefit
Unit commencing on his Normal Benefit Date (or a reduced benefit commencing at
age 65 if he would have qualified for such benefit under Section 3.1(c)). At its
sole discretion, the Committee may commence such payments at an earlier date.
The Executive shall receive the Termination Benefit under Section 3.4 with
respect to any Benefit Unit for which he has not completed his deferrals.

                                      -7-

<PAGE>
 
          3.4  Termination Benefit. Except as provided in Sections 3.1, 3.3 and
               -------------------                                             
3.5, upon any termination of service of the Executive before his Normal Benefit
Date, the Company shall pay to the Executive, as compensation earned for
services rendered prior to his termination of service, a lump sum equal to the
amounts by which his compensation has been reduced pursuant to Paragraph 3 of
the Agreement, plus interest on the aforesaid amounts at the rate per annum
specified in the next paragraph compounded annually from the dates of making
such reductions in the compensation paid to the Executive (the "Termination
Benefit"). Such payment shall be made within sixty (60) days following
termination of service.

          Interest shall be credited with respect to each Benefit Unit at a rate
per annum based on the Executive's number of years of participation in such
Benefit Unit at the time of his termination of service in accordance with the
following schedule:

          Years of Participation
              in Benefit Unit               Interest Rate
          ----------------------            -------------
                   0 - 2                        6%

                   3 - 5                        8%

                   6 - 8               Moody's (but not less than
                                           8% nor more than 12%)

                   9 - 10              Moody's + 2% (but not less
                                       than 8% nor more than 12%)

          The applicable interest rate based on the Executive's years of
participation in the Benefit Unit (i.e., 6%, 8%, Moody's (but not less than 8%
nor more than 12%), or Moody's + 2% (but 

                                      -8-

<PAGE>
 
not less than 8% nor more than 12%)) will apply on a retroactive basis for all
years of participation in the Benefit Unit. Whenever the Moody's rate is
applicable in crediting interest, interest shall be credited for each Plan Year
using the separate Moody's rates which are applicable for each Plan Year. The
Moody's rate which shall be used in crediting interest earned during any Plan
Year will be the Moody's rate for the month of July before the Plan Year in
question.

          Notwithstanding any other provision of the Plan, upon any termination
of the Executive's participation in a Benefit Unit under the Plan while the
Executive continues in the service of the Company, the Executive shall
immediately cease to be eligible for any other benefits under the Plan with
respect to such Benefit Unit and shall only be entitled to receive his
Termination Benefit at the time of his termination of service with the Company.
In its sole discretion, the Committee may pay the Termination Benefit to the
Executive on an earlier date at any time subsequent to his termination of
participation in the Benefit Unit under the Plan.

          3.5  Survivor's Benefit. If the Executive dies while in service with
               ------------------                                             
the Company before his Normal Benefit Date, the Company shall pay to the
Executive's Beneficiary in equal monthly installments commencing on the first
day of the month after the Executive's death one-twelfth of the amount per annum
specified in Paragraph 5 of the Agreement for fifteen years (the

                                      -9-

<PAGE>
 
"Survivor's Benefit"). At its sole discretion, the Committee may accelerate the
manner and time of payment of the Survivor's Benefit, which shall be actuarially
adjusted as determined by the Committee.

          3.6  Emergency Benefit. In the event that the Committee, upon the
               -----------------                                           
written petition of the Executive, determines, in its sole discretion, that the
Executive has suffered an unforeseeable financial emergency, the Company shall
pay to the Executive, as soon as practicable following such determination, the
Termination Benefit to which the Executive would have been entitled pursuant to
Section 3.4 if he had a termination of service on the date of such determination
(the "Emergency Benefit"). For purposes of this Plan, an unforeseeable financial
emergency is an unexpected need for cash arising from an illness, casualty loss,
sudden financial reversal, or other such unforeseeable occurrence. Cash needs
arising from foreseeable events such as the purchase of a house or education
expenses for children shall not be considered to be the result of an
unforeseeable financial emergency. Upon payment of an Emergency Benefit with
respect to a Benefit Unit, the Executive shall immediately cease to be eligible
for any other benefits under the Plan with respect to such Benefit Unit.

                                     -10-

<PAGE>
 
          3.7   Recipients of Payments; Designation of Beneficiary. All payments
                --------------------------------------------------              
to be made by the Company under the Plan shall be made to the Executive during
his lifetime, provided that if the Executive dies prior to the completion of
such payments, then all subsequent payments under the Plan shall be made by the
Company to the Beneficiary or Beneficiaries determined in accordance with this
Section 3.7. The Executive may designate a Beneficiary or Beneficiaries by
filing a written notice of such designation with the Committee. The Executive
may from time to time change the designated Beneficiary or Beneficiaries without
the consent of such Beneficiary or Beneficiaries by filing a new designation in
writing with the Committee. The spouse of a married Executive shall join in any
designation of a Beneficiary or Beneficiaries other than the spouse. If no
designation shall be in effect at the time when any benefits payable under this
Plan shall become due, the Beneficiary shall be the spouse of the Executive, or
if no spouse is then living, the representatives of the Executive's estate.

           3.8  Deferral of Payment. Except as provided herein, the Committee
                -------------------                                          
may, in its sole discretion, defer the payment of any benefit provided for by
Section 3.4 to a date other than those provided for in such Section, provided,
                                                                     -------- 
however, that any such payment shall be made, in all events, no later than three
- -------
(3) years following the date of payment otherwise provided for in

                                     -11-

<PAGE>
 
such Section unless the Executive consents to a later payment. In the event that
a payment is deferred pursuant to this Section 3.8, the amount payable pursuant
to Section 3.4 shall be increased by an amount equal to interest on such amount
from the date otherwise payable to the date of payment, compounded annually, at
an annual rate equal to the prime rate of interest charged from time to time by
Security Pacific National Bank (i.e., the lowest rate of interest charged to its
most creditworthy commercial borrowers on unsecured loans maturing in ninety
(90) days or less) or twelve percent (12%) per annum, whichever is less. This
Section 3.8 shall not apply, and no payments shall be deferred hereunder, in the
event of termination of the Plan or termination of service within three (3)
years following a "Change of Control" of the Parent Company. For this purpose a
"Change of Control" shall mean (i) the sale or other transfer of 50% or more of
the voting stock of the Parent Company, (ii) a merger, consolidation, business
combination or other reorganization of the Company in which the former
shareholders of the Parent Company hold less than 50% of the value of the
outstanding stock of the surviving corporation, or (iii) the sale or other
transfer of all or substantially all of the assets of the Parent Company.

          3.9   Election to Defer Payment. With the consent of the Committee,
                -------------------------   
the Executive may elect to defer payment of any 

                                     -12-

<PAGE>
 
benefits provided for by the Plan, with payments to be actuarially increased as
determined by the Committee.

          3.10  Withholding; Employment Taxes. To the extent required by the law
                -----------------------------                                   
in effect at the time payments are made, the Company shall withhold any taxes
required to be withheld by the federal or any state or local government from
payments made hereunder.

          3.11  Approved Leave of Absence. If an Executive is absent from
                -------------------------
service by reason of a leave of absence for a specified period of time which is
formally approved in writing by the Committee, no deferrals shall be made by
the Executive during the approved leave of absence. If an Executive returns to
service with the Company within thirty (30) days following the end of the
specified period of the approved leave of absence, the Executive shall resume
making deferrals in the annual amounts which the Executive previously
elected until deferrals are completed for all Benefit Units.

          During any approved leave of absence, interest shall continue to be
credited for purposes of computing any Termination Benefit payable pursuant to
Section 3.4, and the Executive shall continue to be eligible for the Survivor's
Benefit payable pursuant to Section 3.5. An approved leave of absence shall not
constitute a termination of service unless the Executive fails to return to
service with the Company within thirty (30) days

                                     -13-

<PAGE>
 
following the end of the specified period of the approved leave of absence.
However, the period of such approved leave of absence shall not be counted as
years of participation in a Benefit Unit. Also, the Normal Benefit Date (as
defined in Section 1.6) shall be extended by any approved leave of absence and
shall be determined by disregarding any period of approved leave of absence in
calculating ten (10) years after commencement of deferrals with respect to a
Benefit Unit.


                                      IV

                        CONDITIONS RELATED TO BENEFITS

          4.1   Administration of Agreement. The Parent Company's Board of
                ---------------------------                               
Directors shall appoint an Administrative Committee consisting of three or more
persons to administer the Plan and to interpret and apply its provisions in
accordance with its terms. The Board of Directors shall select the Executives
who are eligible to participate in the Plan and determine the number of Benefit
Units (or fraction of a Benefit Unit) which each Executive is eligible to
receive. A member of the Committee shall not vote or act upon any matter which
relates solely to such member as an Executive. In the absence of the appointment
of an Administrative Committee, references herein to the Committee shall mean
the Board of Directors of the Parent Company.

                                     -14-

<PAGE>
 
          4.2   Rights on Termination of Service. Except as expressly provided
                --------------------------------                              
in this Plan, the Company shall not be required or be liable to make any payment
under this Plan subsequent to the termination of service of the Executive.

          4.3   No Right to Company Assets. Neither the Executive nor any other
                --------------------------                                     
person shall acquire by reason of the Plan or Agreement any right in or title to
any assets, funds or property of the Company whatsoever including, without
limiting the generality of the foregoing, any specific funds or assets which the
Company, in its sole discretion, may set aside in anticipation of a liability
hereunder, nor in or to any policy or policies of insurance on the life of the
Executive owned by the Company. No trust shall be created in connection with or
by the execution or adoption of this Plan or the Agreement, and any benefits
which become payable hereunder shall be paid from the general assets of the
Company. The Executive shall have only a contractual right to the amounts, if
any, payable hereunder unsecured by any asset of Company.

          4.4  No Employment Rights. Nothing herein shall constitute a contract
               --------------------                                            
of continuing service or in any manner obligate the Company to continue the
services of the Executive, or obligate the Executive to continue in the service
of the Company, and nothing herein shall be construed as fixing or 

                                     -15-

<PAGE>
 
regulating the bonuses or other compensation payable to the Executive.

          4.5  Company's Right to Terminate. The Company reserves the sole right
               ----------------------------                                     
to terminate the Plan and/or the Agreement pertaining to the Executive at any
time prior to the commencement of payment of his benefits. In the event of any
such termination, the Executive shall be entitled to the amount specified in
Section 3.4 of this Plan at the time of termination of the Plan and/or his
Agreement.

          4.6  Protective Provisions. The Executive will cooperate with the
               ---------------------                                       
Company by furnishing any and all information requested by the Company, in order
to facilitate the payment of benefits hereunder, taking such physical
examinations as the Company may deem necessary and taking such other actions as
may be requested by the Company. If the Executive refuses to cooperate, the
Company shall have no further obligation to the Executive under the Plan or his
Agreement. In the event of the Executive's suicide during the first two years of
his Agreement or if the Executive makes any material misstatement of information
or non-disclosure of medical history, then no benefits will be payable to the
Executive under the Plan or his Agreement, or in the Company's sole discretion,
benefits may be payable in a reduced amount.

                                     -16-

<PAGE>
 
          4.7   Offset. If at the time payments or installments of payments are
                ------                                                         
to be made hereunder the Executive or the Beneficiary or both are indebted or
obligated to the Company, then the payments remaining to be made to the
Executive or the Beneficiary or both may, at the discretion of the Company, be
reduced by the amount of such indebtedness or obligation, provided, however,
that an election by the Company not to reduce any such payment or payments shall
not constitute a waiver of its claim for such indebtedness or obligation.

          4.8   Arbitration. Any controversy or claim arising out of or relating
                -----------                                                     
to this Plan or the Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. The
arbitration shall occur in Los Angeles, California. The fees and expenses of any
arbitration shall be awarded by the arbitrator(s).

 
                                       V

                                 MISCELLANEOUS

          5.1   Nonassignability. Neither the Executive nor any other person
                ----------------                                            
shall have any right to commute, sell, assign, pledge, anticipate, mortgage or
otherwise encumber, transfer, 

                                     -17-

<PAGE>
 
hypothecate or convey in advance of actual receipt the amounts, if any, payable
hereunder, or any part thereof, which are, and all rights to which are,
expressly declared to be unassignable and non-transferable. No part of the
amounts payable shall, prior to actual payment, be subject to seizure or
sequestration for the payment of any debts, judgments, alimony or separate
maintenance owed by the Executive or any other person, or be transferable by
operation of law in the event of the Executive's or any other person's
bankruptcy or insolvency.

          5.2   Gender and Number. Wherever appropriate herein, the masculine
                -----------------                                            
may mean the feminine and the singular may mean the plural or vice versa.

          5.3   Notice. Any notice required or permitted to be given under the
                ------                                        
Plan shall be sufficient if in writing and hand delivered, or sent by registered
or certified mail, and if given to the Company, delivered to the principal
office of the Company, directed to the attention of the President of the
Company. Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark or the receipt
for registration or certification.

                                     -18-

<PAGE>
 
          IN WITNESS WHEREOF, the Company has adopted this KORN/FERRY SENIOR
EXECUTIVE INCENTIVE PLAN FOR U.S. EXECUTIVES effective on January 1,
1987.

                                                KORN/FERRY INTERNATIONAL      
                                                                              
                                                                              
                                                                              
                                                By /s/ Norman A. Glick
                                                   ----------------------------
                                                Its 
                                                    


                                                By /s/ Peter L. Dunn
                                                   ----------------------------
                                                Its 
                                                    

                                     -19-

<PAGE>
 
                                 AMENDMENT TO

                  KORN/FERRY SENIOR EXECUTIVE INCENTIVE PLAN

                              FOR U.S. EXECUTIVES


     This Amendment to the KORN/FERRY SENIOR EXECUTIVE INCENTIVE PLAN FOR U.S. 
EXECUTIVES (the "Plan") shall be effective as of January 1, 1987.


     I.  Section 3.11 of the Plan is hereby amended to read as follows:


     "3.11 Approved Leave of Absence.  If an Executive is absent from service by
           -------------------------
reason of a leave of absence for a specified period of time which is formally 
approved in writing by the Committee, no deferrals shall be made by the 
Executive during the approved leave of absence.  If an Executive returns to 
service with the Company within thirty (30) days following the end of the 
specified period of the approved leave of absence, the Executive shall resume 
making deferrals in the annual amounts which the Executive previously elected 
until deferrals are completed for all Benefit Units.

     During any approved leave of absence, interest shall continue to be
credited for purposes of computing any Termination Benefit payable pursuant to
Section 3.4, and the Executive shall continue to be eligible for the Survivor's
Benefit payable pursuant to Section 3.5. An approved leave of absence shall not
constitute a termination of service or break in continuous service unless the
Executive fails to return to service with the

                                     -20-

<PAGE>
 
Company within thirty (30) days following the end of the specified period of the
approved leave of absence.

     The period of such approved leave of absence shall normally not be counted
as years of participation in a Benefit Unit; however, the Committee, in its sole
discretion, may determine to count such period as years of participation in a
Benefit Unit, provided all deferrals with respect to the Benefit Unit have been
completed prior to commencement of the approved leave of absence. Also, the
Normal Benefit Date (as defined in Section 1.6) shall be extended by any
approved leave of absence and shall be determined by disregarding any period of
approved leave of absence in calculation ten (10) years after commencement of
deferrals with respect to a Benefit Unit, unless otherwise determined by the
Committee in its sole discretion."

     IN WITNESS WHEREOF, the Company has adopted this AMENDMENT TO KORN/FERRY 
SENIOR EXECUTIVE INCENTIVE PLAN FOR U.S. EXECUTIVES by authority of its Board of
Directors on      July 14    , 1987.
             ----------------


                                              KORN/FERRY INTERNATIONAL       
                                                                             
                                              By /s/ Richard M. Ferry        
                                                 ----------------------------
                                              Its President                  
                                                  --------------------------- 

ATTEST

/s/ Peter L. Dunn
- -------------------------
Asst Secretary

                                     -21-



<PAGE>
 
                                                                    EXHIBIT 10.8
 
                      EXECUTIVE SALARY CONTINUATION PLAN
                      ----------------------------------

ELIGIBILITY         All Vice Presidents of Korn/Ferry International
- -----------

EFFECTIVE DATE      May 1, 1974
- --------------

DESCRIPTION OF PLAN
- -------------------

                    The Executive Salary Continuation Plan will pay Korn/Ferry
                        ----------------------------------     
                    Vice Presidents a partial salary of $7,000 per year for the
                    five year period following retirement totalling $35,000 in
                                                                     ------ 
                    additional compensation to supplement Social Security and
                    the existing Profit Sharing Plan.

                    In the event of the death of a Vice President before
                    retirement, this plan provides that the Vice President's
                    family will be kept on the Korn/Ferry payroll for a ten year
                    period, paying $10,000 to the family per year, a benefit
                    which totals $100,000.

                    This Salary Continuation Plan is provided in lieu of the
                    existing Excess Group Life Insurance Plan, which provides a
                    $50,000 death benefit in the event of death before
                    retirement and has no post-retirement benefits.


SIGNIFICANCE TO PARTICIPANT
- ---------------------------

                    A.   Current Benefits
                         ---------------- 

                         Korn/Ferry Vice Presidents will no longer incur the tax
                         burden they currently realize due to the taxable income
                         (economic benefit) they now report under the Group
                         plan. This will amount to a savings of $6,735 (or $337
                         per year) in taxes for an executive who is age 45 and
                         works until retirement.


                    B.   Deferred Benefits     
                         -----------------

                         Since the Korn/Ferry Vice President will receive
                         $35,000 in cash at retirement, this entire amount is an
                         increase over the existing plan.
                         



   

<PAGE>
 
                    Assuming a 45 year old executive is in the 40% marginal tax
                    bracket ($22,000 of taxable income) he would have to earn
                    an additional $1,270 per year and invest it at 8% gross
                    rate of return in order to equal the after-tax amount of the
                    Salary Continuation benefit at retirement.

               C.   Estate and Family Benefits
                    --------------------------

                    As mentioned earlier, the executive's family will receive
                    $10,000 per year for a 10-year period in the event of death
                    before retirement.

                    The family may elect to take the commuted present value in a
                    lump sum if desired, although income tax considerations may
                    make this choice an undesirable one.

FUNDING
- -------

               Funding for this plan will be provided through insurance
               contracts purchased by and owned by Korn/Ferry International on
               the lives of participating officers. This will insure the monies
               necessary to provide the plan benefits.

VESTING
- -------

               No benefits are vested and in the event of termination before 
               retirement, no benefits will be payable.

QUALIFICATION
- -------------

               It is necessary for each participating executive to provide the
               necessary medical information to the insurance carrier for the
               insurance contracts to be issued. The existing group insurance
               plan will remain in force until the new coverage becomes
                    --------------------
               effective.

               You will be contacted directly about the necessary data.

AGREEMENTS
- ----------

               Plan specifications will be elaborated on in a separate Salary
               Continuation Agreement which you will receive shortly.

<PAGE>
 
COSTS
- -----

               The entire cost of the plan will be borne by Korn/Ferry
               International and you will have no tax liability during your
               working years.

TAXATION
- --------

               All plan benefits will be taxable income to the recipients as 
               received.

OTHER CONSIDERATIONS
- --------------------

               This Plan in no way effects the $70,000 Basic Group Life
               Insurance coverage for each Vice President which will remain in
               force. Only the Excess Group Life is being replaced.




     




<PAGE>
 
                                                                    EXHIBIT 10.9
 
                          STOCK REPURCHASE AGREEMENT

          THIS STOCK REPURCHASE AGREEMENT (the "Agreement") is entered into as
of ____________________ by and between Korn/Ferry International, a California
corporation (the "Company"), and _________________________________________, an
individual (the "Shareholder").


                                    RECITALS

          A.   The Company is a corporation duly organized and existing under
the laws of the State of California.

          B.   The Shareholder is a participant in the Korn/Ferry International 
Retirement Plan ("Retirement Plan"). It is anticipated that the Retirement Plan 
will be terminated, and that shares of the Company will be distributed to the 
Shareholder pursuant to such termination.

          C.   The Company and the Shareholder acknowledge that the shares of 
the Company to be distributed to the Shareholder pursuant to the termination of 
the Retirement Plan shall be subject to this Stock Repurchase Agreement.

          NOW, THEREFORE, in consideration of the foregoing and in consideration
of the mutual promises set forth below, the parties hereto agree as follows:

          1.   DEFINITIONS. For all purposes of this Agreement, the following
               -----------                                                   
definitions apply:

               "Book Value" means the book value of a Share, as determined in
accordance with generally accepted accounting principals applied in accordance
with the usual
 accounting practices of the Company.

               "Fiscal Year" means the fiscal year of the Company, which begins
each May 1 and ends each April 30.

               "Shares" means the shares of Company Common Stock currently
held or acquired by Shareholder in the future.

               "Value" means, for purposes of determining the price at which a
Share will be sold or purchased pursuant to this Agreement, (a) the Book Value
of such Share as of the end of the Fiscal Year immediately preceding such sale
or purchase, or (b) such other value or formula for determining value as may be
specified from time to

                                       1

<PAGE>
 
time after the date hereof in a resolution adopted by a majority of the
shareholders of the Company as the value or formula for determining Value to be
used in connection with any sales and purchases of Shares by the Company,
including, without limitation, sales and purchases pursuant to the equity plans
adopted by the Company in 1991 (the Executive Participation Program, the Foreign
Executive Participation Program and the 1991 Executive Stock Purchase Plan
(collectively referred to herein as the "Equity Plans")).

          2.   COMPLIANCE WITH AGREEMENT. Except as expressly set forth herein,
               -------------------------                                       
the Shareholder shall not sell, transfer, hypothecate, pledge or otherwise
dispose of the Shares or any interest therein held by Shareholder (a "Transfer")
without the prior written consent of the Company. Any purported Transfer not in
compliance with the terms and conditions of this Agreement shall be void and of
no force and effect. If the Shares are Transferred, in whole or part,
voluntarily or involuntarily, by operation of law or otherwise, by reason of
insolvency or bankruptcy of the Shareholder, or otherwise in violation of the
provisions of this Agreement, the recipient of any of the Shares shall not be
registered on the books of the Company and shall not be recognized as the holder
of the Shares by the Company and shall not acquire any voting, dividend or other
rights in respect thereof.

          3.   INVESTMENT INTENT. The Shareholder hereby represents and warrants
               -----------------                                                
to the Company that the Shareholder's holds the shares for his or her own
account, for investment purposes only and not with a view to distribution or
resale of the Shares. The Shares have not been, and will not be, registered
under the Securities Act of 1933, as amended, or the securities laws of any
state. The Shareholder may not sell the Shares unless they have been so
registered or unless, in the opinion of counsel satisfactory to the Company,
such registration is not required.

          4.   RESTRICTION ON CERTIFICATES. The Shareholder understands and
               ---------------------------                                 
agrees that the certificate(s) issued to him or her representing the Shares:

               (i)  Shall contain the following legend:

     "TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY REQUIRE
     REGISTRATION UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND THIS
     CERTIFICATE MAY NOT BE TRANSFERRED WITHOUT EVIDENCE OF SUCH REGISTRATION OR
     OF AN EXEMPTION FROM THE REGISTRATION REQUIREMENT OF THE ACT. THE RIGHT TO
     SELL, TRANSFER OR OTHERWISE DISPOSE OF OR PLEDGE THE SHARES REPRESENTED BY
     THIS CERTIFICATE IS PROHIBITED BY THE TERMS OF A STOCK REPURCHASE
     AGREEMENT. A COPY OF SUCH AGREEMENT IS ON FILE AT THE COMPANY'S PRINCIPAL
     PLACE OF BUSINESS."

                                       2

<PAGE>
 
               (ii)  May contain additional legends as required by state
securities laws.

               (iii) Shall contain the following legend, if the Shareholder is
not a U.S. Person, as defined in the Act and Regulation S promulgated
thereunder.

     "THE TRANSFER OF THESE SECURITIES IS PROHIBITED EXCEPT IN ACCORDANCE WITH
     THE PROVISIONS OF REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF
     1933, AS AMENDED."

          5.   POSSESSION OF CERTIFICATES. The Company shall hold the
               --------------------------                            
certificates evidencing the Shares as custodian to protect its interests
hereunder. In furtherance thereof, Shareholder shall execute and deliver to the
Company an assignment in blank in the form of Exhibit A hereto, for the transfer
of such certificates. The Company will deliver to Shareholder a receipt for such
Shares in the form of Exhibit B hereto.

          6.   REPURCHASE OF SHARES BY COMPANY. Upon the termination of
               ------------- -----------------                         
Shareholder's employment with the Company (for any reason whatsoever), and
subject to any prohibitions on the purchase of Shares by the Company under
applicable law or any agreement binding on the Company, the Shareholder shall
sell and the Company shall purchase the Shares at a price per share equal to the
Value of a share of Company Common Stock as of the date on which such Shares are
to be purchased by the Company. Company and Shareholder agree that Company shall
purchase the Shares on a date specified by Company, which shall not be later
than 90 days after termination of Shareholder's employment with the Company.
Notwithstanding the foregoing, if the Company is prohibited from purchasing the
Shares by applicable law or by any contract or agreement binding on the Company,
including without limitation any loan agreement, the Company will purchase the
Shares as soon as practicable after it determines in good faith that it is
legally and contractually permitted to do so. If Shareholder paid for all or any
part of the Shares with a promissory note or notes payable to the Company, the
Company will, and Shareholder hereby authorizes the Company to, offset against
any amounts owing to Shareholder by the Company with respect to Shares purchased
hereunder any amounts outstanding for principal or accrued interest under such
promissory note(s). Any amount so offset shall be deducted from the purchase
price to be paid under this section upon the purchase of the Shares by the
Company. The balance of the purchase price for the Shares, if any, shall be paid
by the Company, in its sole and absolute discretion, either in cash or by
delivery of a non-transferable promissory note in the form of Exhibit C hereto
(the "Note"); provided, however, that if termination of employment is due to
Shareholder's death, the balance of the purchase price shall be paid in cash.
The Note shall bear simple interest at Bank of America's reference rate as of
the date hereof and may be for term of up to five years. The Note shall be paid
in equal annual installments of principal plus all accrued and unpaid interest
on the total principal amount. Subject to the preceding sentence, the

                                       3

<PAGE>
 
actual term of the Note will be determined in the sole and absolute discretion
of the Company. The indebtedness evidenced by the Note, both principal and
interest, shall be subordinated and junior, to the extent set forth in the next
sentence, to all indebtedness of the Company, both principal and interest
(accrued and accruing thereon both before and after the date of filing a
petition in any bankruptcy, insolvency, reorganization or receivership
proceedings, whether or not allowed as a claim in such case or proceeding) in
respect of borrowed money, whether outstanding on the date of the Note or
thereafter created, incurred or assumed (collectively, the "Senior Debt");
provided, that such Senior Debt shall not include any obligation of the Company
under the Equity Plans to repurchase shares of its common stock. Upon the
maturity of any of the Senior Debt by lapse of time, acceleration or otherwise,
all principal of, and interest on, all such matured Senior Debt shall first be
paid in full before any payment is made by the Company on account of principal
of, or interest on, the Note.

          7.   ASSIGNMENT OF PURCHASE RIGHTS. The Company may assign, in whole
               -----------------------------                                  
or part, its right to purchase the Shares under this Agreement to a designee(s).

          8.   PRESENTLY OWNED AND AFTER-ACQUIRED SHARES. The Shareholder agrees
               -----------------------------------------                        
that the terms and conditions of this Agreement shall be binding upon him or her
as to any shares of Common Stock of the Company which Shareholder owns as of the
date hereof or which may hereafter be acquired by the Shareholder, without
further action.

          9.   CHANGE IN MARITAL STATUS. In the event that the Shareholder's
               ------------------------                                     
marital status is altered by dissolution or divorce or by the death of the
Shareholder's spouse, any interest of his or her former spouse, whether as
community property or as a result of a property settlement agreement, a divorce
decree or other legal proceeding, may be purchased by the Company and shall
be sold by the Shareholder's former spouse or his or her estate according to the
provisions of this Agreement. The Shareholder agrees to notify the Company of
any change in marital status, including, without limitation, marriage,
dissolution of marriage, divorce or death of spouse, within 10 business days of
said event. The Shareholder agrees to cause any spouse who has not signed a
consent to this Agreement in the form of Exhibit D to do so at the time notice
is given to the Company under this Section.

          10.  AMENDMENT. No change, amendment or modification of this Agreement
               ---------                                                        
shall be valid unless it is in writing and signed by the Company and the
Shareholder.

          11.  REMEDIES. The Shares cannot be readily purchased or sold in the
               --------                                                       
open market and, for that reason, among others, the parties will be irreparably
damaged in the event the agreements contained herein are not specifically
enforced. If any dispute arises concerning the transfer of any Shares, an
injunction may be issued

                                       4

<PAGE>
 
restraining any such transfer pending the determination of such controversy. In
the event of any controversy, such rights or obligations shall be enforceable in
a court by a decree of specific performance. Such remedy shall, however, be
cumulative and not exclusive, and shall be in addition to any other remedy which
the parties may have. The provisions of this Agreement are for the benefit of
the Company and the Shareholder and may be enforced by either of them.

          12.  EXPENSES. Shareholder agrees to pay to the Company the amount of
               --------                                                        
any and all reasonable expenses, including, without limitation, reasonable
attorneys, fees and expenses, which the Company may incur in connection with the
enforcement of its rights hereunder.

          13.  NOTICES. Any notice required or permitted to be given hereunder
               -------                                                        
shall be in writing and shall be mailed first-class, postage prepaid, or shall
be personally delivered. Any communication so addressed and mailed shall be
deemed to be given seven days after mailing and any communication delivered in
person shall be deemed to be given when receipted for, or actually received by,
an authorized officer of the recipient. All such communications, if intended for
the Company, shall be addressed to the Company as follows:

               Korn/Ferry International             
               1800 Century Park East                
               Suite 900                             
               Los Angeles, California 90067         
               Attn.: Corporate Office -
                      Vice President - Administration   

and if intended for the Shareholder shall be addressed to the Shareholder at his
or her address as shown on the Company's books. Any party may change his, her
or its address for notice by giving notice thereof to the other party to this
Agreement. A change of address notice by the Shareholder shall be recorded in
the books of the Company as the Shareholder's address for notice unless the
Shareholder otherwise instructs the Company.

          14.  GOVERNING LAW. All questions with respect to the construction of
               -------------                                                   
this Agreement and the rights and liabilities of the parties hereto shall be
governed by the laws of California.

          15.  SUCCESSORS AND ASSIGNS. Subject to the terms herein, this
               ----------------------                                   
Agreement shall inure to the benefit of, and shall be binding upon, the assigns,
successors in interest, personal representatives, estates, heirs and legatees of
each of the parties hereto.

                                       5

<PAGE>
 
          16.  ENTIRE AGREEMENT. This Agreement contains the entire Agreement of
               ----------------                                                 
the parties hereto and supersedes any prior written or oral agreements between
them concerning the subject matter contained herein. There are no
representations, agreements, arrangements or understandings, oral or written,
between and among the parties hereto relating to the subject matter contained in
this Agreement which are not fully set forth herein.

          17.  COUNTERPARTS. This Agreement may be executed in counterparts,
               ------------                                                 
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

          18.  WAIVER. No waiver of any right pursuant hereto or waiver of any
               ------                                                         
breach hereof shall be effective unless in writing and signed by the party
waiving such right or breach. No waiver of any right or waiver of any breach
shall constitute a waiver of any other or similar right or breach, and no
failure to enforce any right hereunder shall preclude or affect the later
enforcement of such right.

          19.  CAPTIONS. The captions of the various sections herein are solely
               --------                                                        
for the convenience of the parties hereto and shall not affect or control the
meaning or construction of this Agreement.

          20.  SEVERABILITY. Should any portion of this Agreement be declared
               ------------                                                  
invalid and unenforceable, then such portion shall be deemed to be severable
from this Agreement and shall not affect the remainder hereof.

          21.  AGREEMENT AVAILABLE FOR INSPECTION. An original copy of this
               ----------------------------------                          
Agreement, together with all amendments, duly executed by the Company and the
Shareholder, shall be delivered to the Secretary of the Company and maintained
by him or her at the principal executive office of the Company and shall be
available for inspection by any person requesting to see it.

                                       6

<PAGE>
 
          22.  ADDITIONAL DOCUMENTS. The parties hereto agree to sign all
               --------------------                                      
necessary documents and take all other actions necessary to carry out the
provisions of this Agreement.

          IN WITNESS, WHEREOF, the parties have executed this Shareholder's
Agreement as of the date first written above.

                                        ________________________________

                                        SHAREHOLDER

                                        ________________________________

                                        By:  ___________________________

                                             Name: _____________________

                                        ________________________________

                                        KORN/FERRY INTERNATIONAL

                                        ________________________________

                                        By:  ___________________________

                                             Name:  
                                                   ---------------------

                                             Title: 
                                                   ---------------------

                                       7



<PAGE>
 
                                                                   EXHIBIT 10.10



                             AMENDED AND RESTATED
                          STOCK REPURCHASE AGREEMENT

          THIS AMENDED AND RESTATED STOCK REPURCHASE AGREEMENT (the "Agreement")
is entered into as of ________________ by and between Korn/Ferry international,
a California corporation (the "Company"), and _________________________, an
individual (the "Shareholder"), and is an amendment and restatement of the
previous Stock Repurchase Agreement between the Company and the Shareholder (the
"Prior Agreement") [MODIFY AS APPROPRIATE IF MORE THAN ONE PRIOR AGREEMENT.].

                                   RECITALS

          A.   The Company is a corporation duly organized and existing under
the laws of the State of California.

          B.   [MODIFY AS APPROPRIATE FOR EACH INDIVIDUAL.] In 1991, the Company
adopted the Executive Participation Program (the "Equity Plan"), which provides
for the sale of shares of Company common stock to certain officers of the
Company.

          C.   Pursuant to the Equity Plan the Shareholder subscribed to
purchase shares of Company Common Stock under the Executive Participation
Program Stock Subscription Agreement (Basic Equity Account) between Company and
Shareholder (the "Subscription Agreement"), which required that Shareholder
enter into the Prior Agreement.

          D.   In August 1998, the Company's shareholders approved the initial
public offering
 of the Company (the "IPO"), and authorized the Company to offer
to amend and restate the Prior Agreement, subject to the consummation of the
IPO.

          E.   The Shareholder and the Company now wish to enter into this
Agreement as an amendment and restatement of the Prior Agreement.  This
Agreement shall become effective if and only if the is consummated on or before
____________, 19___.

          NOW, THEREFORE, in consideration of the foregoing and the mutual
promises set forth below, the parties hereto agree as follows:

          1.   DEFINITIONS. For all purposes of this Agreement, the following 
               -----------  
definitions apply:

               "Book Value" means the book value of a Share, as determined in
accordance with generally accepted accounting principals applied in accordance
with the usual accounting practices of the Company.

<PAGE>
 
               "Equity Committee" shall mean a committee appointed by the Board
of Directors of the Company. The Equity Committee shall be comprised of three
members of the board of directors of the Company, at least two of which shall
not be officers or employees of the Company.

               "Fiscal Year" means the fiscal year of the Company, which is
currently specified as the period beginning each May 1 and ending each April 30,
or any other period specified by the Board of Directors of the Company as the
fiscal year of the Company.

               "401(k) Plan" means the Korn/Ferry International Employee Tax
Deferred Savings Plan.

               "Shares" means the shares of Company Common Stock currently owned
by the Shareholder from any source or which may be acquired by Shareholder in
the future under the Equity Plan, or distributed to the Shareholder under the
401(k) Plan. Shares acquired on the public market following the IPO shall not be
considered as "Shares".

               "Value" means, for purposes of determining the price at which a
Share will be sold or purchased by the Company pursuant to Section 7 of this
Agreement, (a) the Book Value of such Share as of the end of the Fiscal Year
ending April 30, 1998, plus interest at the rate of eight and one-half percent
(8.5%) per annum, (b) such other value or formula for determining value as may
be specified from time to time after the date hereof in a resolution adopted by
the Board of Directors of the Company for purposes of this Agreement.

          2.   COMPLIANCE WITH AGREEMENT.  Except as expressly set forth herein,
               -------------------------                                        
the Shareholder shall not sell, transfer, hypothecate, pledge or otherwise
dispose of the Shares or any interest therein held by Shareholder (a "Transfer")
without the prior written consent of the Company.  Any purported Transfer not in
compliance with the terms and conditions of this Agreement shall be void and of
no force and effect.  If the Shares are Transferred, in whole or part,
voluntarily or involuntarily, by operation of law or otherwise, by reason of
insolvency or bankruptcy of the Shareholder, or otherwise in violation of the
provisions of this Agreement, the recipient of any of the Shares shall not be
registered on the books of the Company and shall not be recognized as the holder
of the Shares by the Company and shall not acquire any voting, dividend or other
rights in respect thereof.

          3.   INVESTMENT INTENT.  The Shareholder hereby represents and 
               -----------------      
warrants to the Company that the Shareholder's purchase of the Shares has been
made for his or her own account, for investment purposes only and not with a
view to distribution or resale of the Shares. The sale of the Shares has not
been registered under the Securities Act of 1933, as amended, or the securities
laws of any state. Except as expressly set forth herein, the Shareholder may not
sell the Shares unless they have 

                                       2

<PAGE>
 
been so registered or unless, in the opinion of counsel satisfactory to the
Company, such registration is not required.

          4.   RESTRICTION ON CERTIFICATES.  The Shareholder understands and
               ---------------------------                                  
agrees that the certificate(s) issued to him or her representing the Shares:

               (i)   Shall contain the following legend:

     "TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY REQUIRE
     REGISTRATION UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND THIS
     CERTIFICATE MAY NOT BE TRANSFERRED WITHOUT EVIDENCE OF SUCH REGISTRATION OR
     OF AN EXEMPTION FROM THE REGISTRATION REQUIREMENT OF THE ACT.  THE RIGHT TO
     SELL, TRANSFER OR OTHERWISE DISPOSE OF OR PLEDGE THE SHARES REPRESENTED BY
     THIS CERTIFICATE IS PROHIBITED BY THE TERMS OF A RESTATED AND AMENDED STOCK
     REPURCHASE AGREEMENT.  A COPY OF SUCH AGREEMENT IS ON FILE AT THE COMPANY'S
     PRINCIPAL PLACE OF BUSINESS."

               (ii)  May contain additional legends as required by state
securities laws.

          5.   PERMITTED SALES AT AND FOLLOWING IPO.  Notwithstanding the
               ------------------------------------                      
restrictions on the sale of Shares contained herein, the Shareholder may sell
Shares according to the following schedule:

     DATE                     PERMISSIBLE SALES
     ----                     -----------------

     Consummation of the      Ten percent (10%) of the  
     Company's Initial        Shareholder's Shares 
     Public Offering
     ("IPO Date")

     Second anniversary       An additional twenty percent 
     of IPO Date              (20%) of the Shareholder's Shares 

     Third Anniversary of     An additional twenty percent 
     IPO Date                 (20%) of the Shareholder's Shares 

     Fourth Anniversary       Any remaining Shares 
     of IPO Date

The foregoing schedule of permissible sales shall be applied as follows:

                                       3

<PAGE>
 
               (a)  The percentages shall be applied with respect to the sum of
the Shareholder's current Shares as of the time of a sale, plus any Shares
previously sold. As an example by way of illustration only, and not reflective
of the Shareholder's actual number of Shares, assume the Shareholder had 100
Shares on the IPO Date, and that an additional 50 Shares were beneficially owned
by the Shareholder under the 401(k) Plan. The Shareholder would have the right,
as of the IPO Date, to sell ten percent (10 shares) of the Shares held by the
Shareholder other than the Shares beneficially owned under the 401(k) Plan.
(Sale of Shares beneficially owned under the 401(k) Plan are governed by the
provisions of the 401(k) Plan rather than this Agreement.) If the Shareholder
sold the permitted ten Shares on the IPO Date, and, before the second
anniversary of the IPO Date, received a distribution from the 401(k) Plan of the
Shareholder's fifty Shares, the Shareholder would have 140 Shares on the second
anniversary of the IPO Date. The Shareholder would be permitted to sell up to 35
shares on the second anniversary of the IPO Date (the sum of the Shares then
held (140), plus the shares previously sold (10), times 30%, less the shares
previously sold, equals 35 shares).

               (b)  Shares sold on the IPO Date shall be sold pursuant to the
procedures established by the Company.  No Shares may be sold in the period from
the day after the IPO Date to the second anniversary of the IPO Date.  Fifty
percent (50%) of the proceeds of the sale of the Shareholder's shares on the IPO
Date (or, if less, the outstanding balance of the Shareholder's notes under the
Subscription Agreement) shall be used by the Company to reduce the balance of
the Shareholder's notes under the Subscription Agreement.

               (c)  Any Company Common Stock beneficially owned by the
Shareholder in the 401(k) Plan shall not count towards determining the Shares
which may be sold unless and until such Shares are distributed to the
Shareholder from the 401(k) Plan.

               (d)  The foregoing schedule shall cease to apply to the
Shareholder's Shares and the Shares may be sold without restriction in the event
of the Shareholder's death.

          6.   POSSESSION OF CERTIFICATES.  The Company shall hold the 
               --------------------------                         
certificates evidencing the Shares as custodian to protect its interests
hereunder until the Shareholder has the right to sell the Shares, as set forth
in Section 5 above. In furtherance thereof, Shareholder has executed and
delivered (or shall herewith execute and deliver) to the Company assignment(s)
in blank, in the form of Exhibit A to the Prior Agreement, for the transfer of
such certificates. The Company has delivered to Shareholder a receipt for such
Shares in the form of Exhibit B to the Prior Agreement.

                                       4

<PAGE>
 
          Upon the request of Shareholder, when the Shareholder has the right to
sell Shares, the Company shall deliver the Shares which may be sold to the
Shareholder, and the Company and the Shareholder shall appropriately modify the
assignment(s) in blank and the receipt to reflect the delivery of Shares.

          7.   REPURCHASE OF SHARES BY COMPANY.
               ------------------------------- 

          (a)  Upon an occurrence described in Section 7(b) or 7(c) hereof, and
subject to any prohibitions on the purchase of Shares by the Company under
applicable law or any agreement binding on the Company, the Shareholder shall
sell, if the Company elects to purchase, the number of Shares determined under
the applicable subsection at a price per share equal to the Value as of the date
on which such Shares are to be purchased by the Company.  Notwithstanding the
foregoing, if the Company is prohibited from purchasing the Shares by applicable
law or by any contract or agreement binding on the Company, including without
limitation any loan agreement, the Company may elect to purchase the Shares
determined under the applicable subsection as soon as practicable after it
determines in good faith that it is legally and contractually permitted to do
so.  If Shareholder paid for all or any part of the Shares with a promissory
note or notes payable to the Company, the Company will, and Shareholder hereby
authorizes the Company to, offset against any amounts owing to Shareholder by
the Company with respect to Shares purchased hereunder any amounts outstanding
for principal or accrued interest under such promissory note(s).  Any amount so
offset shall be deducted from the purchase price to be paid under this section
upon the purchase of the Shares by the Company.  The balance of the purchase
price for the Shares, if any, shall be paid by the Company, in its sole and
absolute discretion, either in cash or by delivery of a non-transferable
promissory note in the form of Exhibit C hereto (the "Note").  The Note shall
bear simple interest at Bank of America's  (or its successor's) reference rate
as of the date hereof and may be for term of up to five years.  The Note shall
be paid in equal annual installments of principal plus all accrued and unpaid
interest on the total principal amount.  Subject to the preceding sentence, the
actual term of the Note will be determined in the sole and absolute discretion
of the Company.  The indebtedness evidenced by the Note, both principal and
interest, shall be subordinated and junior, to the extent set forth in the next
sentence, to all indebtedness of the Company, both principal and interest
(accrued and accruing thereon both before and after the date of filing a
petition in any bankruptcy, insolvency, reorganization or receivership
proceedings, whether or not allowed as a claim in such case or proceeding) in
respect of borrowed money, whether outstanding on the date of the Note or
thereafter created, incurred or assumed (collectively, the "Senior Debt");
provided, that such Senior Debt shall not include any obligation of the Company
under the Equity Plan to repurchase shares of its common stock.  Upon the
maturity of any of the Senior Debt by lapse of time, acceleration or otherwise,
all principal of, and interest on, all such matured Senior Debt shall first be
paid in full before any payment is made by the Company on account of principal
of, or interest on, the Note.

                                       5

<PAGE>
 
          (b)  The Company shall have the right to purchase, and in the event
the Company elects to purchase, the Shareholder shall sell to the Company, all
of the Shareholder's Shares, if the Company determines that any one or more of
the following past or present acts or events have occurred: (1) the Shareholder
engages or has engaged in behavior that is disruptive to the Company, or (2) the
Shareholder interferes with (or has interfered with) or engages in conduct that
interferes with (or has interfered with) the efficient operation of the Company
or any office of the Company, or (3) the Shareholder engages or has engaged in
acts or conduct that are injurious to or otherwise harm the Company or any
office of the Company, or (4) the Shareholder breaches or has breached any
agreement with the Company, or (5) the Shareholder engages or has engaged in
conduct or acts detrimental to the Company, or (6) the Shareholder becomes or
became affiliated with a competitor, or develops, or make a contribution to, a
competing enterprise, (7) the Shareholder discloses or has disclosed
confidential Company information to a third party, or (8) the Shareholder is or
was convicted of a felony or other crime involving fraud, dishonesty or acts of
moral turpitude.

               If the Company determines that any one or more of the foregoing
acts or events has occurred, the Shareholder may appeal such determination to
the Equity Committee within ten days of receipt of written notice of such
determination from the Company. The Equity Committee shall have 30 days to
either confirm or overturn the Company's determination. If the Equity Committee
confirms the Company's determination, the Equity Committee shall also determine
if the Shareholder's acts or conduct are curable by the Shareholder. If the
Equity Committee determines that the Shareholder's acts or conduct are curable,
then the Shareholder shall be given thirty (30) days following notice of the
Equity Committee's decision to cure such acts or conduct, and an additional ten
(10) days to provide proof of such cure acceptable to the Equity Committee. If
the Equity Committee determines that the acts or conduct are not curable, or the
Shareholder does not provide proof that curable acts or conduct have been cured,
then the determination that the Shareholder engaged in acts or conduct
detrimental to the Company shall be final and binding.

               Shareholder acknowledges that the Company's purchase right under
this subsection 7(b) may be financially disadvantageous to the Shareholder if,
at the time of the purchase, there is a large differential between the Value (as
that term is defined herein) of the Shares to be purchased and the then market
value of such shares.

          (c)  At any time, but not more frequently than once in any two-year
period, the Equity Committee may determine that the Company shall have the right
to purchase the number of Shares determined by the Equity Committee (a "Company
Call").  No Company Call shall be for a number of Shareholder's Shares greater
than ten percent (10%) of the Shares for which Sales are not yet permissible
under Section 5 hereof.  The Equity Committee shall make its determination under
this Section 7(c) based upon the Equity Committee's assessment of market
conditions for the Company's 

                                       6

<PAGE>
 
common stock and the Company's recent financial performance. Any Company Call
shall be made on a pro rata basis among the shareholders with whom the Company
has entered into agreements similar to this Agreement.

          Provided, however, this Section 7 does not apply to Shares released
for sale under Section 5 herein.

          8.   ASSIGNMENT OF PURCHASE RIGHTS.  The Company may assign, in whole
               -----------------------------                  
or part, its right to purchase the Shares under this Agreement to a designee(s).

          9.   PRESENTLY OWNED AND AFTER-ACQUIRED SHARES.  The Shareholder 
               -----------------------------------------      
agrees that the terms and conditions of this Agreement shall be binding upon him
or her as to any Shares.

          10.  CHANGE IN MARITAL STATUS.  In the event that the Shareholder's
               ------------------------                        
marital status is altered by dissolution or divorce or by the death of the
Shareholder's spouse, any interest of his or her former spouse in the Shares,
whether as community property or as a result of a property settlement agreement,
a divorce decree or other legal proceeding, may be purchased by the Company and
shall be sold by the Shareholder's former spouse or his or her estate according
to the provisions of this Agreement. The Shareholder agrees to notify the
Company of any change in marital status, including, without limitation,
marriage, dissolution of marriage, divorce or death of spouse; within 10
business days of said event. The Shareholder agrees to cause any spouse who has
not signed a consent to this Agreement in the form of Exhibit D to do so at the
time notice is given to the Company under this Section.

          11.  AMENDMENT.  No change, amendment or modification of this 
               ---------                                          
Agreement shall be valid unless it is in writing and signed by the Company and
the Shareholder.

          12.  REMEDIES. The parties agree that the Company will be irreparably
               --------
damaged in the event the agreements contained herein are not specifically
enforced. If any dispute arises concerning the transfer of any Shares, an
injunction may be issued restraining any such transfer pending the determination
of such controversy. In the event of any controversy, such rights or obligations
shall be enforceable in a court by a decree of specific performance. Such remedy
shall, however, be cumulative and not exclusive, and shall be in addition to any
other remedy which the Company may have.

          13.  EXPENSES.  Shareholder agrees to pay to the Company the amount of
               --------                                           
any and all reasonable expenses, including, without limitation, reasonable
attorneys' fees and expenses, which the Company may incur in connection with the
enforcement of its rights hereunder.

          14.  NOTICES.  Any notice required or permitted to be given hereunder
               -------                                         
shall be in writing and shall be mailed first-class, postage prepaid, or shall
be personally 

                                       7

<PAGE>
 
delivered, or shall be sent by telecopier. Any communication so addressed and
mailed shall be deemed to be given seven days after mailing and any
communication delivered in person shall be deemed to be given when receipted
for, or actually received by, an authorized officer of the recipient. All such
communications, if intended for the Company, shall be addressed to the Company
as follows:

                    Korn/Ferry International
                    1800 Century Park East
                    Suite 900
                    Los Angeles, California 90067
                    Attn.:  Corporate Secretary

          and if intended for the Shareholder shall be addressed to the
Shareholder at his or her address as shown on the Company's books.  Any party
may change his, her or its address for notice by giving notice thereof to the
other party to this Agreement.  A change of address notice by the Shareholder
shall be recorded in the books of the Company as the Shareholder's address for
notice unless the Shareholder otherwise instructs the Company.

          15.  GOVERNING LAW.  All questions with respect to the construction
               -------------                                    
of this Agreement and the rights and liabilities of the parties hereto shall be
governed by the laws of California.

          16.  SUCCESSORS AND ASSIGNS.  Subject to the terms herein, this
               ----------------------                       
Agreement shall inure to the benefit of, and shall be binding upon, the assigns,
successors in interest, personal representatives, estates, heirs and legatees of
each of the parties hereto. Nothing herein shall obligate the Company to obtain
the consent of Shareholder if the Company undergoes a reorganization,
restructuring or recapitalization, including without limitation, the acquisition
by the Company of an entity or entities controlled by the Company in connection
with the reincorporation of the Company in a state other than California.

          17.  ENTIRE AGREEMENT.  This Agreement contains the entire Agreement
               ----------------                              
of the parties hereto and supersedes any prior written or oral agreements
between them concerning the subject matter contained herein. There are no
representations, agreements, arrangements or understandings, oral or written,
between and among the parties hereto relating to the subject matter contained in
this Agreement which are not fully set forth herein.

          18.  COUNTERPARTS.  This Agreement may be executed in counterparts, 
               ------------                                    
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

          19.  WAIVER.  No waiver of any right pursuant hereto or waiver of
               ------                                            
any breach hereof shall be effective unless in writing and signed by the party
waiving such 

                                       8

<PAGE>
 
right or breach. No waiver of any right or waiver of any breach shall constitute
a waiver of any other or similar right or breach, and no failure to enforce any
right hereunder shall preclude or affect the later enforcement of such right.

          20.  CAPTIONS.  The captions of the various sections herein are
               --------                                       
solely for the convenience of the parties hereto and shall not affect or control
the meaning or construction of this Agreement.

          21.  SEVERABILITY.  Should any portion of this Agreement be
               ------------                                       
declared invalid and unenforceable, then such portion shall be deemed to be
severable from this Agreement and shall not affect the remainder hereof.

          22.  AGREEMENT AVAILABLE FOR INSPECTION.  An original copy of this
               ----------------------------------              
Agreement, together with all amendments, duly executed by the Company and the
Shareholder, shall be delivered to the Secretary of the Company and maintained
by him or her at the principal executive office of the Company and shall be
available for inspection by any person requesting to see it.

          23.  REGULATION G, T, U OR X.  The Company's possession of the
               -----------------------                           
certificates evidencing the Shares pursuant to Section 6 of this Agreement does
not violate Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System.

          24.  ADDITIONAL DOCUMENTS.  The parties hereto agree to sign all
               --------------------                              
necessary documents and take all other actions necessary to carry out the
provisions of this Agreement.

          IN WITNESS, WHEREOF, the parties have executed this Amended and
Restated Stock Repurchase Agreement as of the date first written above.
 
                               SHAREHOLDER

                               By:____________________________

                               Name:__________________________


                               KORN/FERRY INTERNATIONAL


                               By:____________________________ 

                               Name:   Elizabeth S.C.S. Murray
                                       -----------------------

                               Title:   Executive VP & CFO
                                       -----------------------

                                       9

<PAGE>
 
                                   EXHIBIT A

                          IRREVOCABLE STOCK ASSIGNMENT

          For good and valuable consideration pursuant to Section 6 of that
certain Amended and Restated Stock Repurchase Agreement between the undersigned
and Korn/Ferry International, the undersigned hereby sells, assigns and
transfers to _______________________ _______ shares of common stock of
Korn/Ferry International, represented by Certificate No(s). _______________
standing in the name of the undersigned on the books of said company.



                                      By:____________________________

                                      Name:__________________________

                                      Dated:___________, 19__


WITNESS:

By:____________________________ 

Name:__________________________

Dated:___________________, 19__

                                       10

<PAGE>
 
                                   EXHIBIT B

                                    RECEIPT

          Korn/Ferry International, a California corporation (the "Company"),
hereby acknowledges that it has received and is holding as custodian on behalf
of ______________________________________________________________, an officer of
the Company ("Executive"), _______ shares of Company Common Stock (the
"Shares"), represented by certificate(s) number _________, _________ and
__________ issued on _____________, 19___ in the name of Executive (copies of
which are attached hereto), together with an Irrevocable Stock Assignment
executed by Executive (the "Stock Assignment").  The Shares and the Stock
Assignment are being held by the Company pursuant to and in accordance with the
terms of that certain Amended and Restated Stock Repurchase Agreement between
the Company and Executive, and any promissory note(s) and related Stock Pledge
Agreement delivered by Executive to the Company in connection with the purchase
of all or a portion of the Shares.


                                            KORN/FERRY INTERNATIONAL


                                            By:____________________________

                                            Name:__________________________

                                            Title:_________________________


Dated: _______________, 19__

                                       11

<PAGE>
 
                                   EXHIBIT C

                            KORN/FERRY INTERNATIONAL
                 NON-TRANSFERABLE SUBORDINATED PROMISSORY NOTE



$____                                                           __________,19__


          FOR VALUE RECEIVED, the undersigned, KORN/FERRY INTERNATIONAL, a
California corporation (the "Company") hereby promises to pay to the order of
_____________________ __________________ ("Payee") the principal sum of
______________________________ dollars ($___________), plus interest on the
unpaid balance thereof at the rate of ______% per annum [reference rate of Bank
of America or its successor on the date hereof].

          Payments of principal and interest hereunder shall be in lawful money
of the United States of America and shall be payable in ______________ (____)
annual payments, the first such payment to be made on ___________, 19__, and the
final such payment to be made on ____________, 19__. Interest shall be simple
interest and shall be paid on the basis of a 360-day year and a 30-day month.

          Principal and interest on this note are payable, at _______________, 
or such other place as Payee shall designate in writing for such purpose at
least five business days in advance of the applicable payment date. Principal
and interest on this note may be prepaid at any time, in whole or in part,
without premium or penalty. The timely tender of any payment of principal or
interest on this note shall be deemed to have been made if a check for such
payment is mailed two business days before the day such payment is due.


          If any payment of principal or interest on this note shall be due on a
Saturday, Sunday or legal holiday under the laws of the State of California, or
any other day on which banking institutions in the City of Los Angeles are
obligated or authorized by law or executive order to close, such payment shall
be made on the next succeeding business day in California, and any such extended
time shall not be included in computing interest in connection with such
payment.

          The indebtedness evidenced by this note, both principal and interest,
is subordinated and junior to the extent set forth in Section 7 of that certain
Amended and Restated Stock Repurchase Agreement dated as of _________________
between the Company and Payee.

                                       12

<PAGE>
 
          Payee shall not sell, assign or otherwise transfer or dispose of all
or any part of this note to any person, partnership, corporation, firm or other
entity, except with the prior written consent of the Company.

          This note is made and delivered in California and shall be governed,
construed and enforced according to the laws of the State of California.


                                              KORN/FERRY INTERNATIONAL



                                              By:__________________________

                                              Name:________________________

                                              Title:_______________________

                                       13

<PAGE>
 
                                   EXHIBIT D

                        CONSENT OF SPOUSE OF SHAREHOLDER

          The undersigned, being the spouse of the Shareholder,
________________, who has signed the foregoing Amended and Restated Stock
Repurchase Agreement, hereby acknowledges that he or she has read and is
familiar with the provisions of said Agreement including but not limited to
Section 10 herein and agrees to be bound thereby and join therein to the extent,
if any, that his or her agreement and joinder may be necessary.  The undersigned
hereby agrees that the Shareholder may join in any future amendment or
modifications of the Agreement without any further signature, acknowledgment,
agreement or consent on his or her part; and the undersigned hereby further
agrees that any interest which he or she may have in the Shares held by
Shareholder shall be subject to the provisions of this Agreement.



                                      By:__________________________

                                      Name:________________________

                                      Dated:_______________________

                                       14



<PAGE>
 
                                                                   Exhibit 10.11

                                                     (domestic version, which is
                                                        the same in all material
                                                                 respects as the
                                                         international version)


                        KORN/FERRY EMPLOYMENT CONTRACT


                                    SAMPLE


          AGREEMENT dated (INSERT HIRE DATE)______________________, by and 
between KORN/FERRY INTERNATIONAL, a California corporation, (hereinafter called
the "Corporation") and (INSERT EXECUTIVE'S NAME)______________________,
(hereinafter called the "Executive"). 

                                  WITNESSETH:
                                  -----------

          In consideration of the mutual covenants contained herein, the 
parties agree as follows:

          FIRST:    The Corporation agrees to employ the Executive and the 
          -----
Executive agrees to serve the Corporation, and any subsidiary or affiliate of 
the Corporation, in the capacity of Vice President, for the term of this 
agreement.

          SECOND:   The initial term of the Executive's employment under this
          ------
agreement shall be for the period commencing on, (INSERT HIRE DATE)_____________
and expiring on, (INSERT APRIL 30, AND WHATEVER IS THE CURRENT FISCAL YEAR, E.G.
APRIL 30, 1999)_____________(unless sooner terminated as provided in this
agreement) and thereafter Executive's employment hereunder shall automatically
continue year to year for further successive terms of one year each (each ending
on the next April 30th, each such year being referred to as an "extended year"),
unless at least thirty (30) days prior
 to the end of the initial term or the
- ------
then current extended year, as the case may be, either party does not wish the
employment of Executive under this agreement to be continued beyond the end of
the initial term or then current extended year, as the case may be, in


                                       1

<PAGE>
 
                                    SAMPLE

which event Executive's employment shall terminate at the end of such initial 
term or then current extended year.

          THIRD:    (A) The Executive shall devote his full time and efforts to 
          -----
the business and affairs of the Corporation, its subsidiaries and affiliates and
shall use his best efforts to promote the interests thereof.  During the term of
this agreement, the Executive shall not engage in any other business or business
activity whether or not such business activity is pursued for gain, profit or 
other pecuniary advantage; provided, however, that the Executive shall not be 
prevented from investing his assets in such form or manner as will not require 
any substantial amount of time or services on the part of the Executive in the 
operation of the affairs of the enterprises in which such investments are made.

                    (B) The Executive agrees to hold such offices in the 
Corporation and/or any subsidiary or affiliate of the Corporation to which, from
time to time, he may be elected or appointed, without additional compensation.  
The Executive shall render such services to the Corporation and/or to any and 
all subsidiaries and affiliates of the Corporation at such times and at such 
places as shall from time to time be designated by the Board of Directors and/or
the President of the Corporation.

                    (C) It is contemplated that the Executive shall perform his 
duties in such places as may be required. The Executive may be obliged, from 
time to time, and for reasonable periods of time, to travel in the performance 
of his duties. In such cases, the Corporation shall pay or reimburse the 
Executive for all reasonable travel and other expenses incurred by him in 
connection with the performance of his services under this agreement, upon 
presentation of expense statements or vouchers and such other supporting 
information as it may from time

                                       2

<PAGE>
 
                                    SAMPLE

to time request; provided, however, that the amount available for such travel 
and other expenses may be fixed in advance by the President.

          FOURTH: (A)  The Corporation shall compensate the Executive for the 
          ------
services to be rendered by the Executive hereunder, including all services, if 
any, to be rendered as an officer and/or Director of the Corporation and/or any 
subsidiary or affiliate of the Corporation. During the initial term of the 
Executive's employment hereunder, such compensation shall be at the rate of 
(SALARY) per annum; during an extended year of the Executive's employment 
hereunder, such compensation shall be at the same rate per annum as was in 
effect during the prior extended year (or during the initial term in the case of
the first such extended year). Corporation may, in its sole discretion, but 
shall not be obligated to increase Executive's rate of compensation in the 
course of Corporation's annual compensation review or otherwise by written 
agreement with Executive. The applicable compensation for the initial term and 
for each extended year (if any) shall be paid in equal (semi-) monthly 
installments.

                  (B)  The Executive shall, in addition to his salary, be
eligible to receive an annual bonus as may be approved by the Board of
Directors, less income tax withholding and other customary employee deductions.
In the event of termination of the Executive's employment under this Agreement,
he shall be entitled only to such payment of the bonus as was approved by or
pursuant to authority from the Board of Directors as of the date of termination.

                  (C)  The Executive shall be eligible to participate in any 
group insurance, deferred compensation or other plan or program adopted by the 
Corporation for the benefit of its executive employees of similar stature of the
Executive in accordance with the provisions of the respective plan or plans.

                                       3

<PAGE>
 
                                    SAMPLE

                  (D)  The Executive shall be entitled to twenty (20) days 
annual vacation, exclusive of sick leave and holidays recognized by the 
Corporation, which may be taken at such times as are consistent with good 
business practices.

          FIFTH:  (A)  The Executive acknowledges that (i) he holds a senior 
          -----
management position with the Corporation, (ii) in such capacity he is 
responsible for carrying out procedures and methods by which the Corporation 
develops and conducts its business, (iii) he has access to the Corporation's 
clients, channels for developing clients and recruiting executives for 
employment, and other confidential information of the Corporation, (iv) he has 
direct substantial responsibility to maintain the Corporation's business 
relationship with clients of the Corporation whose affairs he handles, (v) it 
would be unfair to the Corporation if the Executive were to appropriate to 
himself or others the benefits of the Corporation's many years of developing 
such business relationships, especially when the Executive enjoys a relationship
with a client of the Corporation as a result of his being introduced to the
client's personnel as the representative of the Corporation, (vi) it would be
unfair to the Corporation if the Executive were to appropriate to himself or
others the benefits of the business, personnel and other confidential
information which the Corporation has developed in the conduct of its business
and (vii) it is therefore fair that reasonable restrictions should be placed on
certain activities of the Executive after his employment with the Corporation
terminates.

                  (B)  The Executive agrees during his term of employment, 
except as necessary to carry on the business of the Corporation, and after the 
expiration of his employment, that he shall not, directly or indirectly, use 

                                       4

<PAGE>
 
                                    SAMPLE

or disclose to any person, firm or corporation, any candidate list, personal 
histories or resumes, employment information, business information, customer 
lists, business secrets, or any other information not generally known in the 
industry concerning the business or policies of the Corporation, including, but 
not limited to, the Corporation's list of clients or placement candidates.

                  (C)  The Executive agrees that during the term of his 
employment hereunder, and for the two year period immediately subsequent to the 
expiration of his employment, he will not directly or indirectly (as owner, 
principal, agent, partner, officer, employee, independent contractor,
consultant, stockholder or otherwise), (i) solicit or accept any executive
search or placement assignment from, or otherwise attempt to provide services
then provided by the Corporation to, any existing client of the Corporation or
its subsidiaries or affiliates or any person who has been a client of the
Corporation or its subsidiaries or affiliates during the proceeding two years,
(ii) solicit for employment or otherwise attempt to engage the services of any
employee of the Corporation or its subsidiaries or affiliates. The term "client"
as used in clause (C) (i) hereof shall mean only clients as to which the
Executive, at any time during the three years preceding his termination of
employment, contacted or engaged in activities on behalf of the Corporation.

                  (D)  Nothing herein shall be deemed to prevent the Executive 
after termination of his employment, from engaging in business competitive to 
that of the Corporation provided the Executive does so without violating the 
above provisions which, among other matters, prohibit the Executive's utilizing 
the Corporation's confidential records, soliciting the

                                       5

<PAGE>
 
                                    SAMPLE

Corporation's employees and soliciting the Corporation's clients as defined in 
clause (C) (i) hereof.

                  (E)  The Executive recognizes and acknowledges that any breach
of the foregoing subparagraphs FIFTH (B) and (C) would result in immeasurable
and irreparable harm to the Corporation, and accordingly, agrees that in
addition to, and not in lieu of, all other remedies available to the Corporation
by reason of such breach, the Corporation shall be entitled to temporary and
permanent injunctive relief to prevent the occurrence or continuation thereof.

          SIXTH:  (A)  The Executive's employment under this agreement shall 
          -----
terminate upon the first to happen or occur of any of the following events or 
conditions:

          (1)  the death of the Executive;

          (2)  the permanent disability of the Executive; or

          (3)  the Corporation's election to terminate the employment of the 
Executive upon notice to him if:

               (a) the Executive shall by reason of illness, physical or mental
               disability or other incapacity, fail to render the services
               provided for by this agreement for a period of sixty (60)
               consecutive days or for nonconsecutive periods aggregating more
               than one hundred twenty (120) days within any six month period,
               exclusive of Saturdays, Sundays, holidays or days on which the
               Executive was on vacation provided, however, that the Corporation
               shall have given the Executive such notice during his absence; or

                                       6

<PAGE>
 
                                    SAMPLE

               (b) in the opinion of the Board of Directors of the Corporation,
               or a committee thereof, the Executive has breached any statutory
               or common law duty of loyalty to the Corporation, or has
               neglected those duties in such a manner as to meet reasonable
               standards of performance established by the Board of Directors or
               a committee thereof.
          
                    (B)  All compensation shall cease to accrue upon 
termination of the Executive's employment.

                    (C)  The Executive's employment hereunder may be terminated 
with cause by the Corporation in the event the Executive shall commit any act of
fraud against the Corporation, or any criminal act. Any such act shall be deemed
to be a breach of this agreement by the Executive.

          SEVENTH:  In the event that the Executive is unable, for any reason to
          -------
perform the duties required of him under this agreement for a period of thirty 
(30) consecutive days, the Corporation shall have the right at its option to 
suspend payment of all forms of compensation provided for in paragraph FOURTH
hereof from and after the expiration of such thirty (30) day period. Any such
suspension shall not extend the term of employment hereunder nor shall the
Executive be entitled to retroactive compensation for the period of such
suspension.

          EIGHTH:   All notices, requests, demands and other communications 
          ------
provided for by this agreement shall be in writing and shall be deemed to have 
been given at the time when mailed by any general or branch United States Post 
Office, by first class postage prepaid, certified or registered

                                       7

<PAGE>
 
                                    SAMPLE

mail, return receipt requested, and addressed to the address of the respective 
party stated below or to such changed address as such party may have fixed by 
like notice similarly given:

          To the Corporation:      Korn/Ferry International
                                   Executive Offices
                                   237 Park Avenue
                                   New York, New York 10017

          To the Executive:        ___________________________

                                   ___________________________

                                   ___________________________

                                   ___________________________

provided, however, that any notice of change of address shall be deemed to have 
been given only upon receipt, or first attempted delivery by the post office.

          NINTH:       This agreement shall inure to the benefit of and be 
          -----
binding upon the Corporation, its successors and assigns, and the Executive, his
heirs, executors, administrators and legal representatives, except that this 
agreement shall terminate upon the death of the Executive.

          TENTH:       This agreement sets forth the entire agreement and 
          -----
understanding between the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements and understandings of any kind and 
every nature between them.

          ELEVENTH:    This agreement shall not be changed, modified or amended 
          --------
except by a writing signed by the parties hereto.

          TWELFTH:     This agreement shall be governed by the laws of the State
          -------
of New York.

                                       8

<PAGE>
 
                                    SAMPLE

          THIRTEENTH:  In the event that any provision of this agreement, or 
          ----------
the application of any provision hereof, is declared to be illegal, invalid or 
otherwise unenforceable by a court of competent jurisdiction, the remainder of 
this agreement shall not be affected except to the extent necessary to delete 
such illegal, invalid or unenforceable provision, unless the provision held 
invalid shall substantially impair the benefit of the remaining portion of this 
agreement.

          FOURTEENTH:  This agreement may be executed in counterparts, each of 
          ----------
which shall be deemed an original, but all of which together shall constitute 
one and the same instrument.

IN WITNESS WHEREOF, this agreement has been executed by the parties in New York 
on the day and in the year first above written.



                                        KORN/FERRY INTERNATIONAL


                                        By:__________________________________
                                             Peter L. Dunn



                                        EXECUTIVE:



                                        _____________________________________


                                       9



<PAGE>
 
                                                                   Exhibit 10.12

                           KORN/FERRY INTERNATIONAL

               DEFERRED COMPENSATION ELECTION FORM - APRIL 1998

         THIS FORM MUST BE COMPLETED AND RETURNED TO CHARLES RAFOWICZ
            IN THE LOS ANGELES OFFICE NO LATER THAN APRIL 22, 1998.

Full Name (print or type):______________________________Soc. Sec. No.___________

FISCAL 1998 BONUS AWARD -  DISCRETIONARY PORTION: I hereby irrevocably elect to 
defer the receipt of the following amount from any Discretionary Portion of the 
Fiscal 1998 bonus to be awarded to me on April 30, 1998 (minimum deferral of 
$5,000 or 5% whichever is greater, maximum deferral of 100%): PLEASE COMPLETE
ONLY ONE

     A. $_________ -OR- B._________% -OR- C.________% in excess of $________  

REMAINING 1998 BASE SALARY: I hereby irrevocably elect to defer the receipt of 
the following portion of my base salary compensation beginning May 1, 1998 
through December 31, 1998 ($5,000 or 5% minimum whichever is greater, maximum 
90%):
PLEASE COMPLETE ONLY ONE

     A. $_________ -OR- B._________% per pay period


In making this election to defer compensation, I acknowledge and certify that:

 .    Korn/Ferry International, at its sole and complete discretion, may reduce 
     the amounts to be deferred by me under this program.

 .    The amounts deferred will be paid to me on April 30, 1999 with interest
     equal to Korn/Ferry International's bank borrowing rate compounded
     annually.

 .    If I terminate
 employment with Korn/Ferry International, retire, or die
     prior to April 30, 1999, the amounts deferred plus interest will be paid to
     me or to my beneficiary on April 30, 1999.

 .    The deferral of salary and/or bonus compensation may reduce the amount of
     contributions I might be eligible to make or Korn/Ferry International
     company contributions I might be eligible to receive under the Employee Tax
     Deferred Compensation (401k) Plan for the 1998 Plan Year and/or the 1999
     Plan Year.

 .    My election to defer receipt of compensation is not due to reliance upon
     any financial or tax advice given by Korn/Ferry International.

 .    Under current interpretation of the law, my deferral should serve to reduce
     income for Federal income tax purposes, but the Internal Revenue Service
     has not and will not give a ruling to that effect.

__________________________________________             _______________
Signature                                               Date  

================================================================================
FOR COMPANY USE ONLY

Deferral accepted as follows:

     Discretionary Bonus deferral: $________, __________, % (_____% in excess 
     $________)

     Salary Compensation deferral: $___________, ___________% per 16 pay periods

By ___________________________________________       Date___________________





<PAGE>
 
                                                                   Exhibit 10.13





                  KORN/FERRY INTERNATIONAL FUTURESTEP, INC.,
                            A Delaware corporation



                           STOCK PURCHASE AGREEMENT

<PAGE>
 
                             STOCK PURCHASE AGREEMENT

          THIS STOCK PURCHASE AGREEMENT (this "Agreement"), is dated as of
December 1, 1997 ("Agreement Date"), by and among KORN/FERRY INTERNATIONAL, a
California corporation ("KFI"), BILL GROSS' IDEALAB!, a California corporation
("Idealab"), MAN JIT SINGH, an individual ("Singh"), and KORN/FERRY
INTERNATIONAL FUTURESTEP, INC., a Delaware corporation ("Company").

                                  ARTICLE 1.

                                   PREAMBLE

     1.1  The primary business purpose of the Company is to create, establish
and maintain a business providing executive search and ancillary services to
candidates and client companies on-line through the medium of the Internet (the
"Business"). It is the intention of the Shareholders that the Company be a
subsidiary of KFI. The Certificate of Incorporation, as filed with the Delaware
Secretary of State, and the By-Laws which the Shareholders intend to adopt for
the Company, are annexed hereto as Exhibits A and B, respectively.

     1.2  The purpose of this Agreement is to set forth the amount, terms and
conditions under which the Shareholders will purchase shares of the Company's
voting common stock, and the nature and terms and conditions
 under which the
Shareholders will contribute other assets and services to the Company.

     1.3  Concurrently herewith, the Shareholders and the Company are entering
into a certain Shareholders Agreement of even date (the "Shareholders
Agreement"), pursuant to which the Shareholders and the Company have agreed upon
matters relating to the management, control and operation of the Company, and
restrictions upon the transfer of shares of the capital stock of the Company.

     1.4  Concurrently herewith, KFI and the Company are entering into a certain
License Agreement of even date, pursuant to which, among other things, KFI will
license to the Company the use of its name in connection with the Business (the
"License Agreement").

     1.5  Concurrently herewith, the Company and Singh are entering into a
certain Employment Agreement of even date, pursuant to which, among other
things, Singh is employed as the President and Chief Executive Officer of the
Company, for the term and consideration, and subject to the conditions, set
forth therein (the "Singh Employment Agreement").

     1.6  Concurrently herewith, KFI and Singh are entering into a certain
Agreement of even date (the "KFI/Singh Agreement") and a certain Stock
Repurchase Agreement of even date

<PAGE>
 
(the "KFI Stock Repurchase Agreement"), pursuant to which, among other things,
Singh is admitted as a shareholder of KFI, subject to the terms and conditions
set forth therein.

     1.7  The Shareholders intend that the Shareholders Agreement, the License
Agreement, the Singh Employment Agreement, the KFI/Singh Agreement, and the KFI
Stock Repurchase Agreement, be executed and delivered concurrently with the
execution and delivery of this Agreement.

     1.8  Unless otherwise defined herein, all capitalized terms used in this
Agreement, shall have the meanings set forth in the Appendix annexed hereto.

          NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:

                                  ARTICLE 2.

                            INITIAL CAPITALIZATION

     2.1  Purchase of Initial Shares. Concurrently herewith, each Shareholder
          --------------------------                                         
shall purchase the following number of shares of the voting common stock of the
Company for the cash consideration indicated, which when issued shall constitute
"Shares" within the meaning of this Agreement and the Shareholders Agreement:


                                             Cash Purchase Price            
     Name of Shareholder     No. Shares    Per Share         Total           
     -------------------     ----------    -------------------------         
     KFI                      1,142,778    $.025          $28,569.45  
     Idealab                    318,334    $.025          $ 7,958.35  
     Singh                      950,000    $.025          $23,750.00
                             ----------                   ---------- 
          Totals              2,411,112                   $60,277.80 
            
                                                               
                                              Cash Purchase Price  
     Name of Shareholder    No. of Shares   Per Share         Total      
     -------------------    -------------   ------------------------
     KFI                      7,085,722     $.25       $1,771,430.50    
     Idealab                    768,166     $.25       $  192,041.50     
                            -------------              -------------     
          Totals              7,853,888                $1,963,472.00     

     2.2  Payment of Purchase Price and Issuance of Stock Certificates. Each
          ------------------------------------------------------------      
Shareholder shall pay to the Company the Total Cash Purchase Price for his or
its Shares within one (1) business day after the Agreement Date by check or by
wire transfer of immediately available funds. Upon receipt of such funds,
certificates evidencing the Shares so purchased shall be issued and delivered to
the applicable Shareholder.

                                      -2-

<PAGE>
 
                                  ARTICLE 3.

                SECOND ROUND FINANCING AND SUBSEQUENT OFFERINGS

     3.1  Purchase of Shares. At the times specified in Section 3.2 below, KFI
          ------------------                                                  
hereby agrees to purchase the following additional number of shares of voting
common stock ("Additional Shares") of the Company for the cash consideration
specified, which when issued will constitute "Shares" within the meaning of this
Agreement and the Shareholders Agreement:

                                                  Cash Purchase Price       
     Name of Shareholder    No. of Shares      Per Share         Total        
     -------------------    -------------      -------------------------  
     KFI                      2,600,000        $0.50          $1,300,000   

     3.2  Timing of Purchase of Additional Shares. It is anticipated that the
          ---------------------------------------                            
Additional Shares required to be purchased by KFI as set forth in Section 3.1
above will be purchased in increments during calendar year 1998, as additional
cash capital is needed by the Company. From time to time hereafter, the Board of
Directors of the Company shall determine the amount and timing of the capital
needed by the Company from the sale of these additional Shares. When such a
determination is made by the Board of Directors of the Company, the Company
shall give KFI at least thirty (30) days prior written notice specifying the
amount of capital needed ("Capital Call Amount") and the date on or before which
such capital must be funded (the "Capital Call Date"). Subject to the provisions
of Sections 3.3 and 3.5 below, KFI shall fund 100% of the Capital Call Amount
specified in the notice from the Company on or before the Capital Call Date, and
concurrently therewith, KFI shall be issued one (1) share of the voting common
stock of the Company for each $0.50 so funded.

     3.3  Right of Idealab to Purchase Additional Shares. The number of shares
          ----------------------------------------------                      
of the issued and outstanding voting common stock of the Company owned from time
to time by Idealab after the issuance of the Shares pursuant to Article 2 of
this Agreement, expressed as a percentage of the total issued and outstanding
voting common stock of the Company, shall be referred to herein as the "Idealab
Percentage." It is the intention of the parties hereto that if and when the
Company offers the Additional Shares, Idealab shall have the right (but not the
obligation) to maintain its then Idealab Percentage with respect to the total
issued and outstanding shares of the voting common stock of the Company.
Accordingly, if and when the Company offers to sell any of the Additional
Shares, Idealab shall have the right (but not the obligation) to purchase from
the Company that number (or less) of such Additional Shares which, after giving
effect to the issuance of all Additional Shares then being offered and sold by
the Company at that time, will result in Idealab's percentage ownership of the
then issued and outstanding voting common stock of the Company being equal to
(or if Idealab elects, less than) the Idealab Percentage immediately prior to
such issuance. In order to exercise this right, Idealab must give written notice
to the Company and KFI of its intention to exercise such right, specifying the
number of shares it intends to purchase, sufficiently in advance of the date
scheduled for the consummation of the sale of such Additional Shares so that the
sale of such Additional Shares is not delayed beyond such scheduled date. If
Idealab exercises such right, it

                                      -3-

<PAGE>
 
shall thereupon become obligated to consummate the purchase of the shares it has
elected to purchase for the same price, on the same terms and conditions, and at
the same time as the other Additional Shares are to be sold.

     3.4  Rights of Idealab and KFI to Purchase Other Shares. The number of
          --------------------------------------------------
shares of the issued and outstanding voting common stock of the Company owned
from time to time after the issuance of the Additional Shares by KFI, its
subsidiaries, employees, shareholders, partners, and trusts and other entities
formed by KFI for the purpose of holding shares of the capital stock of the
Company, expressed as a percentage of the total issued and outstanding voting
common stock of the Company, shall be referred to herein as the " KFI
Percentage." It is the intention of the parties hereto that if and when the
Company sells other shares of its voting common stock in addition to the
Additional Shares (the "Other Shares") in transactions that do not involve
licensing, promotion or other agreements with the purchaser in addition to the
purchase of the Other Shares and which do not constitute public offerings of
such Other Shares ("Subsequent Offerings"), KFI and Idealab shall each have the
right (but not the obligation) to maintain its then KFI Percentage or its then
Idealab Percentage, as applicable, with respect to the total issued and
outstanding shares of the voting common stock of the Company. Accordingly, KFI
and Idealab shall each have the right (but not the obligation) to purchase that
number of shares of the voting common stock being offered in the Subsequent
Offerings which, after giving effect to the issuance of all shares then being
offered and sold by the Company at that time, will result in KFI's or Idealab's
percentage ownership of the then issued and outstanding voting common stock of
the Company, as applicable, being equal to (or if KFI or Idealab elect to
purchase less, less than) the KFI Percentage or Idealab Percentage, as
applicable, immediately prior to the issuance of such Other Shares in the
Subsequent Offerings. In order to exercise this right, KFI and Idealab must give
written notice to the Company of its intention to exercise such right,
specifying the number of shares it intends to purchase, sufficiently in advance
of the date scheduled for the consummation of the sale of the Other Shares being
offered in the Subsequent Offerings so that the sale of such Other Shares is not
delayed beyond such scheduled date. If KFI or Idealab exercises such right, it
shall thereupon become obligated to consummate the purchase of the Other Shares
it has elected to purchase for the same price, on the same terms and conditions,
and at the same time as the Other Shares being offered in the Subsequent
Offerings are to be sold. The Company shall give Idealab and KFI prompt written
notice of such Subsequent Offerings sufficiently in advance of the date
scheduled for the consummation of the sale of the Other Shares.

     3.5  Right to Designate Purchasers. KFI and Idealab shall each have the
          -----------------------------                                     
right to assign their respective rights to purchase some or all of the
Additional Shares and the Other Shares under this Article 3 to another Person or
otherwise designate other Persons to purchase some or all of the Additional
Shares or Other Shares ("Designated Purchaser") ; provided and on condition
that: (a) no such Designated Purchaser constitutes a "Non-Permitted Transferee"
within the meaning of the Shareholders Agreement; (b) each such Designated
Purchaser executes a document, in form and substance satisfactory to the Company
and its counsel, pursuant to which such Designated Purchaser agrees to be bound
by the provisions of this Agreement and the Shareholders Agreement, agrees to
become a "Shareholder" hereunder and thereunder, and agrees to receive and hold
all such Additional Shares or Other Shares subject to the restrictions,

                                      -4-

<PAGE>
 
terms and conditions of this Agreement and the Shareholders Agreement; and (c)
no such assignment or designation by KFI or Idealab shall relieve KFI or Idealab
from their respective obligations under this Article 3 to purchase such Shares,
at the times and for the purchase price and on the other terms and conditions
set forth herein. The rights afforded to KFI and Idealab under this Section 3.5
may, subject to compliance with applicable securities laws, be effected by KFI
or Idealab first acquiring such Additional Shares or Other Shares from the
Company and thereafter transferring such Additional Shares or Other Shares to
the Designated Purchasers.

                                  ARTICLE 4.

                           RESTRICTIONS ON TRANSFER

     4.1  Restrictions on Transferability. The Shares shall not be transferable
          -------------------------------                                      
except upon the conditions specified in Section 4.2 below, which conditions are
intended to insure compliance with the provisions of the Securities Act of 1933,
as amended (the "Securities Act"). Each Shareholder will cause any proposed
transferee of the Shares to agree to take and hold such securities subject to
the provisions and upon the conditions specified in this Article 4.

     4.2  Legends on Stock Certificates. Each stock certificate evidencing
          -----------------------------                                   
Shares purchased pursuant to this Agreement and any other securities issued in
respect of such Shares upon or in connection with any Reorganization Transaction
(collectively, the "Restrictive Securities") shall (unless otherwise permitted
by the provisions of Section 4.3 below) bear the following legend or a legend
substantially similar to the following legend:

          "THE SECURITIES EVIDENCED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
          PURPOSE ONLY AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
          1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE
          SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED,
          PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT IN COMPLIANCE
          WITH THE REQUIREMENTS OF SUCH ACT AND OF ANY APPLICABLE STATE
          SECURITIES LAWS. AT THE REQUEST OF THE COMPANY, SUCH COMPLIANCE SHALL
          BE EVIDENCED BY AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE
          REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, FROM COUNSEL
          FOR THE TRANSFEROR (WHO IS REASONABLY SATISFACTORY TO THE COMPANY AND
          ITS COUNSEL), TO THE EFFECT THAT THE SECURITIES PROPOSED TO BE
          TRANSFERRED MAY BE TRANSFERRED WITHOUT COMPLIANCE WITH THE
          REGISTRATION AND QUALIFICATION REQUIREMENTS OF FEDERAL AND APPLICABLE
          STATE SECURITIES LAWS, IN RELIANCE UPON AN APPLICABLE EXEMPTION FROM
          SUCH REGISTRATION AND QUALIFICATION REQUIREMENTS."


                                      -5-

<PAGE>
 
     4.3  Removal of Securities Act Legend. The legend required under Section
          --------------------------------                                   
4.2 above on any stock certificate evidencing the Shares may be removed or not
required if (a) such Shares have been registered under the Securities Act or (b)
the Company receives an unqualified written opinion of counsel addressed to the
Company, in form and substance reasonably satisfactory to the Company and its
counsel (from counsel who shall be reasonably satisfactory to the Company and
its counsel) to the effect that the proposed Transfer of the Restricted
Securities may be effected without registration under the Securities Act or any
applicable state securities laws, or (c) the Company receives a "no-action"
letter from the Securities and Exchange Commission (and any necessary state
securities administrator) to the effect that the distribution of such securities
without registration under the Securities Act will not result in a
recommendation by the Staff of the Commission (or such administrators) that
action be taken with respect thereto.

     4.4  Other Restrictions on Transfer. The Shares shall also be subject to
          ------------------------------                                     
the restrictions on transfer and other provisions of the Shareholders Agreement.

     4.5  Investment Representations and Warranties. Each Shareholder hereby
          -----------------------------------------                         
represents and warrants as indicated below:

          (a) Each individual Shareholder has reviewed, completed and executed
Schedule 1 hereto which is incorporated herein and made a part hereof by this
reference, and the information provided to the Company in such Schedule 1 is
complete and accurate.

          (b) By reason of its, his or her business or financial experience,
each such Shareholder has such knowledge and experience in financial and
business matters that such Shareholder is capable of evaluating the merits and
risks of an investment in the Company and of making an informed investment
decision with respect thereto, and has the capacity to protect its, his or her
interests in connection with its, his or her purchase of the Shares.

          (c) Each Shareholder has adequate means of providing for current needs
and personal contingencies, has no need for liquidity in the investment, and is
able to bear the economic risk of an investment in the Company of the size
contemplated.

          (d) Each Shareholder will purchase his or its Shares for his or its
own account and for investment purposes only, and such Shareholder is not
purchasing the Shares with a view to or for sale in connection with any
distribution, resale or disposition of such Shares.

          (e) The information provided in this Section (including without
limitation the information set forth in Schedule 1 hereto) may be relied upon in
determining whether the offering in which each such Shareholder proposes to
participate is exempt from registration under the Securities Act, and applicable
state securities laws and the rules promulgated thereunder.

          (f) Each Shareholder will notify the Company immediately of any
material changes to the information given by such Shareholder in this Section.

                                      -6-

<PAGE>
 
          (g) Each Shareholder such has a high degree of familiarity with the
business and operations of the Company and understands and has evaluated the
merits and risks inherent in any investment in the Shares.

          (h) Each Shareholder is relying solely upon his or its own knowledge
of the Company and its prospects for the purpose of making his decision to
purchase the Shares, and understands that no person has been authorized in
connection with this offering to make any representations, and any
representations given or made, must not be relied upon as having been authorized
by the Company.

     4.6  Acknowledgments and Covenants. Each Shareholder acknowledges and
          -----------------------------                                   
agrees as follows:

          (a) The Company has made available to each Shareholder the opportunity
to ask questions of, and receive answers from, persons acting on behalf of the
Company concerning the Company and the proposed sale of Shares pursuant to this
Agreement, and otherwise to obtain any additional information, to the extent the
Company or its executive officers possess such information or could acquire it
without unreasonable effort or expense, necessary to verify the accuracy of the
information which such Shareholder has acquired.

          (b) Each Shareholder further acknowledges and agrees with the Company
that (i) the Shares, when issued, will not have been registered under the
Securities Act, or qualified under any state securities laws; (ii) any sale or
other disposition of the Shares will be limited to a transaction permitted by
the Shareholders Agreement and as to which, in each instance, an exemption from
the registration requirements of the Securities Act and any applicable
requirements under state securities laws can be established to the satisfaction
of the Company and its counsel.

                                  ARTICLE 5.

                             ADDITIONAL COVENANTS

     5.1  Reimbursement of KFI. The Company shall reimburse KFI for all legal
          --------------------                                               
fees, and other costs, expenses and capital expenditures, incurred or paid by
KFI in connection with the business of the Company, including, without
limitation, sums paid to Man Jit Singh on account of the Singh Employment
Agreement, trademark expenses, costs of equipment, advertising expenses, wages
paid to other employees of the Company, rent and license fees, and legal fees
incurred in connection with the preparation and negotiation of agreements with
Self Discovery Dynamics LLC and Dow Jones & Company (collectively referred to
herein as "Reimbursable Amounts"). Reimbursable Amounts shall not include legal
fees incurred in connection with the negotiation, preparation and implementation
of this Agreement, the Shareholders Agreement, the Singh Employment Agreement,
the License Agreement, the KFI/Singh Agreement and the KFI Stock Repurchase
Agreement. Such reimbursement shall be made within 3 business days after KFI
makes demand therefor, which may be given at any time after the date of this
Agreement. At KFI's option, exercisable in its sole and absolute discretion, all
or any portion of such

                                      -7-

<PAGE>
 
Reimbursable Amounts and all or any portion of any loans or other advances made
by KFI to or for the benefit of the Company may, in lieu of such reimbursement
and repayment, be credited against any sums otherwise payable by KFI for the
purchase of Shares by KFI under this Agreement.

     5.2  Rights to Disclose Participation of Idealab and Involvement with
          ----------------------------------------------------------------
Company. The Company and KFI shall each have the right to publicly disclose the
- -------                                                                        
participation and involvement of Idealab in the Company and its businesses.
Idealab shall prominently include and display on that page of its Internet site
on which Internet links for its other portfolio of companies or businesses is
included or displayed, an Internet link (in form and substance reasonably
satisfactory to the Company) to all of the Company's Internet sites. Idealab
shall have the right to publicly disclose its participation and involvement in
the Company and its businesses and shall have the right to include the Company
in its list of portfolio companies or businesses.

                                  ARTICLE 6.

                                 MISCELLANEOUS

     6.1  Transfer of Stock. Except as otherwise expressly provided in this
          -----------------                                                
Agreement and the Shareholders Agreement, each Shareholder agrees not to
transfer any of his shares of capital stock of the Company, without complying
with the provisions of such Agreements.

     6.2  Injunctive Relief. It is acknowledged that it will be impossible to
          -----------------                                                  
measure the damages that would be suffered by the nonbreaching party if any
party fails to comply with the provisions of this Agreement and that in the
event of any such failure, the nonbreaching parties will not have an adequate
remedy at law. The non-breaching parties shall, therefore, be entitled to obtain
specific performance of the breaching party's obligations hereunder and to
obtain immediate injunctive relief. The breaching party shall not urge, as a
defense to any proceeding for such specific performance or injunctive relief,
that the nonbreaching parties have an adequate remedy at law.

     6.3  Certificate of Incorporation and By-Laws. Subject to the provisions of
          ----------------------------------------                              
this Agreement, the Certificate of Incorporation and By-Laws of the Company may
be amended in any manner permitted thereunder, except that neither the
Certificate of Incorporation nor the By-Laws shall be amended in any manner that
would conflict with, or be inconsistent with, the provisions of this Agreement.

     6.4  Preparation of Agreement. It is acknowledged by each party that such
          ------------------------                                            
party either had separate and independent advice of counsel or the opportunity
to avail itself or himself of separate and independent legal counsel. Each party
hereto understands and acknowledges that the law firm of Morrison & Foerster
LLP, is legal counsel to KFI only, and does not represent any other parties to
this Agreement. In light of these and other relevant facts it is further
acknowledged that no party shall be construed to be solely responsible for the
drafting hereof,

                                      -8-

<PAGE>
 
and therefore any ambiguity shall not be construed against any party as the
alleged draftsman of this Agreement.

     6.5  Cooperation and Further Assurances. Each party agrees, without further
          ----------------------------------                                    
consideration, to cooperate and diligently perform any further acts, deeds and
things and to execute and deliver any documents that may from time to time be
reasonably necessary or otherwise reasonably required to consummate, evidence,
confirm and/or carry out the intent and provisions of this Agreement, all
without undue delay or expense.

     6.6  Interpretation.
          -------------- 

          6.6.1 Entire Agreement/No Collateral Representations. Each party
                ----------------------------------------------            
expressly acknowledges and agrees that this Agreement, the Shareholders
Agreement, the Singh Employment Agreement, the License Agreement, the KFI/Singh
Agreement and the KFI Stock Repurchase Agreement: (i) are the final expression
of the parties agreements with respect to the subject matter hereof and thereof
and are the complete and exclusive statements of the terms of such agreement;
(ii) supersedes any prior or contemporaneous agreements, promises, assurances,
guarantees, representations, understandings, conduct, proposals, conditions,
commitments, acts, course of dealing, warranties, interpretations or terms of
any kind, oral or written (collectively and severally, the "Prior Agreements"),
and that any such Prior Agreements are of no force or effect except as expressly
set forth herein and therein; and (iii) may not be varied, supplemented or
contradicted by evidence of Prior Agreements. Any agreement hereafter made shall
be ineffective to modify, supplement or discharge the terms of this Agreement,
in whole or in part, unless such agreement is in writing and signed by the party
against whom enforcement of the modification or supplement is sought.

          6.6.2 Waiver. No breach of any agreement or provision herein
                ------                                                
contained, or of any obligation under this Agreement, may be waived, nor shall
any extension of time for performance of any obligations or acts be deemed an
extension of time for performance of any other obligations or acts contained
herein, except by written instrument signed by the party to be charged or as
otherwise expressly authorized herein. No waiver of any breach of any agreement
or provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof, or a waiver or relinquishment of any other agreement
or provision or right or power herein contained.

          6.6.3 Remedies Cumulative. Except as otherwise provided in this
                -------------------                                      
Agreement, the remedies of each party under this Agreement, the Shareholders
Agreement, the Singh Employment Agreement, the KFI/Singh Agreement, the KFI
Stock Repurchase Agreement, and the License Agreement are cumulative and shall
not exclude any other remedies to which such party may be lawfully entitled.

          6.6.4 Severability. If any term or provision of this Agreement or the
                ------------                                                   
application thereof to any Person or circumstance shall, to any extent, be
determined to be invalid, illegal or unenforceable under present or future laws
effective during the term of this Agreement, then and, in that event: (i) the
performance of the offending term or provision (but

                                      -9-

<PAGE>
 
only to the extent its application is invalid, illegal or unenforceable) shall
be excused as if it had never been incorporated into this Agreement, and, in
lieu of such excused provision, there shall be added a provision as similar in
terms and amount to such excused provision as may be possible and be legal,
valid and enforceable, and (ii) the remaining part of this Agreement (including
the application of the offending term or provision to persons or circumstances
other than those as to which it is held invalid, illegal or unenforceable) shall
not be affected thereby and shall continue in full force and effect to the
fullest extent provided by law.

          6.6.5 No Third Party Beneficiary. The parties specifically disavow any
                --------------------------                                      
desire or intention to create any third party beneficiary obligations, and
specifically declare that no third party shall have any rights hereunder or any
right of enforcement hereof.

          6.6.6 No Reliance Upon Prior Representation. The parties acknowledge
                -------------------------------------                         
that no other party has made any oral representation or promise which would
induce them prior to executing this Agreement to change their position to their
detriment, partially perform, or part with value in reliance upon such
representation or promise; the parties acknowledge that they have taken such
action at their own risk; and the parties represent that they have not so
changed their position, performed or parted with value prior to the time of
their execution of this Agreement.

          6.6.7 Headings; References; Incorporation; Gender. The headings used
                -------------------------------------------                   
in this Agreement are for convenience and reference purposes only, and shall not
be used in construing or interpreting the scope or intent of this Agreement or
any provision hereof. References to this Agreement shall include all amendments
or renewals thereof. All cross-references in this Agreement, unless specifically
directed to another agreement or document, shall be construed only to refer to
provisions within this Agreement, and shall not be construed to be referenced to
the overall transaction or to any other agreement or document. Any exhibit
referenced in this Agreement shall be construed to be incorporated in this
Agreement. As used in this Agreement, each gender shall be deemed to include the
other gender, including neutral genders or genders appropriate for entities, if
applicable, and the singular shall be deemed to include the plural, and vice
versa, as the context requires.

     6.7  Enforcement.
          ----------- 

          6.7.1 Applicable Law. This Agreement and the rights and remedies of
                --------------                                               
each party arising out of or relating to this Agreement (including, without
limitation, equitable remedies) shall be solely governed by, interpreted under,
and construed and enforced in accordance with the laws (without regard to the
conflicts of law principles thereof) of the State of Delaware, as if this
agreement were made, and as if its obligations are to be performed, wholly
within the State of Delaware.

          6.7.2 Consent to Jurisdiction; Service of Process. Any action or
                -------------------------------------------               
proceeding arising out of or relating to this Agreement shall be filed in and
heard and litigated solely before the state courts of California located within
the County of Los Angeles. Each party generally and unconditionally accepts the
exclusive jurisdiction of such courts and to venue therein,

                                      -10-

<PAGE>
 
consents to the service of process in any such action or proceeding by certified
or registered mailing of the summons and complaint in accordance with the notice
provisions of this Agreement, and waives any defense or right to object to venue
in said courts based upon the doctrine of "Forum Non Conveniens". Each party
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement.

          6.7.3 Attorneys' Fees and Costs. If any party institutes or should the
                -------------------------                                       
parties otherwise become a party to any Action Or Proceeding based upon or
arising out of this Agreement including, without limitation, to enforce or
interpret this Agreement or any provision hereof, or for damages by reason of
any alleged breach of this Agreement or any provision hereof, or for a
declaration of rights in connection herewith, or for any other relief, including
equitable relief, in connection herewith, the Prevailing Party in any such
Action Or Proceeding, whether or not such Action Or Proceeding proceeds to final
judgment or determination, shall be entitled to receive from the non-Prevailing
Party as a cost of suit, and not as damages, all Costs And Expenses of
prosecuting or defending the Action Or Proceeding, as the case may be,
including, without limitation, reasonable Attorneys' And Other Fees.

     6.8  Notices. Any notice, approval, disapproval, consent, waiver, or other
          -------                                                              
communication (collectively, "Notices") required or permitted to be given under
this Agreement shall be in writing and shall be delivered personally or mailed,
certified or registered United States mail, postage prepaid, return receipt
requested, or sent by Federal Express or other reliable overnight carrier for
next business day delivery, or by fax. All Notices shall be deemed delivered (a)
if personally served, when actually delivered to the address of the person to
whom such Notice is given, (b) if sent via Federal Express or other overnight
courier for next business day delivery, one (1) business day following the date
on which the Notice is given to Federal Express or other overnight courier, (c)
if by mail, three (3) days following deposit in the United States mail, or (d)
if by fax, when the transmitting telecopier machine has confirmed that the
Notice has been completed or sent without error. All Notices shall be addressed
to the party to whom such Notice is to be given at the party's address set forth
below or as such party shall otherwise direct by Notice sent pursuant to this
Section 6.8:

     If to the Company:   Korn/Ferry International Futurestep, Inc.
                          c/o Korn/Ferry International                    
                          1800 Century Park East, Suite 900              
                          Los Angeles, California 90067                  
                          Attention:  Man Jit Singh, President            
                          Telephone:  (310) 843-4121                      
                          Telecopier: (310) 553-8640                      

     If to KFI:           Korn/Ferry International
                          1800 Century Park East, Suite 900            
                          Los Angeles, California 90067            
                          Attention:  Peter L. Dunn, Vice Chairman  
                          Telephone:  (310) 843-4100      
                          Telecopier: (310) 553-8640       

                                     -11-

<PAGE>
 
          With a copy to:    Michael C. Cohen, Esq.            
                             Morrison & Foerster LLP           
                             555 West Fifth Street, 35th Floor 
                             Los Angeles, California 90013     
                             Telephone:  (213) 892-5404         
                             Telecopier: (213) 892-5454          
                          
          If to Idealab:     idealab!                 
                             130 West Union Street    
                             Pasadena, CA 91103       
                             Attention:  Mr. William Gross   
                             Telephone:  (626) 585-6900
                             Telecopier: (626) 535-2742 

          With a copy to:    idealab!                                     
                             130 West Union Street                        
                             Pasadena, CA 91103                           
                             Attention:  Ms. Marcia Goodstein
                             Telephone:  (626) 535-2765
                             Telecopier: (626) 535-2742 

          If to Singh:       Mr. Man Jit Singh                  
                             1050 Brooklawn Drive             
                             Los Angeles, CA 90077            
                             Telephone:  (310) 278-1572       
                             Telecopier: (310) 278-1572        
                             
          With a copy to:    Paul H. Irving, Esq.            
                             Manatt, Phelps & Phillips LLP   
                             11355 W. Olympic Boulevard      
                             Los Angeles, CA 90064           
                             Telephone:  (310) 312-4000       
                             Telecopier: (310) 312-4224       
                                 

     6.9  Counterparts. This Agreement may be executed in counterparts, each of
          ------------                                                         
which shall be deemed an original, and all of which together shall constitute
one and the same instrument, binding on all parties hereto. Any signature page
of this Agreement may be detached from any counterpart of this Agreement and re-
attached to any other counterpart of this Agreement identical in form hereto by
having attached to it one or more additional signature pages.

     6.10 Assignment. Except as otherwise expressly provided in this Agreement,
          ----------                                                           
no party hereto may assign their rights or delegate their duties under this
Agreement without the prior written consent of all of the other parties hereto;
provided, however, that KFI may, without the

                                     -12-

<PAGE>
 
consent of any other party hereto, assign its rights and delegate its duties
under this Agreement to any Person which acquires all or substantially all of
the assets of KFI, either through a purchase of such assets, by merger, by
consolidation, by reorganization, or otherwise.

     IN WITNESS WHEREOF, the Company and the Shareholders have executed this
Agreement in counterparts.

                              KORN/FERRY INTERNATIONAL,                  
                              a California corporation                       
                                                                             
                                                                             
                              By: /s/ Peter L. Dunn                   
                                 -----------------------------------------
                              Peter L. Dunn,                                 
                              Chief Administrative Officer                   
                                                                             
                                                                             
                              BILL GROSS' IDEALAB!,                          
                              a California corporation                       
                                                                             
                                                                             
                              By: /s/ Marcia Goodstein   
                                 ----------------------------------------- 
                                    Marcia Goodstein, COO
                                                                             
                                                                          
                              KORN/FERRY INTERNATIONAL FUTURESTEP, INC.,  
                               a Delaware corporation                     
                                                                          
                                                                          
                              By: /s/ Man Jit Singh
                                 -----------------------------------------      
                                  MAN JIT SINGH, PRESIDENT                


                              By: /s/ Man Jit Singh    
                                 -----------------------------------------  
                                  MAN JIT SINGH

                                     -13-

<PAGE>
 
                                   APPENDIX

                              CERTAIN DEFINITIONS


     1.   "Action Or Proceeding" means any and all claims, suits, actions,
notices, inquiries, proceedings, hearings, arbitrations or other similar
proceedings, including appeals and petitions therefrom, whether formal or
informal, governmental or non-governmental, or civil or criminal.

     2.   "Affiliate" means with respect to any person or entity ("Person No.
1"), any other person or entity which either (i) directly or indirectly owns or
controls Person No. 1, or (ii) is directly or indirectly owned or controlled by
Person No. 1, or (iii) is under direct or indirect common control with Person
No. 1. The term "control" (and its corollaries) includes, without limitation,
ownership of interests representing a majority of total voting power in an
entity, and "ownership" (and its corollaries) includes, without limitation,
ownership of a majority of the equity interests in an entity.

     3.   "Agreement" means this Agreement and all agreements, exhibits,
schedules and appendices expressly annexed hereto.

     4.   "Attorneys' And Other Fees" means attorneys' fees, accountants' fees,
fees of other professionals, witness fees (including experts engaged by the
parties, but excluding shareholders, officers, employees or partners of the
parties), and any and all other similar fees incurred in the prosecution or
defense of an Action Or Proceeding.

     5.   "Costs And Expenses" means the cost to take depositions, the cost to
arbitrate a dispute, if applicable, and the costs and expenses of travel and
lodging incurred with respect to an Action Or Proceeding.

     6.   "Person" means any individual, firm, corporation, trust, partnership
(limited or general), limited liability company, sole proprietorship or
association.

     7.   "Prevailing Party" means the party who is determined to prevail by the
court after its consideration of all damages and equities in an Action Or
Proceeding, whether or not the Action Or Proceeding proceeds to final judgment.
The court shall retain the discretion to determine that no party is the
Prevailing Party in which case no party shall be entitled to recover its Costs
And Expenses.

     8.   "Reorganization Transaction" means any stock split, stock dividend,
merger or consolidation involving the Company, any recapitalization of the
Company, or any transaction involving the sale of all or substantially all of
the assets of the Company.

<PAGE>
 
     9.   "Shares" means all of the issued and outstanding shares of the capital
stock of the Company now owned or hereafter acquired by the Shareholders,
including, without limitation, the shares purchased and to be purchased pursuant
to the Stock Purchase Agreement.

     10.  "Stock" means all issued and outstanding shares of the voting capital
stock of the Company and includes the Shares.

     11.  "Transfer" when used with reference to the Shares means any sale,
transfer, assignment, pledge, grant of a security interest in, gift or other
disposition of any of the Shares, or any right or interest therein, with or
without consideration, directly or indirectly, whether voluntary or involuntary,
by operation of law or otherwise.

                                      -2-

<PAGE>
 
                                  SCHEDULE 1

                        REPRESENTATIONS AND WARRANTIES

          Each individual Shareholder should initial each of the following
representations, if applicable:
                 ------------- 

          MJS  (a)  Shareholder is a U.S. Person. (A "U.S. Person" includes (i)
          ---
any natural person resident in the United States, or (ii) any partnership or
corporation organized or incorporated under the laws of the United States).

          MJS  (b)  Shareholder's individual net worth or joint net worth with
          ---
his spouse exceeds $1,000,000.

          MJS  (c)  Shareholder's income (including, but not limited to, salary,
          ---
bonus, interest and dividend income and vested contributions to any pension or
profit sharing plan) was in excess of $200,000 in each of the last two years,
and Shareholder reasonably expects an income in excess of $200,000 in this year.

          MJS  (d)  Shareholder's joint income with his spouse (including, but
          ---
not limited to salary, bonus, interest and dividend income and vested
contributions to any pension or profit sharing plan) was in excess of $300,000
in each of the last two years, and Shareholder reasonably expects a joint income
in excess of $300,000 in this year.

          MJS  (f)  Shareholder's investment in the Shares does not exceed 10%
          ---
of Shareholder's net worth or joint net worth with Shareholder's spouse.

                                                  SHAREHOLDER


                                                    /s/ Man Jit Singh
                                                 -----------------------------



<PAGE>
 
                                                                   Exhibit 10.14




                  KORN/FERRY INTERNATIONAL FUTURESTEP, INC.,
                            A Delaware corporation



                            SHAREHOLDERS AGREEMENT

<PAGE>
 
                               TABLE OF CONTENTS


<TABLE> 
<CAPTION> 
                                                                        Page
                                                                        ----
<S>                                                                     <C> 
ARTICLE 1.  PREAMBLE..................................................   1
ARTICLE 2.  ELECTION OF DIRECTORS.....................................   2
            2.1  Election of Directors................................   2
ARTICLE 3.  MANAGEMENT AND CONTROL....................................   3
            3.1  General..............................................   3
            3.2  Limitation on Certain Actions by the Company.........   3
            3.3  Limitation on Certain Actions by Idealab.............   4
            3.4  Certain Obligations of the Company...................   4
            3.5  Activities of KFI....................................   4
ARTICLE 4.  GENERAL RESTRICTION ON TRANSFER OF SHARES.................   5
            4.1  General Restricition.................................   5
            4.2  Non-Permitted Transferee.............................   5
            4.3  Permitted Transfers..................................   5
            4.4  Company Options......................................   6
ARTICLE 5.  SALES OF SHARES...........................................   6
            5.1  Notice of Sale.......................................   6
            5.2  Options to Purchase..................................   6
            5.3  Notice of Exercise of Options........................   6
            5.4  Failure to Exercise Options for All Offered Shares...   7
ARTICLE 6.  INVOLUNTARY TRANSFERS.....................................   7
            6.1  Notice of Involuntary Transfer.......................   7
            6.2  Options to Purchase..................................   7
            6.3  Notice of Exercise of Options........................   8
            6.4  Failure to Exercise Options..........................   8
ARTICLE 7.  FAILURE TO GIVE NOTICES...................................   9
            7.1  Applicability of Articles 5 and 6....................   9
            7.2  Notice of Exercise...................................   9
ARTICLE 8.  BANKRUPTCY, DISSOLUTION, OR CHANGE
            OF CONTROL OF A SHAREHOLDER...............................   9
            8.1  Company Option to Purchase...........................   9
            8.2  Shareholders Option to Purchase......................  10
            8.3  Failure to Exercise Options..........................  10
ARTICLE 9.  TERMINATION
 OF EMPLOYMENT, DEATH AND DISABILITY OF SINGH..  10
            9.1  Company Option to Purchase...........................  10
            9.2  Shareholders Option to Purchase......................  11
            9.3  Failure to Exercise Options..........................  11
            9.4  Definition of Disability.............................  11
            9.5  Singh Put Right......................................  11
</TABLE>
 

                                -i-            
       

<PAGE>
 

<TABLE>
<S>                                                                         <C>
ARTICLE 10. DETERMINATION OF PURCHASE PRICE................................ 12
            10.1   Purchase Price Under Articles 6, 7, AND 8............... 12
            10.2   Purchase Price Under Article 9.......................... 12
            10.3   Goodwill................................................ 13
            10.4   Allocation of Total Purchase Price...................... 13
ARTICLE 11. PAYMENT OF PURCHASE PRICE...................................... 13
            11.1   Purchases Under Articles 6, 7, 8 and 9.................. 13
            11.2   Insurance Policies...................................... 14
ARTICLE 12. SPECIAL PUT AND CALL OPTIONS................................... 14
            12.1   Put Rights and Call Rights.............................. 14
                   12.1.1  IPO Put Rights.................................. 14
                   12.1.2  Other Put Rights................................ 15
                   12.1.3  IPO Call Rights................................. 15
                   12.1.4  Other Call Rights............................... 15
            12.2   IPO Could Have Been Completed........................... 16
            12.3   IPO Opinions............................................ 16
            12.4   Appraisers.............................................. 17
            12.5   Purchase Price and Payment Terms........................ 17
ARTICLE 13. MISCELLANEOUS.................................................. 19
            13.1   Transfer of Stock....................................... 19 
            13.2   Legend.................................................. 19 
            13.3   Certificate of Incorporation and By-Laws................ 19 
            13.4   Injunctive Relief....................................... 19 
            13.5   Preparation of Agreement................................ 19 
            13.6   Cooperation and Further Assurances...................... 19 
            13.7   Interpretation.......................................... 20 
                   13.7.1  Entire Agreement/No Collateral Representations.. 20 
                   13.7.2  Waiver.......................................... 20 
                   13.7.3  Remedies Cumulative............................. 20 
                   13.7.4  Severability.................................... 20 
                   13.7.5  No Third Party Beneficiary...................... 21 
                   13.7.6  No Reliance Upon Prior Representation........... 21 
                   13.7.7  Headings; References; Incorporation; Gender..... 21 
            13.8   Enforcement............................................. 21 
                   13.8.1. Applicable Law.................................. 21 
                   13.8.2  Consent to Jurisdiction; Service of Process..... 21 
                   13.8.3  Attorneys' Fees and Costs....................... 22 
            13.9   Notices................................................. 22 
            13.10  Spousal Consent; Change in Marital Status............... 23 
            13.11  Counterparts............................................ 24 
            13.12  Assignment.............................................. 24 
</TABLE>
 

APPENDIX     CERTAIN DEFINITIONS


                                     -ii- 

<PAGE>
 
                            SHAREHOLDERS AGREEMENT


          THIS SHAREHOLDERS AGREEMENT (this "Agreement"), is dated as of
December 1, 1997 ("Agreement Date"), by and among KORN/FERRY INTERNATIONAL, a
California corporation ("KFI"), BILL GROSS' IDEALAB!, a California corporation
("Idealab"), MAN JIT SINGH, an individual ("Singh"), and KORN/FERRY
INTERNATIONAL FUTURESTEP, INC., a Delaware corporation ("Company").

                                  ARTICLE 1.

                                   PREAMBLE


     1.1  The primary business purpose of the Company is to create, establish
and maintain a business providing executive search and ancillary services to
candidates and client companies on-line through the medium of the Internet (the
"Business"). It is the intention of the Shareholders that the Company be a
subsidiary of KFI.

     1.2  The Shareholders are purchasing shares of the Company's voting common
stock pursuant to that certain Stock Purchase Agreement of the same date
herewith between the Company and the Shareholders (the "Stock Purchase
Agreement"), in the amounts and for the cash consideration set forth therein. As
set forth in the Stock Purchase Agreement, KFI will initially own and control at
least a majority of the outstanding shares of the capital stock of the Company.

     1.3  Concurrently herewith, KFI and the Company are entering into a certain
License Agreement of even date, pursuant to which, among other things, KFI will
license to the Company the use of its name in connection with the Business (the
"License Agreement").

     1.4  Concurrently herewith, the Company and Singh are entering into a
certain Employment Agreement of even date, pursuant to which, among other
things, Singh is employed as the President and Chief Executive Officer of the
Company, for the term and consideration, and subject to the conditions, set
forth therein (the "Singh Employment Agreement").

     1.5  Concurrently herewith, KFI and Singh are entering into a certain
Agreement of even date ("KFI/Singh Agreement") and a certain Stock Repurchase
Agreement of even date ("KFI Stock Repurchase Agreement"), pursuant to which,
among other things, Singh is admitted as a shareholder of KFI, subject to the
terms and conditions set forth therein.

     1.6  The Shareholders intend that the Stock Purchase Agreement, the License
Agreement, the Singh Employment Agreement, the KFI/Singh Agreement, and the KFI
Stock Repurchase Agreement, be executed and delivered concurrently with the
execution and delivery of this Agreement.

<PAGE>
 
     1.7  Unless otherwise defined herein, all capitalized terms used in this
Agreement, shall have the meanings set forth in the Appendix annexed hereto.

          NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:

                                  ARTICLE 2.

                             ELECTION OF DIRECTORS

     2.1  Election of Directors.
          --------------------- 

          2.1.1   At each annual meeting of the Stockholders, or at each special
meeting of the Stockholders involving the election of directors of the Company,
and at any other time at which Stockholders will have the right to or will vote
for or render consent in writing regarding the election of directors of the
Company, then and in each event, the Shareholders hereby covenant and agree to
vote all Shares presently owned or hereafter acquired by them (whether owned of
record or over which any Shareholder exercises voting control) in favor of the
following actions:

          (a)  to fix and maintain the number of directors at five (5);

          (b)  to cause and maintain the election to the Board of Directors of
the Company (i) three (3) representatives designated by KFI, who shall initially
be Richard Ferry, Michael Boxberger, Peter Dunn (individually, a "KFI Director"
and collectively the "KFI Directors"), and (ii) so long as Idealab owns of
record at least five (5) percent (5%) of the issued and outstanding shares of
the voting capital stock of the Company, one (1) representative designated by
Idealab, who shall initially be Bill Gross (the "Idealab Director"), and (iii)
Singh himself, as long as Singh remains employed by the Company. The KFI
Directors, the Idealab Director and Singh, in his capacity as a director
pursuant to this subparagraph, are referred to herein as "Designated Directors"
and individually as a "Designated Director."

          2.1.2   None of the parties entitled to designate directors hereunder
shall vote to remove any Designated Director, except for bad faith or willful
misconduct. Each of the parties hereto shall vote or cause to be voted all
Shares owned by them and over which they have voting control (a) to remove from
the Board of Directors any director designated by any party pursuant hereto at
the request of such party, and (b) to fill any vacancy in the membership of the
Board of Directors with a designee of the party whose Designated Director's
resignation or removal from the Board caused such vacancy.

          2.1.3   If any party entitled to designate directors hereunder fails
to give notice to the Company as provided above, it shall be deemed that the
Designated Director of such party then serving as director shall be its designee
for reelection.

                                      -2-

<PAGE>
 
          2.1.4   If Idealab shall cease to be entitled to a Designated Director
because for any reason whatsoever its ownership of Stock falls below five
percent (5%) or Singh shall cease to be entitled to be a Designated Director
because for any reason he ceases to be employed by the Company, then the Idealab
Director and/or Singh, as applicable, may be removed as a director of the
Company by Stockholder Approval, and the vacancy created by such removal may be
filled by the vote or written consent of a majority of the remaining Designated
Directors. Thereafter, at each annual meeting of the Stockholders, or at each
special meeting of the Stockholders involving the election of directors of the
Company, and at any other time at which Stockholders will have the right to or
will vote for or render consent in writing regarding the election of directors
of the Company, the replacement on the Board of Directors for the Idealab
Director and/or Singh, as applicable, shall be elected by Stockholder Approval.

                                  ARTICLE 3.

                            MANAGEMENT AND CONTROL

     3.1  General. The business and affairs of the Company shall be managed,
          -------                                                           
controlled and operated in accordance with its Certificate of Incorporation and
By-Laws, as the same may be amended from time to time, except that neither the
Certificate of Incorporation nor the By-Laws shall be amended in any manner that
would conflict with, or be inconsistent with, the provisions of this Agreement.

     3.2  Limitation on Certain Actions by the Company. Without the prior
          --------------------------------------------                   
written consent of KFI, which consent may be exercised or withheld in the sole
discretion of KFI, the Company shall not, directly or indirectly, voluntarily or
involuntarily, by operation of law or otherwise, do or cause to be done any of
the following, and none of the Shareholders shall vote their Shares, or give
proxies or written consents, to approve any of the following:

          3.2.1   enter into any Reorganization Transaction or adopt or effect
     any plan involving a Reorganization Transaction;

          3.2.2   liquidate or dissolve or adopt any plan of liquidation or
     dissolution, or file any petition in bankruptcy, or enter into any
     assignment for the benefit of creditors; or

          3.2.3   issue, sell or deliver any capital stock or debt securities
     (or securities convertible into capital stock or debt securities) of the
     Company, or any interest therein, or issue, sell or grant any warrants or
     options to acquire any capital stock of the Company, or any interest
     therein, or conduct any public offering of any of its securities, or
     voluntarily register any securities of the Company or the Company itself
     under the Securities Exchange Act of 1934, as amended;

          3.2.4   amend or restate the Company's Certificate of Incorporation or
     By-Laws;

                                      -3-

<PAGE>
 
          3.2.5  allow any KFI Competitor or any Company Competitor to use the
     Company's services for any purpose or to have access to any service, data
     or other information used or provided by the Company;

          3.2.6  merge, consolidate, acquire, sell assets to or otherwise enter
     into any business relationship or transaction with a KFI Competitor or a
     Company Competitor;

          3.2.7  during the three (3) year period following the Agreement Date,
     become a KFI Competitor, except with respect to KFI's North American
     executive search business involving jobs at an annual salary level of
     $120,000 or less. During such three (3) year period, KFI may continue to
     engage in such business in competition with the Company; or

          3.2.8  during the two (2) year period following the Agreement Date,
     solicit for job placements outside of North America.

     3.3  Limitation on Certain Actions by Idealab. Without the prior written
          ----------------------------------------                           
consent of KFI, which consent may be exercised or withheld in the sole
discretion of KFI, so long as Idealab owns any Stock, or options, rights or
warrants to acquire any Stock, and for a period of seven (7) years after the
date on which it ceases to own any Stock, neither it nor any Person which is
under its control, shall, directly or indirectly, do or cause to be done any of
the following:

          3.3.1  engage in any Job Placement Competitive Business; or

          3.3.2  become a Job Placement Competitor.


     3.4  Certain Obligations of the Company.
          ---------------------------------- 

          3.4.1  During the three (3) year period following the Agreement
Date, the Company shall refer all inquiries and deliver all resumes regarding
job placements involving annual salary levels in excess of $120,000 to KFI,
without compensation, unless specifically requested not to do so by a client or
candidate.

          3.4.2  The Company shall refer all job search inquiries and deliver
all resumes which the Company receives and does not intend to pursue to KFI,
without compensation.

     3.5  Activities of KFI. It is understood that KFI is currently engaged in
          -----------------                                                   
businesses, either directly or indirectly through others, which are or may
become competitive with the business of the Company, either now or in the
future. The Company, and all other parties to this Agreement, and all Persons
who hereafter become parties to this Agreement or become otherwise bound by the
provisions of this Agreement, hereby acknowledge and agree that KFI may continue
to engage in such businesses, even if such businesses are or become competitive
with the Company, and the pursuit of any such businesses, even if competitive
with the interests of the

                                      -4-

<PAGE>
 
Company, shall not be deemed wrongful or improper. KFI may hereafter engage in 
or possess an interest in other activities, businesses or business ventures of 
any nature or description, independently or with others, similar or dissimilar 
to the activities of the Company, and the pursuit of any such future activities,
businesses or business ventures, even if competitive with the interests of the 
Company, shall not be deemed wrongful or improper. KFI shall not be obligated to
present any particular investment or opportunity to the Company, even if such 
opportunity is of a character that, if presented to the Company, could be taken 
by the Company, and KFI shall have the right to take for its own account 
(individually or as a partner or fiduciary with or of other Persons) or to 
recommend to others any such particular investment or other opportunity. KFI 
shall not be required to contribute or otherwise transfer to the Company any 
existing businesses or any future activities, businesses or business ventures 
hereafter engaged in by KFI, and neither the Company nor any of the Shareholders
are entitled to any of the income or profits derived therefrom. To the fullest 
extent permitted by applicable law, the Company and the Shareholders hereby 
waive and relinquish any and all rights which they may now have or hereafter 
acquire under applicable law which are inconsistent with the provisions of this 
Section.

                                  ARTICLE 4.

                   GENERAL RESTRICTION ON TRANSFER OF SHARES

     4.1  General Restriction.  No Shareholder shall Transfer any of his Shares 
          -------------------
or any right or interest therein, without the prior written consent of the 
Company and all of the Shareholders, except a Transfer which meets the 
requirements of this Agreement. Any purported Transfer in violation of any 
provision of this Agreement shall be void and ineffectual, and shall not operate
to Transfer any interest or title in or to the Shares.

     4.2  Non-Permitted Transferee.  Notwithstanding anything contained in this 
          ------------------------
Agreement to the contrary, under no circumstances may any of the Shares or any 
right or interest therein, be Transferred to a Person (referred to herein as a 
"Non-Permitted Transferee") who is, as of the date of Transfer, a Company 
Competitor or a KFI Competitor, without first obtaining the prior written 
consent of the Company and KFI, which consent may be withheld or given in the 
sole discretion of the Company or KFI, respectively. In the event any 
Non-Permitted Transferee acquires any Shares or any interest therein, then (a) 
such Non-Permitted Transferee shall receive and hold such Shares subject to all 
of the restrictions and other provisions of this Agreement and (b) such Non-
Permitted Transferee shall be required to Transfer all such Shares to a Person
who is not a Non-Permitted Transferee within thirty (30) days after first
acquiring such Shares, such Transfer to be made in accordance with the
provisions of this Agreement.

     4.3  Permitted Transfers.  Notwithstanding anything contained in this 
          -------------------
Agreement to the contrary, none of the restrictions on transfer or other 
provisions set forth in Articles 5 through 12 of this Agreement, shall apply to 
any Transfer by a Shareholder of his or its Shares, or any interest therein, 
which constitutes a Permitted Transfer.

                                      -5-

<PAGE>
 
     4.4  Company Options.  The rights and obligations of the Company to 
          ---------------
purchase Shares pursuant to Article 5 through 12 of this Agreement shall at all 
times be subject to the laws of the State of Delaware governing the rights of a 
corporation to purchase its own Stock.

                                  ARTICLE 5.

                                SALES OF SHARES

     5.1  Notice of Sale.  If any Shareholder intends to Sell its or his Shares 
          --------------
to a specified Person, then at least thirty (30) days prior to the date of the 
consummation of the proposed Sale by such Shareholder (the "Offering 
Shareholder") of any of its or his Shares, or any right or interest therein (the
"Offered Shares"), the Offering Shareholder shall give written notice of such 
proposed Sale ("Article 5 Notice of Sale") to the President and to the Secretary
of the Company and to all other Shareholders. The Article 5 Notice of Sale must 
set forth the name of the proposed transferee, the number of Offered Shares to 
be Sold, the price per Share, and all other terms and conditions of the proposed
Sale. Immediately thereafter, the President or the Secretary shall cause a 
special meeting of the Directors to be called to afford the Company the 
opportunity to exercise its option to purchase the Offered Shares pursuant to 
this Article 5. The meeting shall be called for a date not later than fifteen 
(15) days after the date of delivery to the Company of the Article 5 Notice of 
Sale.

     5.2  Options to Purchase.  At the meeting the Company shall be given the 
          -------------------
first option to purchase all or any portion of the Offered Shares. In the event 
that the Company cannot or does not elect to purchase all of the Offered Shares 
at the meeting, then written notice (the "Article 5 Company Notice") shall be 
given to the Shareholders (other than the Offering Shareholder) within five (5) 
days after such meeting, setting forth the number of Offered Shares not 
purchased by the Company, the number of Offered Shares each of the remaining 
Shareholders is entitled to purchase, assuming all remaining Shareholders elect 
to purchase the full amount of Offered Shares they are entitled to purchase, the
price and payment terms per Offered Share, and all other material facts. Each of
the remaining Shareholders (other than the Offering Shareholder) shall have the 
option, which must be exercised, if at all, by delivering written notice of 
exercise to the Company within five (5) business days after delivery of the 
Article 5 Company Notice, to purchase that portion of the Offered Shares not 
purchased by the Company that the number of Shares held by it or him bears to 
the number of Shares held by all Shareholders electing to purchase the Offered 
Shares. The right of the Company and the Shareholders to exercise their options 
to purchase the Offered Shares pursuant to this Article 5 is not dependent upon 
all of the Offered Shares being purchased by the Company and/or Shareholders.

     5.3  Notice of Exercise of Options.
          -----------------------------

          5.3.1  Prior to the expiration of the thirty (30) day period following
the date of delivery by the Offering Shareholder of the Article 5 Notice of Sale
("Option Period"), the Company shall give written notice of exercise of the 
options to the Offering Shareholder, setting

                                      -6-

<PAGE>
 
forth the name of each party who has elected to purchase the Offered Shares and 
the number of Offered Shares to be purchased by each party.

          5.3.2  Each Shareholder who exercises his option to purchase shall be 
deemed to have authorized the Company to give, on its or his behalf, notice of 
exercise of the option. Upon the giving of such notice of exercise to the 
Offering Shareholder, each of the parties named therein shall be obligated to 
purchase the number of Offered Shares which such party has elected to purchase 
for the same purchase price and on all other terms and conditions set forth in 
the Article 5 Notice of Sale.

     5.4  Failure to Exercise Options for All Offered Shares. In the event that 
          --------------------------------------------------
the Company and/or the Shareholders do not elect to purchase all of the Offered 
Shares, then at any time during the sixty (60) days following the expiration of 
such Option Period, subject to the provisions of Section 4.2 above, the Offering
Shareholder may Sell those Offered Shares not purchased by the Company and the 
Shareholders ("Remaining Offered Shares"), to the person, at the price and on 
the terms specified in the Article 5 Notice of Sale, provided that such person 
executes a document, in form and substance satisfactory to the Company and its 
counsel, pursuant to which such person agrees to be bound by the provisions of 
this Agreement, and thereby agrees to receive and hold all the Offered Shares so
purchased subject to all of the provisions and restrictions contained herein. If
the Remaining Offered Shares have not been so Sold prior to the expiration of 
such sixty (60) day period, the Remaining Offered Shares shall again become 
subject to all of the provisions of this Agreement and may not thereafter be 
Transferred except in the manner and on the terms set forth in this Agreement.

                                  ARTICLE 6.

                             INVOLUNTARY TRANSFERS

     6.1  Notice of Involuntary Transfer. At least thirty (30) days prior to an 
          ------------------------------
Involuntary Transfer by a Shareholder (the "Transferring Shareholder") of any of
his Shares, or any right or interest therein (the "Article 6 Shares"), the
Transferring Shareholder shall give written notice of such proposed Involuntary
Transfer ("Notice of Involuntary Transfer") to the President and the Secretary
of the Company and to all other Shareholders. The Notice of Involuntary Transfer
must set forth the name and address of the proposed transferee, the number of
Article 6 Shares to be transferred, and all other material circumstances
surrounding the proposed Involuntary Transfer. Immediately thereafter, the
President or the Secretary shall cause a special meeting of the Directors to be
called to afford the Company the opportunity to exercise its option to purchase
the Article 6 Shares. The meeting shall be called for a date not later than
fifteen (15) days after the date of delivery to the Company of the Notice of
Involuntary Transfer.

     6.2  Options to Purchase. At the meeting the Company shall be given the 
          -------------------
first option to purchase all or any portion of the Article 6 Shares. In the 
event that the Company cannot or does not elect to purchase all of the Article 6
Shares at the meeting, then written notice (the "Article 6 Company Notice") 
shall be given to the Shareholders (other than the Transferring Shareholder) 
within five (5) days after such meeting, setting forth the number of Article 6 
Shares

                                      -7-
   

<PAGE>
 
not purchased by the Company, the number of Article 6 shares each of the 
remaining Shareholders is entitled to purchase, assuming all remaining 
Shareholders elect to purchase the full amount of Article 6 Shares they are 
entitled to purchase, the price and payment terms per Article 6 Share, 
determined in accordance with Article 10 and 11 below, and all other material
facts. Each of the remaining Shareholders (other than the Transferring
Shareholder) shall have the option, which must be exercised, if at all, by
delivering written notice of exercise to the Company within five (5) business
days after delivery of the Article 6 Company Notice, to purchase that portion
of the Article 6 Shares not purchased by the Company that the number of Shares
held by it or him bears to the number of Shares held by all Shareholders
electing to purchase the Article 6 Shares. The right of the Company and the
Shareholders to exercise their options to purchase the Article 6 Shares pursuant
to this Article 6 is not dependent upon all of the Article 6 Shares being
purchased by the Company and/or Shareholders.

     6.3  Notice of Exercise of Options.
          -----------------------------

          6.3.1  Prior to the expiration of the thirty (30) day period following
the date of delivery by the Transferring Shareholder of the Article 6 Notice of
Sale ("Article 6 Option Period"), the Company shall give written notice of
exercise of the options to the Transferring Shareholder, setting forth the name
of each party who has elected to purchase the Article 6 Shares and the number of
Article 6 Shares to be purchased by each party.

          6.3.2  Each Shareholder who exercises his option to purchase shall be 
deemed to have authorized the Company to give, on his behalf, notice of 
exercise of the option. Upon the giving of such notice of exercise to the 
Transferring Shareholder, each of the parties named therein shall be obligated
to purchase the number of Article 6 Shares which such party has elected to
purchase for the purchase price set forth in Article 10 of this Agreement and
the purchase price shall be paid in the manner provided in Article 11 of this
Agreement.

     6.4  Failure to Exercise Options. In the event that the Company and/or the 
          ---------------------------
Shareholders do not elect to purchase all of the Article 6 Shares prior to the 
expiration of the Article 6 Option Period, then at any time during the sixty 
(60) days following the expiration of the Article 6 Option Period, subject to 
the provisions of Section 4.2 above, the Article 6 Shares not purchased by the 
Company and the Shareholders (the "Remaining Article 6 Shares") may be 
Involuntarily Transferred, to the person and in the manner set forth in the
Notice of Involuntary Transfer, provided that such person executes a document,
in form and substance satisfactory to the Company and its counsel, pursuant to
which such person agrees to be bound by the provisions of this Agreement, and
thereby agrees to receive and hold all the Remaining Article 6 Shares subject to
all of the provisions and restrictions contained herein. If the Remaining
Article 6 Shares have not been so Involuntarily Transferred prior to the
expiration of such sixty (60) day period, the Remaining Article 6 Shares shall
again become subject to all of the provisions of this Agreement and may not
thereafter be Transferred except in the manner and on the terms set forth in
this Agreement.

                                      -8-


  

<PAGE>
 
                                   ARTICLE 7.

                            FAILURE TO GIVE NOTICES

     7.1  Applicability of Articles 5 and 6. The failure to give an Article 5
          ---------------------------------                                  
Notice of Sale or an Article 6 Notice of Involuntary Transfer as required in
Articles 5 and 6 hereof shall not prevent the exercise by the Company and/or the
Shareholders of their options to purchase the Offered Shares or the Article 6
Shares as provided therein. If a Sale or an Involuntary Transfer has occurred
and no Article 5 Notice of Sale or Notice of Involuntary Transfer was given, any
Shareholder may call a combined meeting of the directors and Shareholders at any
time thereafter for the purpose of determining whether the Company and/or the
Shareholders will exercise their options to purchase the Offered Shares or
Article 6 Shares, or any portion thereof, which have been Sold or Involuntarily
Transferred substantially in the manner set forth in Articles 5 and 6 hereof.

     7.2  Notice of Exercise. In the event the Company and/or the Shareholders
          ------------------                                                  
elect to exercise their options to acquire all or a portion of the Offered
Shares or Article 6 Shares as set forth in Articles 5 or 6 above, then the
notice of exercise shall be mailed to the person who acquired such Shares, at
the last known address of such person which the Company shall be able to
ascertain. The person acquiring such Shares shall be required to sell such
Shares, and shall execute and deliver the certificates evidencing such Shares,
to the Company and/or the Shareholders pursuant to the exercise of such options.

                                   ARTICLE 8.

         BANKRUPTCY, DISSOLUTION, OR CHANGE OF CONTROL OF A SHAREHOLDER

     8.1  Company Option to Purchase. If(a) a petition in bankruptcy is filed by
          --------------------------                                            
or against any Shareholder, or (b) any Shareholder elects to dissolve, or (c)
control, directly or indirectly, either through stock ownership, by contract or
otherwise, of any Shareholder is acquired by a Company Competitor or a KFI
Competitor, or (d) five percent (5%) or more of the voting power of a
Shareholder is acquired, directly or indirectly, by a Company Competitor or a
KFI Competitor (such Shareholder being referred to herein as the "Article 8
Shareholder"), then the Company shall have the first option to purchase all or
any portion of the Article 8 Shareholder's Shares ("Article 8 Shares") from the
Article 8 Shareholder or other person who would otherwise acquire such Shares
(referred to herein as the "Article 8 Shareholder's Successor"). Such option
shall be exercisable by the Company during the thirty (30) day period following
the date on which the applicable event referred to in subparagraphs (a) through
(d) above occurs and must be exercised, if at all, by giving written notice of
exercise to such Article 8 Shareholder or such Article 8 Shareholder's Successor
prior to the expiration of said thirty (30) day period. If the Company duly
exercises such option, then the Article 8 Shareholder or the Article 8
Shareholder's Successor shall be required to sell such Article 8 Shares to the
Company for the purchase price specified in Article 10 and such purchase price
shall be paid in the manner provided for in Article 11 hereof.

                                      -9-

<PAGE>
 
     8.2  Shareholders Option to Purchase. If for any reason the Company does
          -------------------------------                                    
not exercise its option to purchase all of said Article 8 Shares, then the
Company shall give each of the remaining Shareholders prompt written notice
specifying the number of Article 8 Shares not purchased by the Company and other
relevant information. Each of the remaining Shareholders shall have the option
to purchase that portion of the Article 8 Shares not purchased by the Company
that the number of Shares held by it or him bears to the number of Shares held
by all Shareholders electing to purchase the Article 8 Shares. Such options
shall be exercisable by the Shareholders during the sixty (60) day period
following the date on which the applicable event referred to in Section 8.1
above occurs, and must be exercised, if at all, by giving written notices of
exercise to such Article 8 Shareholder or such Article 8 Shareholder's Successor
prior to the expiration of said sixty (60) day period. If the Shareholders duly
exercise such options, then the Article 8 Shareholder or the Article 8
Shareholder's Successor shall be required to sell all such Article 8 Shares to
such Shareholders for the purchase price specified in Article 10 hereof and such
purchase price shall be paid in the manner provided for in Article 11 hereof.

     8.3  Failure to Exercise Options. If the Company and the Shareholders shall
          ---------------------------                                           
fail to exercise their options to purchase all of the Article 8 Shares of the
Article 8 Shareholder within the time periods referred to in Sections 8.1 and
8.2 above, then such options shall automatically expire with respect to the
Article 8 Shares not so purchased by the Company and the Shareholders
("Remaining Article 8 Shares"); provided, however, that such Remaining Article 8
Shares and the Article 8 Shareholder or the Article 8 Shareholder's Successor
shall nevertheless remain subject to the terms and conditions of this Agreement
with respect to such Remaining Article 8 Shares, including, without limitation,
the provisions of Article 2 hereof, and such Remaining Article 8 Shares may not
thereafter be Transferred by the Article 8 Shareholder or the Article 8
Shareholder's Successor without compliance with all of the terms and conditions
of this Agreement.

                                   ARTICLE 9.

            TERMINATION OF EMPLOYMENT, DEATH AND DISABILITY OF SINGH

     9.1  Company Option to Purchase. In the event that for any reason
          --------------------------                                  
whatsoever (a) Singh's employment with the Company is terminated, with or
without cause, by the Company or by Singh, or Singh otherwise is no longer
employed by the Company, or (b) Singh becomes and remains "Disabled" (as defined
in Section 9.4 below) for a consecutive period of sixty (60) days or for
nonconsecutive periods aggregating one hundred and twenty (120) days
("Disability Period"), and Singh's employment with the Company is terminated by
the Company pursuant to Section 7.4 of the Singh Employment Agreement, or (c)
Singh's employment with the Company is terminated because of the death of Singh,
then the Company shall have the first option to purchase all or any portion of
Singh's Shares ("Article 9 Shares") from Singh or Singh's estate, executor,
administrator or guardian, as applicable ("Article 9 Shareholder's Successor").
The date on which Singh's employment with the Company is terminated by reason of
the foregoing shall sometimes be referred to herein as the Employment
Termination Date. Such option shall be exercisable by the Company during the
sixty (60) day period following the Employment Termination Date, and must be
exercised, if at all, by giving written notice of exercise to Singh

                                     -10-

<PAGE>
 
or the Article 9 Shareholder's Successor prior to the expiration of said sixty
(60) day period. If the Company duly exercises such option, then Singh or the
Article 9 Shareholder's Successor shall be required to sell such Article 9
Shares to the Company for the purchase price specified in Article 10 hereof and
such purchase price shall be paid in the manner provided for in Article 11
hereof.

     9.2  Shareholders Option to Purchase. If for any reason the Company does
          -------------------------------                                    
not exercise its option to purchase all of said Article 9 Shares, then the
Company shall give each of the remaining Shareholders prompt written notice
specifying the number of Article 9 Shares not purchased by the Company and other
relevant information. Each of the remaining Shareholders shall have the option
to purchase that portion of the Article 9 Shares not purchased by the Company
that the number of Shares held by it or him bears to the number of Shares held
by all Shareholders electing to purchase the Article 9 Shares. Such options
shall be exercisable by the Shareholders during the sixty (60) day period
following the Employment Termination Date, and must be exercised, if at all, by
giving written notices of exercise to Singh or the Article 9 Shareholder's
Successor prior to the expiration of said sixty (60) day period. If the
Shareholders duly exercise such options, then Singh or the Article 9
Shareholder's Successor shall be required to sell all such Article 9 Shares to
such Shareholders for the purchase price specified in Article 10 hereof and such
purchase price shall be paid in the manner provided for in Article 11 hereof.

     9.3  Failure to Exercise Options. If the Company and the Shareholders shall
          ---------------------------                                           
fail to exercise their options to purchase all of the Article 9 Shares within
the time periods referred to in Sections 9.1 and 9.2 above, then such options
shall automatically expire with respect to the Article 9 Shares not purchased
(the "Remaining Article 9 Shares"); provided, however, that such Remaining
Article 9 Shares, Singh and the Article 9 Shareholder's Successor shall
nevertheless remain subject to all of the terms and conditions of this
Agreement, including, without limitation, the provisions of Article 2 hereof.

     9.4  Definition of Disability. For purposes of this Agreement, the term
          -----------------------                                          
"Disabled" shall have the meaning set forth in Section 7.4 of the Singh
Employment Agreement.

     9.5  Singh Put Right. If Section 9.1(a) applies and Singh's employment
          ---------------                                                   
with the Company was terminated by the Company without cause, or Section 9.1(b)
or Section 9.1(c) applies, and as of the date of termination of such employment,
Singh had been employed with the Company for a continuous period of at least
thirty-six (36) months, and the Company and the Shareholders have not exercised
their options to purchase all of the Article 9 Shares within the time periods
referred to in Sections 9.1 and 9.2 above, then for the thirty (30) day period
following the expiration of the sixty (60) day period referred to in Section 9.2
above, Singh shall have the right to require the Company to purchase all of
Singh's Shares. Such right (sometimes referred to herein as the "Singh Put
Right") shall be exercisable by Singh during the thirty (30) day period referred
to herein and must be exercised, if at all, by giving written notice of exercise
to the Company prior to the expiration of said thirty (30) day period. If Singh
duly exercises the Singh Put Right, then the Company shall be required to
purchase all of Singh's Shares, subject to the provisions of Section 4.4 above,
for the purchase price specified in Article 10 hereof and such purchase price
shall be paid in the manner provided for in Article 11 hereof.

                                      -11-

<PAGE>
 
                                  ARTICLE 10.

                        DETERMINATION OF PURCHASE PRICE

     10.1 Purchase Price Under Articles 6, 7, and 8. The total purchase price
          -----------------------------------------                          
per share of each Share purchased pursuant to Articles 6, 7 and 8 hereof shall
be an amount equal to the Per Share Book Value.

     10.2 Purchase Price Under Article 9. As a general rule, the total purchase
          ------------------------------                                       
price per share for each Share purchased pursuant to Article 9 hereof shall be
an amount equal to the higher of the average amount per Share paid by Singh for
such Shares ("Per Share Cost") or the Per Share Book Value; provided, however,
that:

          10.2.1   If Section 9.1(a) applies and Singh's employment with the
     Company was terminated by the Company without cause, or Section 9.1(b) or
     Section 9.1(c) applies, and as of the date of termination of such
     employment, Singh had been employed with the Company for a continuous
     period of at least eighteen (18) months, but not more than thirty-six (36)
     months, the total purchase price for each Share purchased pursuant to
     Article 9 hereof shall be the greater of (a) the Per Share Cost, or (b) the
     Per Share Book Value, or (c) if the Company has sold additional shares of
     its capital stock to other investors as of the date of termination of such
     employment (sometimes referred to herein as the "Second Round Financing"),
     $1.20 per share, or (d) if as of the date of termination of such employment
     the Company has completed an IPO, the Per Share Market Value; provided,
     further however, that if Section 10.2.1(c) applies, the purchase price
     shall be payable only if and when the Company has completed an IPO or an
     IPO could have been completed within the meaning of Section 12.2 below,
     such payment to be made in the manner set forth in Article 11 hereof.

          10.2.2   If Section 9.1(a) applies and Singh's employment with the
     Company was terminated by the Company without cause or by Singh for any
     reason, or Section 9.1(b) or Section 9.1(c) applies, and as of the date of
     termination of such employment, Singh had been employed with the Company
     for a continuous period of at least thirty-six (36) months, the total
     purchase price for each Share purchased pursuant to Article 9 hereof shall
     be the greater of (a) the Per Share Cost, or (b) the Per Share Book Value,
     or (c) if the Company has completed the Second Round Financing as of the
     date of termination of such employment, $1.50 per share, or (d) if as of
     the date of termination of such employment the Company has completed an
     IPO, the Per Share Market Value; provided, further however, that if Section
     10.2.2(c) applies, the purchase price shall be payable only if and when the
     Company has completed an IPO or an IPO could have been completed within the
     meaning of Section 12.2 below, such payment to be made in the manner set
     forth in Article 11 hereof.

          10.2.3   If Section 9.5 applies, the total purchase price for each
     Share purchased pursuant to Section 9.5 shall be the greater of (a) the Per
     Share Cost, or (b) the Per Share

                                      -12-

<PAGE>
 
     Book Value, or (c) if the Company has completed the Second Round Financing
     as of the date of termination of such employment, $1.50 per share, or (d)
     if as of the date of termination of such employment the Company has
     completed an IPO, the Per Share Market Value; provided, further however,
     that if Section 10.2.3(c) applies, the purchase price shall be payable only
     if and when the Company has completed an IPO or an IPO could have been
     completed within the meaning of Section 12.2 below, such payment to be made
     in the manner set forth in Article 11 hereof.

     10.3 Goodwill. The parties understand that whether or not the foregoing
          --------                                                          
provisions include a premium above book value, their goodwill, if any, has been
taken into consideration in the formula set forth in Sections 10.1 and 10.2, and
each party hereto recognizes and waives his or its rights, if any, to be
compensated in the purchase price separately for goodwill of the Company. Such
recognition and waiver shall be binding upon the spouse, if any, of any
individual Shareholder and his heirs and assigns.

     10.4 Allocation of Total Purchase Price. In the event that the Shares are
          ----------------------------------                                  
purchased by more than one party hereto, then the purchase price provided herein
shall be allocated among the parties purchasing such Shares on the basis of the
number of Shares so purchased.

                                  ARTICLE 11.

                           PAYMENT OF PURCHASE PRICE

     11.1 Purchases Under Articles 6, 7, 8 and 9.
          -------------------------------------- 

          11.1.1  In the event of any purchase of Shares pursuant to the
options contained in Articles 6, 7, 8 and 9 hereof, then the consummation of
such purchase (the "Closing") shall occur on (a) the thirtieth (30th) day
following the date of the last notice of exercise given pursuant to Articles 6,
7, 8 and 9, as applicable, or if said day is not a business day, then on the
next succeeding business day (such date being referred to herein as the "Closing
Date").

          11.1.2  In the event of any purchase of Shares pursuant to the options
contained in Articles 6, 7, 8 and 9 hereof, then the Company and/or each of
those Shareholders purchasing such Shares shall, subject to the provisions of
Sections 11.1.3 and 11.2 below, pay their respective portions of the total
purchase price in full in cash at the Closing; provided, however, that if
Sections 10.2.1(c), or 10.2.2(c) or 10.2.3(c) applies, then such purchase price
shall be payable within thirty (30) days after the date on which the Company has
completed an IPO or an IPO could have been completed within the meaning of
Section 12.2 below, such payment to be made in the manner set forth in this
Article 11.

          11.1.3  The Company or a Shareholder may elect to pay his or her
respective portion of the total purchase price in installments. If such an
election is made, the purchase price shall be paid twenty percent (20%) in cash
at Closing, and the balance in thirty-six (36) equal monthly installments,
commencing on the first day of the month following the Closing Date and
continuing thereafter on the first day of each succeeding month until the entire
portion of such

                                      -13-

<PAGE>
 
party's respective balance of the purchase price has been paid in full. Such
respective balance shall be evidenced by an installment note executed by such
party and delivered at the Closing to the person from whom the Shares are being
purchased. Such promissory note shall bear simple interest at the prime or
reference lending rate of Bank of America, San Francisco, California, as of the
date of said note; provided, however, that such interest rate shall not exceed
the maximum rate permitted by law. Such promissory note shall contain customary
provisions for late charges and default rates of interest.

            11.1.4   At the Closing, the Shares being purchased pursuant to
Articles 6, 7, 8 and 9, as applicable, shall be transferred to the Company
and/or the Shareholders purchasing such Shares by the execution and delivery of
a stock assignment separate from certificate, together with the original
certificate(s) evidencing such Shares.

      11.2  Insurance Policies. Partially or fully to fund the payments of the
            ------------------                                                
purchase price of Shares to be bought by the Company under Article 9 in the
event of the death of Singh, the Company may, if so directed by the Board of
Directors, apply for, acquire and maintain in full force and effect a policy of
life insurance in an amount sufficient to pay all or part of the purchase price
of such Shares in the event the Company exercises its option to purchase such
Shares pursuant to Article 9. Each policy shall belong solely and absolutely to
the Company, and subject to the provisions of this Agreement, the Company
reserves all the powers and rights of ownership thereof, shall name itself as
primary beneficiary, and agrees to pay all premiums thereon as they fall due.
Any dividends paid upon any of the policies prior to maturity by death of the
insured shall be paid to the Company. Receipts showing payment of premiums shall
be retained on file by the Company and shall be available to the Shareholders
for inspection. In the event the Company exercises its option pursuant to
Article 9 above to purchase such Shares and elects to pay the purchase price
therefor in installments pursuant to Section 11.1.3 above, and the proceeds from
any such life insurance policies are in excess of twenty percent (20%) of the
purchase price of said Shares, then notwithstanding anything to the contrary in
Section 11.1.3, the Company shall nevertheless pay at the Closing the full
amount of such life insurance proceeds in cash, and the balance will be
evidenced by a note in the manner provided in Section 11.1.3 above.

                                  ARTICLE 12.

                         SPECIAL PUT AND CALL OPTIONS

      12.1  Put Rights and Call Rights.
            -------------------------- 

            12.1.1  IPO Put Rights. If on or before December 31,2002, an IPO 
                    --------------    
      could have been completed because the conditions set forth in Section 12.2
      below have been satisfied, but such IPO was not completed solely because
      of a KFI Objection, then Idealab and Singh shall each have the right
      (referred to in this Agreement as an "IPO Put Right") to cause the Company
      to purchase all (but not less than all) of their Shares for the purchase
      price and on the other terms and conditions set forth below in this
      Article 12. In order to exercise the IPO Put Right, Idealab or Singh must
      deliver written notice of

                                      -14-

<PAGE>
 
exercise to the Company and to KFI on or before December 31, 2003. If for any
reason whatsoever either Idealab or Singh fail or neglect to exercise an IPO Put
Right which exists on or before December 31, 2003, then the IPO Put Right shall
automatically expire and be of no further force or effect. If the Company is
unable under applicable law to consummate an IPO Put Right which has been duly
exercised or if the Company has insufficient funds to consummate such an IPO Put
Right, then KFI shall be obligated to consummate such IPO Put Right on the same
terms and conditions.

    12.1.2    Other Put Rights. During the month of September of each year
              ----------------                                            
occurring after December 31, 2003 and provided the Company has not as of
September 1/st/ of any such year consummated an IPO, then Idealab and Singh
shall each have the right (referred to in this Agreement as an "Other Put
Right") to cause the Company to purchase all (but not less than all) of their
Shares for the purchase price and on the other terms and conditions set forth
below in this Article 12. In order to exercise an Other Put Right, Idealab or
Singh must deliver written notice of exercise to the Company and to KFI in the
month of September of such year. If for any reason whatsoever either Idealab or
Singh fail or neglect to exercise an Other Put Right during any such September,
then such Other Put Right for that year shall automatically expire and be of no
further force or effect. KFI shall have no obligation to consummate an Other Put
Right which for any reason cannot be consummated by the Company.

    12.1.3    IPO Call Rights. If on or before December 31, 2002, an IPO could
              ---------------                                                 
have been completed because the conditions set forth in Section 12.2 below have
been satisfied, but such IPO was not completed solely because of a KFI
Objection, then the Company or, at the election of KFI, the Company and/or KFI;
shall have the right (referred to in this Agreement as an "IPO Call Right") to
purchase all (but not less than all) of the Shares then owned by Idealab and/or
Singh for the purchase price and on the other terms and conditions set forth
below in this Article 12, and in the proportions designated by KFI. In order to
exercise the IPO Call Right, the Company and/or KFI must deliver written notice
of exercise to the Idealab and/or Singh, as applicable, on or before December
31,2003. If for any reason whatsoever the Company and/or KFI fail or neglect to
exercise the IPO Call Right which exists on or before December 31, 2003, then
the IPO Call Rights shall automatically expire and be of no further force or
effect.

    12.1.4    Other Call Rights. During the month of September of each year
              ----- ---- ------                                            
occurring after December 31, 2003 and provided the Company has not as of
September 1/st/ of any such year consummated an IPO, then the Company or, at the
election of KFI, the Company and/or KFI, shall have the right (referred to in
this Agreement as an "Other Call Right") to purchase all (but not less than all)
of the Shares of Idealab and/or Singh for the purchase price and on the other
terms and conditions set forth below in this Article 12, and in the proportions
designated by KFI. In order to exercise an Other Call Right, the Company and/or
KFI must deliver written notice of exercise to the Idealab and/or Singh, as
applicable, in the month of September of such year. If for any reason whatsoever

                                      -15-

<PAGE>
 
     either the Company and KFI fail or neglect to exercise an Other Call Right
     during any such September, then such Other Call Right for that year shall
     automatically expire and be of no further force or effect.

     12.2  IPO Could Have Been Completed. An IPO could have been completed 
           -----------------------------                                   
within the meaning of Sections 12.1.1 and 12.1.3 if all of the following
conditions are satisfied:

           12.2.1   All directors of the Company other than the "KFI
Directors" (as this term is used in this Shareholders Agreement) affirmatively
requested and voted in favor of such IPO; and

           12.2.2   The Company had positive EBITDA of at least $14 million
during the twelve (12) calendar month preceding the date on which it is asserted
such an IPO could have been completed; and

           12.2.3   The Company has received the "IPO Opinions" referred to
in Section 12.3 below.

     12.3  IPO Opinions. Upon exercise of an IPO Put Right or an IPO Call Right,
           ------------                                                         
the party giving the notice of exercise shall include in such notice the name of
an appraiser or other valuation expert ("Section 12.3 Exercising Party's
Appraiser"). Within five (5) days after notice of exercise of an IPO Put Right
or an IPO Call Right has been given, the party, or if an IPO Call Right is being
exercised as to Idealab and Singh, both Idealab and Singh, shall select an
appraiser or other valuation expert and give written notice thereof to the party
exercising the IPO Put Right or the IPO Call Right (the "Section 12.3
Recipient's Appraiser"). Within five (5) days after the notice of the name of
the Section 12.3 Recipient's Appraiser is given, the Section 12.3 Exercising
Party's Appraiser and the Section 12.3 Recipient's Appraiser shall select and
notify the parties of a third appraiser or valuation expert ("Section 12.3 Third
Appraiser"). The Section 12.3 Recipient's Appraiser, the Section 12.3 Exercising
Party's Appraiser, and the Section 12.3 Third Appraiser, must each be a Person
who or which has substantial experience in initial public offerings and the
valuation of companies for purposes of initial public offerings. Within fifteen
(15) days thereafter, the Section 12.3 Exercising Party's Appraiser, the Section
12.3 Recipient's Appraiser and the Section 12.3 Third Appraiser shall each
render a written opinion to the exercising party and the other parties as to
whether in its or his opinion a firm underwritten IPO by the Company could have
been completed on or about the date asserted, on terms and conditions which are
consistent with initial public offerings of companies of a similar type under
similar circumstances, utilizing one or more of the top fifteen national
investment banking firms in terms of underwriting revenues from initial public
offerings of equity securities, as established by the most recent published
sources (with such an affirmative opinion being referred to herein as a
"Favorable Opinion"). If at least two of the three opinions constitute Favorable
Opinions, then the condition referred to in Section 12.2.3 shall be deemed
satisfied. If at least two of the three opinions do not constitute Favorable
Opinions, then the condition referred to in Section 12.2.3 shall not be deemed
satisfied, and that result shall be binding on all parties. Each of the
foregoing three appraisers which renders a Favorable Opinion, shall include in
such opinion its or his estimate of the gross offering price per share or an
average of a range of gross offering

                                      -16-

<PAGE>
 
prices per share at which the shares of the capital stock of the Company would
have been sold in such an IPO ("Per Share IPO Estimate"). The fees of the
Section 12.3 Exercising Party's Appraiser shall be paid by the party exercising
the IPO Put Right or IPO Call Right, as applicable, and the fees of the Section
12.3 Recipient Party's Appraiser shall be paid by the party or parties receiving
the notice of exercise. The fees of the Section 12.3 Third Appraiser shall be
borne fifty percent (50%) by the party exercising the IPO Put Right or IPO Call
Right, and fifty percent (50%) by the other parties.

     12.4  Appraisers. Upon exercise of an Other Put Right or an Other Call
           ----------                                                      
Right, the party giving the notice of exercise shall include in such notice the
name of an appraiser or other valuation expert ("Section 12.4 Exercising Party's
Appraiser"). Within five (5) days after notice of exercise of an Other Put Right
or an Other Call Right has been given, the party, or if an Other Call Right is
being exercised as to Idealab and Singh, both Idealab and Singh, shall select an
appraiser or other valuation expert and give written notice thereof to the party
exercising the Other Put Right or Other Call Right (the "Section 12.4
Recipient's Appraiser"). Within five (5) days after the notice of the name of
the Section 12.4 Recipient's Appraiser is given, the Section 12.4 Exercising
Party's Appraiser and the Section 12.4 Recipient's Appraiser shall select and
notify the parties of a third appraiser or valuation expert ("Section 12.4 Third
Appraiser"). The Section 12.4 Recipient's Appraiser, the Section 12.4 Exercising
Party's Appraiser, and the Section 12.4 Third Appraiser, must each be a Person
who or which has substantial experience in the valuation of non-public
companies. Within fifteen (15) days thereafter, the Section 12.4 Exercising
Party's Appraiser, the Section 12.4 Recipient's Appraiser and the Section 12.4
Third Appraiser shall each render a written opinion (collectively, the "Other
Opinions") to the exercising party and the other parties as to the fair market
value of each Share which is the subject of the Other Put Right or Other Call
Right ("Per Share Estimate"). The fees of the Section 12.4 Exercising Party's
Appraiser shall be paid by the party exercising the Other Put Right or Other
Call Right, as applicable, and the fees of the Section 12.4 Recipient Party's
Appraiser shall be paid by the party or parties receiving the notice of
exercise. The fees of the Section 12.4 Third Appraiser shall be borne fifty
percent (50%) by the party exercising the Other Put Right or Other Call Right,
and fifty percent (50%) by the other parties.

     12.5  Purchase Price and Payment Terms.
           -------------------------------- 

           12.5.1   The purchase price payable for each Share pursuant to an IPO
Put Right or an IPO Call Right shall be an amount equal to the average of the
Per Share IPO Estimates set forth in the IPO Opinions.

           12.5.2   The purchase price payable for each Share pursuant to an
Other Put Right or an Other Call Right shall be an amount equal to the average
of the Per Share Estimates set forth in the Other Opinions.

           12.5.3   In the event of any purchase of Shares pursuant to the Put
Rights or the Call Rights, then the consummation of such purchase (the
"Closing") shall occur on the thirtieth (30th) day following the date of the
last IPO Opinion or Other Opinion, as applicable, or if said

                                      -17-

<PAGE>
 
day is not a business day, then on the next succeeding business day (such date
being referred to herein as the "Closing Date").

          12.5.4   The purchase price payable for each Share pursuant to
the Put Rights or the Call Rights shall be payable in cash or by wire transfer
of immediately available funds at the Closing; provided, however, that the
purchase price may be paid in installments if the purchaser of the Shares so
elects. If such an election is made, the purchase price shall be paid twenty
percent (20%) in cash at Closing, and the balance in thirty-six (36) equal
monthly installments, commencing on the first day of the month following the
Closing Date and continuing thereafter on the first day of each succeeding month
until the entire balance of the purchase price has been paid in full. Such
respective balance shall be evidenced by an installment note executed by the
purchaser of the Shares and delivered at the Closing to the person from whom the
Shares are being purchased. Such promissory note shall bear simple interest at
the prime or reference lending rate of Bank of America, Los Angeles, California,
as of the date of said note; provided, however, that such interest rate shall
not exceed the maximum rate permitted by law. Such promissory note shall contain
customary provisions for late charges and default rates of interest.

          12.5.5   At the Closing, the Shares being purchased pursuant to this
Articles 12 shall be transferred to the Company and/or KFI by the execution and
delivery of a stock assignment separate from certificate, together with the
original certificate(s) evidencing such Shares.

          12.5.6   Notwithstanding anything contained in this Section 12.5
to the contrary, if prior to the date on which KFI is required or has the right
to consummate a purchase of Shares pursuant to an exercise of an IPO Put Right
or an IPO Call Right or an Other Put Right or an Other Call Right, KFI has
consummated an IPO with respect to one or more classes of its equity securities
("KFI Public Securities"), then KFI may, at its sole option, pay all or any
portion of the purchase price for such Shares by issuing shares of the KFI
Public Securities, which may be in a transaction not involving any public
offering, and subject to compliance with applicable federal and state securities
laws. For these purposes, the value of each share of the KFI Public Securities
to be issued shall be: (i) If the KFI Public Securities are listed on any
established stock exchange or a national market system, including, without
limitation, The Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, the closing sales price of a share of the KFI Public
Securities (or the closing bid, if no sales were reported) as quoted on such
exchange or system for the last market trading day prior to the Closing Date, or
(ii) if the KFI Public Securities are quoted by a recognized securities dealer
but selling prices are not reported, the mean between the high bid and low
asked prices for the KFI Public Securities on the last market trading day prior
to the Closing Date. By way of example only, if KFI is entitled or required to
pay $10,000 for Shares pursuant to an exercise of an IPO Put Right or an Other
Put Right, KFI may pay said $10,000 by issuing KFI Public Securities having a
value, as determined above, of $10,000.

                                      -18-

<PAGE>
 
                                  ARTICLE 13.

                                 MISCELLANEOUS

     13.1 Transfer of Stock. Except as otherwise expressly provided in this
          -----------------                                                
Agreement and the Stock Purchase Agreement, each Shareholder agrees not to
transfer any of his shares of capital stock of the Company, without complying
with the provisions of those Agreements.

     13.2 Legend. Each certificate representing the Shares shall bear the
          ------                                                         
following legend, until such time as the Shares are no longer subject to the
provisions hereof, in addition to such other legends required by the Stock
Purchase Agreement and applicable federal and state securities laws:

     "The sale, transfer or assignment of the securities represented by this
     certificate are subject to the terms and conditions of a certain
     Shareholders Agreement dated ____________, 1997, among the Company and
     holders of its outstanding capital stock. Copies of such Agreement may be
     obtained at no cost by written request made by the holder of record of this
     certificate to the Secretary of the Company."

     13.3 Certificate of Incorporation and By-Laws. Subject to the provisions of
          ----------------------------------------                              
this Agreement, the Certificate of Incorporation and By-Laws of the Company may
be amended in any manner permitted thereunder, except that neither the
Certificate of Incorporation nor the By-Laws shall be amended in any manner that
would conflict with, or be inconsistent with, the provisions of this Agreement.

     13.4 Injunctive Relief. It is acknowledged that it will be impossible to
          -----------------                                                  
measure the damages that would be suffered by the nonbreaching party if any
party fails to comply with the provisions of this Agreement and that in the
event of any such failure, the nonbreaching parties will not have an adequate
remedy at law. The non-breaching parties shall, therefore, be entitled to obtain
specific performance of the breaching party's obligations hereunder and to
obtain immediate injunctive relief. The breaching party shall not urge, as a
defense to any proceeding for such specific performance or injunctive relief,
that the nonbreaching parties have an adequate remedy at law.

     13.5 Preparation of Agreement. It is acknowledged by each party that such
          ------------------------                                            
party either had separate and independent advice of counsel or the opportunity
to avail itself or himself of separate and independent legal counsel. Each party
hereto understands and acknowledges that Morrison & Foerster LLP is legal
counsel to KFI only, and does not represent any other party to this Agreement.
In light of these and other relevant facts it is further acknowledged that no
party shall be construed to be solely responsible for the drafting hereof, and
therefore any ambiguity shall not be construed against any party as the alleged
draftsman of this Agreement.

     13.6 Cooperation and Further Assurances. Each party agrees, without further
          ----------------------------------                                    
consideration, to cooperate and diligently perform any further acts, deeds and
things and to execute and deliver any documents that may from time to time be
reasonably necessary or

                                     -19-

<PAGE>
 
otherwise reasonably required to consummate, evidence, confirm and/or carry out
the intent and provisions of this Agreement, all without undue delay or expense.

     13.7 Interpretation.
          -------------- 

          13.7.1 Entire Agreement/No Collateral Representations. Each party
                 ----------------------------------------------            
expressly acknowledges and agrees that this Agreement, the Stock Purchase
Agreement, the Singh Employment Agreement, the License Agreement, the KFI/Singh
Agreement and the KFI Stock Repurchase Agreement: (i) are the final expression
of the parties agreements with respect to the subject matter hereof and thereof
and are the complete and exclusive statements of the terms of such agreement;
(ii) supersedes any prior or contemporaneous agreements, promises, assurances,
guarantees, representations, understandings, conduct, proposals, conditions,
commitments, acts, course of dealing, warranties, interpretations or terms of
any kind, oral or written (collectively and severally, the "Prior Agreements"),
and that any such Prior Agreements are of no force or effect except as expressly
set forth herein and therein; and (iii) may not be varied, supplemented or
contradicted by evidence of Prior Agreements. Any agreement hereafter made shall
be ineffective to modify, supplement or discharge the terms of this Agreement,
in whole or in part, unless such agreement is in writing and signed by the party
against whom enforcement of the modification or supplement is sought.

          13.7.2 Waiver. No breach of any agreement or provision herein
                 ------                                                
contained, or of any obligation under this Agreement, may be waived, nor shall
any extension of time for performance of any obligations or acts be deemed an
extension of time for performance of any other obligations or acts contained
herein, except by written instrument signed by the party to be charged or as
otherwise expressly authorized herein. No waiver of any breach of any agreement
or provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof, or a waiver or relinquishment of any other agreement
or provision or right or power herein contained.

          13.7.3 Remedies Cumulative. Except as otherwise provided in this
                 -------------------                                      
Agreement, the remedies of each party under this Agreement, the Stock Purchase
Agreement, the Singh Employment Agreement, the License Agreement, the KFI Stock
Repurchase Agreement, and the KFI/Singh Agreement are cumulative and shall not
exclude any other remedies to which such party may be lawfully entitled.

          13.7.4 Severability. If any term or provision of this Agreement or the
                 ------------                                                   
application thereof to any Person or circumstance shall, to any extent, be
determined to be invalid, illegal or unenforceable under present or future laws
effective during the term of this Agreement, then and, in that event: (i) the
performance of the offending term or provision (but only to the extent its
application is invalid, illegal or unenforceable) shall be excused as if it had
never been incorporated into this Agreement, and, in lieu of such excused
provision, there shall be added a provision as similar in terms and amount to
such excused provision as may be possible and be legal, valid and enforceable,
and (ii) the remaining part of this Agreement (including the application of the
offending term or provision to persons or circumstances other

                                     -20-

<PAGE>
 
than those as to which it is held invalid, illegal or unenforceable) shall not
be affected thereby and shall continue in full force and effect to the fullest
extent provided by law.

          13.7.5        No Third Party Beneficiary. The parties specifically
                        --------------------------                          
disavow any desire or intention to create any third party beneficiary
obligations, and specifically declare that no third party shall have any rights
hereunder or any right of enforcement hereof.

          13.7.6        No Reliance Upon Prior Representation. The parties
                        ---------------- ----- --------------             
acknowledge that no other party has made any oral representation or promise
which would induce them prior to executing this Agreement to change their
position to their detriment, partially perform, or part with value in reliance
upon such representation or promise; the parties acknowledge that they have
taken such action at their own risk; and the parties represent that they have
not so changed their position, performed or parted with value prior to the time
of their execution of this Agreement.

          13.7.7        Headings; References; Incorporation; Gender. The
                        -------------------------------------------     
headings used in this Agreement are for convenience and reference purposes only,
and shall not be used in construing or interpreting the scope or intent of this
Agreement or any provision hereof. References to this Agreement shall include
all amendments or renewals thereof. All cross-references in this Agreement,
unless specifically directed to another agreement or document, shall be
construed only to refer to provisions within this Agreement, and shall not be
construed to be referenced to the overall transaction or to any other agreement
or document. Any exhibit referenced in this Agreement shall be construed to be
incorporated in this Agreement. As used in this Agreement, each gender shall be
deemed to include the other gender, including neutral genders or genders
appropriate for entities, if applicable, and the singular shall be deemed to
include the plural, and vice versa, as the context requires.

     13.8 Enforcement.
          ----------- 

          13.8.1        Applicable Law. This Agreement and the rights and
                        --------------                                   
remedies of each party arising out of or relating to this Agreement (including,
without limitation, equitable remedies) shall be solely governed by, interpreted
under, and construed and enforced in accordance with the laws (without regard to
the conflicts of law principles thereof) of the State of Delaware, as if this
agreement were made, and as if its obligations are to be performed, wholly
within the State of Delaware.

          13.8.2        Consent to Jurisdiction; Service of Process. Any action
                        ------- --------------------------- -------            
or proceeding arising out of or relating to this Agreement shall be filed in and
heard and litigated solely before the state courts of California located within
the County of Los Angeles. Each party generally and unconditionally accepts the
exclusive jurisdiction of such courts and to venue therein, consents to the
service of process in any such action or proceeding by certified or registered
mailing of the summons and complaint in accordance with the notice provisions of
this Agreement, and waives any defense or right to object to venue in said
courts based upon the doctrine of "Forum Non Conveniens". Each party irrevocably
agrees to be bound by any judgment rendered thereby in connection with this
Agreement.

                                      -21-

<PAGE>
 
          13.8.3 Attorneys' Fees and Costs. If any party institutes or should
                 -------------------------                                   
the parties otherwise become a party to any Action Or Proceeding based upon or
arising out of this Agreement including, without limitation, to enforce or
interpret this Agreement or any provision hereof, or for damages by reason of
any alleged breach of this Agreement or any provision hereof, or for a
declaration of rights in connection herewith, or for any other relief, including
equitable relief, in connection herewith, the Prevailing Party in any such
Action Or Proceeding, whether or not such Action Or Proceeding proceeds to final
judgment or determination, shall be entitled to receive from the non-Prevailing
Party as a cost of suit, and not as damages, all Costs And Expenses of
prosecuting or defending the Action Or Proceeding, as the case may be,
including, without limitation, reasonable Attorneys' And Other Fees.

     13.9 Notices. Any notice, approval, disapproval, consent, waiver, or other
          -------                                                              
communication (collectively, "Notices") required or permitted to be given under
this Agreement shall be in writing and shall be delivered personally or mailed,
certified or registered United States mail, postage prepaid, return receipt
requested, or sent by Federal Express or other reliable overnight carrier for
next business day delivery, or by fax. All Notices shall be deemed delivered (a)
if personally served, when actually delivered to the address of the person to
whom such Notice is given, (b) if sent via Federal Express or other overnight
courier for next business day delivery, one (1) business day following the date
on which the Notice is given to Federal Express or other overnight courier, (c)
if by mail, three (3) days following deposit in the United States mail, or (d)
if by fax, when the transmitting telecopier machine has confirmed that the
Notice has been completed or sent without error. All Notices shall be addressed
to the party to whom such Notice is to be given at the party's address set forth
below or as such party shall otherwise direct by Notice sent pursuant to this
Section 13.9:

If to the Company:         Korn/Ferry International Futurestep, Inc.
                           c/o Korn/Ferry International
                           1800 Century Park East, Suite 900
                           Los Angeles, California 90067
                           Attention: Man Jit Singh, President
                           Telephone: (310) 843-4100
                           Telecopier:(310) 553-8640
 
If to KFI:                 Korn/Ferry International
                           1800 Century Park East, Suite 900
                           Los Angeles, California 90067
                           Attention: Peter L. Dunn, Vice Chairman
                           Telephone: (310) 843-4100
                           Telecopier:(310) 553-8640
 

                                      -22-

<PAGE>
 
     With a copy to:     Michael C. Cohen, Esq.
                         Morrison & Foerster LLP
                         555 West Fifth Street, 35th Floor
                         Los Angeles, California 90013
                         Telephone: (213) 892-5404
                         Telecopier: (213) 892-5454
                   
     If to Idealab:      idealab!
                         130 West Union Street
                         Pasadena, CA 91103
                         Attention: Mr. William Gross
                         Telephone: (626) 585-6900
                         Telecopier: (626) 535-2742
                   
     With a copy to:     idealab!
                         130 West Union Street
                         Pasadena, CA 91103
     Attention:          Ms. Marcia Goodstein
                         Telephone: (626) 535-2765
                         Telecopier: (626) 535-2742
                   
     If to Singh:        Mr. Man Jit Singh
                         1050 Brooklawn Drive
                         Los Angeles, CA 90077
                         Telephone: (310) 278-1572
                         Telecopier:(310) 278-1572
                   
     With a copy to:     Paul H. Irving, Esq.
                         Manatt, Phelps & Phillips LLP
                         11355 W. Olympic Boulevard
                         Los Angeles, CA 90064
                         Telephone: (310) 312-4000
                         Telecopier:(310) 312-4224


     13.10       Spousal Consent; Change in Marital Status. Each individual
                 -----------------------------------------                 
Shareholder who is married at the time any Shares are acquired by such
Shareholder, shall cause his or her spouse to execute and deliver a Consent of
Spouse of Shareholder in the form of Exhibit A hereto immediately upon
acquisition of any such Shares and as a condition thereof. In the event that the
Shareholder's marital status is altered by dissolution or divorce or by the
death of the Shareholder's spouse, any interest of his or her former spouse,
whether as community property or as a result of a property settlement agreement,
a divorce degree or other legal proceeding, may be purchased and shall be sold
by the Shareholder's former spouse or his or her estate in the same manner and
at the same time as the Shareholder's Shares are purchased under this Agreement.
Each individual Shareholder agrees to notify the Company of any change in
marital status, including, without limitation, marriage, dissolution of
marriage, divorce or death of spouse,

                                      -23-

<PAGE>
 
within then (10) days after the occurrence of any such event. Each individual
Shareholder agrees to cause any spouse who has not signed a Consent of Spouse of
Shareholder in the form of Exhibit A hereto to do so at the time notice is given
to the Company under this Section.

     13.11       Counterparts. This Agreement may be executed in counterparts,
                 ------------                                                 
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument, binding on all parties hereto. Any
signature page of this Agreement may be detached from any counterpart of this
Agreement and re-attached to any other counterpart of this Agreement identical
in form hereto by having attached to it one or more additional signature pages.

     13.12       Assignment. Except as otherwise expressly provided in this
                 ----------                                                
Agreement, no party hereto may assign their rights or delegate their duties
under this Agreement without the prior written consent of all of the other
parties hereto; provided, however, that KFI may, without the consent of any
other party hereto, assign its rights and delegate its duties under this
Agreement to any Person which acquires all or substantially all of the assets of
KFI, either through a purchase of such assets, by merger, consolidation or
otherwise.

     IN WITNESS WHEREOF, the Company and the Shareholders have executed this
Agreement in counterparts.

                                    KORN/FERRY INTERNATIONAL,
                                    a California corporation

                                    By: /s/ Peter L. Dunn 
                                       -----------------------------
                                       Peter L. Dunn, Vice Chairman



                                    BILL GROSS' IDEALAB!,
                                    a California corporation

                                    By: /s/ Marcia Goodstein
                                       -----------------------------
                                          Marcia Goodstein, COO



                                    KORN/FERRY INTERNATIONAL 
                                    FUTURESTEP, INC.
                                    a Delaware corporation

                                    By: /s/ Man Jit Singh
                                       -----------------------------
                                          Man Jit Singh, President

                                        /s/ Man Jit Singh
                                    ---------------------------------
                                              MAN JIT SINGH

                                      -24-

<PAGE>
 
                                   APPENDIX

                              CERTAIN DEFINITIONS

     1.   "Action Or Proceeding" means any and all claims, suits, actions,
notices, inquiries, proceedings, hearings, arbitrations or other similar
proceedings, including appeals and petitions therefrom, whether formal or
informal, governmental or non-governmental, or civil or criminal.

     2.   "Affiliate" means with respect to any person or entity ("Person No.
1"), any other person or entity which either (i) directly or indirectly owns or
controls Person No. 1, or (ii) is directly or indirectly owned or controlled by
Person No. 1, or (iii) is under direct or indirect common control with Person
No. 1. The term "control" (and its corollaries) includes, without limitation,
ownership of interests representing a majority of total voting power in an
entity, and "ownership" (and its corollaries) includes, without limitation,
ownership of a majority of the equity interests in an entity.

     3.   "Agreement" means this Agreement and all agreements, exhibits,
schedules and appendices expressly annexed hereto.

     4.   "Approved Reorganization Transaction" means a Reorganization
Transaction which has been approved by KFI pursuant to this Agreement.

     5.   "Attorneys' And Other Fees" means attorneys' fees, accountants' fees,
fees of other professionals, witness fees (including experts engaged by the
parties, but excluding shareholders, officers, employees or partners of the
parties), and any and all other similar fees incurred in the prosecution or
defense of an Action Or Proceeding.

     6.   "Call Rights" shall mean collectively, the IPO Call Rights and the
           -----------                                                      
Other Call Rights.

     7.   "Company Competitive Business" means any business which competes,
directly or indirectly, in part or in whole, with any business now or hereafter
conducted or engaged in (a) by the Company, or (b) by any Person in which the
Company has an equity interest, either directly or indirectly, which affords the
Company more than ten percent (10%) of the voting power of such Person.

     8.   "Company Competitor" means any Person (other than KFI or any Affiliate
of KFI) who (a) engages, directly or indirectly, in any Company Competitive
Business, or (b) becomes an organizer, investor, lender, partner, joint
venturer, stockholder, officer, director, employee, manager, consultant,
supplier, vendor, agent, lessor or lessee of or to any Company Competitive
Business, or (c) otherwise in any manner associates with, or aids or abets, or
gives information or financial assistance to any Company Competitive Business.

                                      -1-

<PAGE>
 
     9.   "Costs And Expenses" means the cost to take depositions, the cost to
arbitrate a dispute, if applicable, and the costs and expenses of travel and
lodging incurred with respect to an Action Or Proceeding.

     10.  "Directors" or "directors" means the members of the Board of Directors
of the Company and includes the Designated Directors (as this term is defined in
Section 2.1.1(b) below).

     11.  "Director Approval" means the vote of at least a majority of the
directors present at a meeting at which a quorum of directors is present or the
written consent of at least a majority of the directors.

     12.  "EBITDA" means earnings before interest expense, taxes, depreciation
and amortization, determined in accordance with generally accepted accounting
principles, consistently applied.

     13.  "Involuntary Transfer" when used with reference to the Shares means
any gift of the Shares or any right or interest therein, any other assignment,
transfer or other disposition of any of the Shares or any right or interest
therein, without consideration, any pledge, grant of a security interest in or
other hypothecation of any of the Shares or any right or interest therein, or
any other involuntary Transfer or Transfer by operation of law, of any of the
Shares or any right or interest therein.

     14.  "IPO" means an initial public offering of equity securities by the
Company of KFI, as the context requires, pursuant to an effective registration
statement filed under the Securities Act of 1933, as amended.

     15.  "Job Placement Competitive Business" means any business which
competes, directly or indirectly, in part or in whole, with any one or more of
the following businesses or services, regardless of the medium through which
such business is conducted or such service is provided, whether on the Internet
(or world wide web) or otherwise: (a) executive search, recruiting and/or job
placement services for employers and/or employees, (b) employment consulting
services, (c) career counseling, (d) team development services, (e) research
services relating to employment, (f) the accumulation, circulation, development
and/or publication of information, surveys, studies, statistical data, and
articles pertaining to executive recruiting, jobs, job placement, compensation
and similar human resources and employment-related services, (g) the creation
and/or maintenance of one or more databases of available employment
opportunities or jobs, (h) the creation and/or maintenance of a job listings or
job positions service and/or database, and/or (i) the creation and/or
maintenance of one or more databases of candidates available or potentially
available for employment.

     16.  "Job Placement Competitor" means any Person who (a) engages, directly
or indirectly, in any Job Placement Competitive Business, or (b) becomes an
organizer, investor, lender, partner, joint venturer, stockholder, officer,
director, employee, manager, consultant, supplier, vendor, agent, lessor or
lessee of or to any Job Placement Competitive Business, or (c)

                                      -2-

<PAGE>
 
otherwise in any manner associates with, or aids or abets, or gives information
or financial assistance to any Job Placement Competitive Business.

     17.  "KFI Competitive Business" means any business which competes,
directly or indirectly, in part or in whole, with any business now or hereafter
conducted or engaged in (a) by KFI or its Affiliates, or (b) by any Person
(other than the Company) in which KFI or an Affiliate of KFI has an equity
interest, either directly or indirectly, which affords KFI or such Affiliate
more than ten percent (10%) of the voting power of such Person.

     18.  "KFI Competitor" means any Person (other than KFI or any Affiliate of
KFI) who (a) engages, directly or indirectly, in any KFI Competitive Business,
or (b) becomes an organizer, investor, lender, partner, joint venturer,
stockholder, officer, director, employee, manager, consultant, supplier, vendor,
agent, lessor or lessee of or to any KFI Competitive Business, or (c) otherwise
in any manner associates with, or aids or abets, or gives information or
financial assistance to any KFI Competitive Business.

     19.  "KFI Objection" means either one or more of the following events: (a)
if the "KFI Directors" (as this term is used in this Shareholders Agreement)
constitute a majority of the Company's directors, they affirmatively vote
against an IPO or refuse to vote in favor of an IPO, and all of the other
directors of the Company affirmatively request and vote in favor of the IPO, or
(b) KFI declines to give its written consent to such an IPO pursuant to Section
3.2 of this Agreement, or (c) KFI exercises any other right afforded to it in
the Company's Certificate of Incorporation (as amended) or, in any other
contract, to object to and prevent the IPO.

     20.  "Permitted Transfer" means any of the following Transfers: (a) the
issuance or sale of Stock (or options therefor) by the Company to employees for
the primary purpose of soliciting or retaining their employment; or (b) a Sale
pursuant to an IPO; or (c) a Transfer pursuant to an Approved Reorganization
Transaction; or (d) any Transfer to a Permitted Transferee, or (e) any Transfer
pursuant to the exercise of a Put Right or a Call Right, or (f) any Transfer
pursuant to the Stock Purchase Agreement, or (g) any reorganization of Idealab
pursuant to which (i) all or substantially all of the assets of Idealab are
transferred to or otherwise acquired by a limited liability company or a limited
partnership and (ii) the current shareholders of Idealab constitute all of the
members of such limited liability company or all of the partners of such limited
partnership.

     21.  "Permitted Transferee" means any of the following Persons so long as
such Person does not constitute a Non-Permitted Transferee within the meaning of
Section 4.2 of this Agreement and such Person executes a document, in form and
substance satisfactory to the Company and its counsel, pursuant to which such
person agrees to be bound by the provisions of this Agreement, and agrees to
receive and hold the Shares subject to all of the provisions and restrictions
contained in this Agreement: (a) a transferor's spouse and lineal descendants;
(b) a transferor's personal representatives and heirs; (c) any trustee of any
trust created primarily for the benefit of the transferor or any or all of such
spouse and lineal descendants; (d) or any revocable trust created by a
transferor; or (e) following the death of a transferor, all beneficiaries under
such trust; or (f) the transferor, in the case of a transfer from any Permitted
Transferee back

                                      -3-

<PAGE>
 
to its transferor; or (g) any entity all of the equity of which is directly or
indirectly owned by the transferor; or (h) in the case of KFI, any of KFI's
shareholders or the shareholders of any Affiliate of KFI.

     22.  "Per Share Book Value" shall mean that figure obtained when the net
worth of the Company is divided by the total number of shares of Stock of the
Company issued and outstanding. The net worth of the Company shall be determined
in accordance with generally accepted accounting principles, consistently
applied ("GAAP"). The net worth of the Company as shown on the fiscal year end
statement of the Company for the year immediately preceding the exercise of the
option with respect to the Transfer in question, shall be binding and conclusive
on the parties hereto. Each fiscal year end statement of the Company shall be
prepared in accordance with GAAP.

     23.  "Per Share Market Value" shall apply only if as of the date of
occurrence of the applicable event specified in Section 10.2, an IPO had been
consummated by the Company, in which event the "Per Share Market Value" shall
mean (i) If the Shares are listed on any established stock exchange or a
national market system, including, without limitation, The Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, the closing
sales price of a Share (or the closing bid, if no sales were reported) as quoted
on such exchange or system for the last market trading day preceding the date of
occurrence of the applicable event referred to in Section 9.1, or (ii) if the
Shares are quoted by a recognized securities dealer but selling prices are not
reported, the mean between the high bid and low asked prices for the Shares on
the last market trading day preceding the date of the occurrence of the
applicable event referred to in Section 9.1.

     24.  "Person" means any individual, firm, corporation, trust, partnership
(limited or general), limited liability company, sole proprietorship or
association.

     25.  "Prevailing Party" means the party who is determined to prevail by the
court after its consideration of all damages and equities in an Action Or
Proceeding, whether or not the Action Or Proceeding proceeds to final judgment.
The court shall retain the discretion to determine that no party is the
Prevailing Party in which case no party shall be entitled to recover its Costs
And Expenses.

     26.  "Put Rights" shall mean collectively the IPO Put Rights and the Other
Put Rights.

     27.  "Reorganization Transaction" means any merger or consolidation
involving the Company, any recapitalization of the Company, or any transaction
involving the sale of all or substantially all of the assets of the Company.

     28.  "Sale", "Sell" or "Sold" when used with reference to the Shares means
any voluntary sale, assignment, transfer or other disposition of any of the
Shares or any right or interest therein, for consideration, directly or
indirectly.

                                      -4-

<PAGE>
 
     29.  "Shareholders" means KFI, Idealab, Singh and all other Persons who
acquire Stock and who are required to be bound by the provisions of this
Agreement, and agree to receive and hold the Stock subject to all of the
provisions and restrictions contained in this Agreement.

     30.  "Shares" means all of the issued and outstanding shares of the capital
stock of the Company now owned or hereafter acquired by the Shareholders,
including, without limitation, the shares purchased pursuant to the Stock
Purchase Agreement.

     31.  "Stock" means all issued and outstanding shares of the voting capital
stock of the Company and includes the Shares.

     32.  "Stockholders" or "stockholders" means the record owners of Stock and
includes the Shareholders to the extent of their ownership of Stock.

     33.  "Stockholder Approval" means the affirmative vote of at least a
majority of the Stockholders of the Company at a meeting at which a quorum of
Stockholders is present in person or by proxy, or the written consent of
Stockholders owning at least a majority of the issued and outstanding shares of
the common stock of the Company.

     34.  "Transfer" when used with reference to the Shares means any sale,
transfer, assignment, pledge, grant of a security interest in, gift or other
disposition of any of the Shares, or any right or interest therein, with or
without consideration, directly or indirectly, whether voluntary or involuntary,
by operation of law or otherwise.

                                      -5-

<PAGE>
 
                                   EXHIBIT A

                       CONSENT OF SPOUSE OF SHAREHOLDER
                       --------------------------------


     The undersigned, being the spouse of the Shareholder, Man Jit Singh, who
                                                           -------------  
has signed the within Agreement or otherwise become bound by the provisions of
the within Agreement, hereby acknowledges that he or she has read and is
familiar with the provisions of said Agreement and agrees to be bound thereby
and join therein to the extent, if any, that his or her agreement and joinder
may be necessary. The undersigned hereby agrees that the Shareholder may join in
any future amendment or modifications of said Agreement without any further
signature, acknowledgment, agreement or consent on his or her part; and the
undersigned hereby further agrees that any interest which he or she may have in
the shares of common stock of the Company held by Shareholder shall be subject
to the provisions of said Agreement.



                                             By: /s/ Seirla Singh
                                                ---------------------------- 

                                             Name:__________________________

                                             Dated: as of December 1, 1997
                                                   -------------------------


                                      -1-



<PAGE>
 
                                                                   Exhibit 10.15




                   KORN/FERRY INTERNATIONAL FUTURESTEP, INC.
                            A Delaware corporation


                             EMPLOYMENT AGREEMENT

                                 MAN JIT SINGH

<PAGE>
 
                             EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (this "Agreement"), is entered into as of
December 1, 1997 (the "Agreement Date"), by and between KORN/FERRY
INTERNATIONAL FUTURESTEP, INC., a Delaware corporation ("Company") and MAN
JIT SINGH, an individual ("Executive").


                                  ARTICLE 1.

                                   RECITALS

     1.1  The primary business purpose of the Company is to create, establish
and maintain a business providing executive search and ancillary services to
candidates and client companies on-line through the medium of the Internet (the
"Business"). The Company will be a subsidiary of Korn/Ferry International, a
California corporation ("KFI").

     1.2  The purpose of this Agreement is to set forth the terms and conditions
under which the Company will employ Executive as its President and Chief
Executive Officer.

     1.3  Concurrently herewith, Executive and other Persons (the
"Shareholders") and the Company are entering into a certain Shareholders
Agreement of even date (the "Shareholders Agreement"), pursuant to which the
Shareholders and the Company have agreed upon matters relating to the
management, control and operation of
 the Company, and restrictions upon the
transfer of shares of the capital stock of the Company.

     1.4  Concurrently herewith, KFI and the Company are entering into a certain
License Agreement of even date, pursuant to which, among other things, KFI will
license to the Company the use of its name in connection with the Business (the
"License Agreement").

     1.5  Concurrently herewith, the Company and the Shareholders are entering
into a certain Stock Purchase Agreement of even date, pursuant to which, among
other things, the Shareholders, including Executive, agree to purchase shares of
the capital stock of the Company (the "Stock Purchase Agreement").

     1.6  Concurrently herewith, KFI and Executive are entering into a certain
Agreement of even date ("KFI/Singh Agreement") and a certain Stock Repurchase
Agreement ("KFI Stock Repurchase Agreement"), pursuant to which, among other
things, Executive is hired as a Vice President of KFI and admitted as a
shareholder of KFI, subject to the terms and conditions set forth therein.

     1.7  The Company and Executive intend that the Shareholders Agreement, the
License Agreement, the Stock Purchase Agreement, the KFI/Singh Agreement and the
KFI Stock Repurchase Agreement, be executed and delivered concurrently with the
execution and delivery of this Agreement.

<PAGE>
 
     1.8  Unless otherwise defined herein, all capitalized terms used in this
Agreement, shall have the meanings set forth in the Appendix annexed hereto.

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

                                  ARTICLE 2.

                              TERM OF EMPLOYMENT

     2.1  Term. The term of this Agreement (the "Term") shall commence on the
          ----                                                               
Agreement Date and automatically expire on the earlier of (a) the date on which
this Agreement is terminated under Article 7 below or (b) the third (3rd)
anniversary of the Agreement. Subject to the provisions of this Agreement, the
Company hereby employs Executive and Executive hereby accepts employment with
the Company for the Term.

                                  ARTICLE 3.

                   DUTIES AND RESPONSIBILITIES OF EXECUTIVE

     3.1  Performance of Duties. Executive agrees that during the Term, his
          ---------------------                                            
employment hereunder will be on a full-time basis, and he will faithfully and
efficiently perform his duties and shall devote his full time, efforts, ability,
and attention to the Business. Executive shall report to the Company's Board of
Directors (the "Board").

     3.2  Description of Duties. Executive shall serve as the President and
          ---------------------                                            
Chief Executive Officer of the Company. In this capacity, Executive shall be
responsible for the day-to-day operations of the Business and the long term
overall management, planning and internal operations of the Business, including
without limitation, using his best efforts to (i) maintain and develop the
Business and (ii) meet the objectives of the Company's Operating Plan.
Furthermore, Executive shall do and perform all services, acts, or things
necessary or advisable to discharge his duties under this Agreement, including,
but not limited to, undertaking such travel as is reasonably necessary to
perform such duties, and shall perform such other duties as are commonly
performed by the President and Chief Executive Officer of a privately-held
start-up business which may from time to time be reasonably prescribed by the
Board or by the Chairman. Furthermore, Executive shall abide by all policies and
procedures adopted by the Company or the Board.

     3.3  Other Employment. During the Term, unless the Board otherwise
          ----------------                                             
consents, which consent shall not be unreasonably delayed or withheld, Executive
shall not serve as a director, employee, independent contractor, or officer of
another business, whether or not such business is pursued for gain, profit or
other pecuniary advantage, and whether or not for compensation; provided,
however, that Executive may, (i) serve in any capacity with trade organizations
related to the Business, (ii) accept speaking engagements related to the
Business,

                                      -2-

<PAGE>
 
so long as such activities do not interfere with the performance of his duties
hereunder, and (iii) serve as an executive officer or employee of KFI.

                                  ARTICLE 4.

                           COMPENSATION AND BENEFITS

     4.1  Base Salary. During the Term, Company shall pay to Executive a base
          -----------                                                        
salary at an rate of Three Hundred and Fifty Thousand Dollars ($350,000.00) per
year, payable monthly during the Term in accordance with the Company's regular
payroll practices.

     4.2  Bonus Compensation. As further incentive to Executive, the Company
          ------------------                                                
shall pay to Executive bonus compensation as provided in this Section 4.2 below
(the "Bonus Compensation"). Any such Bonus Compensation shall be paid to
Executive no later than the ninetieth (90th) day following the end of the
calendar year in which the Bonus Compensation is earned. The Bonus Compensation
shall, subject to the limitations set forth below, be payable with respect to
each year of the Term of this Agreement:

          4.2.1 Operating Plans. Within thirty (30) days after the Agreement
                ---------------                                             
Date, and within thirty (30) days before the end of each calendar year
thereafter, the Executive shall, in consultation with the Board, develop and
determine a financial and business operating plan for the Company for the
succeeding twelve month period, which plan shall be subject to the approval of
the Board. The financial and business operating plan as finally approved by the
Board shall be referred to as the "Operating Plan."

          4.2.1 Performance Objectives. Each Operating Plan shall contain
                ----------------------                                   
financial and other objectives for the Company and its Business during the
period covered by the Operating Plan and shall set forth the expected timing for
achievement of such financial and other objectives. Each Operating Plan may also
contain objectives specifically relating to Executive and the performance of his
duties and responsibilities hereunder.

          4.2.2 Amount of Bonus Compensation. Each Operating Plan shall set
                ----------------------------                               
forth the amount of Bonus Compensation which Executive will receive for the
timely achievement of the various financial and other objectives set forth in
such Operating Plan. If all objectives are achieved, the Executive be entitled
to receive aggregate Bonus Compensation in any given year in an amount which
equals approximately twenty-five percent (25%) of the base salary referred to in
Section 4.1 above.

          4.2.3 Determination of Achievement. The Board shall determine, in good
                ----------------------------                                    
faith, whether Executive has earned any Bonus Compensation for any given year.
Such determination by the Board shall be binding and conclusive upon the Company
and Executive.

     4.3  Other Benefits. Except as otherwise herein provided, in his capacity
          --------------                                                      
as a Vice President of KFI pursuant to the KFI/Singh Agreement, Executive shall
be entitled, during the Term, to participate in any group insurance, deferred
compensation or other plan or program

                                      -3-

<PAGE>
 
adopted by KFI for the benefit of its United States executive employees of
similar stature in accordance with the provisions of the respective plan or
plans.

     4.4  Reimbursement of Business Expenses.
          ---------------------------------- 

          4.4.1 Ordinary Expenses. Company shall promptly reimburse Executive
                -----------------                                            
for all reasonable ordinary and necessary business expenses incurred by
Executive in connection with the performance by Executive of his duties under
this Agreement ("Ordinary Business Expenses"). With respect to each such
expenditure, Executive shall furnish to Company adequate records and other
documentary evidence required by federal and state statutes and regulations
issued by the appropriate taxing authorities for the substantiation of each such
expenditure as an income tax deduction.

          4.4.2 Extraordinary Expenses. Any single Ordinary Business Expense
                ----------------------                                      
with a cost in excess of that amount established from time to time by the Board
shall be deemed to be an extraordinary business expense ("Extraordinary Business
Expense"). Executive shall not incur any Extraordinary Business Expense unless
such expense has been approved in advance by the Chairman or by the Board. If
Executive fails to obtain the approval of the Chairman or the Board, the Company
may refuse to reimburse Executive for that expense.

     4.5  Annual Vacation/Sick Leave. Executive shall be entitled to twenty (20)
          --------------------------                                            
days paid annual vacation, exclusive of sick leave and holidays recognized by
the Company, which may be taken at such times as are consistent with good
business practices. Such vacation time shall be prorated for employment periods
less than a full calendar year. Executive may accrue up to fifteen (15) days of
vacation, plus any vacation days scheduled by Executive but canceled on order of
the Board, in any one (1) calendar year during the Term (the "Annual Vacation
Accrual Limit"). In the event that Executive reaches the Annual Vacation Accrual
Limit, Executive shall not be eligible to earn additional vacation until
Executive uses a portion of such earned and accrued vacation. Executive shall be
entitled to sick leave in accordance with the Company's general policy for its
employees, as such policy is modified by the Company from time to time.

     4.6  Repayment of Unauthorized Reimbursement. If any amount paid by the
          ---------------------------------------                           
Company to Executive as reimbursement for any Ordinary Business Expense or
Extraordinary Business Expense, is finally determined by the Board in its good
faith judgment not to be authorized under this Agreement, the part disallowed
shall be repaid to the Company by Executive upon demand.

     4.7  No Liability on the Part of KFI. Executive understands and agrees that
          -------------------------------                                       
KFI shall have no liability or responsibility whatsoever for the payment of any
sums due to Executive under this Agreement or for any benefits to be provided by
the Company to Executive under this Agreement or otherwise.

                                  ARTICLE 5.

                  CONFIDENTIAL INFORMATION AND OTHER MATTERS

                                      -4-

<PAGE>
 
     5.1  Company Information. Executive acknowledges that (i) he holds a senior
          -------------------                                                   
management position with the Company, (ii) in such capacity he is responsible
for carrying out procedure and methods by which the Company develops and
conducts its business, (iii) he has access to the Company's clients, channels
for developing clients and recruiting executives for employment, and other
Confidential Information, (iv) he has direct substantial responsibility to
maintain the Company's business relationship with clients of the Company, (v) it
would be unfair to the Company if Executive were to appropriate to himself or
others the benefits of the Company's developing such business relationships,
especially when the Executive enjoys a relationship with a client of the
Company as a result of his being introduced to the client's personnel as a
representative of the Company, (vi) it would be unfair to the Company if the
Executive were to appropriate to himself or others the benefits of the business,
personnel and other Confidential Information which the Company has developed in
the conduct of its businesses, and (vii) it is therefore fair that reasonable
restrictions should be placed on certain activities of the Executive after his
employment with the Company terminates.

          5.1.1 Executive agrees that he shall not, either during the Term
(except as necessary to carry on the business of the Company), or at any time
after the expiration or termination of his employment, directly or indirectly,
use or disclose to any Person (other than Persons at the Company or KFI), any
Confidential Information. Without limiting the generality of the foregoing,
Executive agrees that he will not, at any time after the expiration or
termination of his employment, directly or indirectly (as owner, principal,
agent, partner, officer, employee, independent contractor, consultant,
stockholder, member or otherwise), use any Confidential Information to (i)
solicit or accept any executive search or placement assignment from, or
otherwise attempt to provide services then provided by the Company to, any
Person; or (ii) solicit for employment or otherwise attempt to engage the
services of any employee of the Company or KFI or their subsidiaries or
Affiliates.

          5.1.2 Executive further agrees that for the two year period
immediately subsequent to the expiration or termination of his employment, he
will not directly or indirectly (as owner, principal, agent, partner, officer,
employee, independent contractor, consultant, stockholder, member or otherwise)
solicit for employment or otherwise attempt to engage the services of any
employee of the Company or KFI or their subsidiaries or Affiliates.

          5.1.3 Nothing herein shall be deemed to prevent the Executive after
termination or expiration of his employment from engaging in business
competitive to that of the Company, provided the Executive does so without using
Confidential Information or otherwise violating the terms and conditions of this
Agreement.

          5.1.4 Executive recognizes and acknowledges that any breach of the
foregoing provisions would result in immeasurable and irreparable harm to the
Company, and accordingly, agrees that in addition to, and not in lieu of, all
other remedies available to the Company by reason of such breach, the Company
shall be entitled to temporary and permanent injunctive relief to prevent the
occurrence or continuation thereof.

                                      -5-

<PAGE>
 
     5.2  Third Party Information. Executive recognizes that from time to time
          -----------------------                                             
the Company may receive from third parties their confidential or proprietary
information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. Executive agrees to hold all such confidential or proprietary
information in the strictest confidence and not to disclose it to any Person or
to use it except as necessary in carrying out his work for the Company,
consistent with the Company's agreement with such third party.

     5.3  Noncompetition Provisions.
          ------------------------- 

          5.3.1 Executive agrees that during the Term, he will not engage in any
other employment, occupation, consulting or other business activity directly
related to the Business or related to any other business in which the Company is
now or hereafter involved, and Executive will not engage in any other activities
which conflict with his obligations to the Company.

          5.3.2 Executive further agrees that during the Term, he will not
become a Company Competitor.

          5.3.3 The provisions of this Section 5.3 are in addition to, and not
in lieu of, the other Noncompetition Provisions contained in the Stock Purchase
Agreement and the Shareholders Agreement, which apply to Executive in his
capacity as a Shareholder.

     5.4  Returning Company Documents. Executive agrees that upon termination or
          ---------------------------                                           
expiration of his employment with the Company, he will deliver to the Company
(and will not keep in his possession, recreate or deliver to anyone else) any
and all devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, or other documents or property, or reproductions of any of the
foregoing items, which constitute the property of the Company.

     5.5  Notification of New Employer. In the event of the termination or
          ----------------------------                                    
expiration of the employment of the Executive, the Executive hereby grants his
consent to the notification by the Company to Executive's new employer solely
about the existence of this Agreement. If requested by such new employer or if
the Company reasonably believes it to be necessary in order to protect the
Company's rights hereunder, the Company may notify the new employer or other
appropriate parties about the existence of the provisions of Article 5 of this
Agreement.

     5.6  Compensation from Others. All compensation for services related to the
          ------------------------                                              
conduct of the Business, including equity or equity-type payments, and
consulting or advisory fees, received by or payable to Executive during the Term
from Persons other than the Company, shall be paid to the Company unless
otherwise approved by the Board.

                                      -6-

<PAGE>
 
                                  ARTICLE 6.

                                  INVENTIONS


     6.1  Inventions Retained and Licensed. Executive hereby represents and
          --------------------------------                                 
warrants that he has no inventions, original works of authorship, developments,
improvements, or trade secrets which were made by Executive prior to his
employment with the Company ("Prior Inventions") and which are owned by
Executive and relate to or could relate to the Business, the Company, or its
products or services, or its research or development activities.

     6.2  Assignment of Inventions. Executive agrees that he will promptly make
          ------------------------                                             
full written disclosure to the Company, will hold in trust for the sole right
and benefit of the Company, and hereby assigns to the Company, or its designee,
all of his right, title and interest in and to any and all inventions, original
works of authorship, developments, concepts, improvements, designs, discoveries,
ideas, trademarks, service marks, tradenames or trade secrets, whether or not it
is or could be subject to a patent or copyright or trademark under patent,
copyright, trademark or similar laws, which Executive may solely or jointly
conceive or develop or reduce to practice, or cause to be conceived or developed
or reduced to practice, during the Term (collectively, the "Inventions"), except
as provided in Section 6.6 below. Executive further acknowledges that all
original works of authorship which are made by him (solely or jointly with
others) within the scope of his employment with the Company and which are
protectible by copyright are "works made for hire," as that term is defined in
the United States Copyright Act. Executive understands and agrees that the
decision whether or not to commercialize or market any Invention developed by
Executive solely or jointly with others is within the Company's sole discretion
and for the Company's sole use and benefit and that no royalty or other
compensation will be due to Executive as a result of the Company's efforts to
commercialize or market any such Invention.

     6.3  Inventions Assigned to the United States. Executive agrees to assign,
          ----------------------------------------                             
without compensation of any kind, to the United States of America or any
governmental entity or agency thereof all of his right, title and interest in
and to any and all Inventions whenever such assignment is requested by the
Company.

     6.4  Maintenance of Records. Executive agrees to keep and maintain adequate
          ----------------------                                                
and current written records of all Inventions made by Executive (solely or
jointly with others) during the Term. The records will be in the form of notes,
sketches, drawings, and any other format that may be specified by the Company.
The records will be made available to and remain the sole property of the
Company at all times.

     6.5  Patent and Copyright Registrations. Executive agrees to assist the
          ----------------------------------                                
Company, or its designees, at the Company's expense, in every proper way to
secure or evidence the Company's rights in the Inventions and any copyrights,
trademarks, service marks, tradenames, patents, mask work rights or other
intellectual property rights relating thereto in any and all countries,
including, the disclosure to the Company of all pertinent information and data
with

                                      -7-

<PAGE>
 
respect thereto, the execution of all applications, specifications, oaths,
assignments and all other instruments which the Company shall deem necessary in
order to apply for and obtain such rights and in order to assign and convey to
the Company, its successors, assigns, and nominees the sole and exclusive
rights, titles and interests in and to such Inventions, and any copyrights,
trademarks, service marks, tradenames, patents, mask work rights or other
intellectual property rights relating thereto. If for any reason Executive
refuses, fails or is unable to sign or pursue any application for any United
States or foreign patent, trademark, or copyright registrations covering
Inventions or original works of authorship assigned to the Company, then
Executive hereby irrevocably designates and appoints the Company and its duly
authorized officers and agents as the agent and attorney in fact of Executive to
act for and in Executive's behalf and stead to execute and file any such
application and to do all other lawfully permitted acts to further the
prosecution and issuance of letters patent or copyright or trademark
registrations thereon with the same legal force and effect as if executed by the
Executive.

     6.6  Exception to Assignments. Executive understands that the provisions of
          ------------------------                                              
this Agreement requiring assignment of Inventions to the Company do not apply to
any Invention which qualifies fully under the provisions of California Labor
Code Section 2870. Executive will advise the Company promptly in writing of any
Inventions that Executive believes meet the criteria section forth in said
statute. Executive hereby represents and warrants to the Company that as of the
Agreement there are no Inventions which are not assignable to the Company under
the provisions of California Labor Code Section 2870.

                                  ARTICLE 7.

                           TERMINATION AND SEVERANCE

     7.1  Termination for Cause. Company reserves the right to terminate
          ---------------------                                         
Executive's employment hereunder at any time for cause. For purposes of this
Agreement, "cause" shall mean, in the good faith opinion of the Board, one or
more of the following: (i) a breach by Executive of a material provision of this
Agreement, the Stock Purchase Agreement, the Shareholders Agreement, the
KFI/Singh Agreement or the KFI Stock Repurchase Agreement, (ii) the habitual
neglect by Executive of his duties under this Agreement or the KFI/Singh
Agreement, and the failure of Executive to cure such habitual neglect within
twenty (20) days after written notice of such habitual neglect has been given by
the Company to Executive, specifying in reasonable detail the nature of the
habitual neglect, (iii) the commission by Executive of a willful act of
dishonesty, fraud, or material misrepresentation, (iv) breach of fiduciary duty
or duty of loyalty by Executive which results in material harm to the Company or
the Business; (v) the chronic alcoholism or addiction of Executive to non-
medically prescribed narcotics; or (vi) the conviction of Executive or the entry
by Executive of a plea of nolo contendre with respect to any misdemeanor crime
                          --------------                                      
involving moral turpitude or with respect to any felony crime. With the
exception of the covenants included in Section 7.5 below, upon a termination of
Executive's employment pursuant to this Section 7.1.1, the obligations of
Executive and Company under this Agreement shall immediately cease. Such
termination shall be without prejudice to any other remedy to which Company may
be entitled either at law, in equity, or under this Agreement, the Stock
Purchase Agreement or the Shareholders Agreement.

                                      -8-

<PAGE>
 
     7.2  Termination Without Cause.
          ------------------------- 

          7.2.1 Termination by Company. Notwithstanding anything to the contrary
                ----------------------                                          
contained in this Agreement, Executive's employment may be terminated at any
time by the Board without cause. With the exception of the covenants included in
Section 7.5 below, upon such termination the obligations of Executive and
Company under this Agreement shall immediately cease.

          7.2.2 Deemed Termination by Company. If the duties and 
                -----------------------------                   
responsibilities of Executive are substantially reduced below those appropriate
for Executive's position as provided in Section 3.2, and Executive delivers
written notice of such reduction to the Company promptly after such reduction
occurs, and the Company does not restore duties and responsibilities to
Executive sufficient to make the duties and responsibilities appropriate for
Executive's position, duties and responsibilities as provided in Section 3.2
within thirty (30) days after the receipt by the Company of such notice, then if
Executive terminates his employment with the Company on or before the tenth 
(10/th/) business day following the expiration of such thirty (30) day period,
such termination shall be deemed a termination by the Company without cause
within the meaning of Section 7.2.1 above. If for any reason Executive does not
terminate his employment within said ten (10) day period, but does terminate his
employment thereafter, such termination shall be deemed a termination by
Executive without cause within the meaning of Section 7.2.3 below.

          7.2.3 Termination by Executive. Executive may terminate his employment
                ------------------------                                        
at any time without cause by giving the Board at least ninety (90) days prior
written notice of such termination and by submitting his written resignation as
an officer and director of the Company, effective as of the date of termination
of his employment. With the exception of the covenants included in Section 7.5
below, upon such termination the obligations of Executive and Company under this
Agreement shall immediately cease.

     7.3  Termination Upon Death or Permanent Disability of Executive.
          ----------------------------------------------------------- 
Executive's employment shall terminate upon the death or permanent disability of
Executive. Upon such termination, the obligations of Executive and Company under
this Agreement shall immediately cease, except as provided in Section 7.5 below.

     7.4  Termination Upon Disability of Executive. Company reserves the right
          ----------------------------------------                            
to terminate Executive's employment if Executive becomes "Disabled." The term
"Disabled" shall mean the failure of Executive to render the services provided
for in this Agreement or in the KFI/Singh Agreement or other failure by
Executive to discharge his duties and responsibilities as the Chief Executive
Officer of the Company or as a Vice President of KFI, for a period of sixty (60)
consecutive days or for nonconsecutive periods aggregating more than one hundred
and twenty (120) days within any given twelve (12) month period, by reason of an
accident or illness, or physical or mental disability, or other incapacity. With
the exception of the covenants included in Section 7.5 below, upon such
termination the obligations of Executive and Company under this Agreement shall
immediately cease.

                                      -9-

<PAGE>
 
     7.5  Payments Upon Termination. The following provisions shall set forth
          -------------------------                                    
the payments and other sums required to be paid to Executive in the event of a
termination of his employment with the Company.

          7.5.1 Termination by Company for Cause. In the event that Executive's
                --------------------------------                               
employment is terminated by Company for cause pursuant to Section 7.1, Company
shall pay to Executive, within ten (10) business days after such termination,
any accrued and unpaid salary which had been earned by Executive under this
Agreement prior to the date of such termination, together with a per diem amount
based upon such salary for any accrued vacation days not previously taken by
Executive in the calendar year in which termination occurs. Executive shall not
be entitled to receive any other compensation or benefits otherwise payable
under this Agreement and shall not be entitled to receive any severance or
similar pay; provided, however, that Company shall reimburse Executive for
expenses incurred through the termination date in accordance with the provisions
of Section 4.4 above.

          7.5.2 Termination by the Company Without Cause. In the event that
                ----------------------------------------                   
Executive's employment is terminated by the Company without cause pursuant to
Section 7.2.1 or Section 7.2.2, Executive shall be entitled to severance pay as
follows: (i) if such termination occurs prior to December 31, 1998, an amount
equal to his then base monthly salary under Section 4.1 for the remainder of the
Term, but in no event more than the base monthly salary payable to Executive
under Section 4.1 for nine (9) months, payable at the election of Executive in a
lump sum or in installments, without interest, and (ii) if such termination
occurs at any time after December 31, 1998, an amount equal to his then base
monthly salary under Section 4.1 for the remainder of the Term, but in no event
more than the base monthly salary payable to Executive under Section 4.1 for six
(6) months, payable at the election of the Executive in a lump sum or in
installments, without interest, and (iii) if such termination occurs at any
time, the maximum permissible Bonus Compensation which Executive had earned as
of the date of termination of his employment, determined in accordance with the
terms and conditions of Section 4.2 above for the year in which such termination
occurs, pro rated through the date of termination on a per diem basis, and (iv)
continuation of the "other benefits" referred to in Section 4.3 for the lesser
of the following periods (which lesser period is sometimes referred to as the
"Severance Period"): (A) the remainder of the Term or (B) the nine (9) month or
six (6) month period referred to in subparagraphs (i) or (ii) above, whichever
is applicable. Furthermore, within ten (10) business days after such
termination, Company shall pay to Executive a per diem amount based upon such
salary for any accrued vacation days not previously taken by Executive in the
calendar year in which termination occurs. Executive shall not be entitled to
receive any other compensation or benefits otherwise payable under this
Agreement and shall not be entitled to any other severance or similar pay;
provided, however, that Company shall reimburse Executive for expenses incurred
through the termination date in accordance with the provisions of Section 4.4
above.
          7.5.3 Termination by Executive Without Cause. In the event that
                --------------------------------------                   
Executive's employment is terminated by Executive pursuant to Section 7.2.3, the
Executive shall be entitled to the same compensation and benefits as provided in
Section 7.5.1 above.

                                     -10-

<PAGE>
 
          7.5.4 Death or Permanent Disability of Executive. In the event that
                ------------------------------------------                   
Executive's employment hereunder is terminated due to Executive's death or
permanent disability pursuant to Section 7.3, the Executive's estate shall be
entitled to the same compensation and benefits as provided in Section 7.5.1
above.

          7.5.5 Disability of Executive. In the event that Executive's
                -----------------------                               
employment hereunder is terminated because Executive has become Disabled
pursuant to Section 7.4, Executive shall be entitled to the same compensation
and benefits as provided in Section 7.5.1 above.

     7.6  Effect of Termination on KFI/Singh Agreement. If for any reason
          --------------------------------------------                   
whatsoever, the Executive's employment with the Company expires or is terminated
by the Company or by the Executive, then the Executive's employment with KFI
pursuant to the KFI/Singh Agreement shall automatically and concurrently expire
or terminate, as applicable, without any severance or other compensation or
payments being payable by KFI to Singh.

                                  ARTICLE 8.

                                 MISCELLANEOUS

     8.1  No Assignment of Rights or Delegation of Duties by Executive;
          -------------------------------------------------------------
Assignment by Company. Executive's rights and benefits under this Agreement are
- ---------------------
personal to him and therefore (i) no such right or benefit shall be subject to
voluntary or involuntary alienation, assignment or transfer; and (ii) Executive
may not delegate his duties or obligations hereunder. The Company may, without
the consent of any other party hereto, assign its rights and delegate its duties
under this Agreement to any Person which acquires all or substantially all of
the assets of the Company, either through a purchase of such assets, by merger,
consolidation or otherwise.

     8.2  Preparation of Agreement. It is acknowledged by each party that such
          ------------------------                                            
party either had separate and independent advice of counsel or the opportunity
to avail itself or himself of separate and independent legal counsel.
Specifically, Executive understands and acknowledges that the law firm of
Morrison & Foerster LLP, is not legal counsel to the Executive. In light of
these and other relevant facts it is further acknowledged that no party shall be
construed to be solely responsible for the drafting hereof, and therefore any
ambiguity shall not be construed against any party as the alleged draftsman of
this Agreement.

     8.3  Cooperation and Further Assurances. Each party agrees, without further
          ----------------------------------                                    
consideration, to cooperate and diligently perform any further acts, deeds and
things and to execute and deliver any documents that may from time to time be
reasonably necessary or otherwise reasonably required to consummate, evidence,
confirm and/or carry out the intent and provisions of this Agreement, all
without undue delay or expense.

     8.4  Interpretation.
          -------------- 

                                     -11-

<PAGE>
 
          8.4.1 Entire Agreement/No Collateral Representations. Each party
                ----------------------------------------------            
expressly acknowledges and agrees that this Agreement, the Stock Purchase
Agreement, the Shareholders Agreement, the KFI/Singh Agreement, the KFI Stock
Repurchase Agreement, and the License Agreement: (i) are the final expression of
the parties agreements with respect to the subject matter hereof and thereof and
are the complete and exclusive statements of the terms of such agreement; (ii)
supersedes any prior or contemporaneous agreements, promises, assurances,
guarantees, representations, understandings, conduct, proposals, conditions,
commitments, acts, course of dealing, warranties, interpretations or terms of
any kind, oral or written (collectively and severally, the "Prior Agreements"),
and that any such Prior Agreements are of no force or effect except as expressly
set forth herein and therein; and (iii) may not be varied, supplemented or
contradicted by evidence of Prior Agreements. Any agreement hereafter made shall
be ineffective to modify, supplement or discharge the terms of this Agreement,
in whole or in part, unless such agreement is in writing and signed by the party
against whom enforcement of the modification or supplement is sought.

          8.4.2 Waiver. No breach of any agreement or provision herein
                ------                                                
contained, or of any obligation under this Agreement, may be waived, nor shall
any extension of time for performance of any obligations or acts be deemed an
extension of time for performance of any other obligations or acts contained
herein, except by written instrument signed by the party to be charged or as
otherwise expressly authorized herein. No waiver of any breach of any agreement
or provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof, or a waiver or relinquishment of any other agreement
or provision or right or power herein contained.

          8.4.3 Remedies Cumulative. Except as otherwise provided in this
                -------------------                                      
Agreement, the remedies of each party under this Agreement, the Shareholders
Agreement, the Stock Purchase Agreement, the License Agreement, the KFI/Singh
Agreement, and the KFI Stock Repurchase Agreement are cumulative and shall not
exclude any other remedies to which such party may be lawfully entitled.

          8.4.4 Severability. If any term or provision of this Agreement or the
                ------------                                                   
application thereof to any Person or circumstance shall, to any extent, be
determined to be invalid, illegal or unenforceable under present or future laws
effective during the term of this Agreement, then and, in that event: (i) the
performance of the offending term or provision (but only to the extent its
application is invalid, illegal or unenforceable) shall be excused as if it had
never been incorporated into this Agreement, and, in lieu of such excused
provision, there shall be added a provision as similar in terms and amount to
such excused provision as may be possible and be legal, valid and enforceable,
and (ii) the remaining part of this Agreement (including the application of the
offending term or provision to persons or circumstances other than those as to
which it is held invalid, illegal or unenforceable) shall not be affected
thereby and shall continue in full force and effect to the fullest extent
provided by law.

          8.4.5 No Third Party Beneficiary. The parties specifically disavow any
                --------------------------                                      
desire or intention to create any third party beneficiary obligations, and
specifically declare that no third party shall have any rights hereunder or any
right of enforcement hereof.

                                     -12-

<PAGE>
 
          8.4.6 No Reliance Upon Prior Representation. The parties acknowledge
                -------------------------------------                         
that no other party has made any oral representation or promise which would
induce them prior to executing this Agreement to change their position to their
detriment, partially perform, or part with value in reliance upon such
representation or promise; the parties acknowledge that they have taken such
action at their own risk; and the parties represent that they have not so
changed their position, performed or parted with value prior to the time of
their execution of this Agreement.

          8.4.7 Headings; References; Incorporation; Gender. The headings used
                -------------------------------------------                   
in this Agreement are for convenience and reference purposes only, and shall not
be used in construing or interpreting the scope or intent of this Agreement or
any provision hereof. References to this Agreement shall include all amendments
or renewals thereof. All cross-references in this Agreement, unless specifically
directed to another agreement or document, shall be construed only to refer to
provisions within this Agreement, and shall not be construed to be referenced to
the overall transaction or to any other agreement or document. Any exhibit
referenced in this Agreement shall be construed to be incorporated in this
Agreement. As used in this Agreement, each gender shall be deemed to include the
other gender, including neutral genders or genders appropriate for entities, if
applicable, and the singular shall be deemed to include the plural, and vice
versa, as the context requires.

     8.5  Enforcement.
          ----------- 

          8.5.1 Applicable Law. This Agreement and the rights and remedies of
                --------------                                               
each party arising out of or relating to this Agreement (including, without
limitation, equitable remedies) shall be solely governed by, interpreted under,
and construed and enforced in accordance with the laws (without regard to the
conflicts of law principles thereof) of the State of California, as if this
agreement were made, and as if its obligations are to be performed, wholly
within the State of California.

          8.5.2 Consent to Jurisdiction; Service of Process. Any action or
                -------------------------------------------               
proceeding arising out of or relating to this Agreement shall be filed in and
heard and litigated solely before the state courts of California located within
the County of Los Angeles. Each party generally and unconditionally accepts the
exclusive jurisdiction of such courts and to venue therein, consents to the
service of process in any such action or proceeding by certified or registered
mailing of the summons and complaint in accordance with the notice provisions of
this Agreement, and waives any defense or right to object to venue in said
courts based upon the doctrine of "Forum Non Conveniens". Each party irrevocably
agrees to be bound by any judgment rendered thereby in connection with this
Agreement.

          8.5.3 Attorneys' Fees and Costs. If any party institutes or should the
                -------------------------                                       
parties otherwise become a party to any Action Or Proceeding based upon or
arising out of this Agreement including, without limitation, to enforce or
interpret this Agreement or any provision hereof, or for damages by reason of
any alleged breach of this Agreement or any provision hereof, or for a
declaration of rights in connection herewith, or for any other relief, including

                                     -13-

<PAGE>
 
equitable relief, in connection herewith, the Prevailing Party in any such
Action Or Proceeding, whether or not such Action Or Proceeding proceeds to final
judgment or determination, shall be entitled to receive from the non-Prevailing
Party as a cost of suit, and not as damages, all Costs And Expenses of
prosecuting or defending the Action Or Proceeding, as the case may be,
including, without limitation, reasonable Attorneys' And Other Fees.

     8.6  Notices. Any notice, approval, disapproval, consent, waiver, or other
          -------                                                              
communication (collectively, "Notices") required or permitted to be given under
this Agreement shall be in writing and shall be delivered personally or mailed,
certified or registered United States mail, postage prepaid, return receipt
requested, or sent by Federal Express or other reliable overnight carrier for
next business day delivery, or by fax. All Notices shall be deemed delivered (a)
if personally served, when actually delivered to the address of the person to
whom such Notice is given, (b) if sent via Federal Express or other overnight
courier for next business day delivery, one (1) business day following the date
on which the Notice is given to Federal Express or other overnight courier, (c)
if by mail, three (3) days following deposit in the United States mail, or (d)
if by fax, when the transmitting telecopier machine has confirmed that the
Notice has been completed or sent without error. All Notices shall be addressed
to the party to whom such Notice is to be given at the party's address set forth
below or as such party shall otherwise direct by Notice sent pursuant to this
Section 8.6:

     If Company:         Korn/Ferry International Futurestep, Inc.
                         c/o Korn/Ferry International               
                         1800 Century Park East, Suite 900        
                         Los Angeles, California 90067            
                         Attention: Peter L. Dunn, Vice Chairman  
                         Telephone: (310) 843-4100                
                         Telecopier: (310) 553-8640                

     With a copy to:     Michael C. Cohen, Esq.             
                         Morrison & Foerster LLP            
                         555 West Fifth Street; 35th Floor  
                         Los Angeles, California 90013      
                         Telephone: (213) 892-5404          
                         Telecopier: (213) 892-5454          

     If to Executive:    Mr. Man Jit Singh         
                         1050 Brooklawn Drive      
                         Los Angeles, CA 90077     
                         Telephone: (310) 278-1572 
                         Telecopier: (310) 278-1572 

     With a copy to:     Paul H. Irving, Esq.          
                         Manatt, Phelps & Phillips LLP 
                         11355 W. Olympic Boulevard    
                         Los Angeles, CA 90064          

                                     -14-

<PAGE>
 
                         Telephone: (310) 312-4000 
                         Telecopier: (310) 312-4224

     8.7  Counterparts. This Agreement may be executed in counterparts, each of
          ------------                                                         
which shall be deemed an original, and all of which together shall constitute
one and the same instrument, binding on all parties hereto. Any signature page
of this Agreement may be detached from any counterpart of this Agreement and re-
attached to any other counterpart of this Agreement identical in form hereto by
having attached to it one or more additional signature pages.

     IN WITNESS WHEREOF, the parties have executed this Agreement.

                                   COMPANY:

                                   KORN/FERRY INTERNATIONAL FUTURESTEP, INC.,
                                   a Delaware corporation


                                   By:  /s/ Richard Ferry 
                                        -----------------------------------
                                            Richard Ferry, Chairman


                                   EXECUTIVE:


                                        /s/ Man Jit Singh
                                   ----------------------------------------
                                            MAN JIT SINGH

                                     -15-

<PAGE>
 
                                   APPENDIX

                              CERTAIN DEFINITIONS

     1.   "Action Or Proceeding" means any and all claims, suits, actions,
notices, inquiries, proceedings, hearings, arbitrations or other similar
proceedings, including appeals and petitions therefrom, whether formal or
informal, governmental or non-governmental, or civil or criminal.

     2.   "Affiliate" means with respect to any person or entity ("Person No.
1"), any other person or entity which either (i) directly or indirectly owns or
controls Person No. 1, or (ii) is directly or indirectly owned or controlled by
Person No. 1, or (iii) is under direct or indirect common control with Person
No. 1. The term "control" (and its corollaries) includes, without limitation,
ownership of interests representing a majority of total voting power in an
entity, and "ownership" (and its corollaries) includes, without limitation,
ownership of a majority of the equity interests in an entity.

     3.   "Agreement" means this Agreement and all agreements, exhibits,
schedules and appendices expressly annexed hereto.

     4.   "Attorneys' And Other Fees" means attorneys' fees, accountants' fees,
fees of other professionals, witness fees (including experts engaged by the
parties, but excluding shareholders, officers, employees or partners of the
parties), and any and all other similar fees incurred in the prosecution or
defense of an Action Or Proceeding.

     5.   "Company Competitive Business" means any business which competes,
directly or indirectly, in part or in whole, with any business now or hereafter
conducted or engaged in (a) by the Company, or (b) by any Person in which the
Company has an equity interest, either directly or indirectly, which affords the
Company more than ten percent (10%) of the voting power of such Person.

     6.   "Company Competitor" means any Person (other than KFI or any Affiliate
of KFI) who (a) engages, directly or indirectly, in any Company Competitive
Business, or (b) becomes an organizer, investor, lender, partner, joint
venturer, stockholder, officer, director, employee, manager, consultant,
supplier, vendor, agent, lessor or lessee of or to any Company Competitive
Business, or (c) otherwise in any manner associates with, or aids or abets, or
gives information or financial assistance to any Company Competitive Business.

     7.   "Confidential Information" means all proprietary and confidential
information regarding the Company, KFI, their businesses, clients, and
personnel, including, without limitation: (a) client lists, client prospects,
and business development information; (b) company lists, profiles and reports,
position specifications, salary structures, and engagement information; (c)
source lists, executive lists, and candidate lists, profiles and reports; (d)
candidate resumes, appraisals, compensation information, and reference reports;
(e) search executive methodologies; (f) training and research materials and
methodologies; (g) structure, operations, pricing, financial

                                      -1-

<PAGE>
 
 
and personnel information; (h) information systems design and procedures; (i)
computer technology designs, hardware configuration systems, and software
designs and implementations; (j) information databases, interactive procedures,
tests, analysis and studies developed by or for the benefit of the Company or
KFI; (k) plans, designs, inventions, formulas, research and technology developed
by or for the benefit of the Company or KFI; (l) personal histories or resumes,
employment information, business information, business secrets of clients and
candidates; (m) trade secrets of the Company and KFI; (n) plans, prospects,
policies, practices, and procedures of the Company and KFI which are not
generally known in the industry; (o) all New Information; and (p) all other
proprietary and confidential information of every nature and source. The term
"Confidential Information" does not include any information which: (A) is or
becomes generally available to the public through no breach of this Agreement or
any other agreement to which the Company or KFI is a party; (B) was received
from a third party free to disclose such information without restriction; (C) is
approved for release in writing by the Board of Directors of the Company or KFI,
subject to whatever conditions are imposed by such Boards; (D) is required by
law or regulation to be disclosed, but only to the extent necessary and only for
the purpose required; or (E) is disclosed in response to a valid order of a
court or other governmental body, but only to the extent necessary and for the
purpose required, if and only if, the Company and KFI are first notified of the
order and are permitted to seek an appropriate protective order against public
disclosure of such information.

     8.   "Costs And Expenses" means the cost to take depositions, the cost to
arbitrate a dispute, if applicable, and the costs and expenses of travel and
lodging incurred with respect to an Action Or Proceeding.

     9.   "KFI Competitive Business" means any business which competes, directly
or indirectly, in part or in whole, with any business now or hereafter conducted
or engaged in (a) by KFI or its Affiliates, or (b) by any Person (other than the
Company) in which KFI or an Affiliate of KFI has an equity interest, either
directly or indirectly, which affords KFI or such Affiliate more than ten
percent (10%) of the voting power of such Person.

     10.  "KFI Competitor" means any Person (other than KFI or any Affiliate of
KFI) who (a) engages, directly or indirectly, in any KFI Competitive Business,
or (b) becomes an organizer, investor, lender, partner, joint venturer,
stockholder, officer, director, employee, manager, consultant, supplier, vendor,
agent, lessor or lessee of or to any KFI Competitive Business, or (c) otherwise
in any manner associates with, or aids or abets, or gives information or
financial assistance to any KFI Competitive Business.

     11.  "New Information" means all information related to Executive's duties
and responsibilities which is developed by Executive or under his guidance and
control while in the employment of the Company or KFI, including, without
limitation: (a) client and candidate prospect lists and databases; (b) interview
and reference forms and notes; (c) contact information and procedures; (c)
client and candidate information; (d) client and candidate prospect information;
(e) source lists and executive lists and databases; (f) research materials,
forms, and tests; (g) business development information; (h) computer formats,
forms, tests, interactive

                                      -2-

<PAGE>
 
procedures, methods of analysis and tools developed in connection with the
Business; and (i) all other proprietary and confidential information.

     12.  "Noncompetition Provisions" means those certain provisions contained
in this Agreement and in the Shareholders Agreement and Stock Purchase Agreement
restricting the business activities of Executive, in his capacity as an employee
of the Company, and in his capacity as a Shareholder of the Company.

     13.  "Person" means any individual, firm, corporation, trust, partnership
(limited or general), limited liability company, sole proprietorship or
association.

     14.  "Prevailing Party" means the party who is determined to prevail by the
court after its consideration of all damages and equities in an Action Or
Proceeding, whether or not the Action Or Proceeding proceeds to final judgment.
The court shall retain the discretion to determine that no party is the
Prevailing Party in which case no party shall be entitled to recover its Costs
And Expenses.

                                      -3-



<PAGE>
 
                                                                   Exhibit 10.16




                           KORN FERRY INTERNATIONAL
                           a California corporation


                              KFI/SINGH AGREEMENT

<PAGE>
 
                              KFI/SINGH AGREEMENT

          THIS KFI/SINGH AGREEMENT (this "Agreement"), is dated as of December
1, 1997 ("Agreement Date"), by and among KORN/FERRY INTERNATIONAL, a California
corporation ("KFI") and MAN JIT SINGH, an individual ("Singh").

                                   ARTICLE 1.
                                   PREAMBLE

     1.1  KFI is engaged in the business of providing executive search and
ancillary services.

     1.2  Concurrently herewith, Korn/Ferry International Futurestep, Inc., a
Delaware corporation (the "Company"), and Singh are entering into a certain
Employment Agreement of even date, pursuant to which, among other things, Singh
is employed as the President and Chief Executive Officer of the Company for the
term and consideration, and subject to the conditions, set forth therein (the
"Singh Employment Agreement"). The primary business purpose of the Company is to
provide executive search and ancillary services to candidates and client
companies on-line through the medium of the Internet. The Company will be a
subsidiary of KFI.

     1.3  The purpose of this Agreement is to set forth the terms and conditions
under which Singh will become a Vice President of KFI and purchase shares of the
capital stock of
 KFI, subject to the terms and conditions set forth in this
Agreement.

     1.4  Concurrently herewith, the Company, KFI, Singh and others
("Shareholders") are entering into a certain Shareholders Agreement of even date
(the "Shareholders Agreement"), pursuant to which the Shareholders and the
Company have agreed upon matters relating to the management, control and
operation of the Company, and restrictions upon the transfer of shares of the
capital stock of the Company.

     1.5  Concurrently herewith, KFI and the Company are entering into a certain
License Agreement of even date, pursuant to which, among other things, KFI will
license to the Company the use of its name in connection with its business (the
"License Agreement").

     1.6  Concurrently herewith, the Company, Singh and others are entering into
a certain Stock Purchase Agreement of even date, pursuant to which, among other
things, Singh is purchasing shares of the capital stock of the Company (the
"Stock Purchase Agreement").

     1.7  Concurrently herewith, KFI and Singh are entering into a certain Stock
Repurchase Agreement of even date ("KFI Stock Repurchase Agreement").

     1.8  KFI and Singh intend that the Stock Purchase Agreement, the
Shareholders Agreement, the License Agreement, the Singh Employment Agreement,
and the KFI Stock

<PAGE>
 
Repurchase Agreement, be executed and delivered concurrently with the execution
and delivery of this Agreement.

     1.9  Unless otherwise defined herein, all capitalized terms used in this
Agreement, shall have the meanings set forth in the Appendix annexed hereto.

          NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:


                                  ARTICLE 2.

                                  EMPLOYMENT

     2.1  Employment. Singh is hereby employed during the Term as a Vice
          ----------                                                    
President of KFI, on the terms and conditions set forth in this Agreement.

     2.2  Description of Duties. It is understood and agreed by KFI and Singh,
          ---------------------                                               
that Singh's employment as a Vice President of KFI is for the sole purpose of
facilitating the performance of his duties and responsibilities as the President
and Chief Executive Officer of the Company. Accordingly, Singh shall have such
duties and responsibilities as may be reasonably prescribed from time to time by
the President of KFI or the Board of Directors of KFI (the "Board"), so long as
such duties and responsibilities do not conflict with his duties and
responsibilities with the Company. Singh shall abide by all policies and
procedures adopted by KFI or the Board which are applicable to other executives
of KFI in similar stature, including, without limitation, the KFI Code of
Business Conduct, as such Code may be modified from time to time.

     2.3  Compensation. Singh shall not receive any monetary compensation from
          ------------                                                        
KFI specifically on account of his employment as a Vice President of KFI; it
being understood and agreed that all of the monetary compensation payable to
Singh by the Company under the Singh Employment Agreement constitutes the entire
monetary consideration payable to Singh as an employee of the Company and as a
Vice President of KFI hereunder.

     2.4  Benefits. As set forth in the Singh Employment Agreement. Singh shall
          --------                                                             
be entitled, during the Term, to participate in any group insurance, deferred
compensation or other plan or program (other than the Executive Participation
Program) adopted by KFI for the benefit of its United States executive employees
of similar stature in accordance with the provisions of the respective plan or
plans.

     2.5  Term. The term of Singh's employment hereunder (the "Term") shall be
          ----                                                                
coextensive with the "Term" (as this term is used in the Singh Employment
Agreement) of Singh's employment with the Company under the Singh Employment
Agreement. If for any reason whatsoever, Singh's employment with the Company
expires or is terminated, then Singh's employment with KFI shall automatically,
without any further notice or consideration of any kind, expire and terminate
concurrently. Upon the expiration or termination of Singh's

                                      -2-

<PAGE>
 
employment with the Company, Singh shall not be entitled to receive any
severance, bonus or other form of compensation from KFI; it being understood and
agreed that the severance and other amounts, if any, payable to Singh under the
Singh Employment Agreement upon any expiration or termination of his employment
thereunder shall constitute full and complete payment on account of the
concurrent expiration and termination of his employment with KFI.

     2.6  Annual Vacation/Sick Leave; Other Benefits. Except as otherwise
          ------------------------------------------                     
expressly provided in this Agreement, the vacation, sick leave and other
benefits provided to Singh under the Singh Employment Agreement shall constitute
the sole vacation, sick leave, and other benefits afforded to Singh as an
employee of KFI, and Singh shall not be entitled to receive any vacation or sick
leave benefits or any other benefits from KFI which may be duplicative or
additive to the benefits provided to Singh by the Company.

     2.7  Confidential Information. Singh acknowledges that (i) he holds a
          ------------------------                                        
senior management position with KFI, (ii) in such capacity he is responsible for
carrying out procedures and methods by which the Company develops and conducts
its business, (iii) he has access to KFI's clients, channels for developing
clients and recruiting executives for employment, and other Confidential
Information, (iv) he has direct substantial responsibility to maintain KFI's
business relationship with clients of KFI, (v) it would be unfair to KFI if
Singh were to appropriate to himself or others the benefits of KFI's years' of
developing such business relationships, especially when Singh enjoys a
relationship with a client of KFI as a result of his being introduced to the
client's personnel as a representative of the Company or KFI, (vi) it would be
unfair to the KFI if Singh were to appropriate to himself or others the benefits
of the business, personnel and other Confidential Information which KFI has
developed in the conduct of their businesses, and (vii) it is therefore fair
that reasonable restrictions should be placed on certain activities of Singh
after his employment with KFI terminates.

          2.7.1 Singh agrees that he shall not, either during the Term (except
as necessary to carry on the business of the Company), or at any time after the
expiration or termination of his employment, directly or indirectly, use or
disclose to any Person (other than Persons at the Company or KFI), any
Confidential Information. Without limiting the generality of the foregoing,
Singh agrees that he will not, at any time after the expiration or termination
of his employment, directly or indirectly (as owner, principal, agent, partner,
officer, employee, independent contractor, consultant, stockholder, member or
otherwise), use any Confidential Information to (i) solicit or accept any
executive search or placement assignment from, or otherwise attempt to provide
services then provided by KFI to, any Person; or (ii) solicit for employment or
otherwise attempt to engage the services of any employee of the Company or KFI
or their subsidiaries or Affiliates.

          2.7.2 Singh further agrees that for the two year period immediately
subsequent to the expiration or termination of his employment, he will not
directly or indirectly (as owner, principal, agent, partner, officer, employee,
independent contractor, consultant, stockholder, member or otherwise) solicit
for employment or otherwise attempt to engage the services of any employee of
the Company or KFI or their subsidiaries or Affiliates.

                                     -3-

<PAGE>
 
          2.7.3 Nothing herein shall be deemed to prevent Singh after
termination or expiration of his employment from engaging in business
competitive to that of the Company or KFI, provided Singh does so without using
Confidential Information or otherwise violating the terms and conditions of this
Agreement.

          2.7.4 Singh recognizes and acknowledges that any breach of the
foregoing provisions would result in immeasurable and irreparable harm to KFI,
and accordingly, agrees that in addition to, and not in lieu of, all other
remedies available to KFI by reason of such breach, KFI shall be entitled to
temporary and permanent injunctive relief to prevent the occurrence or
continuation thereof.

     2.8  Third Party Information. Singh recognizes that from time to time KFI
          -----------------------                                             
may receive from third parties their confidential or proprietary information
subject to a duty on the KFI's part to maintain the confidentiality of such
information and to use it only for certain limited purposes. Singh agrees to
hold all such confidential or proprietary information in the strictest
confidence and not to disclose it to any Person or to use it except as necessary
in carrying out his work for KFI, consistent with KFI's agreement with such
third party.

     2.9  Noncompetition Provisions.
          ------------------------- 

          2.9.1 Singh agrees that during the Term, he will not engage in any
other employment, occupation, consulting or other business activity directly
related to the business of the Company or KFI or related to any other business
in which the Company or KFI is now or hereafter involved, and Singh will not
engage in any other activities which conflict with his obligations to the
Company and KFI.

          2.9.2 Singh further agrees that during the Term, he will not become a
KFI Competitor.

          2.9.3 The provisions of this Section 2.9 are in addition to, and not
in lieu of, the other Noncompetition Provisions contained in the Stock Purchase
Agreement and the Shareholders Agreement, which apply to Singh in his capacity
as a "Shareholder" thereunder.

     2.10 Returning KFI Documents. Singh agrees that upon termination or
          -----------------------                                       
expiration of his employment with KFI, he will deliver to KFI (and will not keep
in his possession, recreate or deliver to anyone else) any and all devices,
records, data, notes, reports, proposals, lists, correspondence, specifications,
drawings, blueprints, sketches, materials, equipment, or other documents or
property, or reproductions of any of the foregoing items, which constitute the
property of the KFI.

     2.11 Notification of New Employer. In the event of the termination or
          ----------------------------                                    
expiration of the employment of Singh, Singh hereby grants his consent to the
notification by KFI to Singh's new employer solely about the existence of this
Agreement.

                                     -4-

<PAGE>
 
     2.12 Compensation from Others. All compensation for services related to the
          ------------------------                                              
conduct of the business of KFI, including equity or equity-type payments, and
consulting or advisory fees, received by or payable to Singh during the Term
from Persons other than the Company or KFI, shall be paid to KFI unless
otherwise approved by the Board.

                                   ARTICLE 3.

                              STOCK SUBSCRIPTION

     3.1  Executive Participation Program. In 1991, KFI adopted the Executive
          -------------------------------                                    
Participation Program, which, as amended prior to the date hereof, provides for
the sale to certain officers of KFI of shares of KFI's Common Stock (the
"Shares"). In connection with the Singh Employment Agreement and Singh' s
employment as a Vice President of KFI hereunder, Singh is purchasing Shares, on
the terms and subject to the conditions set forth in this Agreement. Singh
understands and agrees that his rights to acquire Shares, and all of the terms
and conditions relating thereto, are set forth exclusively in this Agreement and
are not necessarily the same terms and conditions available to other executives
under the Executive Participation Program, and Singh shall have no rights or
benefits whatsoever under the Executive Participation Program, except to the
extent similar rights are afforded to Singh under this Agreement.

     3.2  Purchase of Shares; Method of Payment.
          ------------------------------------- 

          3.2.1  Purchase. Singh hereby subscribes for and agrees to purchase
                 --------
from KFI and KFI agrees to issue to Singh an aggregate of twenty thousand
(20,000) Shares (hereinafter collectively referred to as the "Singh Shares") for
Two Hundred and Eight Thousand Dollars ($208,000.00) (the "Total Purchase
Price"), with such Singh Shares being issuable and such amount being payable in
accordance with the provisions of this Agreement.

          3.2.2 Method of Payment. Singh shall pay the Total Purchase Price by
                -----------------
delivery of a promissory note executed by Singh and made payable to KFI in the
principal amount equal to the Total Purchase Price. Such note (the "Note") shall
bear interest at a rate per annum equal to the lowest rate which will avoid the
imputation of interest under the Internal Revenue Code and its rules and
regulations. Such Note shall provide that interest shall accrue and the total of
accrued interest and principal shall be all due and payable on December 31, 
2001. The Note shall contain such other provisions as are customary for
promissory notes of this type and character.

          3.2.3  Issuance of Shares. Subject to the provisions of Section 3.3
                 ------------------
below, KFI will issue to Singh against payment of the Total Purchase Price
therefor, all of the Singh Shares.

     3.3  Stock Repurchase Agreement. The Singh Shares will be subject to the
          --------------------------                                         
terms and conditions of the KFI Stock Repurchase Agreement. Singh shall execute
and deliver to KFI an original KFI Stock Repurchase Agreement concurrently with
the issuance of the Singh Shares. The KFI Stock Repurchase Agreement provides
that the certificates evidencing the Singh Shares will remain in the possession
of KFI to secure KFI's purchase rights thereunder. All certificates

                                     -5-

<PAGE>
 
evidencing Singh Shares shall contain the legends referred to in Section 4 of
the KFI Stock Repurchase Agreement.

     3.4  Investment Representations and Warranties. Singh hereby represents and
          ----------------------------------------- 
warrants as indicated below:

          (a) Singh has reviewed, completed and executed Schedule 1 hereto which
is incorporated herein and made a part hereof by this reference, and the
information provided to KFI in such Schedule 1 is complete and accurate.

          (b) By reason of his business or financial experience, Singh has such
knowledge and experience in financial and business matters that he is capable of
evaluating the merits and risks of an investment in KFI and of making an
informed investment decision with respect thereto, and has the capacity to
protect his own interests in connection with his acquisition of the Singh
Shares.

          (c) Singh has adequate means of providing for current needs and
personal contingencies, has no need for liquidity in the investment, and is able
to bear the economic risk of an investment in KFI of the size contemplated.

          (d) Singh will purchase the Singh Shares for Singh's own account and
for investment purposes only, and Singh is not purchasing the Singh Shares with
a view to or for sale in connection with any distribution, resale or disposition
of such Shares.

          (e) The information provided in this Section (including without
limitation the information set forth in Schedule 1 hereto) may be relied upon in
determining whether the offering in which Singh proposes to participate is
exempt from registration under the Securities Act of 1933, as amended (the
"Act"), and applicable state securities laws and the rules promulgated
thereunder.

          (f) Singh will notify KFI immediately of any material changes to the
information given by Singh in this Section occurring prior to the issuance of
any of the Singh Shares.

          (g) Singh is an officer of the Company and KFI and as such has a high
degree of familiarity with the business and operations of the Company and KFI
and understands and has evaluated the merits and risks inherent in acquiring the
Singh Shares.

          (h) Singh is relying solely upon his knowledge of KFI for the purpose
of making his decision to acquire the Singh Shares, and Singh understands that
no person has been authorized to make any representations, and any
representations given or made, must not be relied upon as having been authorized
by KFI.

     3.5  Acknowledgments and Covenants of Singh. Singh acknowledges and agrees
          --------------------------------------                               
as follows:


                                     -6-

<PAGE>
 
          (a) KFI has made available to Singh the opportunity to ask questions
of, and receive answers from, persons acting on behalf of KFI concerning KFI and
the proposed purchase of Shares by Singh pursuant to this Agreement, and
otherwise to obtain any additional information, to the extent KFI or its
executive officers possess such information or could acquire it without
unreasonable effort or expense, necessary to verify the accuracy of the
information which Singh has acquired.

          (b) Singh further acknowledges and agrees with KFI that (i) the Singh
Shares, when issued, will not have been registered under the Act, or qualified
under any state securities laws; (ii) any sale or other disposition of the Singh
Shares by Singh or by any transferee from Singh will be limited to a transaction
permitted by the Stock Repurchase Agreement and as to which, in each instance,
an exemption from the registration requirements of the Act and any applicable
requirements under state securities laws can be established to the satisfaction
of KFI and its counsel.

                                   ARTICLE 4.

                                 MISCELLANEOUS

     4.1  Preparation of Agreement. It is acknowledged by each party that such
          ------------------------ 
party either had separate and independent advice of counsel or the opportunity
to avail itself or himself of separate and independent legal counsel. Each party
hereto understands and acknowledges that the law firm of Morrison & Foerster
LLP, is legal counsel to KFI only, and does not represent any other parties to
this Agreement. In light of these and other relevant facts it is further
acknowledged that no party shall be construed to be solely responsible for the
drafting hereof, and therefore any ambiguity shall not be construed against any
party as the alleged draftsman of this Agreement.

     4.2  Cooperation and Further Assurances. Each party agrees, without further
          ----------------------------------                                   
consideration, to cooperate and diligently perform any further acts, deeds and
things and to execute and deliver any documents that may from time to time be
reasonably necessary or otherwise reasonably required to consummate, evidence,
confirm and/or carry out the intent and provisions of this Agreement, all
without undue delay or expense.

     4.3  Interpretation.
          -------------- 

          4.3.1 Entire Agreement/No Collateral Representations. Each party
                ----------------------------------------------            
expressly acknowledges and agrees that this Agreement, the Stock Purchase
Agreement, the Singh Employment Agreement, the License Agreement, the KFI Stock
Repurchase Agreement, and the Shareholders Agreement: (i) are the final
expression of the parties agreements with respect to the subject matter hereof
and thereof and are the complete and exclusive statements of the terms of such
agreement; (ii) supersedes any prior or contemporaneous agreements, promises,
assurances, guarantees, representations, understandings, conduct, proposals,
conditions, commitments, acts, course of dealing, warranties, interpretations or
terms of any kind, oral or written (collectively and severally, the "Prior
Agreements"), and that any such Prior Agreements are of no force or

                                      -7-

<PAGE>
 
except as expressly set forth herein and therein; and (iii) may not be
varied, supplemented or contradicted by evidence of Prior Agreements. Any
agreement hereafter made shall be ineffective to modify, supplement or discharge
the terms of this Agreement, in whole or in part, unless such agreement is in
writing and signed by the party against whom enforcement of the modification or
supplement is sought.

          4.3.2 Waiver. No breach of any agreement or provision herein
                ------                                                
contained, or of any obligation under this Agreement, may be waived, nor shall
any extension of time for performance of any obligations or acts be deemed an
extension of time for performance of any other obligations or acts contained
herein, except by written instrument signed by the party to be charged or as
otherwise expressly authorized herein. No waiver of any breach of any agreement
or provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof, or a waiver or relinquishment of any other agreement
or provision or right or power herein contained.

          4.3.3 Remedies Cumulative. Except as otherwise provided in this
                -------------------                                      
Agreement, the remedies of each party under this Agreement, the Shareholders
Agreement, the Singh Employment Agreement, the Stock Purchase Agreement, the KFI
Stock Repurchase Agreement, and the License Agreement are cumulative and shall
not exclude any other remedies to which such party may be lawfully entitled.

          4.3.4 Severability. If any term or provision of this Agreement or the
                ------------                                                   
application thereof to any Person or circumstance shall, to any extent, be
determined to be invalid, illegal or unenforceable under present or future laws
effective during the term of this Agreement, then and, in that event: (i) the
performance of the offending term or provision (but only to the extent its
application is invalid, illegal or unenforceable) shall be excused as if it had
never been incorporated into this Agreement, and, in lieu of such excused
provision, there shall be added a provision as similar in terms and amount to
such excused provision as may be possible and be legal, valid and enforceable,
and (ii) the remaining part of this Agreement (including the application of the
offending term or provision to persons or circumstances other than those as to
which it is held invalid, illegal or unenforceable) shall not be affected
thereby and shall continue in full force and effect to the fullest extent
provided by law.

          4.3.5 No Third Party Beneficiary. The parties specifically disavow any
                --------------------------                                      
desire or intention to create any third party beneficiary obligations, and
specifically declare that no third party shall have any rights hereunder or any
right of enforcement hereof.

          4.3.6 No Reliance Upon Prior Representation. The parties acknowledge
                -------------------------------------                         
that no other party has made any oral representation or promise which would
induce them prior to executing this Agreement to change their position to their
detriment, partially perform, or part with value in reliance upon such
representation or promise; the parties acknowledge that they have taken such
action at their own risk; and the parties represent that they have not so
changed their position, performed or parted with value prior to the time of
their execution of this Agreement.


                                      -8-

<PAGE>
 
          4.3.7   Headings; References; Incorporation; Gender. The headings used
                  -------------------------------------------
in this Agreement are for convenience and reference purposes only, and shall not
be used in construing or interpreting the scope or intent of this Agreement or 
any provision hereof. References to this Agreement shall include all amendments 
or renewals thereof. All cross-references in this Agreement, unless specifically
directed to another agreement or document, shall be construed only to refer to 
provisions within this Agreement, and shall not be construed to be referenced to
the overall transaction or to any other agreement or document. Any exhibit 
referenced in this Agreement shall be construed to be incorporated in this 
Agreement. As used in this Agreement, each gender shall be deemed to include the
other gender, including neutral genders or genders appropriate for entities, if 
applicable, and the singular shall be deemed to include the plural, and vice 
versa, as the context requires.

     4.4  Enforcement.
          ----------- 

          4.4.1   Applicable Law. This Agreement and the rights and remedies of
                  --------------    
each party arising out of or relating to this Agreement (including, without
limitation, equitable remedies) shall be solely governed by, interpreted under,
and construed and enforced in accordance with the laws (without regard to the
conflicts of law principles thereof) of the State of California, as if this
agreement were made, and as if its obligations are to be performed, wholly
within the State of California.

          4.4.2   Consent to Jurisdiction; Service of Process. Any action or 
                  -------------------------------------------   
proceeding arising out of or relating to this Agreement shall be filed in and 
heard and litigated solely before the state courts of California located within 
the County of Los Angeles. Each party generally and unconditionally accepts the 
exclusive jurisdiction of such courts and to venue therein, consents to the 
service of process in any such action or proceeding by certified or registered 
mailing of the summons and complaint in accordance with the notice provisions of
this Agreement, and waives any defense or right to object to venue in said 
courts based upon the doctrine of "Forum Non Conveniens". Each party irrevocably
agrees to be bound by any judgment rendered thereby in connection with this 
Agreement.

          4.4.3   Attorneys' Fees and Costs. If any party institutes or should 
                  -------------------------
the parties otherwise become a party to any Action Or Proceeding based upon or
arising out of this Agreement including, without limitation, to enforce or
interpret this Agreement or any provision hereof, or for damages by reason of
any alleged breach of this Agreement or any provision hereof, or for a
declaration of rights in connection herewith, or for any other relief, including
equitable relief, in connection herewith, the Prevailing Party in any such
Action Or Proceeding, whether or not such Action Or Proceeding proceeds to final
judgment or determination, shall be entitled to receive from the non-Prevailing
Party as a cost of suit, and not as damages, all Costs And Expenses of
prosecuting or defending the Action Or Proceeding, as the case may be,
including, without limitation, reasonable Attorneys' And Other Fees.

     4.5  Notices. Any notice, approval, disapproval, consent, waiver, or other 
          -------
communication (collectively, "Notices") required or permitted to be given under 
this Agreement shall be in writing and shall be delivered personally or mailed,
certified or registered United

                                      -9-

<PAGE>
 
States mail, postage prepaid, return receipt requested, or sent by Federal 
Express or other reliable overnight carrier for next business day delivery, or 
by fax. All Notices shall be deemed delivered (a) if personally served, when
actually delivered to the address of the person to whom such Notice is given,
(b) if sent via Federal Express or other overnight courier for next business day
delivery, one (1) business day following the date on which the Notice is given
to Federal Express or other overnight courier, (c) if by mail, three (3) days
following deposit in the United States mail, or (d) if by fax, when the
transmitting telecopier machine has confirmed that the Notice has been completed
or sent without error. All Notices shall be addressed to the party to whom such
Notice is to be given at the party's address set forth below or as such party
shall otherwise direct by Notice sent pursuant to this Section 4.5:


     If to KFI:       Korn/Ferry International
                      1800 Century Park East, Suite 900
                      Los Angeles, California 90067
                      Attention: Peter L. Dunn, Vice Chairman
                      Telephone:  (310) 843-4100
                      Telecopier: (310) 553-8640

     With a copy to:  Michael C. Cohen, Esq,
                      Morrison & Foerster LLP
                      555 West Fifth Street, 35th Floor
                      Los Angeles, California 90013
                      Telephone:  (213) 892-5404
                      Telecopier: (213) 892-5454

     If to Singh:     Mr. Man Jit Singh
                      1050 Brooklawn Drive
                      Los Angeles, CA 90077
                      Telephone:  (310) 278-1572
                      Telecopier: (310) 278-1572

     With a copy to:  Paul H. Irving, Esq.
                      Manatt, Phelps & Phillips LLP
                      11355 W. Olympic Boulevard
                      Los Angeles, CA 90064
                      Telephone:  (310) 312-4000
                      Telecopier: (310) 312-4224

     4.6  Counterparts. This Agreement may be executed in counterparts, each of
          ------------
which shall be deemed an original, and all of which together shall constitute
one and the same instrument, binding on all parties hereto. Any signature page
of this Agreement may be detached from any counterpart of this Agreement and 
re-attached to any other counterpart of this Agreement identical in form hereto
by having attached to it one or more additional signature pages.

                                     -10-

<PAGE>
 
     4.7  Assignment. Except as otherwise expressly provided in this Agreement,
          ---------- 
no party hereto may assign their rights or delegate their duties under this 
Agreement without the prior written consent of all of the other parties hereto; 
provided, however, that KFI may, without the consent of any other party hereto, 
assign its rights and delegate its duties under this Agreement to any Person 
which acquires all or substantially all of the assets of KFI, either through a 
purchase of such assets, by merger, consolidation or otherwise.

     IN WITNESS WHEREOF, KFI and Singh have executed this Agreement.

                                        KORN/FERRY INTERNATIONAL, INC.,
                                        a California corporation


                                        By: /s/ Peter L. Dunn
                                           ----------------------------------
                                              Peter L. Dunn, Vice Chairman


                                           /s/ Man Jit Singh  
                                        -------------------------------------
                                               MAN JIT SINGH  

                                     -11-

<PAGE>
 

                                   APPENDIX

                              CERTAIN DEFINITIONS

     1.   "Action Or Proceeding" means any and all claims, suits, actions, 
notices, inquiries, proceedings, hearings, arbitrations or other similar 
proceedings, including appeals and petitions therefrom, whether formal or 
informal, governmental or non-governmental, or civic or criminal.

     2.   "Affiliate" means with respect to any person or entity ("Person 
No.1"), any other person or entity which either (i) directly or indirectly owns 
or controls Person No.1, or (ii) is directly or indirectly owned or controlled 
by Person No.1, or (iii) is under direct or indirect common control with Person 
No.1.  The term "control" (and its corollaries) includes, without limitation, 
ownership of interests representing a majority of total voting power in an 
entity, and "ownership" (and its corollaries) includes, without limitation, 
ownership of a majority of the equity interests in an entity.

     3.   "Agreement" means this Agreement and all agreements, exhibits, 
schedules and appendices expressly annexed hereto.

     4.   "Attorneys' And Other Fees" means attorneys' fees, accountants' fees, 
fees of other professionals, witness fees (including experts engaged by the 
parties, but excluding shareholders, officers, employees or partners of the 
parties), and any and all other similar fees incurred in the prosecution or 
defense of an Action Or Proceeding.

     5.   "Company Competitive Business" means any business which competes, 
directly or indirectly, in part or in whole, with any business now or hereafter 
conducted or engaged in (a) by the Company, or (b) by any Person in which the 
Company has an equity interest, either directly or indirectly, which affords the
Company more than ten percent (10%) of the voting power of such Person.

     6.   "Company Competitor" means any Person (other than KFI or any Affiliate
of KFI) who (a) engages, directly or indirectly, in any Company Competitive 
Business, or (b) becomes an organizer, investor, lender, partner, joint 
venturer, stockholder, officer, director, employee, manager, consultant, 
supplier, vendor, agent, lessor or lessee of or to any Company Competitive 
Business, or (c) otherwise in any manner associates with, or aids or abets, or 
gives information or financial assistance to any Company Competitive Business.

     7.   "Confidential Information" means all proprietary and confidential 
information regarding the Company, KFI, their businesses, clients, and 
personnel, including, without limitation: (a) client lists, client prospects, 
and business development information; (b) company lists, profiles and reports, 
position specifications, salary structures, and engagement information; (c) 
source lists, executive lists, and candidate lists, profiles and reports; (d) 
candidate resumes, appraisals, compensation information, and reference reports; 
(e) search executive methodologies;

<PAGE>
 
(f) training and research materials and methodologies; (g) structure, 
operations, pricing, financial and personnel information; (h) information
systems design and procedures; (i) computer technology designs, hardware
configuration systems, and software designs and implementations; (j) information
databases, interactive procedures, tests, analysis and studies developed by or
for the benefit of the Company or KFI; (k) plans, designs, inventions, formulas,
research and technology developed by or for the benefit of the Company or KFI;
(l) personal histories or resumes, employment information, business information,
business secrets of clients and candidates; (m) trade secrets of the Company and
KFI; (n) plans, prospects, policies, practices, and procedures of the Company
and KFI which are not generally known in the industry; (o) all New Information;
and (p) all other proprietary and confidential information of every nature and
source. The term "Confidential Information" does not include any information
which: (A) is or becomes generally available to the public through no breach of
this Agreement or any other agreement to which the Company or KFI is a party;
(B) was received from a third party free to disclose such information without
restriction; (C) is approved for release in writing by the Board of Directors of
the Company or KFI, subject to whatever conditions are imposed by such Boards;
(D) is required by law or regulation to be disclosed, but only to the extent
necessary and only for the purpose required; or (E) is disclosed in response to
a valid order of a court or other governmental body, but only to the extent
necessary and for the purpose required, if and only if, the Company and KFI are
first notified of the order and are permitted to seek an appropriate protective
order against public disclosure of such information.

     8.   "Costs And Expenses" means the cost to take depositions, the cost to 
arbitrate a dispute, if applicable, and the costs and expenses of travel and 
lodging incurred with respect to an Action Or Proceeding.

     9.   "KFI Competitive Business" means any business which competes, directly
or indirectly, in part or in whole, with any business now or hereafter conducted
or engaged in (a) by KFI or its Affiliates, or (b) by any Person (other than the
Company) in which KFI or an Affiliate of KFI has an equity interest, either 
directly or indirectly, which affords KFI or such Affiliate more than ten 
percent (10%) of the voting power of such Person.

     10.  "KFI Competitor" means any Person (other than KFI or any Affiliate of 
KFI) who (a) engages, directly or indirectly, in any KFI Competitive Business, 
or (b) becomes an organizer, investor, lender, partner, joint venturer, 
stockholder, officer, director, employee, manager, consultant, supplier, vendor,
agent, lessor or lessee of or to any KFI Competitive Business, or (c) otherwise 
in any manner associates with, or aids or abets, or gives information or 
financial assistance to any KFI Competitive Business.

     11.  "New Information" means all information related to Executive's duties 
and responsibilities which is developed by Executive or under his guidance and 
control while in the employment of the Company or KFI, including, without 
limitation: (a) client and candidate prospect lists and databases; (b) 
interview and reference forms and notes; (c) contact information and procedures;
(c) client and candidate information; (d) client and candidate prospect 
information; (e) source lists and executive lists and databases; (f) research 
materials, forms, and tests; (g) business development information; (h) computer 
formats, forms, tests, interactive

                                      -2-



<PAGE>
 
procedures, methods of analysis and tools developed in connection with the 
Business; and (i) all other proprietary and confidential information.

     12.  "Person" means any individual, firm, corporation, trust, partnership 
(limited or general), limited liability company, sole proprietorship or 
association.

     13.  "Prevailing Party" means the party who is determined to prevail by the
court after its consideration of all damages and equities in an Action Or 
Proceeding, whether or not the Action Or Proceeding proceeds to final judgment. 
The court shall retain the discretion to determine that no party is the 
Prevailing Party in which case no party shall be entitled to recover its Costs 
And Expenses.

                                      -3-


<PAGE>
 
                                  SCHEDULE 1

                        REPRESENTATIONS AND WARRANTIES

         Singh should initial each of the following representations, if
                                                                     --
applicable:
- ----------

          MJS  (a)  Singh is a U.S. Person. (A "U.S. Person" is (i) any natural 
          ---
person resident in the United States).

          MJS  (b)  Singh's individual net worth or joint net worth with his 
          ---
spouse exceeds $1,000,000.

          MJS  (c)  Singh's income (including, but not limited to, salary, 
          ---     
bonus, interest and dividend income and vested contributions to any pension or 
profit sharing plan) was in excess of $200,000 in each of the last two years, 
and Singh reasonably expects an income in excess of $200,000 in this year.

          MJS  (d)  Singh's joint income with his spouse (including, but not 
          ---
limited to salary, bonus, interest and dividend income and vested contributions 
to any pension or profit sharing plan) was in excess of $300,000 in each of the 
last two years, and Singh reasonably expects a joint income in excess of 
$300,000 in this year.

          MJS  (d)  Singh's investment in the Singh Shares does not exceed 10% 
          ---
of Singh's net worth or joint net worth with Singh's spouse.


                                                /s/ Man Jit Singh  
                                               -----------------------  
                                               MAN JIT SINGH



<PAGE>
 
                                                                   Exhibit 10.17





                           KORN/FERRY INTERNATIONAL,
                           A California corporation




                          STOCK REPURCHASE AGREEMENT

<PAGE>
 
                          STOCK REPURCHASE AGREEMENT

     THIS STOCK REPURCHASE AGREEMENT (the "Agreement") is entered into as of 
December 1, 1997 by and between KORN/FERRY INTERNATIONAL, a California 
corporation (the "Company"), and MAN JIT SINGH, an individual (the 
"Shareholder").

                                   RECITALS

     A.   The Company is a corporation duly organized and existing under the 
laws of the State of California.

     B.   The Shareholder and the Company have entered into a certain KFI/Singh 
Agreement dated as of the date hereof (the "KFI/Singh Agreement"), pursuant to 
which the Shareholder will acquire certain shares of the common stock of the 
Company (the "Shares"), subject to the terms and conditions set forth therein.

     C.   The Shareholder and Company desire to set forth the terms and 
conditions under which the Company will repurchase the Shares.

     NOW, THEREFORE, in consideration of the foregoing and in consideration of 
the mutual promises set forth below, the parties hereto agree as follows:

     1.   DEFINITIONS. For all purposes of this Agreement, the following 
          -----------
definitions apply:


          "Action Or Proceeding" means any and all claims, suits, actions, 
notices, inquiries, proceedings, hearings,
 arbitrations or other similar
proceedings, including appeals and petitions therefrom, whether formal or
informal, governmental or non-governmental, or civil or criminal.

          "Alternative Repurchase Price" means the Per Share Book Value of such 
Share as of the end of the Fiscal Year immediately preceding such sale or 
purchase.

          "Attorneys' And Other Fees" means attorneys' fees, accountants' fees,
fees of other professionals, witness fees (including experts engaged by the
parties, but excluding shareholders, officers, employees or partners of the
parties), and any and all other similar fees incurred in the prosecution or
defense of an Action Or Proceeding.

          "Basic Repurchase Price" means, for purposes of determining the price 
at which a Share will be reacquired by the Company pursuant to this Agreement, 
Ten Dollars and Forty Cents ($10.40) per Share.

          "Costs And Expenses" means the cost to take depositions, the cost to 
arbitrate a dispute, if applicable, and the costs and expenses of travel and 
lodging incurred with respect to an Action Or Proceeding.


<PAGE>
 
          "Fiscal Year" means the fiscal year of the Company, which begins each 
May 1 and ends each April 30.

          "IPO" means an initial public offering of equity securities by the 
Company pursuant to an effective registration statement filed under the 
Securities Act of 1933, as amended.

          "Per Share Book Value" means the book value of a Share, as determined 
in accordance with generally accepted accounting principals applied in 
accordance with the usual accounting practices of the Company.

          "Prevailing Party" means the party who is determined to prevail by the
court after its consideration of all damages and equities in an Action Or
Proceeding, whether or not the Action Or Proceeding proceeds to final judgement.
The court shall retain the discretion to determine that no party is the
Prevailing Party in which case no party shall be entitled to recover its Costs
And Expenses.

          "Purchase Note" means that certain promissory note executed by 
Shareholder in favor of the Company pursuant to the KFI/Singh Agreement which 
was delivered by Shareholder to Company in payment for the Shares purchased 
pursuant to the KFI/Singh Agreement.

          "Shares" means the shares of the Company common stock now held or 
hereafter acquired by Shareholder in the future, including without limitation 
the "Singh Shares" referred to in the KFI/Singh Agreement.

          "Triggering Event" means any termination of Shareholder's employment 
with the Company (for any reason whatsoever, whether for cause or without cause 
or by reason of death or disability, by the Shareholder or by the Company, or 
whether such employment is automatically terminated upon the termination of 
Shareholder's employment with Korn/Ferry International Futurestep, Inc.).

     2.   COMPLIANCE WITH AGREEMENT. Except as expressly set forth herein, the 
          ------------------------
Shareholder shall not sell, transfer, hypothecate, pledge or otherwise dispose 
of the Shares or any interest therein held by Shareholder (a "Transfer") without
the prior written consent of the Company. Any purported Transfer not in 
compliance with the terms and conditions of this Agreement shall be void and of 
no force and effect. If the Shares are Transferred, in whole or in part, 
voluntarily or involuntarily, by operation of law or otherwise, by reason of 
insolvency or bankruptcy of the Shareholder, or otherwise in violation of the 
provisions of this Agreement, the recipient of any Shares shall not be 
registered on the books of the Company and shall not be recognized as the holder
of the Shares by the Company and shall not acquire any voting, dividend or other
rights in respect thereof.

     3.   INVESTMENT INTENT. The Shareholder hereby represents and warrants to 
          -----------------
the Company that the Shareholder's purchase of the Shares has been made for his 
or her own

                                      -2-

<PAGE>
 
account, for investment purposes only and not with a view to distribution or 
resale of the Shares. The Shares have not been, and will not be, registered 
under the Securities Act of 1933, as amended, or the securities laws of any 
state. The Shareholder may not sell the Shares unless they have been so 
registered or unless, in the opinion of counsel satisfactory to the Company, 
such registration is not required.

          4.   RESTRICTION ON CERTIFICATES. The Shareholder understands and 
               ---------------------------
agrees that the certificate(s) issued to him or her representing the Shares:

               (a)  Shall contain the following legend:

     "TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY REQUIRE
     REGISTRATION UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND THIS
     CERTIFICATE MAY NOT BE TRANSFERRED WITHOUT EVIDENCE OF SUCH REGISTRATION OR
     OF AN EXEMPTION FROM THE REGISTRATION REQUIREMENT OF THE ACT. THE RIGHT TO
     SELL, TRANSFER OR OTHERWISE DISPOSE OF OR PLEDGE THE SHARES REPRESENTED BY
     THIS CERTIFICATE IS PROHIBITED BY THE TERMS OF A STOCK REPURCHASE
     AGREEMENT. A COPY OF SUCH AGREEMENT IS ON FILE AT THE COMPANY'S PRINCIPAL
     PLACE OF BUSINESS."

               (b)  May contain additional legends as required by state 
securities laws.

               (c)  Shall contain the following legend, if the Shareholder is 
not a U.S. Person, as defined in the Act and Regulation S promulgated 
thereunder/

     "THE TRANSFER OF THESE SECURITIES IS PROHIBITED EXCEPT IN ACCORDANCE WITH
     THE PROVISIONS OF REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF
     1933, AS AMENDED."

          5.   POSSESSION OF CERTIFICATES.  The Company shall hold the 
               --------------------------
certificates evidencing the Shares as custodian to protect its interests 
hereunder. In furtherance thereof, Shareholder shall execute and deliver to the 
Company an assignment in blank in the form of Exhibit A hereto, for the transfer
of such certificates. The Company will deliver to Shareholder a receipt for such
Shares in the form of Exhibit B hereto.

          6.   REPURCHASE OF SHARES BY COMPANY; CANCELLATION OF PURCHASE NOTE.
               --------------------------------------------------------------

               (a)  If a Triggering Event occurs prior to June 1, 2001 and as of
the date of such Triggering Event an IPO has not been completed, then:

                    (i)  The Shareholder shall sell and the Company shall
               purchase that percentage of the Shares indicated below opposite
               the applicable date at a price per share equal to the Basic
               Repurchase Price:

                                      -3-

<PAGE>
 
          Triggering Event Occurs            Percentage of Shares Repurchased
          -----------------------            -------------------------------- 
          Prior to 5/31/99                                100%
          6/01/99 to 5/31/00                              66 2/3%
          6/01/00 to 5/31/01                              33 1/3%
          After 6/01/01                                   0%

                    (ii)   The Shareholder shall sell and the Company shall
          purchase all of the remaining Shares then owned by the Shareholder at
          a price per share equal to the Alternative Repurchase Price.

                    (iii)  All sums payable by the Company to Shareholder as
          part of the purchase price for Shares pursuant to Section 6(a)(i)
          shall be retained by the Company and applied to the repayment of
          principal payable under the Purchase Note, and the remaining
          outstanding balance of principal, if any, due under the Purchase Note,
          plus all accrued and unpaid interest thereunder shall be forgiven,
          canceled and discharged.

               (b)  If a Triggering Event occurs on or after June 1, 2001 and as
of the date of such Triggering Event an IPO has not been completed, then the 
Shareholder shall sell and the Company shall purchase all of the Shares then 
owed by the Shareholder at a price per share equal to the Alternative 
Repurchase Price.

               (c)  If a Triggering Event occurs prior to June 1, 2001 and as of
the date of such Triggering Event an IPO has been completed, then:

                    (i)   The Shareholder shall sell and the Company shall
          purchase that percentage of the Shares indicated below opposite the
          applicable date at a price per share equal to the Basic Repurchase
          Price:


          Triggering Event Occurs            Percentage of Shares Repurchased
          -----------------------            -------------------------------- 
          Prior to 5/31/99                                100%
          6/01/99 to 5/31/00                              66 2/3%
          6/01/00 to 5/31/01                              33 1/3%
          After 6/01/01                                   0%

                    (ii)  All sums payable by the Company to Shareholder as part
          of the purchase price for Shares pursuant to Section 6(c)(i) shall be
          retained by the Company and applied to the repayment of principal
          payable under the Purchase Note, and the remaining outstanding balance
          of principal, if any, due under the Purchase Note, plus all accrued
          and unpaid interest thereunder shall be forgiven, canceled and
          discharged.

                                      -4-


<PAGE>
 
               (d)  If a Triggering Event occurs on or after June 1, 2001 and as
of the date of such Triggering Event an IPO has been completed, then Company is 
not required or entitled to purchase and the Shareholder is not required or 
entitled to sell any Shares to the Company.

               (e)  If as of midnight on an "Applicable Date" indicated below no
Triggering Event has occurred, then that percentage of the accrued interest and 
original principal amount otherwise due under the Purchase Note which is set 
forth opposite such "Applicable Date" under the column entitled "Percentage 
Forgiven" shall be automatically forgiven, canceled and discharged:


               Applicable Date               Percentage Forgiven
               ---------------               -------------------
               5/31/99                             33 1/3%
               5/31/00                             33 1/3%
               5/31/01                             33 1/3%

               (f)  For purposes of assisting the Shareholder to pay a portion 
of his tax liability arising out of the cancellation of indebtedness pursuant to
Section 6(e) above, at any time within thirty (30) days after an Applicable
Date, Shareholder may by written notice delivered to the Company elect to sell
to the Company and cause the Company to repurchase, for a per share purchase
price equal to the Alternative Repurchase Price, not more than that number of
Shares which when multiplied by the Alternative Repurchase Price would equal
twenty-five percent (25%) of the amount of principal indebtedness forgiven on
the immediately preceding Applicable Date pursuant to Section 6(e) above;
provided and on condition that no Triggering Event shall have occurred prior to
the date on which such purchase of Shares is consummated.

               (g)  The Company's obligations under this Agreement to purchase 
any Shares is subject to any prohibitions on the purchase of Shares by the 
Company under applicable law or any agreement binding on the Company. Company 
and Shareholder agree that Company shall purchase the Shares on a date specified
by Company, which shall not be later than 90 days after the date of the 
Triggering Event. Notwithstanding the foregoing, if the Company is prohibited 
from purchasing the Shares by applicable law or by any contract or agreement 
binding on the Company, including without limitation any loan agreement, the 
Company will purchase the Shares as soon as practicable after it determines in 
good faith that it is legally and contractually permitted to do so. The purchase
price for the Shares shall be paid by the Company, in its sole and absolute 
discretion, either in cash or by delivery of a non-transferable promissory note 
in the form of Exhibit C hereto (the "Note"); provided, however, that if 
termination of employment is due to Executive's death, the balance of the 
purchase price shall be paid in cash. The Note shall bear simple interest at 
Bank of America's reference rate as of the date hereof and may be for term of up
to five years. The Note shall be paid in equal annual installments of principal 
plus all accrued and unpaid interest on the total principal amount. Subject to 
the preceding sentence, the actual term of the Note will be determined in the 
sole and absolute discretion of the Company. The indebtedness evidenced by the 
Note, both principal and interest, shall be subordinated and junior, to the 
extent set forth in the next sentence, to all indebtedness of the Company, both 
principal and interest (accrued and accruing thereon both before and after the 
date of filing a petition in any bankruptcy, insolvency, reorganization or 

                                      -5-


<PAGE>
 
receivership proceedings, whether or not allowed as a claim in such case or 
proceeding) in respect of borrowed money, whether outstanding on the date of the
Note or thereafter created, incurred or assumed (collectively, the "Senior 
Debt"); provided, that such Senior Debt shall not include any obligation of the 
Company under the Executive Participation Program to repurchase shares of its 
common stock. Upon the maturity of any of the Senior Debt by lapse of time, 
acceleration or otherwise, all principal of, and interest on, all such matured 
Senior Debt shall first be paid in full before any payment is made by the 
Company on account of principal of, or interest on, the Note.

               (h)  In addition to all of the restrictions on transfer and other
provisions contained in this Agreement, Shareholder agrees to be bound by and
adhere to the "Additional Transfer Restrictions" with respect to all of the
Shares and agrees that the Shares shall be subject to such "Additional Transfer
Restrictions", if any. For purposes of this subparagraph (h), the term
"Additional Transfer Restrictions" shall mean those restrictions applicable to
the transferability or liquidity of shares of the common stock of the Company
(including, without limitation, holdbacks, lock-ups, volume restrictions, claw-
backs and other similar provisions, however formulated) which at least a
majority of the number of shareholders of the Company hereafter agree to,
approve or adopt or otherwise become bound by. In this regard, Shareholder
agrees to promptly and timely take such action, and execute and deliver such
documents (including, without limitation, agreements containing terms and
conditions pertaining to the Additional Transfer Restrictions that are
substantially similar to the terms and conditions contained in agreements
executed by at least a majority of the number of shareholders of the Company),
as from time to time may be reasonably requested by the Company in order to
confirm or evidence Shareholder's agreement to be bound by and adhere to the
Additional Transfer Restrictions.

          7.   ASSIGNMENT OF PURCHASE RIGHTS. The Company may assign, in whole 
               -----------------------------
or part, its right to purchase the Shares under this Agreement to a designee(s).

          8.   PRESENTLY OWNED AND AFTER-ACQUIRED SHARES. The Shareholder agrees
               -----------------------------------------
that the terms and conditions of this Agreement shall be binding upon him or her
as to any shares of Common Stock of the Company which Shareholder owns as of the
date hereof or which may hereafter be acquired by the Shareholder, without 
further action.

          9.   CHANGE IN MARITAL STATUS. In the event that the Shareholder's 
               ------------------------
marital status is altered by dissolution or divorce or by the death of the 
Shareholder's spouse, any interest of his or her former spouse, whether as 
community property or as a result of a property settlement agreement, a divorce 
decree or other legal proceeding, may be purchased by the Company and shall be 
sold by the Shareholder's former spouse or his or her estate according to the 
provisions of this Agreement. The Shareholder agrees to notify the Company of 
any change in marital status, including, without limitation, marriage, 
dissolution of marriage, divorce or death of spouse, within 10 business days of 
said event. The Shareholder agrees to cause any spouse who has not signed a 
consent to this Agreement in the form of Exhibit D to do so at the time notice 
is given to the Company under this Section.

                                      -6-


<PAGE>
 
          10.  AMENDMENT. No change, amendment or modification of this 
               ----------
Agreement shall be valid unless it is in writing and signed by the Company and 
the Shareholder.

          11.  REMEDIES. The Shares cannot be readily purchased or sold in the 
               --------
open market and, for that reason, among others, the parties will be irreparably
damaged in the event the agreements contained herein are not specifically
enforced. If any dispute arises concerning the transfer of any Shares, an
injunction may be issued restraining any such transfer pending the determination
of such controversy. In the event of any controversy, such rights or obligations
shall be enforceable in a court by a decree of specific performance. Such remedy
shall, however, be cumulative and not exclusive, and shall be in addition to any
other remedy which the parties may have. The provisions of this Agreement are
for the benefit of the Company and the Shareholder and may be enforced by either
of them.

          12.  AGREEMENT AVAILABLE FOR INSPECTION. An original copy of this 
               ----------------------------------
Agreement, together with all amendments, duly executed by the Company and the 
Shareholder, shall be delivered to the Secretary of the Company and maintained 
by him or her at the principal executive office of the Company and shall be 
available for inspection by any person requesting to see it.

          13.  ADDITIONAL DOCUMENTS. The parties hereto agree to sign all 
               --------------------
necessary documents and take all other actions necessary to carry out the 
provisions of this Agreement.

          14.  NO ASSIGNMENT OF RIGHTS OR DELEGATION OF DUTIES BY EXECUTIVE;
               ------------------------------------------------------------
ASSIGNMENT BY COMPANY. Shareholder's rights and benefits under this Agreement
- --------------------- 
are personal to him and therefore (i) no such right or benefit shall be subject 
to voluntary or involuntary alienation, assignment or transfer; and (ii) 
Shareholder may not delegate his duties or obligations hereunder. The Company 
may, without the consent of any other party hereto, assign its rights and 
delegate its duties under this Agreement to any Person which acquires all or 
substantially all of the assets of the Company, either through a purchase of 
such assets, by merger, consolidation or otherwise.

          15.  PREPARATION OF AGREEMENT. It is acknowledged by each party that 
               ------------------------
such party either had separate and independent advice of counsel or the 
opportunity to avail itself or himself of separate and independent legal 
counsel. Specifically, Shareholder understands and acknowledges that the law
firm of Morrison & Foerster LLP, is not legal counsel to the Shareholder. In
light of these and other relevant facts it is further acknowledged that no party
shall be construed to be solely responsible for the drafting hereof, and
therefore any ambiguity shall not be construed against any party as the alleged
draftsman of this Agreement.

          16.  INTERPRETATION.
               --------------

               16.1 Entire Agreement/No Collateral Representations. Each party 
                    ----------------------------------------------
expressly acknowledges and agrees that this Agreement and the KFI/Singh 
Agreement: (i) are the final expression of the parties agreements with respect 
to the subject matter hereof and thereof and are the complete and exclusive 
statements of the terms of such agreement; (ii) supersedes 

                                      -7-


<PAGE>
 
any prior or contemporaneous agreements, promises, assurances, guarantees, 
representations, understandings, conduct, proposals, conditions, commitments, 
acts, course of dealing, warranties, interpretations or terms of any kind, oral 
or written (collectively and severally, the "Prior Agreements"), and that any 
such Prior Agreements are of no force or effect except as expressly set forth 
herein and therein; and (iii) may not be varied, supplemented or contradicted by
evidence of Prior Agreements. Any agreement hereafter made shall be ineffective 
to modify, supplement or discharge the terms of this Agreement, in whole or in 
part, unless such agreement is in writing and signed by the party against whom 
enforcement of the modification or supplement is sought.

               16.2 Waiver. No breach of any agreement or provision herein 
                    ------
contained, or of any obligation under this Agreement, may be waived, nor shall 
any extension of time for performance of any obligations or acts be deemed an 
extension of time for performance of any other obligations or acts contained 
herein, except by written instrument signed by the party to be charged or as 
otherwise expressly authorized herein. No waiver of any breach of any agreement 
or provision herein contained shall be deemed a waive of any preceding or 
succeeding breach thereof, or a waiver or relinquishment of any other agreement 
or provision or right or power herein contained.

               16.3 Severability. If any term or provision of this Agreement or 
                    ------------
the application thereof to any Person or circumstance shall, to any extent, be 
determined to be invalid, illegal or unenforceable under present or future laws 
effective during the term of this Agreement, then and, in that event: (i) the 
performance of the offending term or provision (but only to the extent its 
application is invalid, illegal or unenforceable) shall be excused as if it had 
never been incorporated into this Agreement, and, in lieu of such excused 
provision, there shall be added a provision as similar in terms and amount to 
such excused provision as may be possible and be legal, valid and enforceable, 
and (ii) the remaining part of this Agreement (including the application of the
offending term or provision to persons or circumstances other than those as to
which it is held invalid, illegal or unenforceable) shall not be affected
thereby and shall continue in full force and effect to the fullest extent
provided by law.


               16.4 No Third Party Beneficiary. The parties specifically disavow
                    --------------------------
any desire or intention to create any third party beneficiary obligations, and 
specifically declare that no third party shall have any rights hereunder or any 
right of enforcement hereof.

               16.5 No Reliance Upon Prior Representation. The parties 
                    -------------------------------------
acknowledge that no other party has made any oral representation or promise 
which would induce them prior to executing this Agreement to change their 
position to their detriment, partially perform, or part with value in reliance 
upon such representation or promise; the parties acknowledge that they have 
taken such action at their own risk; and the parties represent that they have 
not so changed their position, performed or parted with value prior to the time 
of their execution of this Agreement.

               16.6 Headings; References; Incorporation; Gender. The headings 
                    -------------------------------------------
used in this Agreement are for convenience and reference purposes only, and 
shall not be used in 

                                      -8-

<PAGE>
 
construing or interpreting the scope or intent of this Agreement or any
provision hereof. References to this Agreement shall include all amendments or
renewals thereof. All cross-references in this Agreement, unless specifically
directed to another agreement or document, shall be construed only to refer to
provisions within this Agreement, and shall not be construed to be referenced to
the overall transaction or to any other agreement or document. Any exhibit
referenced in this Agreement shall be construed to be incorporated in this
Agreement. As used in this Agreement, each gender shall be deemed to include the
other gender, including neutral genders or genders appropriate for entities, if
applicable, and the singular shall be deemed to include the plural, and vice
versa, as the context requires.

          17.  ENFORCEMENT.
               ----------- 

               17.1 Applicable Law. This Agreement and the rights and remedies 
                    --------------                                   
of each party arising out of or relating to this Agreement (including, without
limitation, equitable remedies) shall be solely governed by, interpreted under,
and construed and enforced in accordance with the laws (without regard to the
conflicts of law principles thereof) of the State of California, as if this
agreement were made, and as if its obligations are to be performed, wholly
within the State of California.

               17.2 Consent to Jurisdiction; Service of Process. Any action or
                    -------------------------------------------
proceeding arising out of or relating to this Agreement shall be filed in and
heard and litigated solely before the state courts of California located within
the County of Los Angeles. Each party generally and unconditionally accepts the
exclusive jurisdiction of such courts and to venue therein, consents to the
service of process in any such action or proceeding by certified or registered
mailing of the summons and complaint in accordance with the notice provisions of
this Agreement, and waives any defense or right to object to venue in said
courts based upon the doctrine of "Forum Non Conveniens". Each party irrevocably
agrees to be bound by any judgment rendered thereby in connection with this
Agreement.

               17.3 Attorneys' Fees and Costs. If any party institutes or should
                    -------------------------                                   
the parties otherwise become a party to any Action Or Proceeding based upon or
arising out of this Agreement including, without limitation, to enforce or
interpret this Agreement or any provision hereof, or for damages by reason of
any alleged breach of this Agreement or any provision hereof, or for a
declaration of rights in connection herewith, or for any other relief, including
equitable relief, in connection herewith, the Prevailing Party in any such
Action Or Proceeding, whether or not such Action Or Proceeding proceeds to final
judgment or determination, shall be entitled to receive from the non-Prevailing
Party as a cost of suit, and not as damages, all Costs And Expenses of
prosecuting or defending the Action Or Proceeding, as the case may be,
including, without limitation, reasonable Attorneys' And Other Fees.

          18.  NOTICES. Any notice, approval, disapproval, consent, waiver, or
               -------                                                        
other communication (collectively, "Notices") required or permitted to be given
under this Agreement shall be in writing and shall be delivered personally or
mailed, certified or registered United States mail, postage prepaid, return
receipt requested, or sent by Federal Express or other reliable overnight
carrier for next business day delivery, or by fax. All Notices shall be deemed
delivered

                                      -9-

<PAGE>
 
(a) if personally served, when actually delivered to the address of the person
to whom such Notice is given, (b) if sent via Federal Express or other overnight
courier for next business day delivery, one (1) business day following the date
on which the Notice is given to Federal Express or other overnight courier, (c)
if by mail, three (3) days following deposit in the United States mail, or (d)
if by fax, when the transmitting telecopier machine has confirmed that the
Notice has been completed or sent without error. All Notices shall be addressed
to the party to whom such Notice is to be given at the party's address set forth
below or as such party shall otherwise direct by Notice sent pursuant to this
Section 18:

     If Company:         Korn/Ferry International                
                         1800 Century Park East, Suite 900        
                         Los Angeles, California 90067            
                         Attention: Peter L. Dunn, Vice Chairman  
                         Telephone: (310) 843-4100                
                         Telecopier: (310) 553-8640               
                                                                  
     With a copy to:     Michael C. Cohen, Esq.             
                         Morrison & Foerster LLP            
                         555 West Fifth Street, 35th Floor  
                         Los Angeles, California 90013      
                         Telephone: (213) 892-5404          
                         Telecopier: (213) 892-5454          

     If to Shareholder:  Mr. Man Jit Singh         
                         1050 Brooklawn Drive      
                         Los Angeles, CA 90077     
                         Telephone: (310) 278-1572 
                         Telecopier: (310) 278-1572 


     With a copy to:     Paul H. Irving, Esq.
                         Manatt, Phelps & Phillips LLP
                         11355 W. Olympic Boulevard
                         Los Angeles, CA 90064     
                         Telephone: (310) 312-4000 
                         Telecopier: (310) 312-4224 

          19.  COUNTERPARTS. This Agreement may be executed in counterparts, 
               ------------                                                  
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument, binding on all parties hereto. Any
signature page of this Agreement may be detached

                                     -10-

<PAGE>
 
from any counterpart of this Agreement and re-attached to any other counterpart
of this Agreement identical in form hereto by having attached to it one or more
additional signature pages.

           IN WITNESS, WHEREOF, the parties have executed this Agreement.


                                        SHAREHOLDER


                                        By:  /s/ Man Jit Singh
                                             -----------------------------------
                                             Name:  MAN JIT SINGH
                                                    ----------------------------

                                        KORN/FERRY INTERNATIONAL,
                                        a California corporation


                                        By:  /s/ Peter L. Dunn
                                             -----------------------------------
                                                  Peter L. Dunn, Vice Chairman

                                     -11-

<PAGE>
 
                                   EXHIBIT A

                         IRREVOCABLE STOCK ASSIGNMENT


          For good and valuable consideration pursuant to Section 6 of that
certain Stock Repurchase Agreement between the undersigned and Korn/Ferry
International, the undersigned hereby sells, assigns and transfers to
___________________________________________ shares of common stock of Korn/Ferry
International, represented by Certificate No(s). ________________ standing in
the name of the undersigned on the books of said company.



                                        By: /s/ Man Jit Singh
                                           -----------------------------
                                        Name:  Man Jit Singh

                                        Dated: ______________, 19__


WITNESS:


By: /s/ Seirla Singh
    ---------------------------- 
Name:   SEIRLA SINGH
       -------------------------
Dated: _______________, 19____

<PAGE>
 
                                   EXHIBIT B

                                    RECEIPT


          Korn/Ferry International, a California corporation (the "Company"),
hereby acknowledges that it has received and is holding as custodian on behalf
of __________________________________, an officer of the Company ("Executive"),
__________ shares of Company Common Stock (the "Shares"), represented by
certificate(s) number ___________, ___________ and ___________ issued on
_____________________, 19 ___ in the name of Executive (copies of which are
attached hereto), together with an Irrevocable Stock Assignment executed by
Executive (the "Stock Assignment"). The Shares and the Stock Assignment are
being held by the Company pursuant to and in accordance with the terms of that
certain Stock Repurchase Agreement between the Company and Executive.

                                        KORN/FERRY INTERNATIONAL



                                        By:  __________________

                                             Name: ____________

                                             Title: ___________



Dated: ______________, 19__

<PAGE>
 
                                   EXHIBIT C

                           KORN/FERRY INTERNATIONAL
                 NON-TRANSFERABLE SUBORDINATED PROMISSORY NOTE
                                  
$___________                                                      _________,19__


          FOR VALUE RECEIVED, the undersigned, KORN/FERRY INTERNATIONAL, a
California corporation (the "Company") hereby promises to pay to the order
of___________________________________________ ("Payee") the principal sum of
________________________ dollars ($____________), plus interest on the unpaid
balance thereof at the rate of_____% per annum [reference rate of Bank of
America on the date hereof]. 

     Payments of principal and interest hereunder shall be in lawful money of
the United States of America and shall be payable in ______________ (____)
annual payments, the first such payment to be made on ____________, 19__, and 
the final such payment to be made on _____________, 19__. Interest shall be
simple interest and shall be paid on the basis of a 360-day year and a 30-day
month.

          Principal and interest on this note are payable, at __________________
_____________________________________, or such other place as Payee shall
designate in writing for such purpose at least five business days in advance of
the applicable payment date. Principal and interest on this note may be prepaid
at any time, in whole or in part, without premium or penalty. The timely tender
of any payment of principal or interest on this note shall be deemed to have
been made if a check for such payment is mailed two business days before the day
such payment is due.

          If any payment of principal or interest on this note shall be due on a
Saturday, Sunday or legal holiday under the laws of the State of California, or
any other day on which banking institutions in the City of Los Angeles are
obligated or authorized by law or executive order to close, such payment shall
be made on the next succeeding business day in California, and any such extended
time shall not be included in computing interest in connection with such
payment.

          The indebtedness evidenced by this note, both principal and interest,
is subordinated and junior to the extent set forth in Section 6 of that certain
Stock Repurchase Agreement dated as of_________________ between the Company and
Payee.

          Payee shall not sell, assign or otherwise transfer or dispose of all
or any part of this note to any person, partnership, corporation, firm or other
entity, except with the prior written consent of the Company.

<PAGE>
 
          This note is made and delivered in California and shall be governed,
construed and enforced according to the laws of the State of California.



                                   KORN/FERRY INTERNATIONAL



                                   By:  __________________________

                                        Name: ____________________

                                        Title: ___________________

                                      -2-

<PAGE>
 
                                   EXHIBIT D

                       CONSENT OF SPOUSE OF SHAREHOLDER


          The undersigned, being the spouse of the Shareholder, Man Jit Singh,
                                                                -------------
who has signed the foregoing Agreement, hereby acknowledges that he or she has
read and is familiar with the provisions of said Agreement including but not
limited to Section 9 herein and agrees to be bound thereby and join therein to
the extent, if any, that his or her agreement and joinder may be necessary. The
undersigned hereby agrees that the Shareholder may join in any future amendment
or modifications of the Agreement without any further signature, acknowledgment,
agreement or consent on his or her part; and the undersigned hereby further
agrees that any interest which he or she may have in the shares of common stock
of the Company held by Shareholder shall be subject to the provisions of this
Agreement.


                                      By: /s/ Seirla Singh
                                          ------------------------------
                                               
                                      Name:   SEIRLA SINGH
                                          -------------------------------
                                     
                                      Dated: as of December 1, 1997
                                             ---------------------------



<PAGE>
 
                                                                   EXHIBIT 10.18


                               LICENSE AGREEMENT

                         SELF DISCOVERY DYNAMICS, LLC
                                 ("Licensor")

                                      and

                   KORN/FERRY INTERNATIONAL FUTURESTEP, INC.
                                 ("Licensee")

<PAGE>
 
                               LICENSE AGREEMENT

     This LICENSE AGREEMENT (this "Agreement") is made and entered into as of 
May 15, 1998 (the "Agreement Date"), by and between SELF DISCOVERY DYNAMICS, a 
California limited liability company ("Licensor") and KORN/FERRY INTERNATIONAL 
FUTURESTEP, INC., a Delaware corporation ("Licensee").

                                  ARTICLE 1.

                                   RECITALS

     1.1  Licensee is a newly formed Delaware corporation. The primary (but not 
exclusive) business of Licensee will be to provide executive search and 
ancillary services to candidates and client companies on-line through the medium
of the Internet. Licensee is currently a subsidiary of Korn/Ferry International 
("KFI").

     1.2  Licensor is engaged in, among other businesses, the business of 
creating and developing testing instruments for evaluation, classification and 
analysis of candidates and job offerings. Licensor has created and developed the
test instruments and other material referred to in Exhibit A annexed hereto 
("Licensed Products"). From time to time hereafter Licensor will create and 
develop Enhancements. The Licensed Products and the Enhancements shall
 be 
collectively referred to herein as the "Licensed Material."

     1.3  Licensee (and the Permitted Sublicensees referred to in Section 2.2 
below) desire to use the Licensed Material in connection with the Business (as 
defined in Section 5 of the Appendix). The purpose of this Agreement is to set 
forth the terms and conditions under which the Licensor will grant to Licensee 
the right to use the Licensed Material in connection with the Business.

     1.4  Unless otherwise defined herein, all capitalized terms used in this 
Agreement, shall have the meanings set forth in the Appendix annexed hereto.

     NOW, THEREFORE, for good and valuable consideration, the receipt and 
adequacy of which are hereby acknowledged and agreed to, the Licensor and the 
Licensee hereby agree as follows:

                                  ARTICLE 2.

                                    LICENSE

     2.1  Grant of License.
          ----------------

          2.1.1     Exclusive and Non-Exclusive Worldwide Licenses in 
                    -------------------------------------------------
Perpetuity. The Licensor hereby grants to the Licensee a license to use the 
- ----------
Licensed Material during the Term throughout the Territory, in connection with 
the Business. Such license shall be exclusive with respect to the Business 
involving jobs with first year compensation equal to or in excess of the 
Compensation Threshold (the "Exclusive License"). Such license shall be 
non-exclusive with respect to the Business involving jobs with first year 
compensation less than the Compensation Threshold (the "Non-Exclusive License").
Licensor may grant to another Person an exclusive license with respect to the 
Business involving a job with first year compensation less than the Compensation
Threshold as long as the Non-Exclusive License granted hereunder is expressly 
permitted and excluded from the exclusive coverage of such license.

          2.1.2     Acceptance by Licensee. Licensee hereby accepts the 
                    ----------------------
Exclusive License and the Non-Exclusive License. The Exclusive License and the 
Non-Exclusive License shall be collectively referred to in this Agreement as the
"License."

     2.2  Sublicenses. The Licensee shall not have the right to grant 
          -----------
sublicenses to any Person with respect to any rights conferred upon the Licensee
under this Agreement without the prior written consent of the Licensor, which 
may be given or withheld in the Licensor's sole and absolute discretion; 
provided, however, that the Licensee

                                      -2-


<PAGE>
 
may, without the consent of the Licensor, grant partial or whole, exclusive or 
non-exclusive, sublicenses ("Permitted Sublicense") of either or both of the 
Exclusive License or the Non-Exclusive License to KFI, or any Person which is an
Affiliate of KFI or Licensee or to any Person with respect to which Licensee or 
KFI is a partner, joint venturer, member or shareholder ("Permitted 
Sublicensee"). Upon the grant by Licensee of a Permitted Sublicense, Licensee 
shall immediately notify Licensor of such Permitted Sublicense and deliver to 
Licensor a copy of the sublicense agreement entered into with such Permitted 
Sublicensee. All Permitted Sublicensees shall be subject to and subordinate to 
this Agreement. Licensee shall not enter into any Permitted Sublicenses 
inconsistent with the provisions and intent of this Agreement.

     2.3  Sorkin Human Systems. Licensee understands that Licensor has granted a
          --------------------
license for some or all of the Licensed Material to Sorkin Human Systems 
("SHS"), an entity wholly-owned by Licensor and Sorkin & Associates, a 
California corporation. SHS, among other things, provides services to the 
healthcare industry with respect to recruitment and evaluation of personnel in 
the healthcare industry. Nothing contained in this Agreement shall prohibit or 
restrict the license granted by Licensor to SHS ("SHS License"), provided and on
condition that, with respect to that segment of the Competitive Business which 
involves job placements with first year compensation equal to, or in excess of, 
the Compensation Threshold only, SHS shall restrict its use of the Licensed 
Material to the healthcare industry as specified in Exhibit B annexed hereto 
("SHS Permitted Business Activities"). Licensor shall not permit SHS to use any 
portion of the Licensed Material in any manner which would be inconsistent with 
the Exclusive License granted to Licensee hereunder outside of the SHS Permitted
Business Activities. By executing an Acknowledgment and Agreement in the form of
Exhibit C annexed hereto, SHS and Licensee thereby agree to, and Licensor hereby
acknowledges, the terms and provisions set forth therein. The parties 
acknowledge that, except as expressly provided in Exhibit B, SHS' business 
activities shall in no way be limited by this Agreement. A breach by SHS of the 
Acknowledgement and Agreement shall constitute a breach under this Agreement.

     2.4  Translations. Licensor has created or developed translations of the 
          ------------
Licensed Material for use in languages other than United States English as set 
forth in Exhibit C annexed hereto ("Current Translations"). The Licensed 
Material includes all Current Translations and Licensor shall make available to
Licensee from time to time during the Term at Licensee's request, and for no 
cost, fee or other compensation payable to Licensor, a usable copy of each of 
the Current Translations. If Licensor develops additional translations of the 
Licensed Materials, which it may or may not do in its sole discretion, Licensor 
shall give Licensee prompt written notice of the availability or existence of 
such additional translations and shall make available to Licensee, at Licensee's
request, for no cost, fee or other compensation payable to Licensor, a usable 
copy of each such new translation, which additional translations shall be 
included within the Licensed Material. If Licensee desires translations of 
Licensed Materials not yet developed by Licensor, Licensor, may at its sole and 
absolute discretion, develop such translations pursuant to an agreement with 
Licensee which shall be negotiated separate and apart from this Agreement. 
Licensee shall have the right, at its own cost and expense, to make its own 
translations of the Licensed Material into languages other than United States 
English or cause such translations to be made for the benefit of or use by 
Licensee; provided, however, that Licensor shall have the right to approve such 
translations solely for the purpose of ensuring their accuracy before being used
by Licensee, as long as such approval is not unreasonably withheld. If Licensor 
fails to communicate its disapproval within five (5) business days from receipt 
by Licensor of such translation, such translation shall be deemed approved by 
Licensor.

     2.5  Restrictions on Use of Licensed Material. Nothing contained in this 
          ----------------------------------------
Agreement shall be construed as affording the Licensee or any Permitted 
Sublicensee the right to use the Licensed Material for any purpose other than in
connection with the Business. The Licensee and the Permitted Sublicensees shall 
not permit the client companies to, among other things, access assessments or 
surveys included within the Licensed Material for purposes other than (a) the 
completion of the Culture Profiles and Job Profiles referred to in Sections 3.2
and 3.3 below, (b) the creation of other profiles with the objective of placing
candidates, and (c) the screening and placement of candidates into such client
companies. Any rights to use the Licensed Material for purposes other than the
screening and placement of candidates must be negotiated separate and apart from
this Agreement. Notwithstanding anything contained in this Agreement, Licensee,
KFI and the Permitted Sublicensees shall have the absolute right to use
assessments, evaluation materials, culture profiles, job profiles and other
testing instruments created or developed by Persons other than Licensor, at any
time and from time to time.

                                      -3-

<PAGE>
 
     2.6  Term of License.
          ---------------

          2.6.1 Subject to the provisions of Section 2.6.2 below, the "Term" of
the Exclusive License and the Non-Exclusive License shall each commence on the
Agreement Date and shall continue in perpetuity unless and until Licensee or
Licensor exercises its right to terminate one or both of such Licenses pursuant
to Article 10 hereto. In the event either the Exclusive License or the Non-
Exclusive License is terminated by Licensee pursuant to Article 10 below, the
other non-terminated License shall remain in full force and effect in accordance
with the terms and conditions of this Agreement.

          2.6.2 Notwithstanding the provisions of Section 2.6.1 above, the 
"Term" of the Exclusive License and the Non-Exclusive License for the country of
Japan shall not commence until August 1, 1998.  Licensor hereby represents and 
warrants to and covenants with Licensee that the current license for the 
Licensed Material which it has entered into with another entity for the country 
of Japan will expire on July 31, 1998 and the Licensor will not enter into or 
permit any other Person to enter into any license or other arrangement with such
entity with respect to the Licensed Material inconsistent with the provisions 
and intent of this Agreement.  The Licensor may enter into a non-exclusive 
license or other arrangement with such entity with respect to the Business 
involving jobs in Japan with first year compensation less than the Compensation 
Threshold.

     2.7  Distributors. Licensee shall not have the right to grant to any Person
          ------------
the right to distribute or facilitate the distribution of any Licensed Material 
whether in cooperation with the Licensee or any Permitted Sublicensee, without 
the prior written consent of Licensor, which consent may be given or withheld in
Licensor's sole and absolute discretion.

     2.8  Attribution. Licensee shall attribute the Licensed Materials (or any 
          -----------
portion thereof) to Licensor in the form and manner which Licensee reasonably 
determines.  Licensee acknowledges and agrees that Licensor, in its sole and 
absolute discretion, may change its name and trademarks from time to time during
the Term and that Licensee shall promptly accommodate such changes in any 
attributions pursuant to this Section 2.8.

                                  ARTICLE 3.

                        LICENSE FEES AND OTHER PAYMENTS

     3.1  License Fees. The following annual license fees ("Annual Licensee 
Fees") shall be payable by Licensee for use of the Licensed Material by
Licensee and all Permitted Sublicensees:

     Year 1                             $ 50,000
     Year 2                             $150,000
     Year 3                             $250,000
     Year 4 & Each Year Thereafter      An amount equal to 100% of prior Year's 
                                        fee plus or minus 50% of the percentage
                                        increase or decrease in Placement
                                        Revenues over the Placement Revenues for
                                        the prior Year. (For example, if in Year
                                        4 Placement Revenues increased 30% over
                                        the prior Year's Placement Revenues, the
                                        Annual License Fee for Year 4 would
                                        increase 15% to $287,500 ($250,000 X
                                        1.15). And if in Year 4 Placement
                                        Revenues decreases 30% over the prior
                                        Year's Placement Revenues, the Annual
                                        Licensee Fee for Year 4 would decrease
                                        15% to $212,500 ($250,000 x .85).

Permitted Sublicensees shall not be required to make payment of the Annual 
License Fee or any other similar fee or payment directly to Licensor.

                                      -4-

<PAGE>
 
          3.1.1 Payment of Annual License Fees. The Annual License Fee payable 
                ------------------------------
for Year 1 shall be paid by Licensee within thirty (30) days after the Agreement
Date. The Annual License Fee payable for each of Year 2 and Year 3 shall be paid
within thirty (30) days after the date of commencement of such Year. The Annual 
License Fee for Year 4 and each Year thereafter shall be payable within ninety 
(90) days after the end of each such Year.

     3.2  Quarterly Culture Profile Fees. Culture Profiles created and developed
          ------------------------------
by Licensor, which are completed by the client companies, are part of the 
Licensed Material. Within thirty (30) days after the end of each Quarter,
commencing with the first full Quarter after the Launch Date, Licensee shall
pay to Licensor a quarterly fee ("Culture Profile Fee") in an amount equal to
Seventy-Five Dollars ($75.00) for each Culture Profile included within the
Licensed Material which is completed by each client company for each department,
regardless of the number of Culture Profiles completed for a department or the
number of personnel within the client who complete such Culture Profiles;
provided, however, that the maximum amount of Culture Profile Fees which shall
be payable by Licensee in any Year shall be Fifty Thousand Dollars ($50,000.00).

     3.3  Quarterly Job Profile Fees. Job Profiles created and developed by 
          --------------------------
Licensor, which are completed by the client companies, are part of the Licensed 
Material. Within thirty (30) days after the end of each Quarter, commencing with
the first full Quarter after the Launch Date, Licensee shall pay to Licensor a 
quarterly fee ("Job Profile Fee") in an amount equal to Fifty Dollars ($50.00)
for each Job Profile included within the Licensed Material which is completed by
each client company for each position, regardless of the number of Job Profiles
completed for a position or the number of personnel within the client who
complete such Job Profiles; provided, however, that the maximum amount of Job
Profile Fees which shall be payable by Licensee in any Year shall be Fifty
Thousand Dollars ($50,000.00).
     
     3.4  Quarterly Placement Fees. Within thirty (30) days after the end of 
          ------------------------
each Quarter, commencing with the first full Quarter after the Launch Date, 
Licensee shall pay to Licensor a quarterly placement fee ("Quarterly Placement 
Fee") equal to one percent (1%) of the Placement Revenues actually received by 
Licensee during the preceding Quarter; provided, however, that the maximum 
amount of aggregate Quarterly Placement Fees which shall be payable by Licensee 
for any Year shall be One Hundred Thousand Dollars ($100,000.00).

     3.5  Licensee Registration Fees. From time to time, Licensee and/or any 
          --------------------------
Permitted Sublicensee may, in its sole and absolute discretion, elect to impose
a fee or charge for individual candidates registering on its website on the
Internet ("Registration Fee"). Such Registration Fees shall not constitute
Placement Revenues for purposes of the License Fees or Placement Fees payable by
Licensee to Licensor under this Agreement. However, in the event any such
Registration Fees are collected, Licensor shall receive a royalty equal to
thirty percent (30%) of the Registration Fees collected by Licensee and its
Permitted Sublicensees in each calender quarter during the Term ("Registration
Fee Royalties"). Such Registration Fee Royalties shall be payable quarterly
within thirty (30) days after the end of each calendar quarter during the Term.

     3.6  Currency-Matters. All Royalty payments required to be made by Licensee
          ----------------
hereunder shall be paid to the Licensor in U.S. dollars. If any Placement
Revenues with respect to which Royalties are payable hereunder are received
initially in foreign currency, all such Revenues shall be first converted, where
applicable, from the foreign currency into U.S. dollars at the financial rate of
exchange quoted under Foreign Exchange in the Wall Street Journal or by another
source regularly used by KFI in its business, in the manner which is the
customary practice utilized by KFI, and the amount of the Royalties payable by
Licensee with respect to such Placement Revenues shall be determined after the
conversion. No Royalties based upon Placement Revenues shall be payable if such
Placement Revenues are received by Licensee in a currency which cannot be 
legally converted to U.S. dollars ("blocked currency") until such conversion can
legally be made.

     3.7  Withholding Taxes. If required by applicable law, any and all taxes 
          -----------------
due or payable by the Licensor on Royalty payments or with respect to the 
remittance thereof shall be deducted by Licensee from such payments and shall 
be paid by Licensee to the proper taxing authorities, and proof of payment 
promptly shall be secured by Licensee and sent to the Licensor.

                                      -5-

<PAGE>
 
     3.8    Records. The Licensee shall keep, and cause any Permitted
            -------
Sublicensees to keep, full, complete, accurate and proper records and accounts
of all Placement Revenues and other matters pertinent to the payment of
Royalties hereunder. The Licensor and its duly authorized representatives and
agents shall have the right, at all reasonable times, during normal business
hours, upon at least twenty (20) business days advance written notice, to
examine and/or audit such records and books of account and all other documents
and materials in the possession or under the control of the Licensee and/or the
Permitted Sublicensee, pertaining to the subject matter of this Agreement, and
to make copies and/or extracts therefrom. If the audit shows that there is a
deficiency in the payment of any amounts due pursuant to this Agreement, the
deficiency shall become immediately due and payable. The costs of the audit
shall be paid by Licensor unless the audit shows that Licensee understated the
fees due by more than ten percent (10%), in which case Licensee shall pay all of
Licensor's costs of the audit.

     3.9    Enhancements.
            ------------

            3.9.1  Inclusion. All Enhancements hereafter created, developed or
                   ---------
processed by Licensor, directly or indirectly, shall be included within the
Licensed Material at no additional cost or expense to Licensee.

            3.9.2  Notification. Licensor shall, during the term hereof, notify
                   ------------
the Licensee of any and all Enhancements, and all results thereof and therefrom.
Licensor shall furnish and deliver to Licensee all such Enhancements as soon as
they are available and shall, for the additional consideration set forth in
Section 4.2, assist Licensee in its efforts to incorporate such Enhancements
into the Licensed Material being used by Licensee and its Permitted
Sublicensees.

     3.10   Reports and Basis of Payments. Licensee shall complete and submit to
            -----------------------------   
the Licensor a quarterly report concurrently with the payment of the quarterly 
fees due hereunder and an annual report within ninety (90) days following the 
end of each Year. Each quarterly report shall contain a statement setting forth 
the Placement Revenues of Licensee for the preceding Quarter, the number of 
Culture Profiles and Job Profiles for the preceding Quarter which are subject to
Sections 3.2 and 3.3, the Registration Fees, if any, imposed by Licensee for the
preceding Quarter, and the Culture Profile Fees, Job Profile Fees, Quarterly 
Placement Fees and Registration Royalties, if any, payable to Licensor under 
this Agreement in respect of the preceding Quarter. Annual reports prepared 
pursuant to this section shall include all of the foregoing information for the 
preceding Year and in addition, shall set forth the Annual License Fees payable 
in respect of the succeeding Year. The quarterly and annual reports shall set 
forth the foregoing information on a cash basis. The Annual License Fees and 
Quarterly Placement Fees payable to Licensor hereunder shall be based upon 
actual Placement Revenues received by Licensee on a cash basis during the 
relevant period. The Registration Royalties payable to Licensor hereunder shall 
be based upon actual Registration Fees received by Licensee on a cash basis 
during the relevant period. All information contained in the quarterly and 
annual reports shall constitute "Confidential Information" of Licensee within 
the meaning of this Agreement and shall be subject to the provisions of Article 
9 below.

                                  ARTICLE 4.

               PROFESSIONAL SERVICES TO BE PROVIDED BY LICENSOR

     4.1    Professional Services.
            ---------------------

            4.1.1   Type of Services. During the Term, Licensor shall render
                    ----------------
professional services to Licensee and its Permitted Sublicensees, as requested
from time to time by Licensee and as mutually agreed upon by Licensor, and
Licensee or the Permitted Sublicensees, as applicable. In Year 1 the
professional services shall consist primarily, but not exclusively, of services
relating to the transfer of technology referred to in Article 7 below and
assistance in making certain that Licensee's web site on the Internet is fully
operational. In Years subsequent to Year 1, such professional services shall be
those which are requested from time to time by Licensee, subject to the approval
of Licensor, which approval shall not be unreasonably withheld or delayed.
Licensor hereby commits to providing at least ten (10) days of such professional
services to Licensee during Year 1, if and to the extent requested from time to
time by Licensee, and at least sixty (60) days of professional services during
each Year thereafter during the Term, if and to the extent requested from time
to time by Licensee.

                                      -6-


<PAGE>
 
          4.1.2     Written Descriptions and Budget. Any and all professional 
                    -------------------------------
services to be rendered by Licensor pursuant to Section 4.1.1 above, shall be 
reasonably described in writing and submitted to Licensee for its approval, 
together with a reasonably detailed budget showing the estimated fees to be paid
for such services. Licensor is not authorized to render any such professional 
services unless and until the Chief Executive Officer of Licensee has approved 
in writing the written description and budget referred to above.

     4.2  Professional Services Fees.
          --------------------------
     
          4.2.1     For professional services rendered by Licensor for mutually 
agreed upon research and development of the Licensed Materials during Year 1, 
Licensor shall receive fees at the rate of One Thousand Two Hundred and Fifty 
Dollars ($1,250.00) per day.

          4.2.2     For professional services rendered by Licensor for mutually 
agreed upon research and development of the Licensed Materials during Year 2, 
Licensor shall receive fees at the rate of One Thousand Four Hundred Dollars 
($1,400.00) per day.

          4.2.3     For professional services rendered by Licensor for mutually 
agreed upon research and development of the Licensed Materials during Year 3, 
Licensor shall receive fees at the rate of One Thousand Five Hundred and Forty 
Dollars ($1,540.00) per day.

          4.2.4     For professional services rendered by Licensor for mutually 
agreed upon research and development of the Licensed Materials during Year 4 and
each Year of the Term thereafter, Licensor shall receive fees at the rate of one
hundred and ten percent (110%) of the daily rate paid by Licensee during the 
immediately preceding Year.

          4.2.5     Any other professional services performed by Licensor during
the Term of this Agreement at Licensee's request, subject to the approval of 
Licensor in its sole and absolute discretion, shall be at a fee to be negotiated
at such time.

                                  ARTICLE 5.

                           TRADEMARKS AND COPYRIGHTS


     5.1  Trademarks. All Existing Trademark Registrations relating to Licensor 
          ----------
and/or the Licensed Material are listed in Exhibit E annexed hereto. Licensee 
shall not file any Trademark Application without the prior written consent of 
Licensor. If Licensor consents to any such Trademark Application filing by 
Licensee, then such applications shall be filed in the name of Licensor and the 
costs and expenses incurred in connection therewith shall be shared equally by 
the Licensee and the Licensor. Licensor may, at its sole cost and expense, file 
such Trademark Applications as it deems necessary or appropriate without the 
consent of Licensee. All trademarks pertaining to the Licensed Materials shall 
constitute the property of Licensor and shall be included within the Licensed 
Material hereunder. Licensor and Licensee shall fully cooperate with each other 
in connection with the prosecution and maintenance of all such Trademark 
Applications and all Trademark Registrations; provided, however, that (a) 
Licensor shall indemnify and reimburse Licensee for any and all costs and 
expenses (including, without limitation, all attorneys' fees) incurred by 
Licensee in connection therewith and (b) the obligation of Licensee to cooperate
with Licensor shall not require Licensee to engage in any litigation or 
administrative proceeding.

     5.2  Copyrights. All Existing Copyright Registrations are listed in Exhibit
          ----------
F annexed hereto. Licensee shall not file any Copyright Application without the 
prior written consent of Licensor. If Licensor consents to the filing of any 
such Copyright Application by Licensee, then such applications shall be filed in
the name of Licensor and the costs and expenses incurred in connection therewith
shall be shared equally by the Licensee and by Licensor. Licensor may, at its 
sole cost and expense, file such Copyright Applications as it deems necessary or
appropriate without the consent of Licensees. Licensor and Licensees shall fully
cooperate with each other in connection with the prosecution and maintenance of
all such Copyright Applications and all Copyright

                                      -7-


<PAGE>
 
Registrations; provided, however, that (a) Licensor shall indemnify and 
reimburse Licensee for any and all costs and expenses (including, without 
limitation, all attorneys' fees) incurred by Licensee in connection therewith 
and (b) the obligation of Licensee to cooperate with Licensor shall not require 
Licensee to engage in any litigation or administrative proceeding.

          5.3  Ownership. Licensor shall retain full ownership and title to the 
               ---------
Licensed Material, subject only to the Licensee's and Permitted Sublicensee's 
rights under this Agreement.

          5.4  Notification; Protection.
               ------------------------

               5.4.1     Licensee agrees to promptly notify Licensor of any 
written claims or charges received by Licensee relating to the Licensed Material
or of any infringement of the Licensed Material of which it has knowledge. 
Licensor agrees to promptly notify Licensee of any written claims or charges 
received by Licensor relating to the Licensed Material or of any infringement of
the Licensed Material of which it has knowledge.

               5.4.2     Subject to the provisions of Section 5.4.3, the 
Licensor reserves all rights to protect and preserve the integrity and validity 
of the Trademarks and Copyrights, including the taking of actions deemed by the 
Licensor to be necessary or appropriate to secure, protect and/or maintain the 
Licensor's rights to the Licensed Material. Licensee agrees to (a) do any and 
all things reasonably requested by Licensor which are necessary or appropriate 
to secure, protect and/or maintain the Licensor's rights to the Licensed 
Material (including, but not limited to, executing any relevant documents or 
instruments), and (b) otherwise cooperate with the Licensor's efforts to protect
such rights; provided, however, that subject to the provisions of Section 5.4.3 
below, Licensor shall indemnify and reimburse Licensee for any and all costs and
expenses (including, without limitation, all attorneys' fees) incurred by 
Licensee in connection therewith.

               5.4.3     At the request of the Licensee, the Licensor shall take
such action, including initiating litigation or an appropriate administrative
proceeding, as Licensee may reasonably request to secure, protect and/or
maintain the Licensor's rights to the Licensed Material, in which event the
Licensee shall cooperate with Licensor in connection therewith. In the event
Licensor fails, refuses or neglects to take any such action within ten (10) days
after receiving a request from the Licensee to do so, the Licensee may take such
action (either in its name and/or the name of the Licensor) as it deems
necessary or appropriate in order to secure, protect and/or maintain the
Licensor's rights to the Licensed Material, in which event the Licensor shall
cooperate with Licensee and its counsel in connection therewith. In the event
Licensor takes any action at the request of Licensee pursuant to this Section
5.4.3 or the Licensee takes such action pursuant to this Section 5.4.3, then
Licensor shall bear and be responsible, and indemnify Licensee against, the
first $100,000 in attorneys' fees and court or administrative costs incurred in
connection therewith. Attorneys' fees and court or administrative costs incurred
in excess of $100,000 in connection with any action taken by the Licensor or
Licensee pursuant to the provisions of this Section 5.4.3 shall be borne equally
by Licensor and Licensee. No action taken by the Licensor pursuant to this
Section 5.4.3 may be settled or compromised without the prior written consent of
Licensee.

          5.5  Licensee's Use of Trademarks. The Licensee shall not adopt, use 
               ----------------------------
or register (by filing an amendment to its articles of incorporation, filing a 
fictitious business name statement or otherwise) any trade or business name, 
style or design which includes, or is confusingly similar to, any of the 
Licensor's trademarks, service marks, trade names, logos, insignia, slogans, 
emblems, symbols, designs or other identifying characteristics. The Licensor 
shall not adopt, use or register (by amending its partnership agreement, filing 
a fictitious business name statement or otherwise) any trade or business name, 
style or design which includes, or is confusingly similar to, any of the 
Licensee's trademarks, service marks, trade names, logos, insignia, slogans, 
emblems, symbols, designs or other identifying characteristics.

          5.6  Changes to Trademarks. The Licensor shall have the right at any 
               ---------------------  
time to make additions to, deletions from and changes in any of the Trademarks 
upon notice to the Licensee. At the Licensor's sole option, any such addition, 
deletion or change shall be incorporated into this Agreement upon notice to the 
Licensee.

                                      -8-

<PAGE>
 
     5.7  Indemnification of Licensee. Licensor shall indemnify, defend and hold
          ---------------------------
Licensee and KFI harmless from and against any Claims or Losses which may be 
suffered or incurred by Licensee in connection with or by reason of (a) the 
breach by Licensor of any of its covenants contained in this Agreement, (b) the 
breach by SHS of any of its obligations under the Acknowledgment and Agreement 
attached hereto as Exhibit B, (c) the breach or inaccuracy of any of the 
representations or warranties made by Licensor in this Agreement.

     5.8  Indemnification of Licensor. Licensee shall indemnify, defend and hold
          ---------------------------
Licensor harmless from and against any Claims or Losses which may be suffered or
incurred by Licensor in connection with or by reason of (a) the breach by
Licensee or a Permitted Sublicensee of any of the covenants contained in this
Agreement, and (b) the breach or inaccuracy of any of the representations or
warranties made by Licensee in this Agreement.

                                  ARTICLE 6.

                   OBLIGATIONS RELATED TO COMMERCIALIZATION

     6.1  Rules and Regulations. Licensee shall be responsible for compliance 
          ---------------------
with any and all applicable laws, rules and regulations regarding, and for
obtaining any and all necessary governmental approvals for the use of the
Licensed Material in connection with the Business.

     6.2  Trademark and Copyright Notices. Licensee shall, at its own expense, 
          -------------------------------
apply trademark and copyright notices and other markings as Licensor may 
reasonably request in connection with each and every use of the Licensed 
Material under the laws or regulations of each country where the Licensed 
Material is used, which markings shall be in such form and manner as Licensee 
may reasonably determine.

     6.3  Website HyperLinks. Licensee shall display a link and a reference to 
          -------------------
Licensor's website (in a normal and customary typeface and manner) on the 
Internet on Licensee's website on the Internet as part of Licensee's feedback 
report to candidates. Licensee will, at Licensor's request or with Licensor's 
prior consent, have an additional link to a fulfillment center for purposes of 
selling Licensor's publications.

                                  ARTICLE 7.

                        TECHNOLOGY SHARING AND TRANSFER

     7.1  Technology Transfer. Licensor hereby agrees to provide and transfer to
          -------------------
the Licensee and its Permitted Sublicensees all of the following, which shall 
constitute part of and be included within the meaning of the term Licensed 
Material:

          7.1.1     All such algorithms as may be necessary or appropriate to 
generate or enable Licensee and its Permitted Sublicensees to provide feedback 
to individual candidates based upon assessment test scores derived from the 
Licensed Material.

          7.1.2     All such algorithms as may be necessary or appropriate in 
order for the Licensee and its Permitted Sublicensees to create, develop, 
compute or determine coefficients indicating a particular individual candidate's
suitability and fitness for a particular position or for the culture of one or 
more client companies.

          7.1.3     All such algorithms as may be necessary or appropriate in 
order for the Licensee and its Permitted Sublicensees to produce follow-up 
interview questions.

          7.1.4     All such algorithms as may be necessary or appropriate in 
order for the Licensee and its Permitted Sublicensees to determine the 
potential effectiveness of a particular individual candidate in terms of four 
broad bands of behavioral competency and two leadership profiles.

                                      -9-

<PAGE>
 
               7.1.5     All such compiled software necessary or appropriate for
scoring assessments included within the Licensed Material; provided, however, 
that the Licensee and the Permitted Sublicensees shall not undertake or permit 
other Persons under its control to undertake any decompiling or reverse 
engineering, in whole or in part, of such compiled software provided by 
Licensor.

               7.1.6     All procedures, software and other programs already 
developed or hereafter developed by Licensor relating to the linking of software
and algorithms included within the Licensed Material to databases and user 
interfaces implemented on the world wide web or Internet.

       7.2  Access Rights of Licensor to Licensee's Database; Licensor's Use of 
            -------------------------------------------------------------------
Information.
- -----------

            7.2.1   During the Term, subject to the Confidentiality provisions 
set forth in Article 9, Licensor shall have access to Licensee's database on a 
monthly basis and only for research purposes and the publication of research 
reports relating thereto at such times, for such duration and under such 
conditions as Licensee may reasonably determine. In addition, all other 
information and data obtained by Licensor in connection with Licensee's (and any
Permitted Sublicensee's) use of the Licensed Material may be used by Licensor 
but only for research purposes and publications related to such research.

            7.2.2   All information in Licensee's database and all other 
information and data obtained by Licensor in connection with Licensee's (and any
Permitted Sublicensee's) use of the Licensed Material constitutes Confidential 
Information of Licensee within the meaning of Article 9.

            7.2.3   Under no circumstances whatsoever shall Licensor be 
permitted to use Licensee's database (a) to obtain the names of or any 
correspondence information relating to any candidates or client companies and 
use such information except as expressly authorized herein or (b) to solicit or 
otherwise contact any candidates or client companies of Licensee or KFI or (c) 
for purposes contrary to the terms and intent of this Agreement or (d) for the 
benefit or in aid of a Company Competitor or a KFI Competitor. Nothing in this 
Section 7.2.3 shall restrict Licensor from using information from Licensee's 
database to improve upon the reliability and validity of the Licensed Material
as long as no individual or company is specifically identified and such
information is not identified as originating from Licensee's database or KFI.
The parties acknowledge that Licensor may obtain personal assessment responses
to Licensed Material from Licensee for persons who have registered at Licensee's
website and who have contacted Licensor at Licensor's website and who have also
given written permission to Licensor to obtain said assessment responses from
Licensee and, in addition, has given written authorization to Licensee to
release such information to Licensor. Licensor may charge fees to such persons
for additional career guidance services.

                                  ARTICLE 8.

                        REPRESENTATIONS AND WARRANTIES

       8.1  Representations and Warranties of Licensor. Licensor hereby
            ------------------------------------------   
represents and warrants to Licensee that:

            8.1.1   Licensor is the sole owner of the Licensed Material, the 
Existing Copyright Registrations and the Existing Trademark Registrations, and, 
except as expressly set forth in this Agreement, has not sold, transferred, 
assigned or otherwise disposed of, directly or indirectly, by operation of law 
or otherwise, any of the Licensed Material, any of the Existing Copyright 
Registrations, or any of the Existing Trademark Registrations, or any interest 
therein, to any Person other than Licensee hereunder. To the best of Licensor's 
knowledge, no Person has made any claim or filed any protest or filed any 
action, suit or proceeding challenging Licensor's exclusive ownership rights and
interests in and to the Licensed Material, the Existing Copyright Registrations 
or the Existing Trademark Registrations.

                                     -10-

<PAGE>
 
               8.1.2     Licensor is not aware of any rights of third parties 
that would be infringed by manufacturing, using or selling the Licensed Material
or by any of the Existing Copyright Registrations or by any of the Existing 
Trademark Registrations.

               8.1.3     Licensor is not aware that any third parties in any way
infringing the Licensed Material or the Existing Copyright Registrations or the
Existing Trademark Registrations.

               8.1.4     Licensor is not aware of any action, suit, proceeding 
or other claim pending or threatened against Licensor or any other person, firm 
or entity, involving or relating to the Licensed Material or the Existing 
Copyright Registrations or the Existing Trademark Registrations. Licensor is not
aware of any order, decree or judgment in effect that affects the Licensed 
Material and/or the ability of Licensor to perform its obligations hereunder.

               8.1.5     Licensor is not aware that any aspect of any of the 
Licensed Material or job-person matching violates any federal or state laws, 
including equal employment opportunity laws. Licensor is not aware that the 
Licensed Material or the process of job-person matching included therein has had
an adverse impact on any group protected by any equal employment opportunity
laws, including, but not limited to, Title VII of the Civil Rights Act of 1964,
42 U.S.C Section 2000e et. Seq. and any similar laws of any state. The Licensed
Material and the process of job-person matching included therein have been
validated in accordance with generally accepted professional practices for
construct and criterion related validity. Licensor agrees that in the event of
any challenge by any third party to the legality of the Licensed Material and/or
the process of job-person matching, Licensor shall provide, at no cost to
Licensee (a) evidence establishing that the Licensed Material and the process of
job-person matching included therein do not have an adverse impact on any group
protected by any equal employment opportunity laws for selection into positions
involved in Licensee's Business; (b) evidence that the Licensed Material and the
process of job-person matching have been validated in accordance with standard
practices; and (c) expert witness testimony to support such evidence.

               8.1.6     When used by Licensee (and any Permitted Sublicensee) 
in connection with the Business, the Licensed Material will perform the
functions for which it has been designed. All assessments and job-person
matching included within the Licensed Material have been tested by internal
objective studies conducted by Licensor and the results of those tests
demonstrate that the Licensed Material will perform the functions for which it
has been designed and marketed. The parties acknowledge that the Licensed
Material is designed and marketed to estimate individuals' effectiveness in
specific job-related behavioral competencies.

               8.1.7     Licensor is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of California.
All action required or appropriate in order for Licensor to execute, deliver and
perform this Agreement have been duly and validly taken and Licensor is entitled
to execute and deliver this Agreement and perform its obligations hereunder. 
This Agreement constitutes a legal, valid and binding obligation of Licensor, 
enforceable against Licensor in accordance with its terms and all persons 
executing this Agreement on behalf of Licensor are duly authorized and empowered
to do so.

               8.1.8     No consent, approval or notice is required to be 
obtained or given by Licensor from or to any person, firm or entity, 
governmental or nongovernmental, in order for Licensor to execute and deliver 
this Agreement and perform its obligations hereunder. This Agreement will not 
violate Licensor's Articles of Organization or any other agreement or document 
to which Licensor is a party or by which it is bound.

          8.2  Representations and Warranties of Licensee. Licensee hereby 
               ------------------------------------------
represents and warrants to Licensor that:

               8.2.1     There is no action, suit, proceeding or other claim 
pending or threatened against Licensee and there is no order, decree or judgment
in effect which affects the ability of Licensee to perform its obligations 
hereunder.

               8.2.2     Licensee is a corporation duly organized, validly 
existing and in good standing under the laws of the state of Delaware. All 
action required or appropriate in order for Licensee to execute, deliver and 

                                     -11-

<PAGE>
 
perform this Agreement have been duly and validly taken and Licensee is entitled
to execute and deliver this Agreement and perform its obligations hereunder. 
This Agreement constitutes a legal, valid and binding obligation of Licensee, 
enforceable against Licensee in accordance with its terms and all persons 
executing this Agreement on behalf of Licensee are duly authorized and empowered
to do so.

               8.2.3     No consent, approval or notice is required to be 
obtained or given by Licensee from or to any person, firm or entity, 
governmental or nongovernmental, in order for Licensee to execute and deliver 
this Agreement and perform its obligations hereunder. This Agreement will not 
violate Licensee's Articles of Incorporation, By-Laws or any other agreement or 
document to which Licensee is a party or by which it is bound.


                                  ARTICLE 9.

                                CONFIDENTIALITY

          9.1  Confidentiality.
               ---------------

               9.1.1   Treatment of Confidential Information. The parties agree
                       -------------------------------------         
that during the term of this Agreement, a party receiving Confidential
Information of the other party will (a) maintain in confidence such Confidential
Information, (b) not disclose such Confidential Information to any third party
without prior written consent of the other party and (c) not use such
Confidential Information for any purpose except those expressly permitted by
this Agreement.

               9.1.2   Publications. Nothing in this Agreement shall limit the
                       ------------
Licensor's right to publish information about or related to the Licensed 
Material; provided, however, prior to any such publication, the Licensor shall 
use reasonable efforts to submit to the Licensee for review only a copy of the 
proposed publication prior to the anticipated publication date.

               9.1.3   Publicity. Except as otherwise provided in Section 9.1.4
                       ---------
below or as set forth in Exhibit H annexed hereto, or required by applicable
law, no party shall originate any publication, news release, or other public
announcement, written or oral, whether in the public press or otherwise,
relating to this Agreement or to any sublicense arrangement hereunder, without
the prior written approval of the other party, which approval shall not be
unreasonably withheld. Professional, scholastic, and research publications and
publications distributed to lenders, investment bankers, stockholders or
potential investors in the Licensee or in the Licensor shall be deemed not to
violate this Section.

               9.1.4   Relationships. Licensor is hereby granted permission to
                       -------------
publicly disclose its relationship with the Licensee by virtue of this 
Agreement; provided, the form and substance of such disclosure is approved in 
advance by the Licensee, which approval shall not be unreasonably withheld or 
delayed; provided, however, Licensee, upon ten (10) days advance written notice 
to Licensor, may require Licensor to immediately cease publicly disclosing such 
relationship at the end of such ten (10) day period if Licensor, or any of its 
principals, commit a Revocation Act (as hereafter defined). Licensee is hereby 
granted permission to publicly disclose its relationship with the Licensor by 
virtue of this Agreement; provided, the form and substance of such disclosure 
is approved in advance by the Licensor, which approval shall not be unreasonably
withheld or delayed; provided, however, Licensor, upon ten (10) days advance 
written notice to Licensee, may require Licensee to immediately cease publicly 
disclosing such relationship at the end of such ten (10) day period if Licensee,
or any of its principals, commit a Revocation Act (as hereafter defined). As 
used herein, "Revocation Act" shall mean: (a) conduct which brings the acting 
party into public disrepute; (b) commission of a felony; or (c) conduct which 
becomes the subject of adverse publicity which would or could, in the good faith
judgment of the revoking party, adversely affect the reputation of the revoking 
party.

                                     -12-

<PAGE>
 
                                  ARTICLE 10.

                             TERM AND TERMINATION

     10.1 Termination.
          -----------

          10.1.1    Termination by Licensee Without Cause. At any time and from 
                    -------------------------------------
time to time following the expiration of the first Year of the Term, Licensee
shall have the right to (a) terminate this Agreement without cause or (b)
terminate either the Exclusive License or the Non-Exclusive License without
cause. In order to exercise such right of termination, Licensee shall give
Licensor at least thirty (30) calendar days prior written notice of such
termination. The Annual License Fee shall not be affected by the termination of
either the Exclusive License or Non-Exclusive License if this Agreement remains
in effect.

          10.1.2    Termination Upon Default. Either or both of the following
                    ------------------------
events shall constitute an event of default hereunder: (a) the failure of any
party to pay any amounts when due hereunder within ten (10) business days after
receipt of a written demand therefor; or (b) the failure of any party to perform
any other obligation hereunder within thirty (30) days after receipt of written
notice from the other party specifying in reasonable detail the nature of such
nonperformance. Upon the occurrence of any event of default, the non-defaulting
party may terminate this Agreement and the License by delivering to the
defaulting party written notice thereof. Such termination shall be effective
upon the date set forth in such notice. Termination pursuant to this Section
10.1.2 shall not relieve the defaulting party from liability for damages
suffered by the other party. Waiver by either party of a single default or a
succession of defaults shall not deprive such party of its right to terminate
this Agreement by reason of any subsequent default.

          10.1.3    Other Termination Event. Licensor may terminate this 
                    -----------------------
Agreement and the License, in its sole and absolute discretion, if Licensee and 
all Permitted Sublicensees, in the aggregate, cease to use the Licensed Material
as part of the registration process for at least 20% of the potential job 
candidates registering at Licensee's (and any Permitted Sublicensee's) Internet
Website.

          10.1.4    Rights Upon Termination. Upon any termination of this 
                    -----------------------
Agreement, the License shall terminate. Upon termination of either but not both 
the Exclusive License or the Non-Exclusive License (if applicable), the License 
which is not terminated shall remain in full force and effect in accordance 
with the terms and conditions of this Agreement. Upon any termination of this 
entire Agreement, the Licensee promptly shall return all materials, samples, 
documents, information and other materials which embody or disclose any Licensed
Material; provided, however, that the Licensee shall not be obligated to provide
the Licensor with Confidential Information or proprietary information 
independently developed by the Licensee, except to the extent it relates to the
Licensed Material. Any such termination shall not relieve either party from any 
obligations accrued up to the date of termination. Notwithstanding the 
termination of this Agreement during any Year, no portion of the Annual License 
Fee paid for such Year shall be refundable. If this Agreement is terminated 
during Year 4 or thereafter, the Annual License Fee shall be determined by 
annualizing the Placement Revenues generated during such partial Year. Upon any 
such termination, each party shall be required to abide by its nondisclosure 
obligations pursuant to Article 9 hereof, which obligations shall survive any 
termination of this Agreement.

                                  ARTICLE 11.

                                 MISCELLANEOUS

     11.1 General Provisions.
          ------------------

          11.1.1    Assignment by Licensee. Except as otherwise provided in 
                    ----------------------
Section 2.2 above, neither this Agreement nor any rights granted hereunder may
be assigned or transferred by the Licensee without the prior written consent of
the Licensor, which consent may be withheld or delayed in Licensor's sole and
absolute discretion; provided, however, that this Agreement and all of the
rights and duties of the Licensee and a Permitted Sublicensee hereunder may be
assigned or transferred to any Person who acquires all or substantially all of
the

                                     -13-






<PAGE>
 
Business of the Licensee or such Permitted Sublicensee, either by way of an 
acquisition, merger, consolidation, reorganization or other transaction.

               11.1.2    Assignment by Licensor. Licensor may transfer its 
                         ----------------------
rights and obligations under this Agreement to any Person without the prior 
written consent of Licensee, provided and on condition that: (a) the transferee 
is also acquiring all right, title and interest in and to the Licensed Material 
and the transferee agrees in writing to assume all of Licensor's duties and 
obligations under this Agreement; and (b) the transferee is not a Company 
Competitor or a KFI Competitor. If the transferee is a Company Competitor or a 
KFI Competitor then Licensor may not transfer its rights and obligations under 
this Agreement to such Person without the prior written consent of Licensee, 
which consent may be given or withheld in the sole and absolute discretion of 
Licensee. For purposes of this Section 11.1.2, a merger, consolidation or 
reorganization of Licensor into or with another Person, whether or not Licensor 
is the surviving entity, the sale of the Licensed Material (including the 
transfer of the Licensed Material in connection with the sale of all or 
substantially all of the assets of Licensor), and/or the acquisition by any 
Person of more than ten percent (10%) of the ownership interests, percentage 
interests in profits, or voting rights of the Licensor, whether by contract, 
purchase of interest or otherwise, shall constitute a transfer of Licensor's 
rights under this Agreement within the meaning of this Section.

               11.1.3    Binding Upon Successors and Assigns. Subject to the 
                         -----------------------------------
limitations on assignment set forth in Sections 11.1.1 and  11.1.2 hereof, this 
Agreement shall be binding upon and inure to the benefit of any successors in 
interest and assigns of the Licensor and the Licensee.

          11.2 Independent Contractors. The relationship between the Licensor 
               -----------------------
and the Licensee shall only be that of independent contractors. The Licensor and
the Licensee shall for no purposes, be deemed to be joint ventures, partners, 
principal and agent, master and servant, or employer and employee. On no account
may a party hereto create (or hold itself out to third parties as being able to 
create) any binding obligation on behalf of the other without the prior written 
consent of the other.

          11.3 Preparation of Agreement. It is acknowledged by each party that 
               ------------------------
such party either had separate and independent advice of counsel or the 
opportunity to avail itself or himself of separate and independent legal 
counsel. Each party hereto understands and acknowledges that the law firm of 
Morrison & Foerster LLP, is legal counsel to Licensee only, and does not 
represent any other parties to this Agreement. In light of these and other 
relevant facts it is further acknowledged that no party shall be construed to be
solely responsible for the drafting hereof, and therefore any ambiguity shall 
not be construed against any party as the alleged draftsman of this Agreement.

          11.4 Cooperation and Further Assurances. Unless otherwise expressly 
               ----------------------------------
provided in this Agreement, each party agrees, without further consideration, to
cooperate and diligently perform any further acts, deeds and things and to 
execute and deliver any documents that may from time to time be reasonably 
necessary or otherwise reasonably required to consummate, evidence, confirm 
and/or carry out the intent and provisions of this Agreement, all without undue 
delay or expense; provided, however, to the extent such cooperation shall 
require the expenditure of time or funds, the party requesting such cooperation 
shall reimburse the other party its costs and reasonably compensate the other 
party for its time.

          11.5 Interpretation.
               --------------

               11.5.1    Entire Agreement/No Collateral Representations. Each 
                         ----------------------------------------------
party expressly acknowledges and agrees that this Agreement: (i) is the final 
expression of the parties agreements with respect to the subject matter hereof 
and thereof and are the complete and exclusive statements of the terms of such 
agreement; (ii) supersedes any prior or contemporaneous agreements, promises, 
assurances, guarantees, representations, understandings, conduct, proposals, 
conditions, commitments, acts, course of dealing, warranties, interpretations or
terms of any kind, oral or written (collectively and severally, the "Prior 
Agreements"), and that any such Prior Agreements are of no force or effect 
except as expressly set forth herein and therein; and (iii) may not be varied, 
supplemented or contradicted by evidence of Prior Agreements. Any agreement 
hereafter made shall be ineffective to modify,

                                     -14-

<PAGE>
 
supplement or discharge the terms of this Agreement, in whole or in part, unless
such agreement is in writing and signed by the party against whom enforcement of
the modification or supplement is sought.

               11.5.2    Waiver. No breach of any agreement or provision herein 
                         ------
contained, or of any obligation under this Agreement, may be waived, nor shall 
any extension of time for performance of any obligations or acts be deemed an 
extension of time for performance of any other obligations or acts contained 
herein, except by written instrument signed by the party to be charged or as 
otherwise expressly authorized herein. No waiver of any breach of any agreement 
or provision herein contained shall be deemed a waiver of any preceding or 
succeeding breach thereof, or a waiver or relinquishment of any other agreement 
or provision or right or power herein contained.

               11.5.3    Remedies Cumulative. Except as otherwise provided in 
                         -------------------
this Agreement, the remedies of each party under this Agreement, at law and in 
equity, shall be cumulative and non-exclusive.

               11.5.4    Severability. If any term or provision of this 
                         ------------
Agreement or the application thereof to any Person or circumstance shall, to any
extent, be determined to be invalid, illegal or unenforceable under present or 
future laws effective during the term of this Agreement, then and, in that
event: (i) the performance of the offending term or provision (but only to the
extent its application is invalid, illegal or unenforceable) shall be excused as
if it had never been incorporated into this Agreement, and, in lieu of such
excused provision, there shall be added a provision as similar in terms and
amount to such excused provision as may be possible and be legal, valid and
enforceable, and (ii) the remaining part of this Agreement (including the
application of the offending term or provision to persons or circumstances other
than those as to which it is held invalid, illegal or unenforceable) shall not
be affected thereby and shall continue in full force and effect to the fullest
extent provided by law.

               11.5.5    No Third Party Beneficiary; No Liability for KFI. 
                         --------------------------
Except to the extent KFI is expressly referred to in this Agreement, the parties
specifically disavow any desire or intention to create any third party
beneficiary obligations, and specifically declare that no third party shall have
any rights hereunder or any right of enforcement hereof. Notwithstanding the
foregoing, KFI shall be a third party beneficiary to the extent of the rights
and benefits expressly conferred own KFI under this Agreement. Under no
circumstances shall KFI have any duty, obligation, liability or responsibility
for any of the duties, obligations and liabilities of Licensee under this
Agreement, either at law or in equity.

               11.5.6    No Reliance Upon Prior Representation. The parties 
                         -------------------------------------
acknowledge that no other party has made any oral representation or promise
which would induce them prior to executing this Agreement to change their
position to their detriment, partially perform, or part with value in reliance
upon such representation or promise; the parties acknowledge that they have
taken such action at their own risk; and the parties represent that they have
not so changed their position, performed or parted with value prior to the time
of their execution of this Agreement.

               11.5.7    Headings; References; Incorporation; Gender. The 
                         -------------------------------------------
headings used in this Agreement are for convenience and reference purposes only,
and shall not be used in construing or interpreting the scope or intent of this 
Agreement or any provision hereof. References to this Agreement shall include 
all amendments or renewals thereof. All cross-references in this Agreement, 
unless specifically directed to another agreement or document, shall be 
construed only to refer to provisions within this Agreement, and shall not be 
construed to be referenced to the overall transaction or to any other agreement 
or document. Any exhibit referenced in this Agreement shall be construed to be 
incorporated in this Agreement. As used in this Agreement, each gender shall be 
deemed to include the other gender, including neutral genders or genders
appropriate for entities, if applicable, and the singular shall be deemed to
include the plural, and vice versa, as the context requires.

          11.6 Enforcement.
               -----------

               11.6.1    Applicable Law. This Agreement and the rights and 
                         --------------     
remedies of each party arising out of or relating to this Agreement (including, 
without limitation, equitable remedies) shall be solely governed by, interpreted
under, and construed and enforced in accordance with the laws (without regard to
the conflicts of law

                                     -15-

<PAGE>
 
principles thereof) of the State of California, as if this agreement were made, 
and as if its obligations are to be performed, wholly within the State of 
California.

           11.6.2   Consent to Jurisdiction; Service of Process. Any action or 
                    -------------------------------------------
proceeding arising out of or relating to this Agreement shall be filed in and 
heard and litigated solely before the state courts of California located within 
the County of Los Angeles. Each party generally and unconditionally accepts 
the exclusive jurisdiction of such courts and to venue therein, consents to the 
service of process in any such action or proceeding by certified or registered 
mailing of the summons and complaint in accordance with the notice provisions of
this Agreement, and waives any defense or right to object to venue in said 
courts based upon the doctrine of "Forum Non Conveniens". Each party irrevocably
agrees to be bound by any judgment rendered thereby in connection with this 
Agreement.

           11.6.3   Attorneys' Fees and Costs. If any party institutes or should
                    -------------------------
the parties otherwise become a party to any Action Or Proceeding based upon or 
arising out of this Agreement including, without limitation, to enforce or 
interpret this Agreement or any provision hereof, or for damages by reason of 
any alleged breach of this Agreement or any provision hereof, or for a 
declaration of rights in connection herewith, or for any other relief, including
equitable relief, in connection herewith, the Prevailing Party in any such 
Action Or Proceeding, whether or not such Action Or Proceeding proceeds to final
judgment or determination, shall be entitled to receive from the non-Prevailing
Party as a cost of suit, and not as damages, all Costs And Expenses of 
prosecuting or defending the Action Or Proceeding, as the case may be, 
including, without limitation, reasonable Attorneys' And Other Fees.

     11.7  Notices. Any notice, approval, disapproval, consent, waiver, or other
           -------
communication (collectively, "Notices") required or permitted to be given 
under this Agreement shall be in writing and shall be delivered personally or 
mailed, certified or registered United States mail, postage prepaid, return 
receipt requested, or sent by Federal Express or other reliable overnight 
carrier for next business day delivery, or by fax. All Notices shall be deemed 
delivered (a) if personally served, when actually delivered to the address of 
the person to whom such Notice is given, (b) if sent via Federal Express or 
other overnight courier for next business day delivery, one (1) business day 
following the date on which the Notice is given to Federal Express or other 
overnight courier, (c) if by mail, three (3) days following deposit in the 
United States mail, or (d) if by fax, when the transmitting telecopier machine 
has confirmed that the Notice has been completed or sent without error. All 
Notices shall be addressed to the party to whom such Notice is to be given at 
the party's address set forth below or as such party shall otherwise direct by 
Notice sent pursuant to this Section:

     If Licensee:      Korn/Ferry International Futurestep, Inc.              
                       1800 Century Park East, Suite 900                      
                       Los Angeles, California 90067                          
                       Attention: Mr. Man Jit Singh, President                
                       Telephone:  (310) 843-4121                             
                       Telecopier: (310) 553-8640                             
                                                                              
     With a copy to:   Michael C. Cohen, Esq.                                  
                       Morrison & Foerster LLP                                 
                       555 West Fifth Street, Suite 3500                       
                       Los Angeles, California 90013-1024                      
                       Telephone:  (213) 892-5404  
                       Telecopier: (213) 892-5454  
                                                   
                                                   
     If Licensor:      Self Discovery Dynamics, LLC
                       615 Hampshire Rd., Suite 357
                       Westlake Village, California 91361 
                       Attention: Kenneth R. Brousseau,. Ph.D., General Partner
                       Telephone:  (805) 495-6854                            
                       Telecopier: (805) 493-5694                            

                                     -16-






<PAGE>
 
     With a copy to:     David Minton, Esq.
                         Seltzer Caplan Wilkins & McMahon
                         2100 Symphony Towers
                         750 B Street
                         San Diego, California 92101
                         Telephone:  (619) 685-3003
                         Telecopier: (619) 685-3100
 
                         Stephen C. Sorkin                
                         Self Discovery Dynamics, LLC     
                         7777 Fay Avenue, Suite 111       
                         La Jolla, California 92037       
                         Telephone:  (619) 551-7353       
                         Telecopier: (619) 551-7340        
     
     11.8   Counterparts. This Agreement may be executed in counterparts, each 
            ------------
of which shall be deemed an original, and all of which together shall constitute
one and the same instrument, binding on all parties hereto.  Any signature page
of this Agreement may be detached from any counterpart of this Agreement and 
re-attached to any other counterpart of this Agreement identical in form hereto
by having attached to it one or more additional signature pages.

     11.9   Exhibits. All Exhibits annexed hereto are incorporated into this 
            --------
Agreement and made a part hereof by this reference.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

LICENSOR:                                   LICENSEE:

SELF DISCOVERY DYNAMICS, LLC,               KORN/FERRY INTERNATIONAL FUTURESTEP,
a California limited liability company      INC., a Delaware corporation

By: /s/ Kenneth R. Brousseau                By: /s/ Man Jit Singh
   -----------------------------------         ---------------------------------
   Kenneth R. Brousseau, Ph.D.,                Man Jit Singh,  
   Member                                      President

By: /s/ Michael J. Driver                   By: ________________________________
   -----------------------------------      
   Michael J. Driver,                       Its:________________________________
   Member

                                     -17-


<PAGE>
 
                                   APPENDIX

                              CERTAIN DEFINITIONS

     1.   "Action Or Proceeding" means any and all claims, suits, actions, 
notices, inquiries, proceedings, hearings, arbitrations or other similar 
proceedings, including appeals and petitions therefrom, whether formal or 
informal, governmental or non-governmental, or civil or criminal.

     2.   "Affiliate" means with respect to any person or entity ("Person 
No. 1"), any other person or entity which either (i) directly or indirectly owns
or controls Person No. 1, or (ii) is directly or indirectly owned or controlled
by Person No. 1, or (iii) is under direct or indirect common control with Person
No. 1. The term "control" (and its corollaries) includes, without limitation,
ownership of interests representing a majority of total voting power in an
entity, and "ownership" (and its corollaries) includes, without limitation,
ownership of a majority of the equity interests in an entity.

     3.   "Agreement" means this Agreement and all agreements, exhibits,
schedules and appendices expressly annexed hereto.

     4.   "Attorneys' And Other Fees" means attorneys' fees, accountants' fees,
fees of other professionals, witness fees (including experts engaged by the
parties, but excluding shareholders, officers, employees or partners of the
parties), and any and all other similar fees incurred in the prosecution or
defense of an Action Or Proceeding.

     5.   "Business" shall mean the business of providing executive recruiting
services which shall be defined as the screening and evaluation of individual
candidates (whether or not placed) for placement in positions with client
companies which have engaged Licensee and/or Permitted Sublicensees for this
purpose, and the placement of individual candidates in positions with client
companies which have engaged Licensee and/or Permitted Sublicensees for this
purposes, in either case whether or not conducted on the Internet. The Parties
acknowledge and agree that the Business shall not include, among other things,
career counseling, team development, research services, publishing, or any
other services or endeavors not specifically included in the definition of
Business ("Excluded Activities"). It is understood and agreed that Licensee, KFI
and the Permitted Sublicensees shall have the absolute right to engage in one or
more of the Excluded Activities so long as they do not use the Licensed Material
in connection with any of the Excluded Activities.

     6.   "Competitive Business" means any business, which directly competes,
in part or in whole, with the Business and includes the conduct of such Business
by KFI.

     7.   "Company Competitor" means any (a) Person (other than KFI or any
Affiliate of KFI) who engages, directly or indirectly, in any Competitive
Business and who, from that segment of the Competitive Business which involves
job placements with first year compensation equal to, or in excess of, the
Compensation Threshold, derives gross revenues in excess of One Million
Dollars($1,000,000) annually, or (b) stockholder, partner, or joint venturer
owning, directly or indirectly, more than a five percent (5%) ownership interest
in any Person referred to in subparagraph (a), or (c) officer, director,
executive employee, agent, or consultant who is hired specifically for the
purpose of advising on executive recruiting matters, of or to any Person
referred to in subparagraph (a).

     8.   "Compensation Threshold" means for the United States of America, as of
the date of determination, the sum of Seventy-Five Thousand Dollars ($75,000.00
US). In making the determination of the Compensation Threshold for areas outside
of the United States of America: (a) the percentages set forth in Exhibit G for
the applicable country shall be used by applying the applicable percentage to
the amount of the Compensation Threshold for the United States of America in
effect on the date of determination; and (b) foreign currency shall be converted
at the currency exchange rates in effect as of the business day immediately
preceding the date of determination as such rates are quoted in the Wall Street
Journal or, if no longer quoted in the Wall Street Journal, as quoted by the
Bank of America. At the beginning of Year 2 and at the beginning of each and
every Year thereafter, the amount of the Compensation Threshold shall be
increased or decreased for each country included

<PAGE>
 
within the Territory by the amount by which the consumer price index (or its
closest equivalent in such country) for the applicable country as a whole for
the preceding Year has increased or decreased. Licensee shall make all
determinations regarding applicable currency exchange rates, applicable consumer
price indices (and applicable equivalent indices, if necessary) and increases or
decreased caused by changes in the consumer price indices (and applicable 
equivalent indices, if necessary) in good faith, and all such determinations
shall be binding and conclusive upon Licensor for all purposes absent mistake or
manifest fraud by Licensee.

     9.   "Confidential Information" means all proprietary and confidential
information regarding the Licensor or Licensee, as applicable, their
subsidiaries and Affiliates, and their businesses, clients, and personnel,
including, without limitation: (a) client lists, client prospects, and business
development information; (b) company lists, profiles and reports, position
specifications, salary structures, and engagement information; (c) source lists,
executive lists, and candidate lists, profiles and reports; (d) candidate
resumes, appraisals, compensation information, and reference reports; (e) search
executive methodologies; (f) structure, operations, pricing, financial and
personnel information; g) information databases (including information
contained therein either individually or in the aggregate), and assessments,
analysis and studies developed exclusively by or for the benefit of the Licensor
or Licensee, as applicable; (h) plans, designs, inventions, formulas, research
and technology developed by or for the benefit of the Licensor or Licensee, as
applicable; (i) personal histories or resumes, employment information, business
information, business secrets of clients and candidates; (j) trade secrets of
the Licensor or Licensee, as applicable; (k) plans, prospects, policies,
practices, and procedures of the Licensor or Licensee, as applicable, which are
not generally known in the industry; and (l) all other proprietary information
of Licensor or Licensee, as applicable, of every nature and source. The term
"Confidential Information" does not include any information which: (A) is or
becomes generally available to the public through no breach of this Agreement or
any other agreement to which the Licensor or Licensee, as applicable, is a
party; (B) was received from a third party free to disclose such information
without restriction; (C) is approved for release in writing by the Board of
Directors or general partners of the Licensee or Licensor, as applicable,
subject to whatever conditions are imposed by the Board or general partners, as
applicable; (D) is required by law or regulation to be disclosed, but only to
the extent necessary and only for the purpose required; or (E) is disclosed in
response to a valid order of a court or other governmental body, but only to the
extent necessary and for the purpose required, if and only if, the Licensor or
Licensee, as applicable, is first notified of the order and are permitted to
seek an appropriate protective order against public disclosure of such
information.

     10.  "Copyright Application(s)" shall mean any and all applications for 
copyright filed after the Agreement Date by Licensor or Licensor which relates 
to any portion of the Licensed Material.

     11.  "Copyright Registration(s)" shall mean (a) the copyright registrations
listed in Exhibit F annexed hereto ("Existing Copyright Registrations") and (b)
any and all copyright registrations received as a result of any Copyright
Application ("Future Copyright Registrations").

     12.  "Costs And Expenses" means the cost to take depositions, the cost to 
arbitrate a dispute, if applicable, and the costs and expenses of travel and 
lodging incurred with respect to an Action Or Proceeding.

     13.  "Enhancements" shall mean all additions, improvements, modifications
or amendments made to the Licensed Material in connection with the Business,
including, without limitation, all assessments included in the Licensee
Material, all feedback sheets to individual candidates and client companies,
training material and promotional material; provided, however, that for the
purposes of this Agreement, Enhancements developed by Licensor exclusively for
another Person other than Licensee which is wholly paid for by, or exclusively
developed for, such other Person shall not be included within the definition of
Enhancements or Licensed Materials

     14. "KFI Competitor" shall have the same meaning as "Company Competitor."

     15.  "Launch Date" shall mean the date on which the on-line internet 
recruiting, executive search and job placement service is first launched by
Licensee on other than a test basis.

                                      -2-



<PAGE>
 
     16.  "Person" means any individual, firm, corporation, trust, partnership 
(limited or general), limited liability company, sole proprietorship or 
association.

     17.  "Placement Revenues" shall mean the gross revenues actually received 
by Licensee from client companies in connection with the placement of 
individuals assessed with the Licensed Materials, and, with respect to any 
Permitted Sublicensee, shall include the gross revenues, if any, actually 
received by the Permitted Sublicensee from client companies in connection with
the placement of individuals assessed with the Licensed Materials.

     18.  "Prevailing Party" means the party who is determined to prevail by the
court after its consideration of all damages and equities in an Action or 
Proceeding, whether or not the Action or Proceeding proceeds to final judgment.
The court shall retain the discretion to determine that no party is the 
Prevailing Party in which case no party shall be entitled to recover its Costs 
and Expenses.

     19.  "Quarter" shall have the following meaning: The first "Quarter" shall 
commence on the Launch Date and shall terminate on the last day of the third 
full calendar month following the Launch Date. The next "Quarter" shall commence
on the first day of the calendar month following the end of the first 
Quarter and shall end on the last day of the third full calendar month following
the end of the first Quarter. Each "Quarter" thereafter shall commence on the 
first day of the calendar month following the end of the prior Quarter and shall
end on the last day of the third full month following the end of such prior 
Quarter.

     20.  "Royalties" shall mean the Annual License Fees, Culture Profile Fees,
Job Profile Fees, Quarterly Placement Fees and Registration Fee Royalties 
payable hereunder by Licensee to Licensor, collectively.

     21.  "Territory" shall mean the entire universe and any and all portions 
thereof.

     22.  "Trademark Application(s)" shall mean any and all applications for a 
trademark, service mark or tradename filed by Licensor or Licensee after the 
Agreement Date which relate to Licensor or utilize any portion of the Licensed 
Material.

     23.  "Trademark Registration(s)" shall mean (a) the trademark registrations
listed on Exhibit E annexed hereto (the "Existing Trademark Registrations"), and
(b) any registration for a trademark, service mark or tradename received
pursuant to any Trademark Application ("Future Trademark Registrations").

     24.  "Year 1" shall commence on the Launch Date and shall terminate on the
day before the first anniversary of the Launch Date. Licensee shall notify
Licensor in writing of the Launch Date within ten (10) business days thereafter.
Each "Year" thereafter shall commence on the anniversary date of the
commencement of the prior Year and end on the day before the anniversary date of
said commencement date.

                                      -3-


<PAGE>
 
                       DESCRIPTION OF LICENSED MATERIAL

StyleView: Role Style Index
StyleView: Operating Style
Career View: Career Concept Questionnaire - Ideal Version
Culture View: Organizational Career Culture Survey
Task View: Job Profiling Form - 1
All translations of the foregoing for use in languages other than United 
States English created or developed by Licensor as of the date of the Agreement
All feedback reports and sheets for candidates and client companies detailing
the results of decision styles assessments based on the StyleView instruments
and career motives assessments based on the CareerView instrument.
All training manuals and materials related to foregoing
All promotional materials related to foregoing
All Trademarks pertaining to the foregoing



                                   Exhibit A
                                   ---------
     





<PAGE>
 
                       SHS PERMITTED BUSINESS ACTIVITIES
                       ---------------------------------

SHS generally may use the Licensed Materials in its discretion pursuant to its 
license with Licensor. However, with respect to that segment of the Business 
covered by the Exclusive License only, SHS shall restrict its use of the 
Licensed Material for the placement of professional and/or executives in 
positions which involve 80% or more Healthcare Information Systems (HIS) 
responsibilities. Without in any way limiting the scope of the foregoing, the 
following is a list of certain typical placements make by SHS which shall 
constitute SHS Permitted Business Activities:

                           HIS VENDOR ORGANIZATIONS

This is their only business and placements include any level for the placed 
professional within such types of organizations.

                           CONSULTING ORGANIZATIONS

Consultants, Sr. Consultants, Managers, Sr. Managers, Directors, VP's, 
Partners, and Associate Partners that typically:

          Evaluate HIS
          Select HIS
          Install/Implement HIS
          Project Manage HIS
          Supervise and/or create Operations respective to HIS 
          Supervise and/or create Process and Strategy respective to HIS
          Play instrumental roles with respect to Integrated Delivery Systems
          Play instrumental roles with respect to Managed Care & HIS     


                             PROVIDER ORGANIZATIONS

CIO's, Directors of HIS, Project Managers of HIS, Installation / Implementation
professionals, Program Managers of HIS, Integrated Delivery Systems
Professionals and other professionals and/or executives specializing in a HIS
function that typically serve in the following types of settings:

          Hospitals & Hospital Chains
          Physician Groups
          Clinics
          Home Health Organizations


                          MANAGED CARE ORGANIZATIONS

HMO's, MSO's,IPO's, PPO's, Insurance Companies, Independent Physician
Organizations and the like that typically make placements for the following
typical positions:

          CIO & other specific HIS executives 
          Director & IS Leads
          Program & Project Managers
          Documentation Specialists 
          Engineers & Programmers 





                                   Exhibit B
                                   ---------   
 

<PAGE>
 
                         ACKNOWLEDGMENT AND AGREEMENT
                         -----------------------------

WHEREAS, Sorkin Human Systems, a joint venture between Licensor and Sorkin & 
Associates, a California Corporation ("S&A"), acknowledges and agrees in favor 
of Licensee as follows (all capitalized terms, if not defined herein, shall have
the meaning set forth in that certain License Agreement between Self Discovery 
Group, LLC and Korn/Ferry International Futurestep, Inc. dated of even date 
herewith ["License Agreement"]):

a)   SHS generally may use the Licensed Material in its discretion pursuant to
     its license with Licensor ("SHS License"). However, with respect to that
     segment of the Competitive Business which involves job placements with
     first year compensation equal to, or in excess of, the Compensation
     Threshold only, SHS agrees to restrict its use of the Licensed Material to
     the healthcare industry as specified in Exhibit B annexed to the License
     Agreement.

b)   If at any time during the term of the SHS License, more than fifty percent
     (50%) of the voting interests of SHS is owned of record or beneficially,
     directly or indirectly, by a Company Competitor or a KFI Competitor or if
     any time during the term of the SHS License, SHS is otherwise controlled by
     a Company Competitor or a KFI Competitor, then the SHS License, with
     respect to that segment of the Competitive Business which involves job
     placements with first year compensation equal to, or in excess of, the
     Compensation Threshold only, shall automatically terminate and be of no
     further force or effect without any further notice or action on the part of
     Licensor.

c)   With respect to that segment of the Competitive Business which involves job
     placements with first year compensation equal to, or in excess of, the
     Compensation Threshold only, SHS may not assign or transfer or sublicense
     any of its rights in or to the SHS License or any other license or
     authority given by Licensor to SHS with respect to the Licensed Material or
     any portion thereof (with respect to that segment of the Competitive
     Business which involves job placements with first year compensation equal
     to, or in excess of, the Compensation Threshold only), directly or
     indirectly, without the prior written consent of the Licensee, which
     consent may be withheld or delayed in the Licensee's sole and absolute
     discretion.

d)   SHS shall not permit or authorize any "Company Competitor" or any "KFI
     Competitor" to use or have access to any of the Licensed Material with
     respect to that segment of the Competitive Business which involves job
     placements with first year compensation equal to, or in excess of, the
     Compensation Threshold.

e)   SHS shall not claim to have a partnership or strategic alliance or other
     relationship with Licensee and shall not publicize the fact that Licensee
     or KFI is using the Licensed Material. Licensee and KFI shall not claim to
     have a partnership or strategic alliance or other relationship with SHS and
     shall not publicize the fact that SHS is using the Licensed Material.

f)   SHS agrees that the provisions of this Acknowledgment and Agreement shall
     be specifically enforceable by Licensee, and that Licensee shall be
     entitled to obtain equitable relief to prevent violation by SHS of any
     provision of this Acknowledgment and Agreement.

SORKIN HUMAN SYSTEMS,
a California joint venture

By:   Self Discovery Dynamics, LLC,               By:  Sorkin & Associates, Inc.
      a California limited liability company           a California corporation


      By:  __________________________                  By: ___________________
      Its: __________________________                  Its:___________________


      By:  __________________________                 
      Its: __________________________                 


                                   Exhibit C
                                   ---------

<PAGE>
 
                             CURRENT TRANSLATIONS
                             --------------------



                                   Exhibit D
                                   ---------


<PAGE>
 
                           TRADEMARK REGISTRATIONS
                           -----------------------

                                     None



                                   Exhibit E
                                   ---------

<PAGE>
 
                            COPYRIGHT REGISTRATIONS
                            -----------------------

                                     None



                                   Exhibit F
                                   ---------



<PAGE>
 
                           STOCK PURCHASE AGREEMENT
                           ------------------------ 

          This STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of 
the 2nd day of June, 1995 by and among Korn/Ferry International, a California 
corporation (the "Company"), Richard M. Ferry, as an individual ("Ferry"), Henry
B. Turner and Peter W. Mullin (collectively, the "Trustee"), Trustees of the
Richard M. Ferry and Maude M. Ferry 1972 Children's Trust (the "Trust"),
California Community Foundation and Richard M. Ferry Co-Trustees, (collectively,
the "Co-Trustees") and the California Community Foundation (the "Foundation"),
with respect to the following facts:

          A.   Ferry currently owns and the Trust may, at Ferry's death, own 
shares of common stock in the Company (this common stock and any other stock in 
the Company, other than shares of Retirement Stock, acquired by either Ferry or 
the Trust after the date of this Agreement is referred to collectively as the 
"Ferry Stock"). Ferry also currently owns shares of the Company's Series A 
Preferred Stock (referred to collectively as the "Preferred Stock"). In 
addition, Ferry may, at his death, own shares of common stock in the Company 
which he acquired as part of the termination and distribution of the Korn/Ferry 
International Retirement Plan (referred to collectively
 as the "Retirement 
Stock").

          B.   Ferry, the Trust, the Co-Trustees and the Foundation each hold a 
nontransferable subordinated promissory note, issued pursuant to the Purchase 
Agreement dated December 31, 1994 as part of the Korn/Ferry Stock Sweep Program 
(referred to collectively as the "Sweep Notes"). In addition, Ferry may, at his 
death, hold a nontransferable subordinated promissory note issued pursuant to 
the Stock Repurchase Agreement for Ferry's Retirement Stock (the "Retirement 
Note").

          C.   The Company is the owner of certain life insurance policies 
(referred to individually as an "Insurance Policy" and collectively as the 
"Insurance Policies") insuring against Ferry's death, which are described in the
attached Schedule 1.

          D.   The Company has agreed to maintain the Insurance Policies in full
force and effect, and the Company has agreed to purchase, and Ferry and the 
Trust have agreed to sell, all of the Ferry Stock then owned by Ferry and the 
Trust upon Ferry's death and to use the proceeds from the Insurance Policies for
such purchase.

          E.   After purchasing all of the Ferry Stock, the Company has further 
agreed to prepay to the extent of any remaining proceeds from the Insurance 
Policies any amounts due under the Sweep Notes upon Ferry's death and to use the
remaining proceeds from the Insurance Policies for such prepayment.

<PAGE>
 
          F.   After prepayment of amounts due under the Sweep Notes, the 
Company has further agreed to purchase, and Ferry, the Trust, the Co-Trustees 
and the Foundation have agreed to sell, to the extent of any remaining proceeds 
from the Insurance Policies all of the Preferred Stock then owned by Ferry, the 
Trust, the Co-Trustees and the Foundation upon Ferry's death and to use the 
remaining proceeds from the Insurance Policies for such purchase. 

          G.   After purchasing all of the Preferred Stock, the Company has 
further agreed to purchase, and Ferry has agreed to sell, to the extent of any 
remaining proceeds from the Insurance Policies, the Retirement Stock then owned 
by Ferry upon Ferry's death, if any, and to use the remaining proceeds from the 
Insurance Policies for such purchase.

          H.   After purchasing all of the Retirement Stock, if any, the 
Company has further agreed prepay to the extent of any remaining proceeds from 
the Insurance Policies any amounts due under the Retirement Note, if any, upon 
Ferry's death and to use the remaining proceeds from the Insurance Policies for 
such prepayment.

          NOW, THEREFORE, FOR VALUABLE CONSIDERATION, THE PARTIES AGREE AS
FOLLOWS:

          1.   MAINTENANCE OF INSURANCE POLICIES.
               ---------------------------------

               (a)  Payment of Premiums and Other Acts. So long as Ferry or the 
                    ----------------------------------
Trust is a shareholder of the Company and until a complete Shareholder 
Termination (as defined in Paragraph 2(d) (ii) below) occurs, the Company agrees
to pay all premiums, when due, on the Insurance Policies and to do any and all 
other acts required to maintain the Insurance Policies in full force and effect.

               (b)  Notice to Insurance Companies. Immediately upon execution of
                    -----------------------------
this Agreement, the Company will notify the issuing insurance company or 
companies of the Insurance Policies (i) to provide the earliest possible prior 
written notice to Ferry and the Trustee of the nonpayment of any premiums when 
due and/or the lapse (for nonpayment of premiums or otherwise) with respect to 
any Insurance Policy issued by it and (ii) to pay the death proceeds under any 
Insurance Policy issued by it only upon receipt of joint authorization by the 
Company and Ferry's executor or legal representative (or, if no executor or 
legal representative is appointed, the Trustee). The purpose of this notice is 
to ensure that (i) the Company maintains the Insurance Policies in full force 
and effect and (ii) the death proceeds of the Insurance Policies will be used in
accordance with the provisions of this Agreement. A form of this notice is 
attached as Exhibit A.

                                       2


<PAGE>
 
          2.   PURCHASE OF THE INSURANCE POLICIES.
               ---------------------------------

               (a)  Right to Purchase. Ferry and/or the Trust (in either event, 
                    -----------------   
as used in this paragraph, a "Purchaser") shall be permitted to purchase an
Insurance Policy upon either an "Insurance Default" or a "Shareholder
Termination" or at any time when there is "Excess Insurance." If there is an
Insurance Default, the Purchaser's right of purchase shall continue until the
earlier of the time the Default has been cured or the Insurance Policy is no
longer in full force and effect, but in no event for less than thirty (30) days.
If there is a Shareholder Termination, the right of purchase shall continue so
long as the Insurance Policy remains in full force and effect. If there is
Excess Insurance, the right of purchase shall continue so long as there
continues to be Excess Insurance.

               (b)  Purchase Price; Terms. The purchase price for each Insurance
                    ---------------------    
Policy purchased shall be the "Insurance Policy Book Value" and shall be paid in
cash. The determination as to which of Ferry or the Trust shall have the right
to purchase an Insurance Policy upon the occurrence of either an Insurance
Default or a Shareholder Termination or at any time when there is Excess
Insurance shall be a matter between Ferry and the Trust, shall be of no concern
to the Company, and the Company shall only be required to sell an Insurance
Policy if it receives a concurrent and unanimous direction from Ferry and the
Trust.

               Ferry or the Trust may purchase from the Company any Insurance 
Policy which is in Default or all or any of the Insurance Policies upon a 
Shareholder Termination. If there is Excess Insurance, the Insurance Policies 
must be purchased in the order of the most recently obtained policy being 
purchased first and the first policy obtained being purchased last; provided 
however, that there must be at least one dollar ($1) of Excess Insurance from 
the remaining Insurance Policies after any such purchase. If Ferry or the Trust 
purchases an Insurance Policy, the company shall be relieved from, and Ferry or 
the Trust shall assume, all obligations for any policy loans on the Insurance 
Policy.

               (c)  Non-Exclusive Remedy. In the event of an Insurance Default,
                    ---------------------
the Purchaser's right to purchase the referenced Insurance Policy shall be in 
addition to any other remedies that the Purchaser may have against the Company 
as a result of the Insurance Default.

               (d)  Definitions. As used in this Agreement, the following 
                    -----------
definitions shall apply:

                    (i)  An "Insurance Default" means the Company's failure to 
pay a premium when due or to do any other act required to maintain the Insurance
Policy in full force and effect.

                                       3

<PAGE>
 
                    (ii)   A "Shareholder Termination" means that date when (A) 
neither Ferry nor the Trust owns any shares of stock in the Company, (B) all 
installment payments due from the Company to Ferry or the Trust for the purchase
of any such shares of stock have been paid in full and (C) all installment 
payments due from the Company to Ferry or the Trust under the Sweep Notes or the
Retirement Note have been paid in full.

                    (iii)  "Excess Insurance" means that the net death proceeds
payable on Ferry's death of the Insurance Policies held by the Company exceeds 
one hundred twenty percent (120%) of the sum of (A) the purchase price which 
would be payable by the Company for the Ferry Stock pursuant to paragraph 3 if
Ferry died on the determination date, (B) the current amount remaining unpaid on
the Sweep Notes as of the determination date, (C) the purchase price which would
be payable by the Company for the Preferred Stock pursuant to paragraph 5 if
Ferry died on the determination date, (D) the purchase price which would be
payable by the Company for the Retirement Stock pursuant to paragraph 6 if Ferry
died on the determination date, and (E) the current amount remaining unpaid on
the Retirement Note, if any, as of the determination.

                    (iv)   The "Insurance Policy Book Value" means the 
cumulative premiums paid to date by the Company for such Insurance Policy (which
premium amount will not include any premiums paid by the Company and allocated 
to Ferry as income), less the aggregate of any loan(s), together with accrued 
but unpaid interest, to the Company against such Insurance Policy.

          3.   PURCHASE OF FERRY STOCK UPON DEATH OF FERRY. Upon Ferry's death,
               -------------------------------------------
the Company agrees to purchase, and Ferry and the Trust agree to sell, all of
the Ferry Stock owned by Ferry and the Trust at the time of Ferry's death. The
purchase price shall be the Value of each share of the Company's stock of the
class being sold by Ferry and the Trust, multiplied by the number of shares of
the class being sold. "Value" means, for purposes of determining the price at
which a Share will be purchased pursuant to the Agreement, (a) the Book Value of
such Share as of the end of the Fiscal Year immediately preceding such purchase,
or (b) such other value or formula for determining value as may be specified
from time to time after the date hereof in a resolution adopted by a majority of
the shareholders of the Company as the value or formula for determining Value to
be used in connection with any sales and purchases of Shares by the Company,
including without limitation, sales and purchases pursuant to the equity plans
adopted by the Company 1991 (the Executive Participation Program, the Foreign
Executive Participation Program and the 1991 Executive Stock Purchase Plan,
collectively referred to herein as the "Equity Plans"). "Book Value" means the
book value of a Share, as determined in accordance with generally accepted
accounting principles applied in accordance with the usual accounting practices
of the Company. The purchase price shall be paid in cash (without interest) to
the extent of proceeds from the Insurance Policies, within five (5) days after
collection of any such proceeds. If the proceeds from the Insurance Policies

                                       4


  

<PAGE>
 
are insufficient to pay for the shares purchased, the balance owing shall be 
paid to Ferry and the Trust, in cash (together with interest per annum from the 
date of Ferry's death at a rate equal to Bank of America's reference rate on the
date of Ferry's death), within six (6) months after Ferry's death. All payments 
shall be pro-rated between the Trust and Ferry, unless they agree otherwise. 
Ferry and the Trust shall, if required by the Company, concurrently with 
delivery of the certificate(s) representing the Ferry Stock being sold to the 
Company, deliver to the Company a written representation and warranty from each 
of them that the seller owns such Ferry Stock free and clear of any liens or 
encumbrances and is lawfully empowered to transfer such Ferry Stock to the 
Company. As used in this paragraph, Ferry shall mean, where applicable, the 
executor, administrator or other legal representative of Ferry's estate.

          4.   PREPAYMENT OF SWEEP NOTES UPON DEATH OF FERRY. The Company 
               ---------------------------------------------
agrees that following Ferry's death, the Company shall prepay all the amounts 
due, if any, under the Sweep Notes to the extent of any remaining proceeds from 
the Insurance Policies after the Company's Ferry Stock purchase pursuant to 
paragraph 3. All such prepayments will be made in accordance with the provisions
of the Sweep Notes and shall be paid within sixty (60) days following the death
of Ferry or within five (5) days after the Company's Ferry Stock purchase
pursuant to paragraph 3, whichever is later. If the proceeds from the Insurance
Policies are insufficient to prepay all the Sweep Notes, any remaining accrued
and unpaid interest and any remaining scheduled installment payments shall
continue to be subject to the terms and conditions of the Sweep Notes. All
prepayments made under this Agreement shall be pro-rated between Ferry, the
Trust, the Co-Trustees and the Foundation, unless they agree otherwise. Ferry,
the Trust, the Co-Trustees and the Foundation shall, if required by the Company,
concurrently with delivery of the Sweep Note(s), deliver to the Company a
written representation and warranty from each of them that the seller owns such
Sweep Note free and clear of any liens or encumbrances and is lawfully empowered
to transfer such Sweep Note to the Company. As used in this paragraph, Ferry
shall mean, where applicable, the executor, administrator or other legal
representative of Ferry's estate.

          5.   PURCHASE OF PREFERRED STOCK UPON DEATH OF FERRY. Upon Ferry's 
               -----------------------------------------------
death, the Company agrees to purchase, and Ferry, the Trust, the Co-Trustees and
the Foundation agree to sell, all of the Preferred Stock owned by Ferry, the 
Trust, the Co-Trustees and the Foundation at the time of Ferry's death. The 
purchase price shall be determined in accordance with the purchase price as 
provided in the Purchase Agreement dated December 31, 1994 as part of the 
Korn/Ferry Stock Sweep Program. The purchase price shall be paid in cash 
(without interest) to the extent of any remaining proceeds from the Insurance 
Policies after the Company's Ferry Stock purchase pursuant to paragraph 3 and 
Sweep Notes prepayment pursuant to paragraph 4, within five (5) days after the 
prepayment of all amounts due under the Sweep Notes pursuant to paragraph 4. If 
the proceeds from the Insurance

                                       5

<PAGE>
 
Policies are insufficient to pay for all the Preferred Stock shares purchased, 
any remaining shares of Preferred Stock shall continue to be subject to the 
terms and conditions of the Purchase Agreement dated December 31, 1994 as part 
of the Korn/Ferry Stock Sweep Program. All payments made under this Agreement 
shall be pro-rated between Ferry, the Trust, the Co-Trustees and the Foundation,
unless they agree otherwise. Ferry, the Trust, the Co-Trustees and the 
Foundation shall, if required by the Company, concurrently with delivery of the 
certificate(s) representing the Preferred Stock being sold to the Company, 
deliver to the Company a written representation and warranty from each of them 
that the seller owns such Preferred Stock free and clear of any liens or 
encumbrances and is lawfully empowered to transfer such Preferred Stock to the 
Company. As used in this paragraph, Ferry shall mean, where applicable, the 
executor, administrator or other legal representative of Ferry's estate.

          6.   PURCHASE OF RETIREMENT STOCK UPON DEATH OF FERRY. Upon Ferry's
               ------------------------------------------------
death, the Company agrees to purchase, and Ferry agrees to sell, all of the 
Retirement Stock owned by Ferry at the time of Ferry's death. The purchase price
shall be determined in accordance with the Stock Repurchase Agreement for shares
of Ferry's Retirement Stock. The purchase price shall be paid in cash (without 
interest) to the extent of any remaining proceeds from the Insurance Policies 
after the Company's Ferry Stock purchase pursuant to paragraph 3, Sweep Notes 
prepayment pursuant to paragraph 4 and Preferred Stock purchase pursuant to 
paragraph 5, within five (5) days after the prepayment of all amounts due under 
the Sweep Notes pursuant to paragraph 4. If the proceeds from the Insurance 
Policies are insufficient to pay for all the Retirement Stock shares purchased, 
any remaining shares of Retirement Stock shall continue to be subject to the 
terms and conditions of the Stock Repurchase Agreement for shares of Ferry's 
Retirement Stock. Ferry shall, if required by the Company, concurrently with 
delivery of the certificate(s) representing the Retirement Stock being sold to 
the Company, deliver to the Company a written representation and warranty that 
he owns such Retirement Stock free and clear of any liens or encumbrances and is
lawfully empowered to transfer such Retirement Stock to the Company. As used in 
this paragraph, Ferry shall mean, where applicable, the executor, administrator 
or other legal representative of Ferry's estate.

          7.   PREPAYMENT OF RETIREMENT NOTE UPON DEATH OF FERRY. The Company 
               -------------------------------------------------
agrees that within ninety (90) days following Ferry's death or within five (5) 
days after the Company's Retirement Stock purchase pursuant to paragraph 6, 
whichever is later, the Company shall prepay all the amounts due, if any, under 
the Retirement Note to the extent of any remaining proceeds from the Insurance 
Policies after the Company's Ferry Stock purchase pursuant to paragraph 3, Sweep
Notes prepayment pursuant to paragraph 4, Preferred Stock purchase pursuant to 
paragraph 5 and Retirement Stock purchase to paragraph 6. Unless otherwise 
provided by the Retirement Note, all such prepayments will be applied first to 
accrued and unpaid interest and then to

                                       6

<PAGE>
 
scheduled installments of principal in the order of maturity. If the proceeds
from the Insurance Policies are insufficient to prepay all of the Retirement
Note, any remaining accrued and unpaid interest and any remaining scheduled
installment payments shall continue to be subject to the terms and conditions of
the Retirement Note. Ferry shall, if required by the Company, concurrently with
delivery of the Retirement Note, deliver to the Company a written representation
and warranty that he owns such Retirement Note free and clear of any liens or
encumbrances and is lawfully empowered to transfer such Retirement Note to the
Company. As used in this paragraph, Ferry shall mean, where applicable, the
executor, administrator or other legal representative of Ferry's estate.

          8.   IMPOSSIBILITY OF COMPANY'S PERFORMANCE.
               -------------------------------------- 

               (a)  Stock Purchase. If, at Ferry's death, it is not legally 
                    --------------     
possible for the Company to purchase all of the shares of stock as provided by
this Agreement, the Company shall purchase as many of the shares as it is
permitted to purchase at the time of Ferry's death. After the Company ceases to
be legally disabled from purchasing such shares, the Company shall purchase all
remaining shares of stock as soon as administratively feasible in accordance
with the provisions of this Agreement. The purchase price for such remaining
shares shall be the greater of:
                    -------    

                    (i)  The purchase price for such shares as determined as of
the date of Ferry's death in accordance with the provisions of this Agreement,
or

                    (ii) The purchase price for such shares as determined as of
the date of the purchase of any remaining shares of stock in accordance with the
provisions of this Agreement.

               (b)  Promissory Note Prepayment. If, at Ferry's death, it is not
                    --------------------------                                 
legally possible for the Company to prepay any of the amounts due under the
Sweep Notes or the Retirement Note as provided by this Agreement, the Company
shall prepay as much of the amounts due as it is permitted to prepay at the time
of Ferry's death. After the Company ceases to be legally disabled from prepaying
amounts due under the Sweep Notes or the Retirement Note, the Company shall
prepay all remaining amounts as soon as administratively feasible in accordance
with the provisions of this Agreement.

          9.   MISCELLANEOUS.
               ------------- 

               (a)  Integration. This Agreement constitutes the entire 
                    -----------  
agreement and understanding of the parties with respect to the transactions
contemplated hereby, and supersedes all prior agreements, arrangements and
understandings related to the subject matter hereof, including, but not limited
to, that certain letter dated May 9, 1991 from the Company to Ferry. No
representation, promise, inducement or statement of intention has been made by
any of the parties hereto not embodied in this

                                       7

<PAGE>
 
Agreement or in the documents referred to herein, and no party shall be bound
by, or liable for, any alleged representation, promise, inducement or statements
of intention not set forth or referred to herein.

               (b)  Governing Law, Jurisdiction and Venue. This Agreement 
                    --------------------------------------     
shall be governed by and construed and enforced in accordance with, the laws of
the State of California.

               (c)  Binding Effect. All of the terms, covenants, 
                    --------------    
representations, warranties and conditions herein shall be binding upon, and
inure to the benefit of, and be enforceable by, the parties hereto, and their
respective successors, assignees and delegatees, including, but not limited to,
successor corporations.

               (d)  Amendment and Waiver. This Agreement may not be amended, 
                    --------------------  
modified, superseded or cancelled, nor may any of the terms, covenants,
representations, warranties or conditions hereof be waived, except by a written
instrument executed by the party against whom such amendment, modification,
supersedure, cancellation or waiver is charged. The failure of any party at any
time or times to require performance of any provision hereof shall in no manner
affect the right at a later time to enforce the same. No waiver by any party of
any condition, or of any breach of any term, covenant, representation, or
warranty contained herein, in any one or more instances, shall be deemed to be
or construed as a further or continuing waiver of any such condition or breach
or waiver of any other condition or of any breach of any other term, covenant,
representation or warranty.

               (e)  Construction. The captions and headings contained herein 
                    ------------ 
are for convenient reference only, and shall not in any way affect the meaning
or interpretation of this Agreement. Notwithstanding any rule or maxim of
construction to the contrary, any ambiguity or uncertainty in this Agreement
shall not be construed against either party based upon authorship of any of the
provisions hereof.

               (f)  Counterparts. This Agreement may be executed in two or more
                    ------------                                               
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.

               (g)  Attorneys' Fees. In the event that any party shall bring 
                    ---------------    
an action in connection with the performance, breach or interpretation of this
Agreement, or in any action related to the transactions contemplated hereby, the
prevailing party in such action, as may be determined by the court or other
tribunal having jurisdiction, shall be entitled to recover from the losing party
in such action, also as determined by the court or other tribunal having
jurisdiction, all actual costs and expenses of such litigation, including
attorneys' fees, court costs, costs of investigation, accounting, and other
costs reasonably related to such litigation, in such amount as may be determined
in the

                                       8

<PAGE>
 
discretion of the court or other tribunal having jurisdiction of such action.

               (h)  Severability. In the event that any provision hereof is 
                    ------------       
determined to be illegal or unenforceable, such determination shall not affect
the validity or enforceability of the remaining provisions hereof, all of which
shall remain in full force and effect.

               (i)  Further Documents. The parties each hereby covenant and 
                    -----------------       
agree that, from time to time, after the date hereof, at the reasonable request
of any party, and without further consideration, they will execute and deliver
such other documents and take such other action as may be reasonably required to
carry out in all respects the transactions contemplated and intended by this
Agreement.

               (j)  Notices. All notices, demands, and other communications 
                    -------     
required or permitted to be given hereunder shall be deemed to have been duly
given and received if in writing and delivered personally or seventy-two (72)
hours after deposit in the United States mail, first class, postage prepaid,
registered or certified mail, return receipt requested, addressed as set forth
next to the signature lines hereto. Any party may change the address to which
communications are to be directed by giving written notice to the other parties
in the manner provided for herein.

               (k)  Gender and Tense. As used in this Agreement, the masculine,
                    ----------------                                           
feminine and neuter gender, and the singular or plural number, shall each be
deemed to include the other or others whenever the context so indicates.

               (1)  Exhibits. All exhibits referred to in this Agreement are 
                    --------  
attached to this Agreement and are incorporated into this Agreement by the
reference to same.

               (m)  Parties in Interest. Nothing in this Agreement, whether 
                    -------------------   
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties to it and their
respective successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third persons to any
party to this Agreement, nor shall any provision give any third persons a right
of subrogation or action over or against any party to this Agreement.

               (n)  Authority. The Company is authorized to enter into this 
                    ---------   
Agreement by resolutions of its Board of Directors adopted on May 1, 1992 and
June 2, 1995.

                                       9

<PAGE>
 
          IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first above written.


                                             KORN/FERRY INTERNATIONAL,
                                             a California corporation

Address:
Korn/Ferry International
1800 Century Park East                       By:/s/ Peter L. Dunn
Suite 900                                       ----------------------------  
Los Angeles, CA 90067                        PETER L. DUNN    



                                             By:/s/ Norman A. Glick
                                                ----------------------------
                                             NORMAN A. GLICK


Address:
Korn/Ferry International
1800 Century Park East                       /s/ Richard M. Ferry
Suite 900                                    -------------------------------
Los Angeles, CA 90067                        RICHARD M. FERRY  
                           


                                             RICHARD M. FERRY AND MAUDE M.
                                             FERRY 1972 CHILDREN'S TRUST


Address:                                     By:/s/ Henry B. Turner
6116 Yucca                                      ----------------------------  
Paradise Valley, AZ 85253                    HENRY B. TURNER, Trustee of the
                                             Richard M. Ferry and Maude M. Ferry
                                             1972 Children's Trust


Address:                                     By:/s/ Peter W. Mullin
Mullin Consulting, Inc.                         ----------------------------  
644 S. Figueroa Street                       PETER W. MULLIN, Trustee of the   
Los Angeles, CA 90017                        Richard M. Ferry and Maude M. Ferry
                                             1972 Children's Trust


                                             CALIFORNIA COMMUNITY
                                             FOUNDATION AND RICHARD M.
                                             FERRY CO-TRUSTEES

Address:                                     By: /s/Richard M. Ferry
Korn/Ferry International                        ----------------------------
1800 Century Park East                       RICHARD M. FERRY, Co-Trustee  
Suite 900                                   
Los Angeles, CA 90067  

                                      10

<PAGE>
 
Address:                                     By:/s/ Jack Shakely
California Community Foundation                 ----------------------------
606 South Olive St., Suite 2400              JACK SHAKELY, Co-Trustee   
Los Angeles, CA 90014            
                                 
                                             

                                             CALIFORNIA COMMUNITY
                                             FOUNDATION


Address:                                     By:/s/ Jack Shakely
California Community Foundation                 ----------------------------
606 South Olive St., Suite 2400              JACK SHAKELY, President
Los Angeles, CA 90014                        -------------------------------
                                             [Print Name]     Title 
                                

                           RATIFICATION AND CONSENT
                           ------------------------

          I, MAUDE M. FERRY, the wife of RICHARD M. FERRY, hereby certify that I
have read the foregoing Agreement and that I hereby approve said Agreement and
agree to be bound thereby.


                                             /s/ Maude M. Ferry
                                             -------------------------------
                                             MAUDE M. FERRY

                                       11

<PAGE>
 
                                  SCHEDULE 1
                                  ----------


                  LIFE INSURANCE POLICIES OWNED BY KORN/FERRY
                  -------------------------------------------
                  INTERNATIONAL INSURING AGAINST THE DEATH OF
                  -------------------------------------------
             RICHARD M. FERRY RELATING TO STOCK PURCHASE AGREEMENT
             -----------------------------------------------------


<TABLE> 
<CAPTION> 
                                           Net Death                                                  Cumulative     
           Policy     Annual      Face      Benefit   Effective    Gross CV   Loan Bal.    Net CV    Corp. Prem.     
Carrier    Number     Premium    Amount     4/30/95      Date      4/30/95     4/30/95    4/30/95      4/30/95       
- ----------------------------------------------------------------------------------------------------------------     
<S>      <C>          <C>      <C>         <C>        <C>         <C>         <C>        <C>         <C>        
PM       0018419120    11,260    500,000     645,411   2/06/75      271,521   160,432      111,089      217,002
PM       0019514080     5,364    216,000     333,530   3/25/78      105,609     5,364      100,245       87,474
PM       0020181960    21,131    942,000   1,061,238  11/01/80      242,880   127,566      115,314      238,873
PM       0121632380    52,626  1,712,000   1,897,032   6/01/86      389,689         0      389,689      473,701
PM       1A22069620    28,815  1,348,779   1,506,831   2/01/89      172,879         0      164,158      195,988
PM       1A22197820    33,175  1,401,744   1,557,696   2/01/90      165,121         0      152,865      196,662
PM       1A22267040    19,675    755,142     827,624   9/19/90       78,314         0       70,432       97,953

                               6,875,665   7,829,362              1,426,013   293,362    1,103,790    1,507,653 
</TABLE>
 

                                      S-1


<PAGE>
 
                                   EXHIBIT A
               [Type on Letterhead of Korn Ferry International]



Ms. Martha Gates
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660

     Re:  Policies Listed on Schedule 1 
          -----------------------------                

Dear Ms. Gates:

          Korn/Ferry International ("KFI") is the owner of certain life
insurance policies issued by Pacific Mutual on the life of Richard M. Ferry
("Ferry") which are identified on Schedule 1 to this letter (hereafter the "PM
Policies").

          We hereby request that you provide the earliest possible prior written
notice of any nonpayment of premiums when due and any lapse (for nonpayment of
premiums or otherwise) with respect to each PM Policy identified on Schedule 1
hereto to Ferry and Henry B. Turner and Peter W. Mullin, who are Trustees of
Ferry's 1972 Children's Trust ("Trust").

          Your notices should be mailed to Messrs. Ferry, Turner and Mullin,
with copies of the notices to Management Compensation Group, at the addresses
set forth below or at any other addresses which they may hereafter furnish to
you in writing:

          FERRY:         Richard M. Ferry
                         Korn/Ferry International
                         1800 Century Park East, Suite 900
                         Los Angeles, CA 90067

          TURNER:        Henry B. Turner
                         6116 Yucca
                         Paradise Valley, AZ 85253

          MULLIN:        Peter W. Mullin
                         Mullin Consulting, Inc.
                         644 S. Figueroa Street
                         Los Angeles, CA 90017

          MULLIN
      CONSULTING,
            INC.:        Linda W. Myers
                         Mullin Consulting, Inc.
                         644 S. Figueroa Street
                         Los Angeles, CA 90017

          KFI, Ferry's executor or other legal representative, or one of the
Trustees of the Trust will provide written notification to you in the event of
Ferry's death. Upon Ferry's

                                       13

<PAGE>
 
death, you are instructed to pay the death proceeds to KFI only upon receipt of
joint authorization by KFI and Ferry's executor or legal representative (or, if
no executor or legal representative is appointed, the Trustees of the Trust).

          The instructions in this letter shall apply to all PM Policies listed
on Schedule 1 to this letter with respect to payment of the proceeds thereof
after Ferry's death, and shall terminate earlier with respect to any policy
listed on Schedule 1 only with Ferry's written consent or upon transfer of the
policy to Ferry during his lifetime.

                                             Sincerely,

                                             KORN/FERRY INTERNATIONAL


                                             By:/s/ Norman A. Glick
                                                ----------------------------

cc: Richard M. Ferry
    Norman A. Glick
    Henry B. Turner
    Peter W. Mullin
    Linda W. Myers

                                       14

<PAGE>
 
                                  SCHEDULE 1
                                  ----------


                  LIFE INSURANCE POLICIES OWNED BY KORN/FERRY
                  -------------------------------------------
                  INTERNATIONAL INSURING AGAINST THE DEATH OF
                  -------------------------------------------
             RICHARD M. FERRY RELATING TO STOCK PURCHASE AGREEMENT
             -----------------------------------------------------


<TABLE> 
<CAPTION> 
                                                Net death                                                       Cumulative    
             Policy      Annual          Face    Benefit     Effective     Gross CV    Loan Bal.      Net CV    Corp. Prem.   
Carrier      Number      Premium        Amount   4/30/95        Date       4/30/95      4/30/95      4/30/95      4/30/95     
- ---------------------------------------------------------------------------------------------------------------------------
<S>        <C>         <C>           <C>        <C>          <C>         <C>           <C>         <C>          <C>  
PM         0018419120     11,260       500,000    645,411      2/06/75     271,521      160,432      111,089       217,002    
PM         0019514080      5,364       216,000    333,530      3/25/78     105,609        5,364      100,245        87,474    
PM         0020181960     21,131       942,000  1,061,238     11/01/80     242,880      127,566      115,314       238,873    
PM         0121632380     52,626     1,712,000  1,897,032      6/01/86     389,689            0      389,689       473,701    
PM         1A22069620     28,815     1,348,779  1,506,831      2/01/89     172,879            0      164,158       195,988    
PM         1A22197820     33,175     1,401,744  1,557,696      2/01/90     165,121            0      152,865       196,662    
PM         1A22267040     19,675       755,142    827,624      9/19/90      78,314            0       70,432        97,953    
                                                                                                                              
                                     6,875,665  7,829,362                1,426,013      293,362    1,103,790     1,507,653     
</TABLE>
 




<PAGE>
 
                                                                   EXHIBIT 10.22

                           REVOLVING LINE AGREEMENT 

     THIS AGREEMENT is made and entered into this 31st day of January, 1997 by 
and between KORN/FERRY INTERNATIONAL (the "Borrower") and 1ST BUSINESS BANK, a 
California banking corporation (the "Bank").

                                   ARTICLE 1

                         AMOUNT AND TERMS OF THE LINE

     Section 1.01. THE REVOLVING LINE. From the date the Borrower has satisfied 
                   ------------------
all conditions precedent as set forth in Article II hereof, to and until
November 30, 1998 (the "MATURITY DATE"), Bank will lend to Borrower an amount up
to but not in excess of Eleven Million Dollars ($11,000,000) outstanding in the
aggregate at any one time (the "REVOLVING LINE") in one or more advances (each
an "Advance"). Within the limits of time and amount and subject to the other
provisions hereof, Borrower may borrow, repay and reborrow all or part of the
Revolving Line in multiple integrals of TWO HUNDRED AND FIFTY THOUSAND DOLLARS
($250,000.00), at any time up until the Maturity Date. The Revolving Line shall
be evidenced by two promissory notes (the "REVOLVING NOTES") which shall be in
substantially the form of Exhibit A. Each Advance, the principal amount thereof,
the interest rate applicable thereto and the unpaid principal balance owing on
the Revolving Notes at any time may be
 evidenced by endorsement on the Notes or
by Bank's internal records, including daily computer print-outs, and such
entries shall be prima facie evidence of the amount of the Revolving Line
outstanding and the terms thereof, but the

<PAGE>
 
failure of the Bank to make any such notation shall not release Borrower from
the obligation to repay amounts borrowed hereunder.

     Section 1.02. STANDBY LETTERS OF CREDIT. The Revolving Line shall include a
                   -------------------------
$3 million sublimit for standby letters of credit to be issued for the 
Borrower's account by the Bank ("Letters of Credit"). Notwithstanding anything 
herein to the contrary, the outstanding principal balance of all Advances plus 
the undrawn face amount of all standby Letters of Credit issued for the 
Borrower's account pursuant hereto plus amounts drawn on letters of credit and 
not yet reimbursed, shall not exceed the Commitment amount. Any standby Letters 
of Credit issued under the Revolving Line shall be issued on or before the 
Maturity Date and, except those specifically excluded in writing by Bank, shall 
have a maximum expiration of 365 days from the date of issuance, but shall in 
no event expire later than the date which is 90 days beyond the Maturity Date.

     During the period Borrower has outstanding Letters of Credit, Borrower 
agrees: 

     (a)  that in the event of a drawing under any Letter of Credit by the
beneficiary thereof, the Borrower shall, immediately upon the receipt of notice
thereof from the Bank, reimburse the Bank in an amount equal to the amount so
paid by the Bank, provided, however, that at the request of the Borrower any sum
drawn under a letter of credit may be deemed to constitute an Advance hereunder
and added to the principal amount outstanding under this Agreement so long as no
Default or Event of Default then exists.

                                      -2-

<PAGE>
 
     (b)  if there is a Default or Event of Default under this Agreement, to 
immediately prepay and make the Bank whole for any reimbursement obligations of 
the Borrower for the face amount of outstanding letters of credit as provided in
Section 502(b)(3) hereof.

     (c)  the issuance of any letter of credit and any amendment to a letter of
credit is subject to the Bank's written approval and must be in form and content
satisfactory to the Bank and in favor of a beneficiary acceptable to the Bank.

     (d)  to sign the Bank's form Application and Agreement for Standby Letter
of Credit.

     (e)  to pay any issuance and/or other fees that the Bank notifies the 
Borrower will be charged for issuing and processing letters of credit for the 
Borrower.

     (f)  to pay the Bank a non-refundable fee equal to 1 1/2% per annum (the 
"Letter of Credit Fee") of the outstanding undrawn amount of each standby letter
of credit, payable quarterly in arrears and calculated on the basis of the face
amount of Letters of Credit outstanding during the immediately preceding
calendar quarter or portion thereof.

     Section 1.03. PROCEDURE FOR ADVANCES. The Borrower shall request Revolving
                   ---------------------- 
Line Advances by submitting to Bank an Authorization for Disbursement in the
form of Exhibit E (i) on or before 2:00 p.m. on the date of any proposed Advance
bearing interest under the Reference Rate Option or (ii) two London Business
Days prior to the date of any proposed Advance bearing interest at the LIBOR-
Rate Option. The Authorization for Disbursement shall specify (i) the amount of
the proposed Advance, (ii) the interest rate option and interest period
applicable thereto, and (iii) instructions for disbursement of the funds. The
Authorization for Disbursement shall be

                                      -3-
 
 



<PAGE>
 
executed by an officer of the Borrower and Bank shall be entitled to rely upon 
such Authorization for Disbursement without inquiry.

     Section 1.04. INTEREST. The unpaid principal balance of each Advance shall 
                   --------
bear interest at either: 1) A rate per annum equal to one half percent (1/2%) 
below the Bank's Reference Rate (which shall be equal to the rate announced by 
the Bank from time to time as its Reference Rate) and shall vary concurrently 
with any change in such Reference Rate (the "Reference Rate Option"): or 2) A 
fixed per annum rate of interest equal to the LIBOR-Rate, plus one and one half 
percent (1 1/2%) (the "LIBOR-Rate Option"). LIBOR-Rate Advances must be in 
minimum amounts of five hundred thousand dollars ($500,000) and integral 
multiples thereof. LIBOR-Rate Advances can be made for periods of one, three and
six months as selected by the Borrower (each an "Interest Period"). No LIBOR 
Rate Advance will be made which would mature after the "Maturity Date". The 
first day of the Interest Period must be a Business Day. The last day of the 
interest period and the actual number of days during the Interest Period will be
determined by the Bank using the practices of the London inter-bank market. The
Bank will have no obligation to accept an election for a LIBOR Rate Advance if
any of the following described events has occurred and is continuing:

     (i)  Dollar deposits in the principal amount, and for the periods equal to 
the interest period, of a LIBOR Rate Advance are not available in the London 
inter-bank market; or

     (ii) the LIBOR Rate does not accurately reflect the actual cost to Bank of 
making and funding any LIBOR Rate Advance.

                                      -4-

<PAGE>
 
     Section 1.05. MANDATORY PAYMENTS. Borrower shall pay interest only on all 
                   ------------------
outstanding Advances under the Revolving Line, calculated on the outstanding 
principal balance thereunder, payable on the last Business Day of each fiscal 
quarter, commencing April 30, 1997 and ending on the Maturity Date.

     Section 1.06. DELIVERY OF NOTES. The Borrower shall deliver the Notes to 
                   -----------------
the Bank pursuant to Article II.

     Section 1.07. PAYMENTS AND COMPUTATIONS. All payments hereunder by the 
                   -------------------------
Borrower shall be made without deduction or offset in lawful money of the United
States of America to the Bank at its Headquarters Office in immediately 
available funds. The Borrower hereby authorizes the Bank, if and to the extent 
payment owed to the Bank is not promptly made pursuant to the Notes or this 
Section 1.07, to charge against the Borrower's account with the Bank an amount 
equal to the interest and fees from time to time due to the Bank hereunder and 
under the Notes. All computations of interest hereunder shall be made by the 
Bank on the basis of a 360-day year and the actual number of days (including the
first day but excluding the last day) elapsed.

     Section 1.08. PAYMENT ON NON-BUSINESS DAYS.  Whenever any payment to be 
                   ----------------------------
made hereunder or under the Notes shall be stated to be due on a day which is 
not a Business Day, such payment shall be made on the next succeeding Business 
Day, and such extension of time shall in such case be included in the 
computation of payment of interest or fee, as the case may be.

     Section 1.09. USE OF PROCEEDS. The proceeds of the Line shall be used only 
                   ---------------
for general corporate purposes of Borrower and its Subsidiaries.

                                      -5-

<PAGE>
 
     Section 1.10.  OPTIONAL SECURITY. The obligations hereunder and under the
                    -----------------
Notes are unsecured; provided, however, that in the event an Event of Default
(as defined in Article V below), or any condition or event which with the giving
of notice or lapse of time, or both, would become such an Event of Default shall
have occurred and be continuing, the Bank may, at its option, elect to secure 
such obligations and upon receipt by the Borrower of written notice of such 
election, Borrower will execute and deliver to the Bank such security 
agreements, financing statements and deeds of trust, and such other documents, 
instruments, notices and agreements as the Bank in its reasonable judgment 
deems necessary or desirable to obtain a perfected security interest in and lien
upon such assets of Borrower (and/or of its Subsidiaries) to fully and 
adequately secure the repayment of the Line, together with all interest thereon,
and all other obligations of Borrower hereunder.

     Section 1.11.  INTEREST AFTER MATURITY. Any Advance which is not paid as 
                    -----------------------
and when due hereunder shall bear interest from and after the Maturity Date to 
the date paid at a rate which is 2% above the Reference Rate.

     Section 1.12.  INDEMNITY. The Borrower shall indemnify the Bank from and 
                    ---------
against any loss or expense (including loss of margin) incurred as a consequence
of any payment or pre-payment of any LIBOR-Rate Advance on any date other than 
the last day of the Interest Period applicable thereunto whether or not such 
payment or pre-payment is mandatory. Amounts payable by Borrower pursuant to 
this Section 1.12 shall be payable on demand.

                                      -6-







    

<PAGE>
 
     Section 1.13.  Fees.  The Borrower shall pay to the Bank a Commitment fee
                    ----
in the amount of three eighths percent (3/8%) per annum of the Unused Commitment
Amount. The Commitment fee shall be paid in arrears on a quarterly basis.

                                  ARTICLE II

                             CONDITIONS OF LENDING


     Section 2.01.  CONDITIONS PRECEDENT TO THE LINE.  The obligation of the 
                    --------------------------------
Bank to make any Advance or issue any Letter of Credit (an "Issuance") under the
Revolving Line is subject to the conditions precedent that the Bank shall have 
received on or before the day of the initial Disbursement the following, each 
dated the date of the initial Disbursement, in form and substance satisfactory 
to the Bank;

     (a)  Duly executed Notes, payable to the order of the Bank (or to the order
of the Bank and such assignee as the Bank may designate with the agreement of 
the Borrower).

     (b)  A copy of the Articles of Incorporation of the Borrower, certified by 
the California Secretary of State.

     (c)  A copy of the By-Laws of the Borrower, certified by its secretary.

     (d)  Certified copies of the resolutions of the Board of Directors of the 
Borrower authorizing this Agreement and the Notes and within ninety days of the 
execution of this Agreement, certified copies of the resolutions of the Boards 
of Directors of the Subsidiaries which are corporations authorizing the 
Guarantees.

                                      -7-

<PAGE>
 
     (f)  An Opinion of O'Melveny & Myers, LLP, counsel to the Borrower, as to 
such matters as required by the Bank.

     Section 2.02.  ADDITIONAL CONDITIONS PRECEDENT. The obligation of the Bank 
                    ------------------------------- 
to make the initial and any subsequent Disbursements, shall be subject to the 
further conditions precedent that the Bank shall have received the following on 
or prior to the day of the requested Disbursement, and that the statements 
therein shall be true and correct as of such date:

     (a)  A certificate of the Borrower's Chief Financial Officer to the effect 
that:

          (i)       The representations and warranties contained in Section 1.09
and 3.01 are true and correct on and as of the date of the Disbursement as
though made on and as of such date;

          (ii)      No event has occurred and is continuing, and no event would 
result from the making of the Disbursement which constitutes an Event of Default
or would constitute an Event of Default but for the requirement that notice be 
given or time elapse or both (a "Default");

          (iii)     The proceeds of the Disbursement will be applied in a manner
consistent with the provisions of Sections 1.09 and 3.01(h); and 

          (iv)      The making of such Disbursement will not contravene any law,
regulation or order applicable to the Borrower.

     (b)  Such other approvals, opinions or documents as the Bank may reasonably
request.

                                     - 8 -

<PAGE>
 
                                  ARTICLE III

                        REPRESENTATIONS AND WARRANTIES

     Section 3.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
                   ---------------------------------------------- 
represents and warrants as follows:

     (a)  SUBSIDIARIES. A complete list of the Borrower's Subsidiaries is 
          ------------
attached as Exhibit C, which Exhibit also shows the jurisdiction of 
incorporation or organization of each Subsidiary, and Borrower's percentage 
ownership of or interest in each Subsidiary, including directors' qualifying 
shares. The Borrower has unrestricted rights to vote the shares or interests of 
all Subsidiaries and (except as restricted by applicable law) to receive 
dividends or distributions thereon. The outstanding shares of all Subsidiaries 
which are corporations are validly issued, fully paid and non-assessable.

     (b)  INCORPORATION, ETC. The Borrower and its Subsidiaries are duly 
          ------------------
organized, validly existing and in good standing under the laws of the 
jurisdictions of their respective incorporation or organization, and are 
qualified to do business in all jurisdictions where the nature of their business
or activities requires such qualification, except where such qualification has 
not had or will not have a material adverse effect on the Borrower.

     (c)  AUTHORIZATION. The execution, delivery and performance by the Borrower
          -------------
of this Agreement and the Notes are within the Borrower's corporate powers, have
been duly authorized by all necessary corporate action, require no governmental 
approval, and do not contravene law or any contractual restriction binding on or
affecting the Borrower.

                                      -9-
     

<PAGE>
 
     (d)  APPROVALS. No authorization or approval or other action by, and no 
          ---------
notice to or filing with, any governmental authority or regulatory body is 
required for the due execution, delivery and performance by the Borrower of this
Agreement or the Notes.

     (e)  BINDING OBLIGATIONS. This Agreement is, and the Notes when delivered 
          -------------------
hereunder will be, legal, valid and binding obligations of the Borrower 
enforceable against the Borrower in accordance with their respective terms, 
except as enforceability may be limited by bankruptcy, insolvency, 
reorganization, moratorium or other similar laws affecting the rights of 
creditors generally or the application of equitable principles.

     (f)  FINANCIAL STATEMENTS. The consolidated balance sheet of the Borrower 
          --------------------
and its Subsidiaries as of April 30, 1996, and the related consolidated 
statements of income and retained earnings of the Borrower and its Subsidiaries 
for the fiscal year then ended, copies of which have been furnished to Bank, 
fairly present the financial condition of the Borrower and its Subsidiaries as 
of such date and the results of the operations of the Borrower and its 
Subsidiaries for the period ended on such date, all in accordance with generally
accepted accounting principles consistently applied, and since that time, except
as disclosed in writing to Bank prior to the date of this Agreement, there has 
been no material adverse change in such condition or operations.

     (g)  LITIGATION. There are no pending or, to the Borrower's knowledge, 
          ----------
threatened actions or proceedings affecting the Borrower or any of its 
Subsidiaries before any court or governmental agency, which in management's 
opinion may materially adversely affect the financial condition or operations of
the Borrower.

                                     -10-

<PAGE>
 
     (h)  USE OF PROCEEDS. Borrower is not engaged principally in, nor does it 
          ---------------
have as one of its important activities, the business of extending credit for 
the purpose of purchasing or carrying any margin stock (within the meaning of 
Regulation U of the Board of Governors of the Federal Reserve System), and no 
part of the proceeds of the Line will be used to purchase or carry any margin 
stock or extend credit to others for the purpose of purchasing or carrying any 
margin stock or used for any purpose which violates Regulation U or Regulation X
or any other provision of law or the apposite regulations.

     (i)  ERISA. With respect to Borrower's or any Subsidiary's employee benefit
          -----
plans, except as disclosed to Bank in writing, (a) Borrower and all Subsidiaries
are in compliance in all material respects with the applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and the 
Internal Revenue Code of 1986, as amended (the "CODE"); (b) no "reportable 
event" within the meaning of Section 4043 of ERISA ("REPORTABLE EVENT") has 
occurred that has not been timely reported or that, whether or not reported, 
would authorize the involuntary termination of one of such plans; (c) there are 
no "accumulated funding deficiencies" within the meaning of Section 412(a) of 
the Code exceeding $250,000 in the aggregate and no waiver of the minimum
funding standards of Code Section 412 has been requested or granted by the
Internal Revenue Service.

                                     -11-


<PAGE>
 
                                  ARTICLE IV

                           COVENANTS OF THE BORROWER

     Section 4.01.  AFFIRMATIVE COVENANTS. So long as the Notes shall remain 
                    ---------------------
unpaid or the Bank shall have any Commitment hereunder, the Borrower will, 
unless the Bank shall otherwise agree in writing:

     (a)  COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its Subsidiaries 
          -------------------------
to comply, in all material respects with all applicable laws, rules, regulations
and orders (the failure to comply with which would have a material adverse 
effect upon the Borrower), such compliance to include, without limitation, the 
payment of, before the same become delinquent, all taxes, assessments and 
governmental charges imposed upon it or upon its property except to the extent 
contested in good faith.

     (b)  INSURANCE. Maintain and cause each of its Subsidiaries to maintain 
          ---------
insurance to such extent and covering such risks as is usual for companies 
engaged in the same or similar businesses and on request will advise the Bank of
all insurance so carried.

     (c)  REPORTING REQUIREMENTS. Furnish to the Bank:
          ----------------------

          (i)  as soon as available and in any event within seventy-five (75) 
days after the end of each quarter of each fiscal year of the Borrower, 
consolidated balance sheets of the Borrower and its Subsidiaries as of the end 
of such quarter and consolidated statements of income and retained earnings of 
the Borrower and its Subsidiaries for the period commencing at the end of the 
previous fiscal year and ending with the end of such quarter, certified by the 
Chief Financial Officer or President of the Borrower, subject to year end audit 
adjustments;

                                     -12-

<PAGE>
 
          (ii)  As soon as available and in any event within one hundred twenty 
(120) days after the end of each fiscal year projected consolidated statements 
of income and retained earnings for the succeeding year in an acceptable form to
the Bank.

          (iii) As soon as available and in any event within one hundred twenty 
(120) days after the end of each fiscal year of the Borrower, a copy of the
annual consolidated audit report for such year for the Borrower and its
Subsidiaries, containing financial statements for such year, certified in a 
manner acceptable to the Bank by Arthur Andersen & Co., or other independent 
certified public accountants acceptable to the Bank;

          (iv)  Promptly after the filing or receiving thereof, copies of all 
reports and notices with respect to any employees benefit plan maintained by the
Borrower disclosing: (a) any Reportable Event; (b) any "prohibited transaction" 
within the meaning of Section 4975 of the Code; or (c) the voluntary or 
involuntary termination of any such plan that is subject to Title IV of ERISA;

          (v)   no later than seventy-five (75) days after the end of each of
the first three fiscal quarters of each fiscal year of the Borrower in the case
of Sections 4.02(a)-(d) and (f)-(m), and one hundred and twenty (120) days after
the end of each fiscal year of the Borrower in the case of Sections 4.02(a)-(m),
a statement in form and substance satisfactory to Bank evidencing compliance
with the appropriate requirements of Section 4.02, certified by Chief Financial
Officer or President of Borrower; and

                                    - 13 -

<PAGE>
 
          (vi)  such other information respecting the condition or operations, 
financial or otherwise, of the Borrower or any of its Subsidiaries as the Bank 
may from time to time reasonably request.

     (d)  INSPECTION OF BOOKS AND RECORDS. Allow the Bank and its agents to 
          -------------------------------
inspect the Borrower's properties and examine, audit, and make copies of books 
and records at any reasonable time. If any of the Borrower's properties, books 
or records are in the possession of a third party to permit the Bank or its 
agents to have access to perform inspections or audits and to respond to the 
Bank's requests for information concerning such properties, books and records.

     (e)  NOTICE OF EVENTS. Give the Bank, promptly upon the Borrower's 
          ----------------
obtaining such knowledge, written notice of any condition or event which has 
resulted or would with the giving of notice, lapse of time or both, result in:

          (i)   a material adverse change in the Borrower's consolidated 
financial condition or operations, or

          (ii)  a breach of or noncompliance with any material term, 
representation, warranty, condition or covenant contained herein or in any 
document delivered pursuant hereto, or

          (iii) a breach of or noncompliance with any material term,
representation, warranty, condition or covenant of any material contract to
which the Borrower or any of its Subsidiaries is a party or by which they or
their property may be bound.

     (f)  NOTICE OF DISPUTES. Give the Bank, promptly upon the Borrower's 
          ------------------
obtaining such knowledge, written notice of any legal, judicial or regulatory 
proceedings affecting the Borrower or

                                   - 14 -   

<PAGE>
 
any of its Subsidiaries in which the amount involved is material and not covered
by insurance and which, if adversely determined, would have a material adverse 
effect upon the Borrower.

     (g)  FORMATION OF SUBSIDIARIES. Advise the Bank promptly of the formation, 
          -------------------------
restructuring, sale, transfer or liquidation of any Subsidiary and update 
Exhibit C to this Agreement accordingly.

     (h)  GUARANTEES. Within ninety (90) days of the date hereof, deliver to the
          ----------
Bank guarantees of the Borrower's obligations hereunder by all Subsidiaries of 
the Borrower listed in Exhibit C hereto, all in form and substance satisfactory 
to the Bank.

     Section 4.02. NEGATIVE COVENANTS. So long as the Notes shall remain unpaid 
                   ------------------
or the Bank shall have any Commitment hereunder, the Borrower will not, without 
the written consent of the Bank:

     (a)  DEBT. Create or suffer to exist, or permit any of its Subsidiaries to 
          ----
create or suffer to exist, any Debt, including Debt secured by the cash 
surrender value of any life insurance policy owned by the Borrower, whether or 
not such debt is recognized on the Borrower's financial statements as prepared 
in accordance with generally accepted accounting principles; other than:

          (i)   Debt described on Exhibit D hereto;

          (ii)  the Line contemplated hereby;

          (iii) purchase money obligations which are secured by security
interests in the equipment or fixtures so acquired, and capital leases entered
into for the use and acquisition of equipment, in the ordinary course of
business, and guarantees of any such Debt; provided that such security interests
shall not extend to other assets of the Borrower or its Subsidiaries;

                                     -15-

<PAGE>
 
          (iv)   trade debt incurred in the ordinary course of business and on 
normal and customary trade terms;

          (v)    Debt arising out of the issuance of letters of credit issued by
Bank or with the consent of Bank, in support of Borrower or its Subsidiaries;

          (vi)   notes payable for a term not in excess of five (5) years,
issued in connection with the purchase of shares of stock of the Borrower owned
by shareholders or in connection with the payment of benefits due to Persons who
leave the employment of the Borrower; provided however, that the issuance of
such notes by the Borrower shall not otherwise create an Event of Default
hereunder or an event which, with the passage of time or the giving of notice,
would constitute an Event of Default hereunder;

          (vii)  Debt incurred by the Borrower to its Subsidiaries or incurred
by Subsidiaries to the Borrower; and

          (viii) Debt secured by the cash surrender value of life insurance
policies owned by the Borrower, whether or not such debt is recognized on the
Borrower's financial statements, providing that the proceeds of such Debt are
either used solely for the purpose of making scheduled premium payments
currently due on such policies or making investments in liquid marketable
securities.

     (b)  NET WORTH RATIO. Permit its Net Worth Ratio (after taking into 
          ---------------
account all Restricted Cash) to be greater than the ratio of 2.5:1.0 at all
times or permit its net worth to be greater than the ratio of 2.25:1.0 after
excluding the accrued liability, "Accrued Bonuses," from "outstanding
Indebtedness," as defined in Section 6.01.

                                     -16-

<PAGE>
 
     (c)  CONSOLIDATED TANGIBLE NET WORTH. Permit its Consolidated Tangible Net
          -------------------------------
Worth to be less than Forty Million Dollars ($40,000,000) at all times.

     (d)  WORKING CAPITAL & CURRENT RATIO. Permit its Net Working Capital to be 
          -------------------------------
less than Seventeen Million Dollars ($17,000,000) or permit its ratio of Current
Assets to Current Liabilities to be less than 1.20 to 1.0, both on a 
consolidated basis.

     (e)  NET INCOME. Permit its Consolidated Net Income in any fiscal year to 
          ----------
be less than Two Million Dollars ($2,000,000).

     (f)  SALES OF ASSETS. Permit any Subsidiary to sell, lease, abandon or 
          ---------------
otherwise dispose of, directly or indirectly, a material amount of the assets 
of the Borrower or the Borrower and its Subsidiaries, taken as a whole, except 
for sales, leases or transfers to the Borrower or any wholly-owned Subsidiary.

     (g)  CONSOLIDATION, MERGER. Permit any Subsidiary to, consolidate with or 
          ---------------------
merge into any other corporation or entity, except (i) any Subsidiary may
consolidate with or merge into the Borrower or a wholly-owned Subsidiary; and
(ii) any Subsidiary the value of whose assets are not material may consolidate
or merge with any other entity provided that the terms of such consolidation or
merger are negotiated at arm's length and constitute fair value under the
circumstances.

     (h)  COVERAGE. Permit its Consolidated Pre interest expense and pre-tax 
          --------
income during any consecutive twelve (12) month period (computed on a quarterly 
basis) to be less than the sum of two hundred percent (200%) of consolidated 
current maturities of long term debt, and consolidated interest expense for the 
preceding twelve month period. (This ratio will be calculated

                                     -17-

<PAGE>
 
at the end of each fiscal quarter, using the results of that quarter and each of
the three immediately preceding quarters.)

     (i)  GUARANTIES. Permit any Subsidiary to, guarantee, endorse or otherwise 
          ----------
become or be contingently liable upon any Indebtedness or obligations of any 
person, firm or corporation (other than Indebtedness or obligations of the 
Borrower or any Subsidiary permitted under this Agreement), in excess of 
$250,000 on an unsecured basis and $500,000 on a secured basis, at any time in 
the aggregate, except in the ordinary course of business as may be necessary to 
support its Subsidiaries.

     (j)  LIENS, ETC. Permit any Subsidiary to create or suffer to exist any 
          ----------
lien, security interest or other charge or encumbrance, or any other type of 
preferential arrangement, upon or with respect to any of its accounts receivable
and properties, whether now owned or hereafter acquired, except:

          (i)   liens for taxes, assessments or other governmental charges or 
levies not at the time delinquent or thereafter payable without penalty or being
contested in good faith;

          (ii)  liens of carriers, warehousemen, mechanics, materialmen, 
landlords and other liens imposed by law, incurred in the ordinary course of 
business for sums not yet delinquent or being contested in good faith;

          (iii) liens securing Debt permitted under Section 4.02(a) and 4.02(i);
and

          (iv)  other liens or encumbrances which in the aggregate are 
immaterial to the Borrower and its Subsidiaries on a consolidated basis and are 
incurred in the ordinary course of the Borrower's business.

                                     -18-

<PAGE>
 
     (k)  INVESTMENT AND ADVANCES.  Permit any Subsidiary (i) to advance, lend 
          -----------------------
or contribute funds to any Person (other than Borrower or any Subsidiary), 
whether by way of loan, stock purchase, capital contribution or otherwise, or 
(ii) to acquire by purchase of stock or by purchase of assets, in exchange for 
cash or shares of capital stock or other securities of the Borrower, any 
Subsidiary or any other Person, all or substantially all of any division or 
portion of the assets and business of any other Person (other than the Borrower 
or any Subsidiary or Strategic Compensation Associates); (iii) provided, 
however, that the Borrower may lend funds (excluding payments to employees 
against future bonuses) to employees for the sole purpose of purchasing shares 
of common stock of the Borrower and the Borrower may loan or provide guarantees 
up to but not in excess of at any one time One Million Five Hundred Thousand 
Dollars ($1,500,000) in the aggregate to employees of the Borrower for other 
purposes.

     (l)  ERISA COMPLIANCE. And with respect to any employee benefit plan 
          ----------------
maintained by it or any Subsidiary, permit:

          (i)   any "prohibited transaction" as such term is defined in Section 
4975 of the Code;

          (ii)  any "accumulated funding deficiency" as such term is defined in 
Section 412(a) of the Code;

          (iii) the voluntary or involuntary termination of any such Plan under 
circumstances that could result in material liability of the Borrower; or

                                     -19-

<PAGE>
 
          (iv) the imposition of a lien on the property of the Borrower pursuant
to Section 4068 of ERISA or Section 412(a) of the Code.

     (m)  OTHER BUSINESS ACTIVITIES.  Engage in any business activities 
substantially different from the Borrower's present business.

                                   ARTICLE V

                               EVENTS OF DEFAULT


     Section 5.01.  EVENTS OF DEFAULT.  The occurrence of any one of the 
                    -----------------
following events shall be an "Event of Default" hereunder:

     (a)  The Borrower shall fail to pay any installment of principal of, or 
interest on, the Notes when due; or

     (b)  Any representation or warranty made by the Borrower herein or by the 
Borrower (or any of its officers) in connection with this Agreement shall prove 
to have been incorrect in any material respect when made; or

     (c)  The Borrower shall fail to perform or observe any of the terms, 
covenants or agreements contained in Article IV of this Agreement; or

     (d)  The Borrower shall fail to perform or observe any other term, covenant
or agreement contained in any other section of this Agreement and any such 
failure shall remain unremedied for thirty (30) days thereafter; or

     (e)  The Borrower or any of its Subsidiaries shall:

                                    - 20 -

<PAGE>
 
          (i)  fail to pay any material Debt (excluding Debt evidenced by the 
Notes) of the Borrower or such Subsidiary (as the case may be), or any interest 
or premium thereon, when due (whether by scheduled maturity, required 
prepayment, acceleration, demand or otherwise) and such failure shall continue 
after the applicable grace period, if any, specified in the agreement or 
instrument relating to such Debt; or

          (ii) fail to perform any term, covenant or condition on its part to be
performed under any agreement or instrument relating to any such material Debt, 
when required to be performed, and such failure shall continue after the 
applicable grace period, if any, specified in such agreement or instrument, if 
the effect of such failure to perform is to accelerate, or to permit the 
acceleration of, the maturity of such Debt; or any such Debt shall be declared 
to be due and payable, or required to be prepaid (other than by a regularly 
scheduled required prepayment), prior to the stated maturity thereof; or

     (f)  The Borrower or any of its Subsidiaries shall admit in writing its
inability to pay its debts, or shall make a general assignment for the benefit
of creditors; or any proceeding shall be instituted by or against the Borrower
or any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property, and any
such proceeding instituted against the Borrower or such Subsidiary shall not
have been dismissed after sixty (60) days; or the Borrower or any of its
Subsidiaries shall take any corporate action to authorize any of the actions set
forth above in this subsection (f); or

                                     -21-

<PAGE>
 
     (g)  A judgment or order for the payment of money in an amount in excess of
$500,000 shall be rendered against the Borrower or any of its Subsidiaries and
such judgment or order shall continue unsatisfied or unstayed, and in effect for
a period of thirty (30) consecutive days; or

     (h)  The institution of a voluntary or involuntary termination of any
employee benefit plan maintained by the Borrower or any Subsidiary pursuant to
Title IV of ERISA if, as of the date thereof, the amount of unfunded "benefit
liabilities" is (after giving effect to the tax consequences thereof), in the
good faith judgment of the Bank, material.

     (i)  A material adverse change occurs in the Borrower's financial
condition, properties, or ability to repay the Revolving Line.

     Section 5.02.  UPON AN EVENT OF DEFAULT.  If any Event of Default shall 
                    ------------------------
have occurred and be continuing, then:

     (a)  if the Event of Default is described in Section 5.01(f), the
Commitment shall forthwith terminate and the Notes, all interest thereon, and
all other amounts payable under this Agreement shall become forthwith due and
payable, without presentment, demand, protest, or notice of any kind, all of
which are hereby expressly waived by the Borrower, and

     (b)  if the Event of Default is described in any Section other than Section
5.01(f), the Bank may, by notice to the Borrower, (i) declare the Commitment to
be terminated, whereupon the same shall forthwith terminate, and/or (ii) declare
                                                             ------
the Notes, all interest thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Notes, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly


                                    - 22 -

<PAGE>
 
waived by the Borrower, and (iii) require the Borrower to immediately prepay and
make the Bank whole for any outstanding Letters of Credit.


                                  ARTICLE VI

                              CERTAIN DEFINITIONS

     Section 6.01  CERTAIN DEFINITIONS. As used herein, and unless otherwise 
                   -------------------
defined herein, the following terms have the following respective meanings:

     "Business Day". Unless otherwise provided in this Agreement, a business day
is a day other than a Saturday or a Sunday on which the Bank is open for 
business in California. All payments and disbursements which would be due on a 
day which is not a business day will be due on the next Business Day. All 
payments received on a day which is not a Business Day will be applied to the 
credit on the next Business Day.

     "Commitment" shall mean the amount of $11,000,000, which the Borrower is, 
     ------------
at any time permitted to borrow in accordance with Section 1.01 and Section 
1.02.

     "Consolidated Gross Expenses" means the annual total of all costs and 
     -----------------------------
expenses of the Borrower and each Subsidiary determined in accordance with 
generally accepted accounting principles consistent with those applied in the 
preparation of the financial statements referred to in Section 3.01 (f) as such
principles may be modified from time to time.

     "Consolidated Gross Revenues" means the annual total of all items of income
     -----------------------------
and revenues of the Borrower and each Subsidiary, determined in accordance with 
generally accepted accounting

                                     -23-

<PAGE>
 
principles consistent with those applied in the preparation of the financial 
statements referred to in Section 3.01(f) as such principles may be modified 
from time to time.

     "Consolidated Net Income" means Consolidated Gross Revenues less 
     -------------------------
Consolidated Gross Expenses (adding or subtracting, as appropriate extraordinary
income or expenses) and less all taxes.

     "Consolidated Tangible Net Worth" means the total of all assets of the 
     ---------------------------------
Borrower and its Subsidiaries, determined on a consolidated basis, less the sum 
of (i) all liabilities of the Borrower and its Subsidiaries, determined on a 
consolidated basis, except for such amounts which are specifically subordinated 
to the Bank in a form satisfactory to the Bank and (ii) the amount, if any, of 
intangible assets such as goodwill, trademarks, trademark rights, trade name 
rights, copyrights, patents, patent rights and licenses, unamortized debt 
discounts and expenses which appear on the asset side of the consolidated 
balance sheet of the Borrower and its Subsidiaries, and (iii) all amounts due 
from officers, directors, or shareholders of the Borrower where the Borrower 
retains no rights of offset against other indebtedness.

     "Current Assets" and "Current Liabilities", means those assets and 
     ----------------     ---------------------
liabilities which are so classified by the Borrower's certified public 
accountant in accordance with generally accepted accounting principles, except 
that deferred taxes shall be excluded from Current Liabilities for purpose of 
this calculation.

     "Debt" means:
     ------

          (i)  Indebtedness for borrowed money or for the deferred purchase 
price of property or services (other than trade debt to vendors and suppliers in
the ordinary course of 

                                     -24-

<PAGE>
 
business and not more than ninety (90) days overdue) in respect of which such 
corporation is liable, contingently or otherwise, as obligor, guarantor or 
otherwise, or in respect of which such corporation otherwise assures a creditor 
against loss;

          (ii)  obligations of such corporation under leases which shall have 
been or should be, in accordance with generally accepted accounting principles, 
included in determining liabilities as shown on the liability side of a balance 
sheet of such Person as of the date as of which Indebtedness is to be 
determined.

          (iii) unfunded benefit liabilities under each employee benefit plan 
maintained for employees of such corporation and covered by Title IV of ERISA.

     "Disbursement" means the making of any Advance or issuance of any Letter of
      ------------
Credit pursuant hereto.

     "Indebtedness" of any Person, means all items of indebtedness which, in
      ------------
accordance with generally accepted accounting principles, would be included in 
determining liabilities as shown on the liability side of a balance sheet of 
such Person as of the date as of which Indebtedness is to be determined.

     "Issuing Bank" means the Bank or any bank who becomes participant pursuant 
      ------------
to Section 7.09 who issues a standby letter of credit for the account of the 
Borrower pursuant to the terms of this Agreement.

     "LIBOR-Rate" means for each Advance under the LIBOR-Rate Option, the rate 
      ----------
per annum determined by the Bank by dividing (the resulting quotient to be 
rounded upward to the nearest 1/100 of 1%) (x) the rate of interest (which shall
be the same for each day of such LIBOR-Rate

                                     -25-

<PAGE>
 
Advance) determined in good faith by the Bank by reference to the Wall street 
Journal or otherwise (which determination shall be presumed correct absent 
obvious error) to be the average of the rates per annum for deposits in U.S. 
Dollars offered to banks in the London Interbank market at approximately 11:00 
o'clock a.m., London time, two London Business Days prior to the first day of 
such Advance for delivery on the first day of such Advance by (y) a number equal
to 1.00 minus the LIBOR-Rate Reserve Percentage.

     The "LIBOR-Rate Reserve Percentage" for any date is the maximum effective
percentage (expressed as a decimal fraction, rounded upward to the nearest 1/100
of 1%), as determined in good faith by the Bank (which determination shall be
conclusive absent manifest error), which is in effect on such day as prescribed
by the Board of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including, with limitation, supplemental,
marginal and emergency reserve requirements) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency liabilities") of a member bank
in such System but only to the extent actually incurred by the Bank, the Bank's
determination thereof to be presumed correct in the absence of obvious error.
The LIBOR-Rate shall be adjusted automatically as of the effective date of each
change in the LIBOR-Rate Reserve Percentage.

     Advances bearing interest under the LIBOR-Rate Option shall be referred to 
as "LIBOR-Rate Advances".

     "London Business Day" means a Business Day which is also a day for dealing 
      -------------------
in deposits of U.S. dollars by and among banks in the London Interbank Market.

                                     -26-

<PAGE>
 
     "Long Term Debt" means any Debt which does not finally mature within 
      --------------
twelve (12) months.

     "Material" means, in reference to payments or liabilities, an amount equal 
      --------
to or exceeding five percent (5%) of Consolidated Tangible Net Worth; in
reference to other matters a condition or event which creates a change or which
with the giving of notice or lapse of time, or both, would create a change in
the financial condition of the Borrower and its Subsidiaries in this amount.

     "Month" with respect to a LIBOR-Rate Interest Period has the following 
      -----
meaning unless a calendar month is specified or the context otherwise clearly 
requires:

          (i)   if the first day of such LIBOR-Rate Interest Period is the last 
day of a calendar month, a "month" is the interval between the last days of 
consecutive calendar months;

          (ii)  otherwise, a "month" is the interval between the days in 
consecutive calendar months numerically corresponding to the first day of such 
LIBOR-Rate Interest Period or, if there is no such numerically corresponding day
in a particular calendar month, then the last day of such calendar month.

     "Net Working Capital" means the excess of Current Assets over Current 
      -------------------
Liabilities of the Borrower and its Subsidiaries (after taking into account all 
Restricted Cash).

     "Net Worth Ratio" means the ratio of (i) outstanding Indebtedness of the 
      ---------------
Borrower and its Subsidiaries including outstanding standby letters of credit
less outstanding borrowings which are secured by said letters of credit on a
consolidated basis, less subordinated debt, to (ii) Consolidated Tangible Net
Worth plus subordinated debt and shall be expressed as a ratio, so that, for
example, if

                                     -27-

<PAGE>
 
the amount of such Indebtedness is twice the amount of Consolidated Tangible Net
Worth, then the Net Worth Ratio is 2 to 1.

     "Person" means any natural person, corporation, firm, association, 
     --------
government, governmental agency or any other entity and whether acting in an 
individual, fiduciary or other capacity.

     "Restricted Cash" means all cash of the Borrower or any Subsidiary which is
     -----------------    
not available for the payment of principal or interest hereunder.

     "Subsidiary" means as to any parent corporation, any other corporation of
     ------------
which at least a majority of the outstanding shares having by the terms thereof
ordinary voting power to elect a majority of the Board of Directors of such
corporation (irrespective of whether or not at the time shares of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such parent corporation and/or one or more of
its Subsidiaries and also means any partnership in which such parent corporation
has directly or indirectly an interest sufficient to control the management or
operations of the partnership.

     "Unused Commitment" means the Commitment amount minus the sum of (i) the 
     -------------------
aggregate amount of all Advances outstanding hereunder and (ii) the undrawn face
amount of all Letters of Credit issued for the account of the Borrower pursuant 
hereto.


                                  ARTICLE VII

                                 MISCELLANEOUS

                                     -28-

<PAGE>
 
     Section 7.01.  AMENDMENTS, ETC.  No amendment or waiver of any provision of
                    ---------------
this Agreement or of the Notes, nor consent to any departure by the Borrower 
therefrom, shall in any event be effective unless the same shall be in writing 
and signed by the Bank, and then such waiver or consent shall be effective only 
in the specific instance and for the specific purpose for which given.

     Section 7.02.  NOTICES, ETC. All notices and other communications provided 
                    ------------
for hereunder shall be in writing (including telegraphic communication) and 
mailed, transmitted by facsimile transmission, telegraphed or delivered, if to 
the Borrower, at its address at 1800 Century Park East, Suite 900, Los Angeles, 
California 90067, Facsimile No. (310) 553-8640, Attention: Norman A. Glick, Vice
President-Finance; if to the Bank, at its address at 601 West Fifth Street, Los 
Angeles, California 90071, Facsimile No. (213) 622-8975, Attention: Commercial 
Loan Department (or any successor office) or to such other address as either 
party may designate to the other in writing. All such notices and communications
shall, when mailed or telegraphed, be effective when deposited in the mails or 
delivered to the telegraph company, respectively, addressed as aforesaid, except
that notices to the Bank pursuant to the provisions of Article I shall not be 
effective until received by the Bank.

     Section 7.03.  COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on 
                    -------------------------
demand all reasonable costs and expenses in connection with the preparation, 
execution and delivery and administration of this Agreement, the Notes and the 
other documents to be delivered hereunder, including the reasonable fees and 
out-of-pocket expenses of counsel for the Bank, with respect thereto, and with 
respect to advising the Bank as to its rights and responsibilities under this

                                     -29-

<PAGE>
 
Agreement and all reasonable costs and expenses, if any, in connection with the 
enforcement of this Agreement, the Notes and the other documents to be delivered
hereunder.

     The Borrower will not deduct any taxes from any payments it makes to the 
Bank. If any government authority imposes any taxes or charges on any payments 
made by the Borrower, the Borrower will pay the taxes or charges. Upon request 
by the Bank, the Borrower will confirm that it has paid the taxes by giving the 
Bank official tax receipts within 30 days after the due date. However, the 
Borrower will not pay the Bank's net income taxes.

     Section 7.04.  ACCOUNTING TERMS. All accounting terms not specifically 
                    ----------------
defined herein shall be construed in accordance with generally accepted 
accounting principles consistent with those applied in the preparation of the 
financial statements referred to in Section 3.01(f) hereof, as such principles 
may be modified from time to time, and all financial data submitted pursuant to 
this Agreement shall be prepared in accordance with such principles.

     Section 7.05.  SURVIVAL. The representations, warranties, covenants and 
                    --------
obligations of Borrower contained herein shall survive the making of the 
Advances and the Maturity Date and shall remain effective until all obligations 
contemplated hereby shall have been paid or performed by Borrower in full, 
including without limitation, the Borrower's obligations under any Letter of 
Credit issued pursuant hereto.

     Section 7.06.  ONE AGREEMENT. This Agreement and any related security or 
                    -------------
other agreements required by this Agreement, collectively:

     (a)  represent the sum of the understandings and agreements between the 
Bank and the Borrower concerning the Revolving Line; and

                                     -30-

<PAGE>
 
     (b)  replace any prior oral or written agreements between the Bank and the 
Borrower concerning this Revolving Line; and

     (c)  are intended by the Bank and the Borrower as the final, complete and 
exclusive statement of the terms agreed to by them.

     In the event of any conflict between this Agreement and any other 
agreements required by this Agreement, including without limitation the 
inclusion of additional fees and additional defaults in the Application and 
Agreement for Stand-by Letters of Credit, this Agreement will prevail.

     Section 7.07.  NO WAIVER. No failure to exercise, and no delay in 
                    ---------
exercising any right, power or remedy hereunder or under any Note or under any 
other document delivered pursuant hereto shall impair any right, power or remedy
which any Bank or the Borrower may have, nor shall any such delay be construed 
to be a waiver of any such rights, powers or remedies, or an acquiescence in any
breach or default under this Agreement or under any Note or under any other 
document delivered pursuant hereto, nor shall any waiver of any breach or 
default of the Borrower or any Bank or the Bank hereunder be deemed a waiver of 
any default or breach subsequently occurring. The rights and remedies herein 
specified are cumulative and not exclusive of any rights or remedies which any 
Bank or the Bank or the Borrower would otherwise have.

     Section 7.08.  SEVERABILITY OF PROVISIONS. In case any one or more of the 
                    --------------------------
provisions contained in this Agreement should be invalid, illegal or 
unenforceable in any respect, the validity, legality and enforceability of the 
remaining provisions contained herein shall not in any way be affected or 
impaired thereby.

                                     -31-

<PAGE>
 
     Section 7.09. PARTICIPATIONS AND ASSIGNMENTS. The Bank shall have the right
                   ------------------------------
at any time to sell, assign, transfer, negotiate or grant participations to
other banks in all or part of the Revolving Line, the Commitment or the
obligations of Borrower outstanding under this Agreement or the Notes, and any
other documents in connection with this Agreement; provided that any such sale,
assignment, transfer, negotiation or participation shall be in compliance with
the applicable federal and state securities laws. The Bank agrees to give notice
to Borrower of the identity of any such buyer, assignee, transferee or
participant prior to consummation of the applicable transaction. The Borrower
hereby acknowledges and agrees that any such disposition will give rise to a
direct obligation of the Borrower to the participant; provided that the Borrower
may rely upon any waiver, consent, amendment or other written advice obtained
from Bank pursuant to Section 7.02 hereof. Each buyer, assignee, transferee and
participant shall be entitled to all of the rights of the Bank hereunder and may
exercise any and all rights of set-off and banker's lien as fully as though the
borrower were directly indebted to such buyer, assignee, transferee and
participant in the amount of the consideration for such sale, assignment,
transfer or participation, plus any accrued but unpaid interest or fees. In
connection with any participation under this Section 7.09, Bank may disclose
any and all information concerning the Borrower and its Subsidiaries in its
possession to the participant and the Borrower hereby consents to such
disclosure. Bank agrees to inform such participant that all such information is
confidential.

     Section 7.10. COUNTERPARTS.  This Agreement may be executed by the parties 
                   ------------
hereto individually, or in any combination of the parties hereto, in two or more
counterparts, each of

                                    -32-  

<PAGE>
 
which shall be deemed an original, but all of which together shall constitute 
one and the same instrument.

     Section 7.11.  SET-OFFS. Bank is hereby authorized at any time and from
                    --------
time to time, without notice to the Borrower (any such notice being expressly
waived by the Borrower), to set-off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Bank to or for the credit or the account
of the Borrower against any and all obligations of the Borrower now or hereafter
existing under this Agreement and the Notes held by the Bank irrespective of
whether the Bank shall have made any demand under this Agreement or the Notes
and although such obligations may be unmatured. The Bank hereunder agrees
promptly to notify the Borrower after each set-off and application made by the
Bank, as the case may be, provided that the failure to give such notice shall
not affect validity of such set-off and application. The rights of the Bank
under Section 7.11 are in addition to other rights and remedies (including
without limitation, other rights of set-off) which the Bank may have, and in the
exercise of such rights, the Borrower agrees that Bank shall assume no liability
to the Borrower, and Subsidiary or any other party for special, indirect or
consequential damages which may arise as a result of a set-off.

     Section 7.12.  BINDING EFFECT: GOVERNING LAW. This Agreement shall be
                    -----------------------------
binding upon and inure to the benefit of the Borrower, the Bank and their
respective successors and assigns when it shall have been executed by the
Borrower and the Bank. The Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Bank. This

                                     -33-


<PAGE>
 
Agreement shall be governed by and construed in accordance with the internal 
laws of the State of California.

     7.13.  ARBITRATION.
            -----------   
          
     (a)    This paragraph concerns the resolution of any controversies or
claims between the Borrower and the Bank, including but not limited to those
that arise from:

            (i)   This Agreement (including any renewals, extensions or
modifications of this Agreement;

            (ii)  Any document, agreement or procedure related to or delivered
in connection with this Agreement;

            (iii) Any violation of this Agreement; or

            (iv)  Any claims for damages resulting from any business conducted
between the Borrower and the Bank, including claims from injury to persons,
property or business interests (torts).

     (b)    At the request of the Borrower or the Bank, any such controversies
or claims will be settled by arbitration in accordance with the United States
Arbitration Act. The United States Arbitration Act will apply even though this
Agreement provides that it is governed by California law.

     (c)    Arbitration proceedings will be administered by the American
Arbitration Association and will be subject to its commercial rules of
arbitration.

     (d)    For purposes of the application of the statute of limitations, the
filing of an arbitration pursuant to this paragraph is the equivalent of the
filing of a lawsuit, and any claim or

                                     -34-


<PAGE>
 
controversy which may be arbitrated under this paragraph is subject to any 
applicable statute of limitations. The arbitrators will have the authority to 
decide whether any such claim or controversy is barred by the statute of 
limitations and, if so, to dismiss the arbitration on that basis.

     (e)  If there is a dispute as to whether an issue is arbitrable, the
arbitrators will have the authority to resolve any such dispute.

     (f)  The decision that results from an arbitration proceeding may be
submitted to any authorized court of law to be confirmed and enforced.

     (g)  The procedure described above will not apply if the controversy or
claim, at the time of the proposed submission to arbitration, arises from or
relates to an obligation to the Bank secured by real property located in
California. In this case, both the Borrower and the Bank must consent to
submission of the claim or controversy to arbitration. If both parties do not
consent to arbitration, the controversy or claim will be settled as follows:

          (i)    The Borrower and the Bank will designate a referee (or a panel
of referees) selected under the auspices of Arbitration Association in the same
manner as arbitrators are selected in Association-sponsored proceedings;

          (ii)   The designated referee (or the panel of referees) will be
appointed by a court as provided in California Code of Civil Procedure Section
638 and the following related sections;

          (iii)  The referee (or the presiding referee of the panel) will be an
active attorney or a retired judge; and

                                     -35-


<PAGE>
 
          (iv)   The award that results from the decision of the referee (or the
panel) will be entered as a judgment in the court that appointed the referee, in
accordance with the provisions of California Code of Civil Procedure Sections
644 and 645.

     (h)  This provision does not limit the right of the Borrower or the Bank
to:

          (i)    exercise self-help remedies such as setoff;

          (ii)   foreclose against or sell any real or personal property 
collateral; or

          (iii)  act in a court of law, before, during or after the arbitration 
proceeding to obtain:

                 (A)  an interim remedy; and/or

                 (B)  additional or supplementary remedies.

     (i)  The pursuit of or a successful action for interim, additional or 
supplementary remedies, or the filing of a court action, do not constitute a 
waiver of the right of the Borrower or the Bank, including the suing party, to 
submit the controversy or claim to arbitration if the other party contests the 
lawsuit. However, if the  controversy or claim arises from or relates to an 
obligation to the Bank which is secured by real property located in California 
at the time of the proposed submission to arbitration, this right is limited 
according to the provision above requiring the consent of both the Borrower and 
the Bank to seek resolution through arbitration.

     (j)  If the Bank forecloses against any real property securing this 
Agreement, the Bank has the option to exercise the power of sale under the deed 
of trust or mortgage, or to proceed by judicial foreclosure.

                                     -36-

<PAGE>
 
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.


          KORN/FERRY INTERNATIONAL            
          A California Corporation            
                                              
          By: /s/ Norman A. Glick
             --------------------------------- 
          Title: V.P. Finance
                ------------------------------                     

          1st Business Bank                   
                                              
          By: /s/ Robert Kummer Jr.
             --------------------------------- 
          Title: Chairman and CEO             
                ------------------------------                     

          By: /s/ Kim Defenderfer
             --------------------------------- 
          Title: Vice President                
                ------------------------------ 

                                     -37-


<PAGE>
 
                FIRST AMENDMENT TO THE REVOLVING LINE AGREEMENT


THIS FIRST AMENDMENT TO THE REVOLVING LINE AGREEMENT is made and entered into 
this 27th day of February, 1998, by and between KORN/FERRY INTERNATIONAL, a 
California corporation (the "Borrower"), and Mellon 1st Business Bank, a 
California Banking Corporation (the "Bank"). This Amendment shall be called the 
First Amendment to the Revolving Line Agreement.

RECITALS

A. Borrower and Bank entered into that certain Revolving Line Agreement dated 
January 31, 1997, wherein Bank agreed to lend to Borrower an amount up to but 
not in excess of Eleven Million Dollars ($11,000,000) outstanding in the 
aggregate at any one time. All initial capitalized terms used herein and not 
otherwise defined herein shall have the same meaning as the Revolving Line 
Agreement. Borrower and Bank agree to the following.

NOW THEREFORE, in consideration of the foregoing and other good and valuable 
consideration rendered to the parties, the parties do mutually agree as follows:

AGREEMENT

1.   MATURITY DATE. In Section 1.01 the Maturity Date is hereby amended from 
November 30, 1998 to November 30, 1999.

2.   LETTER OF CREDIT FEE. In Section 1.02(f) the non-refundable fee of 1 1/2% 
per annum of the outstanding undrawn amount of each standby letter of credit is 
hereby amended from 1 1/2% to 1.00%.

3.   CONSOLIDATED TANGIBLE NET WORTH DEFINITION. Section (i) in the definition
of Consolidated Tangible Net Worth in Section 6.01 of the Loan Agreement is
hereby amended from "all liabilities of the Borrower and its Subsidiaries,
determined on a consolidated basis, except for such amounts which are
specifically subordinated to the Bank in a form satisfactory to the Bank and" to
"all liabilities of the Borrower and its Subsidiaries, determined on a
consolidated basis, except for subordinated debt and"

4.   REAFFIRMATION. As of the date hereof, Borrower hereby reaffirms for the 
benefit of Bank that the representations and warranties of Borrower as set forth
in Article III of the Revolving Line Agreement are true and correct.

5.   FULL FORCE AND EFFECT. Each and every and all singular of the terms, 
conditions and covenants contained in the Revolving Line Agreement shall remain
in full force and effect except as specifically amended herein, and not present
or future rights remedies, benefits or powers belonging or accruing to Bank
under the Revolving Line Agreement, shall be affected, prejudiced, limited or
restricted hereby.

IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to the
Revolving Line Agreement as of the date first above written.

<PAGE>
 
First Amendment to the Revolving Line Agreement
Page 2

KORN/FERRY INTERNATIONAL 
A California Corporation.

By:/s/ E.S. Murray 
   ---------------------------
Its: VP & CFO
    --------------------------


MELLON IST BUSINESS BANK
a California Corporation

By:/s/ Kim Defenderfer                    By: /s/ Robert Kummer Jr.
   ---------------------------               ----------------------------------
   Vice President                         Chairman & Chief Executive Officer

<PAGE>
 
               SECOND AMENDMENT TO THE REVOLVING LINE AGREEMENT

THIS SECOND AMENDMENT TO THE REVOLVING LINE AGREEMENT is made and entered into 
this 19th day of June, 1998, by and between KORN/FERRY INTERNATIONAL, a 
California corporation (the "Borrower"), and Mellon 1st Business Bank, a 
California Banking Corporation (the "Bank"). This Amendment shall be called the 
Second Amendment to the Revolving Line Agreement.

RECITALS

A. Borrower and Bank entered into that certain Revolving Line Agreement dated 
January 31, 1997, wherein Bank agreed to lend to Borrower an amount up to but 
not in excess of Eleven Million Dollars ($11,000,000) outstanding in the 
aggregate at any one time. All initial capitalized terms used herein and not 
otherwise defined herein shall have the same meaning as the Revolving Line 
Agreement.

NOW THEREFORE, in consideration of the foregoing and other good and valuable 
consideration rendered to the parties, the parties do mutually agree as follows:

AGREEMENT

1.   ADDITION OF TEMPORARY INCREASE. The following sentence is hereby added to 
Section 1.01 after the first sentence which ends with the phase (each an 
"Advance").

"In addition to the Eleven Million Dollars ($11,000,000) Revolving Line, the 
Bank will lend the Borrower an amount up to but not in excess of Five Million 
Dollars ($5,000,000) ("Temporary Increase") under the same terms and conditions
as the Revolving Line except that the maturity date of the Temporary Increase 
will be September 30, 1998. Hereafter all references to the Maturity Date shall 
include the maturity date of the Temporary Increase. Also, hereafter all 
references to the Revolving Line shall include the Revolving Line and the 
Temporary Increase except the Temporary Increase shall be evidenced by two 
promissory notes (the "Temporary Increase Notes") and the Temporary Increase 
will not have a sublimit for standby letters of credit.

2.   REAFFIRMATION. As of the date hereof, Borrower hereby reaffirms for the 
benefit of Bank that the representations and warranties of Borrower as set forth
in Article III of the Revolving Line Agreement are true and correct.

3.   FULL FORCE AND EFFECT. Each and every and all singular of the terms, 
conditions and covenants contained in the Revolving Line Agreement shall remain
in full force and effect as specifically amended herein, and not present or
future rights remedies, benefits or powers belonging or accruing to Bank under
the Revolving Line Agreement, shall be affected, prejudiced, limited or
restricted hereby.

IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to 
the Revolving Line Agreement as of the date first above written.

<PAGE>
 
Second Amendment to the Revolving Line Agreement
Page 2

KORN/FERRY INTERNATIONAL 
A California Corporation.

By:/s/ E. S. Murray
   ---------------------------
Its: Chief Financial Officer
    --------------------------


MELLON IST BUSINESS BANK
a California Corporation

By:/s/ Kim Defendefer                     By:/s/ Robert Kummer Jr.
   ---------------------------               ----------------------------------
   Senior Vice President                  Chairman & Chief Executive Officer


<PAGE>
 
                            TEMPORARY INCREASE NOTE
                            -----------------------

$2,000,000                                               Los Angeles, California
                                                         June 19, 1998

FOR VALUE RECEIVED, KORN-FERRY INTERNATIONAL, a California corporation (the 
"Borrower"), promises to pay to the order of MELLON BANK, N.A., a Pennsylvania 
banking corporation (the "Bank") the principal sum of TWO MILLION DOLLARS 
($2,000,000) or, if less, the aggregate unpaid principal amount of all Loans 
made by the Bank to the undersigned pursuant to the Revolving Line Agreement by 
and between the Borrower and the Bank dated as of January 31, 1997 as shown on 
the records of the Bank or on the schedule attached hereto (and any continuation
or amendment thereof), payable on the September 30, 1998; plus interest as 
calculated below.

Interest shall be payable from the date hereof on the unpaid principal balance 
outstanding hereunder at any time quarterly, on the last Business Day of each 
fiscal quarter, commencing on July 30, 1998 and continuing until the September 
30, 1998, at either:

(a)  a fluctuating rate equal at all times to and including the date of 
maturity, one half percent (1/2%) lower than the rate which the Bank publicly 
announces from time to time at its Los Angeles Main Office (defined below) as 
its "Reference Rate"; or

(b)  a fixed rate of interest equal to the London Interbank Offered Rate (LIBOR)
of the same origination and maturity dates plus one and one half percent (1 
1/2%). Fixed rate advances must be made with forty eight(48) hours advance 
notice and in minimum increments of five hundred thousand dollars ($500,000). 
Such advances will be subject to a prepayment penalty equal to the amount of 
interest which would have accrued had the advance been outstanding for the full
maturity; and

(c)  after maturity, whether by acceleration or otherwise, both before as well 
as after judgment, the Reference Rate plus two percent (2%).

Any change in the interest rate resulting from a change in the Reference Rate 
shall be effective on and as of the date of such change.

Interest shall be computed on the basis of a year of 360 days for the actual 
number of days elapsed.

Both principal and interest are payable in lawful money of the United States of 
America, without deduction or offset, to the Bank at 601 West Fifth Street, Los 
Angeles, California 90071 (Los Angeles Main Office), in immediately available 
funds.

The failure of the Bank to exercise its rights to make demand at any one time 
will not constitute a waiver of such right at any subsequent time. Acceptance by
the Bank of any payment hereunder which is less than payment in full of all 
amounts due and payable at the time of such payment shall not constitute a 
waiver of the right to exercise such option at that time or any subsequent time 
or nullify any prior exercise of such option, except as and to the extent 
otherwise provided by law and any such payment may be applied to any 
indebtedness owed to the Bank in any order the Bank chooses.

<PAGE>
 
If the Note is not paid when due, whether on demand or at the date set forth 
herein, the Borrower promises to pay all costs of collection including, but not 
limited to, reasonable attorneys' fees and all expenses incurred in connection 
with the protection of realization of any collateral securing the payment 
hereof, or enforcement of any guarantee or security therefore, incurred by the 
Bank or any holder hereof on account of such collection, whether or not suit is 
actually filed thereof.

The Borrower, for itself, its successors and assigns, hereby waives diligence, 
presentment, protest and demand and notice of protest, demand, dishonor and 
nonpayment of this Note.

This Note is one of the Notes referred to in, and is subject to and governed by,
the Revolving Line Agreement.  Reference is made thereto for the definitions, 
terms, conditions and provisions governing this Note, including the conditions 
under which the amount owing hereunder may be accelerating.

This Note may be prepaid only in accordance with the terms of the Revolving Line
Agreement.

This Note is made under and governed by the laws of the State of California.



KORN-FERRY INTERNATIONAL


By: /s/ E. S. Murray
   ---------------------------------
By:     E. S. Murray
   ---------------------------------

<PAGE>
 
                            TEMPORARY INCREASE NOTE
                            -----------------------

$3,000,000                                               Los Angeles, California
                                                         June 19, 1998

FOR VALUE RECEIVED, KORN-FERRY INTERNATIONAL, a California corporation (the 
"Borrower"), promises to pay to the order of MELLON 1ST BUSINESS BANK, a
California banking corporation (the "Bank") the principal sum of THREE MILLION
DOLLARS ($3,000,000) or, if less, the aggregate unpaid principal amount of all
Loans made by the Bank to the undersigned pursuant to the Revolving Line
Agreement by and between the Borrower and the Bank dated as of January 31, 1997
as shown on the records of the Bank or on the schedule attached hereto (and any
continuation or amendment thereof), payable on the September 30, 1998; plus
interest as calculated below.

Interest shall be payable from the date hereof on the unpaid principal balance 
outstanding hereunder at any time quarterly, on the last Business Day of each 
fiscal quarter, commencing on July 30, 1998 and continuing until the September 
30, 1998, at either:

(a)  a fluctuating rate equal at all times to and including the date of 
maturity, one half percent (1/2%) lower than the rate which the Bank publicly 
announces from time to time at its Los Angeles Main Office (defined below) as 
its "Reference Rate"; or

(b)  a fixed rate of interest equal to the London Interbank Offered Rate (LIBOR)
of the same origination and maturity dates plus one and one half percent (1 
1/2%). Fixed rate advances must be made with forty eight (48) hours advance 
notice and in minimum increments of five hundred thousand dollars ($500,000). 
Such advances will be subject to a prepayment penalty equal to the amount of 
interest which would have accrued had the advance been outstanding for the full
maturity; and

(c)  after maturity, whether by acceleration or otherwise, both before as well 
as after judgment, the Reference Rate plus two percent (2%).

Any change in the interest rate resulting from a change in the Reference Rate 
shall be effective on and as of the date of such change.

Interest shall be computed on the basis of a year of 360 days for the actual 
number of days elapsed.

Both principal and interest are payable in lawful money of the United States of 
America, without deduction or offset, to the Bank at 601 West Fifth Street, Los 
Angeles, California 90071 (Los Angeles Main Office), in immediately available 
funds.

The failure of the Bank to exercise its rights to make demand at any one time 
will not constitute a waiver of such right at any subsequent time. Acceptance by
the Bank of any payment hereunder which is less than payment in full of all 
amounts due and payable at the time of such payment shall not constitute a 
waiver of the right to exercise such option at that time or any subsequent time 
or nullify any prior exercise of such option, except as and to the extent 
otherwise provided by law and any such payment may be applied to any 
indebtedness owed to the Bank in any order the Bank chooses.


<PAGE>
 
                                REVOLVING NOTE
                                --------------


$6,600,000                                             Los Angeles California
                                                       January 31, 1997

FOR VALUE RECEIVED, KORN-FERRY INTERNATIONAL, a California corporation (the 
"Borrower"), promises to pay to the order of 1ST BUSINESS BANK, a California 
banking corporation (the "Bank") the principal sum of SIX MILLION SIX HUNDRED 
THOUSAND ($6,600,000) or, if less, the aggregate unpaid principal amount of all 
Loans made by the Bank to the undersigned pursuant to the Revolving Line 
Agreement by and between the Borrower and the Bank dated as of January 31, 1997 
as shown on the records of the Bank or on the schedule attached hereto (and any 
continuation thereof), payable on the Maturity Date, as defined in the Revolving
Line Agreement; plus interest as calculated below.

Interest shall be payable from the date hereof on the unpaid principal balance 
outstanding hereunder at any time quarterly, on the last Business Day of each 
fiscal quarter, commencing on April 30, 1997 and continuing until the Maturity 
Date, at either:

(a)  a fluctuating rate equal at all times to and including the date of 
maturity, one half percent (1/2%) lower than the rate which the Bank publicly 
announces from time to time at its Los Angeles Main Office (defined below) as 
its "Reference Rate"; or

(b)  a fixed rate of interest equal to the London Interbank Offered Rate (LIBOR)
of the same origination and maturity dates plus one and one half percent 
(1 1/2%). Fixed rate advances must be made with forty eight (48) hours advance 
notice and in minimum increments of five hundred thousand dollars ($500,000). 
Such advances will be subject to a prepayment penalty equal to the amount of 
interest which would have accrued had the advance been outstanding for the full 
maturity; and

(c)  after maturity, whether by acceleration or otherwise, both before as well 
as after judgment, the Reference Rate plus two percent (2%).

Any change in the interest rate resulting from a change in the Reference Rate 
shall be effective on and as of the date of such change.

Interest shall be computed on the basis of a year of 360 days for the actual 
number of days elapsed.

Both principal and interest are payable in lawful money of the United States of 
America, without deduction or offset, to the Bank at 601 West Fifth Street, Los 
Angeles, California 90071 (Los Angeles Main Office), in immediately available 
funds.

The failure of the Bank to exercise its rights to make demand at any one time 
will not constitute a waiver of such right at any subsequent time. 
Acceptance by the Bank of any payment hereunder which is less than payment in 
full of all amounts due and payable at the time of such payment shall not 
constitute a waiver of the right to exercise such option at that time or any 
subsequent time or nullify any prior exercise of such option, except as and to 
the extent otherwise provided by law and any such payment may be applied to any 
indebtedness owed to the Bank in any order the Bank chooses.



<PAGE>
 
If this Note is not paid when due, whether on demand or at the date set forth 
herein, the Borrower promises to pay all costs of collection including, but not 
limited to, reasonable attorneys' fees and all expenses incurred in connection 
with the protection of realization of any collateral securing the payment 
hereof, or enforcement of any guarantee or security therefore, incurred by the 
Bank or any holder hereof on account of such collection, whether or not suit is 
actually filed thereof.

The Borrower, for itself, its successors and assigns, hereby waives diligence, 
presentment, protest and demand and notice of protest, demand, dishonor and 
nonpayment of this Note.

This Note is one of the Notes referred to in, and is subject to and governed by,
the Revolving Line Agreement. Reference is made thereto for the definitions, 
terms, conditions and provisions governing this Note, including the conditions 
under which the amounts owing hereunder may be accelerating.

This Note may be prepaid only in accordance with the terms of the Revolving Line
Agreement.

This Note is made under and governed by the laws of the State of California.



KORN-FERRY INTERNATIONAL

By: /s/ Norman A. Glick
    ---------------------------

By:     Norman A. Glick
    ---------------------------

<PAGE>
 
                                REVOLVING NOTE
                                --------------

$4,400,000                                        Los Angeles, California
                                                  January 31, 1997

FOR VALUE RECEIVED, KORN-FERRY INTERNATIONAL, a California corporation (the 
"Borrower"), promises to pay to the order of MELLON BANK, N.A., a Pennsylvania 
banking corporation (the "Bank") the principal sum of FOUR MILLION FOUR HUNDRED 
THOUSAND ($4,400,000) or, if less, the aggregate unpaid principal amount of all 
Loans made by the Bank to the undersigned pursuant to the Revolving Line 
Agreement by and between the Borrower and the Bank dated as of January 31, 1997 
as shown on the records of the Bank or on the schedule attached hereto (and any 
continuation thereof), payable on the Maturity Date, as defined in the Revolving
Line Agreement; plus interest as calculated below.

Interest shall be payable from the date hereof on the unpaid principal balance 
outstanding hereunder at any time quarterly, on the last Business Day of each 
fiscal quarter, commencing on April 30, 1997 and continuing until the Maturity 
Date, at either:

(a)  a fluctuating rate equal at all times to and including the date of 
maturity, one half percent (1/2%) lower than the rate which the Bank publicly 
announces from time to time at its Los Angeles Main Office (defined below) as 
its "Reference Rate"; or

(b)  a fixed rate of interest equal to the London Interbank Offered Rate (LIBOR)
of the same origination and maturity dates plus one and one half percent 
(1 1/2%).  Fixed rate advances must be made with forty eight (48) hours advance 
notice and in minimum increments of five hundred thousand dollars ($500,000).  
Such advances will be subject to a prepayment penalty equal to the amount of 
interest which would have accrued had the advance been outstanding for the full 
maturity; and

(c)  after maturity, whether by acceleration or otherwise, both before as well 
as after judgment, the Reference Rate plus two percent (2%).

Any change in the interest rate resulting from a change in the Reference Rate 
shall be effective on and as of the date of such change.

Interest shall be computed on the basis of a year of 360 days for the actual 
number of days elapsed.

Both principal and interest are payable in lawful money of the United States of 
America, without deduction or offset, to the Bank at 601 West Fifth Street, Los 
Angeles, California 90071 (Los Angeles Main Office), in immediately available 
funds.

The failure of the Bank to exercise its rights to make demand at any one time 
will not constitute a waiver of such right at any subsequent time.  Acceptance 
by the Bank of any payment hereunder which is less than payment in full of all 
amounts due and payable at the time of such payment shall not constitute a 
waiver of the right to exercise such option at that time or any subsequent time 
or nullify any prior exercise of such option, except as and to the extent 
otherwise provided by law and any such payment may be applied to any 
indebtedness owed to the Bank in any order the Bank chooses.


<PAGE>
 
If this Note is not paid when due, whether on demand or at the date set forth 
herein, the Borrower promises to pay all costs of collection including, but not 
limited to, reasonable attorneys' fees and all expenses incurred in connection 
with the protection of realization of any collateral securing the payment 
hereof, or enforcement of any guarantee or security therefore, incurred by the 
Bank or any holder hereof on account of such collection, whether or not suit is 
actually filed thereof.

The Borrower, for itself, its successors and assigns, hereby waives diligence, 
presentment, protest and demand and notice of protest, demand, dishonor, and 
nonpayment of this Note.

This Note is one of the Notes referred to in, and is subject to any governed by,
the Revolving Line Agreement. Reference is made thereto for the definitions,
terms, conditions and provisions governing this Note, including the conditions
under which the amounts owing hereunder may be accelerating.

This Note may be prepaid only in accordance with the term of the Revolving Line 
Agreement.

This Note is made under and governed by the laws of the State of California.


KORN-FERRY INTERNATIONAL

By: /s/ Norman A. Glick
    --------------------------------

By:     Norman A. Glick
    --------------------------------

<PAGE>
 
                                   EXHIBIT C
                               January 31, 1997

                     KORN/FERRY INTERNATIONAL SUBSIDIARIES

Parent Company
Korn/Ferry International, (California Corporation)

SUBSIDIARIES                                          PERCENT-OWNED*

ARGENTINA
Korn/Ferry International S.A.                               100%

AUSTRALIA
Korn/Ferry International Pty. Limited*                      100%

AUSTRIA (Branch of London)
Korn/Ferry Carre Orban International, Ltd.
Niederlassung Osterreich                                    100%

BRAZIL
Korn/Ferry International S/C Ltda.                          100%

CANADA
Korn/Ferry International Limited                      100% (INACTIVE)

CHILE
Korn/Ferry International S.A.                               100%

CHINA
Korn/Ferry International (China) Limited                    100%

CZECH REPUBLIC
Korn/Ferry Carre/Orban International spol.s.r.o.            100%

DENMARK
Korn/Ferry International A/S***                       100% (INACTIVE)

FRANCE
Korn/Ferry International & Cie, S.N.C.**                    100%
Korn/Ferry International, S.N.C.** Brussels (Branch)
Korn/Ferry International, S.N.C.** Armsterdam (Branch)


<PAGE>
 
K/FI
REVISED January 31, 1997
PAGE 2

GERMANY -
Korn/Ferry International, GmbH.                             100%
                                                                
GREECE                                                          
Korn/Ferry International S.A.                               100%
                                                                
HONG KONG                                                       
Korn/Ferry International (H.K.) Limited                     100%
                                                                
HUNGARY                                                         
Korn/Ferry International Budapest                               
 Individual Consulting & Services Ltd.                          
 (Short Form Name: K/F Ltd.)                                100%
                                                                
ITALY                                                           
Korn/Ferry Carre/Orban International S.R.L.                 100%
                                                                
JAPAN                                                           
Nihon Korn/Ferry International                              100%
                                                                
NETHERLANDS                                                     
K/FI Holdings BV (Netherlands)                        100% (INACTIVE) 
Korn/Ferry Carre/Orban International B.V.                   100%
                                                                
NEW ZEALAND                                                     
Korn/Ferry International (New Zealand) Ltd.                 100%
                                                                
NORWAY                                                          
Korn/Ferry Carre/Orban International A/S                    100%
                                                                
POLAND                                                          
Korn/Ferry Carre/Orban International Sp.z o.o.              100%
                                                                
PUERTO RICO                                                     
Korn/Ferry Caribbean, Inc.***                               100%
                                                                
ROMANIA                                                         
Korn/Ferry International srl.                               100% 

<PAGE>
 
K/FI
REVISED January 31, 1997
PAGE 3

SINGAPORE
Korn/Ferry International Pte. Ltd.                     100%

SLOVAKIA
New Europe Consulting Group, spol. s.r.o.              100%

SPAIN
Korn/Ferry Espana, S.A.                                100%

SWEDEN
Korn/Ferry Carre'/Orban International, A.B.            100%

SWITZERLAND
Korn/Ferry (Switzerland) S.A. (Zurich)                 100%
Korn/Ferry International S.A. (Geneva)                 100%
John Stork International (Geneva)                      100% (INACTIVE)
K/F Associates AG                                      100%

UNITED KINGDOM
Korn/Ferry International, Limited                      100%
John Stork International Group Limited                 100%
John Stork International Limited                       100%
Pintab Associates Limited                              100%

UNITED STATES
Korn/Ferry International                               100%
Strategic Compensation Group, Inc.                     100%
Avery & Associates, Inc.                               100% (INACTIVE)
Continental American Management, Co.                   100% (INACTIVE)
John Stork International Group Limited                 100% (INACTIVE)
Korn/Ferry Carre'/Orban Worldwide, Inc.                100%
Korn/Ferry S.A.                                        100% (INACTIVE)


<PAGE>
 
K/FI
REVISED January 31, 1997
PAGE 4

VENEZUELA 
Korn/Ferry International Consultores
 Asociados, C.A.                                        100%
Korn/Ferry International Consultores
 Asociados, C.A. Bogota (Branch)



*    Includes Directors' qualifying shares
**   In process of being converted to a full
      subsidiary of Korn/Ferry International
***  In the process of liquidation.

<PAGE>
 

<TABLE> 
<CAPTION> 
                                                                                Notes 
Description                                                                     Payable
- ------------------------------------------------------------------------------------------
<S>                                                                             <C> 
Section 4.02(a)(i)
- --------------

Bank Lines of Credit - United States
  First Business Bank/Bank of America                                           $  500,000 

Loans against Cash Surrender Value of Life Insurance -
  Loans against cash surrender values of life Insurance policies are not
  considered indebtedness of the Company for purposes of this loan
  agreement. These amounts are considered to be a reduction of the related
  assets as recorded in the financial statements of the Company.                   -   
                                                                                ----------
                                                                                $  500,000
                                                                                ==========

Section 4.02 (a)(vi)
- ---------------

Indebtedness incurred incident to repurchase of the Company's capital stock
and to payment of benefits to former employees. Loans are payable in 
installments over a five year period and are subordinated to bank debt.

  Nancy Albert                                                                  $   38,000
  1972 Childrens Trust - Richard Ferry                                          $  470,000
  California Community Foundation                                               $  151,000
  California Community Foundation & Richard Ferry Trustee                       $  990,000
  Ken Clark                                                                     $  228,000
  Mel Connet                                                                    $   56,000
  Deborah Cornwall                                                              $  313,000
  Joe Defregger                                                                 $   88,000
  Heinrich Eichenberger                                                         $  163,000
  Richard Ferry                                                                 $1,096,000
  Peter Gasperini                                                               $   18,000
  Wilmot Gravenslund                                                            $  145,000
  Richard Hardison                                                              $  192,000
  John Harlow                                                                   $   76,000
  James Herget                                                                  $   26,000
  Bill Ingils                                                                   $   28,000
  Harold Johnson                                                                $   10,000
  Peter Kelly                                                                   $   64,000
  Arnold Kuypers                                                                $   26,000
  Irene Latino                                                                  $   26,000
  Robert Lepage                                                                 $  132,000
  Bernhard Mahlo                                                                $   66,000
  Joseph McMahon                                                                $   19,000
  Martin Nass                                                                   $    6,000
  Howard Nitschke                                                               $   63,000         
  Win Priem                                                                     $   19,000
  Paul Putney                                                                   $   48,000
  Robert Rollo                                                                  $   88,000
  Buzz Schulte                                                                  $    5,000
  Gary Silverman                                                                $   41,000
  John Sullivan                                                                 $   26,000
  William Tholke                                                                $   78,000     
  Jean-Marie Van Den Borre                                                      $  101,000
  Laurence Vienot                                                               $  178,000
  Daniel Wilbrez                                                                $   27,000
  Matthew Wright                                                                $    3,000

                                                                                ---------- 
                                                                                $5,104,000
                                                                                ==========
</TABLE>
 



<PAGE>
 
                                                                   Exhibit 10.23

                   REVOLVING CREDIT AND TERM LOAN AGREEMENT


THIS AGREEMENT is made and entered into this 31st day of January, 1997 by and
between KORN/FERRY INTERNATIONAL (the "BORROWER") and 1ST BUSINESS BANK, a
California banking corporation (the "BANK").


                                   ARTICLE I

                         AMOUNT AND TERMS OF THE LOAN


     Section 1.01. THE REVOLVING LOAN. From the date the Borrower has satisfied
                   ------------------                                           
all conditions precedent as set forth in Article II hereof, to and until
November 30, 1997 (the "CONVERSIOn DATE"), Bank will lend to Borrower an amount
up to but not in excess of Five Million Dollars ($5,000,000) outstanding in the
aggregate at any one time (the "REVOLVING LOAN") in one or more advances (each
an "Advance"). Within the limits of time and amount and subject to the other
provisions hereof, Borrower may borrow, repay and reborrow all or part of the
Revolving Loan in multiple integrals of TWO HUNDRED AND FIFTY THOUSAND DOLLARS
($250,000.00), at any time up until the Conversion Date, at which time the
unpaid principal balance of the Revolving Loan will be converted to a term loan
(the "TERM LOAN") in accordance with, and subject to the conditions set forth
in, Section 1.02 hereof. The Revolving Loan shall be evidenced by two promissory
notes (the "REVOLVING NOTES") which
 shall be in substantially the form of
Exhibit A. Each Advance, the principal amount thereof, the interest rate
applicable thereto and the unpaid principal balance owing on the Revolving Notes
at any time may be evidenced by

<PAGE>
 
endorsement on the Notes or by Bank's internal records, including daily computer
print-outs, and such entries shall be prima facie evidence of the amount of the
Revolving Loan outstanding and the terms thereof, but the failure of the Bank to
make any such notation shall not release Borrower from the obligation to repay
amounts borrowed hereunder.

     Section 1.02. THE TERM LOAN. The principal balance of the Revolving Loan
                   -------------                                             
outstanding on the Conversion Date shall be converted to the Term Loan on the
Conversion Date, except that Bank shall not be obligated to make such conversion
unless Borrower, as of the Conversion Date, shall be in compliance with all of
the provisions of this Agreement and any other agreement by and between Borrower
and Bank. The Term Loan shall be evidenced by two promissory notes, (the "TERM
NOTES"), which shall be substantially in the form of Exhibit B. The Revolving
Loan and Term Loan are collectively referred to herein as the "LOANS", and the
Revolving Notes and Term Notes are collectively referred to here as the "NOTES".

     Section 1.03. PROCEDURE FOR ADVANCES. The Borrower shall request Revolving
                   ----------------------                                      
Loan advances by submitting to Bank an Authorization for Disbursement in the
form of Exhibit E (i) on or before 2:00 p.m. on the date of any proposed Advance
bearing interest under the Reference Rate Option; or (ii) two London Business
Days prior to the date of any proposed Advance bearing Interest at the LIBOR-
Rate Option. The Authorization for Disbursement shall specify (i) the amount of
the proposed Advance, (ii) the interest rate option and interest period
applicable thereto, and (iii) instructions for disbursement of the funds. The
Authorization for Disbursement shall be executed by an officer of the Borrower
and Bank shall be entitled to rely upon such Authorization for Disbursement
without inquiry.

                                      -2-

<PAGE>
 
     Section 1.04. INTEREST - REVOLVING LOAN AND TERM LOAN. The unpaid principal
                   ---------------------------------------                      
balance of the Loans shall bear interest at either: 1) a rate per annum equal to
one half percent (1/2%) below the Bank's Reference Rate (which shall be equal to
the rate announced by the Bank from time to time as its Reference Rate) and
shall vary concurrently with any change in such Reference Rate (the "Reference
Rate Option"): or 2) A fixed per annum rate of interest equal to the LIBOR-Rate
plus one and one half percent (1 1/2%) (the LIBOR-Rate Option). LIBOR-Rate
Advances must be in minimum amounts of five hundred thousand dollars ($500,000)
and integral multiples thereof. LIBOR-Rate Advances can be made for periods of
one, three and six months as selected by the Borrower (each an "Interest
Period"). No LIBOR-Rate Advance on the Revolving Line will be made which would
mature after the Conversion Date. No LIBOR-Rate Advance on the Term Loan will be
made which would mature after the Maturity Date. The first day of the Interest
Period must be a Business Day. The last day of the Interest Period and the
actual number of days during the Interest Period will be determined by the Bank
using the practices of the London inter-bank market. The Bank will have no
obligation to accept an election for a LIBOR-Rate Advance if any of the
following described events has occurred and is continuing:

     (i)  Dollar deposits in the principal amount, and for the periods equal to
the Interest Period, of a LIBOR-Rate Advance are not available in the London
inter-bank market; or

     (ii) the LIBOR Rate does not accurately reflect the cost of a LIBOR-Rate
Advance: or (iii) Borrower shall have a one time option at the Conversion Date,
to fix the rate of interest for the Term Loan. Said fixed rate shall be equal to
the U.S. Treasury Note Yield (as quoted in the Wall Street Journal), for U.S.
Treasury Notes with a maturity equivalent to the Maturity Date of the

                                      -3-

<PAGE>
 
Term Loan, plus 1.75%. Such fixed rate Advance will be subject to a prepayment
premium equal to the amount of interest which would have accrued had the Advance
been outstanding for the full maturity.

     Section 1.05. MANDATORY PAYMENTS. Borrower shall pay interest only on all
                   ------------------                                         
outstanding Advances under the Revolving Notes calculated on the outstanding
principal balance thereunder, payable on the last Business Day of each fiscal
quarter, commencing April 30, 1997 and ending on (and including) the Conversion
Date. The Term Notes shall provide for equal quarterly installments of principal
each together with accrued interest, payable on the last Business Day of each
fiscal quarter commencing on the last Business Day of the first fiscal quarter
following the Conversion Date, and continuing until November 30, 2002 (the
"Maturity Date") at which time all unpaid principal and accrued interest shall
be due and payable.

     Section 1.06. DELIVERY OF NOTES. The Borrower shall deliver the Notes to
                   -----------------                                         
the Bank pursuant to Article II.

     Section 1.07. OPTIONAL PREPAYMENTS. The Borrower may at any time prepay the
                   --------------------                                         
Notes in whole or ratably in part, provided that each partial prepayment shall
be in the principal amount not less than One Hundred Thousand Dollars ($100,000)
and shall be applied first to any interest then due, and then, to principal
which, in the case of prepayment to the Term Notes, shall be applied to the
installment of principal in the inverse order of their maturities.

     Section 1.08. PAYMENTS AND COMPUTATIONS. All payments hereunder by the
                   -------------------------                               
Borrower shall be made without deduction or offset in lawful money of the United
States of America to the Bank at its Lending Office in immediately available
funds. The Borrower hereby authorizes the

                                      -4-

<PAGE>
 
Bank, if and to the extent payment owed to the Bank is not promptly made
pursuant to the Notes or this Section 1.05, to charge against the Borrower's
account with the Bank an amount equal to the interest and fees from time to time
due to the Bank hereunder and under the Notes. All computations of interest
hereunder shall be made by the Bank on the basis of a 360-day year and the
actual number of days (including the first day but excluding the last day)
elapsed.

     Section 1.09. PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be made
                   ----------------------------                                 
hereunder or under the Notes shall be stated to be due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest or fee, as the case may be.

     Section 1.10. USE OF PROCEEDS. The proceeds of the Loan shall be used only
                   ---------------                                             
for general corporate purposes of Borrower and its Subsidiaries.

     Section 1.11. OPTIONAL SECURITY. The obligations hereunder and under the
                   -----------------                                         
Notes are unsecured; provided, however, that in the event an Event of Default
(as defined in Article V below), or any condition or event which with the giving
of notice or lapse of time, or both, would become such an Event of Default shall
have occurred and be continuing, the Bank may, at its option, elect to secure
such obligations and upon receipt by the Borrower of written notice of such
election, Borrower will execute and deliver to the Bank such security
agreements, financing statements and deeds of trust, and such other documents,
instruments, notices and agreements as the Bank in its reasonable judgment deems
necessary or desirable to obtain a perfected security interest in and lien upon
such assets of Borrower (and/or of its Subsidiaries) to fully and adequately
secure the

                                      -5-

<PAGE>
 
repayment of the Loan, together with all interest thereon, and all other
obligations of Borrower hereunder.


     Section 1.12. FEES. The Borrower shall pay to the Bank a Commitment fee in
                   ----
the amount of three eighths percent (3/8%) per annum of the unused portion of
the Commitment The Commitment fee shall be paid in arrears on a quarterly basis.

     Section 1.13. INTEREST AFTER MATURITY. Any Advance which is not paid as and
                   -----------------------                                      
when due hereunder shall bear interest from and after the Maturity Date to the
date paid at a rate which is 2% above the Reference Rate.

     Section 1.14. INDEMNITY. The Borrower shall indemnify the Bank from and
                   ---------                                                
against any loss or expense (including loss of margin) incurred as a consequence
of any payment or prepayment of any LIBOR-Rate Advance on any date other than
the last day of the Interest Period applicable thereunto whether or not such
payment or pre-payment is mandatory. Amounts payable by Borrower pursuant to
this Section 1.14 shall be payable on demand.



                                  ARTICLE II

                             CONDITIONS OF LENDING



      SECTION 2.01. CONDITIONS PRECEDENT TO THE LOAN. The obligation of the Bank
                    --------------------------------                            
to make any Advance on the Revolving Loan is subject to the conditions precedent
that the Bank shall have received on or before the day of the initial Advance
the following, each dated the date of the initial Advance, in form and substance
satisfactory to the Bank;

                                      -6-

<PAGE>
 
     (a)  Duly executed Notes, payable to the order of the Bank (or to the order
of the Bank and such assignee as the Bank may designate with the agreement of
the Borrower).

     (b)  A copy of the Articles of Incorporation of the Borrower, certified by
the California Secretary of State.

     (c)  A copy of the By-Laws of the Borrower, certified by its secretary.

     (d)  Certified copies of the resolutions of the Board of Directors of the
Borrower authorizing this Agreement and the Notes and within ninety days of the
execution of this Agreement, certified copies of the resolutions of the Boards
of Directors of the Subsidiaries which are corporations authorizing the
Guarantees.

     (e)  An Opinion of O'Melveny & Myers, LLP, counsel to the Borrower, as to
such matters as required by the Bank.

     Section 2.02. ADDITIONAL CONDITIONS PRECEDENT. The obligation of the Bank
                   -------------------------------                            
to make the initial and any subsequent Advance shall be subject to the further
conditions precedent that the Bank shall have received the following on or prior
to the day of the requested Advance, and that the statements therein shall be
true and correct as of such date:

     (a)  A certificate of the Borrower's Chief Financial Officer to the effect
that:

          (i) The representations and warranties contained in Section 1.09 and
3.01 are true and correct on and as of the date of the disbursement as though
made on and as of such date;

          (ii) No event has occurred and is continuing, and no event would
result from the making of the Advance which constitutes an Event of Default or
would constitute an Event of Default but for the requirement that notice be
given or time elapse or both;

                                      -7-

<PAGE>
 
          (iii) The proceeds of the Advance will be applied in a manner
consistent with the provisions of Sections 1.09 and 3.01(h); and

          (iv)  The making of such Advance will not contravene any law,
regulation or order applicable to the Borrower.

     (b)  Such other approvals, opinions or documents as the Bank may reasonably
request.



                                  ARTICLE III

                         REPRESENTATIONS ND WARRANTIES

     Section 3.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
                   ----------------------------------------------              
represents and warrants as follows:

     (a)  SUBSIDIARIES. A complete list of the Borrower's Subsidiaries is
          ------------                                                   
attached as Exhibit C, which Exhibit also shows the jurisdiction of
incorporation or organization of each Subsidiary, and Borrower's percentage
ownership of or interest in each Subsidiary, including directors' qualifying
shares. The Borrower has unrestricted rights to vote the shares or interests of
all Subsidiaries and (except as restricted by applicable law) to receive
dividends or distributions thereon. The outstanding shares of all Subsidiaries
which are corporations are validly issued, fully paid and non-assessable.

     (b)  INCORPORATION ETC. The Borrower and its Subsidiaries are duly
          -----------------                                            
organized, validly existing and in good standing under the laws of the
jurisdictions of their respective incorporation or organization, and are
qualified to do business in all jurisdictions where the nature of their business

                                      -8-

<PAGE>
 
or activities requires such qualification, except where such qualification has
not had or will not have a material adverse effect on the Borrower.

     (c)  AUTHORIZATION. The execution, delivery and performance by the Borrower
          -------------
of this Agreement and the Notes are within the Borrower's corporate powers, have
been duly authorized by all necessary corporate action, require no governmental
approval, and do not contravene law or any contractual restriction binding on or
affecting the Borrower.

     (d)  APPROVALS. No authorization or approval or other action by, and no
          ---------
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Borrower of this
Agreement or the Notes.

     (e)  BINDING OBLIGATIONS. This Agreement is, and the Notes when delivered
          -------------------                                                 
hereunder will be, legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally or the application of equitable principles.

     (f)  FINANCIAL STATEMENTS. The consolidated balance sheet of the Borrower
          --------------------                                                
and its Subsidiaries as of April 30, 1996, and the related consolidated
statements of income and retained earnings of the Borrower and its Subsidiaries
for the fiscal year then ended, copies of which have been furnished to Bank,
fairly present the financial condition of the Borrower and its Subsidiaries as
of such date and the results of the operations of the Borrower and its
Subsidiaries for the period ended on such date, all in accordance with generally
accepted accounting principles consistently

                                      -9-

<PAGE>
 
applied, and since that time, except as disclosed in writing to Bank prior to
the date of this Agreement, there has been no material adverse change in such
condition or operations.

     (g) LITIGATION. There are no pending or, to the Borrower's knowledge,
         ----------
threatened actions or proceedings affecting the Borrower or any of its
Subsidiaries before any court or governmental agency, which in management's
opinion may materially adversely affect the financial condition or operations of
the Borrower.

     (h) USE OF PROCEEDS. Borrower is not engaged principally in, nor does it
         ---------------
have as one of its important activities, the business of extending credit for
the purpose of purchasing or carrying any margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System), and no
part of the proceeds of the Loan will be used to purchase or carry any margin
stock or extend credit to others for the purpose of purchasing or carrying any
margin stock or used for any purpose which violates Regulation U or Regulation X
or any other provision of law or the apposite regulations.

     (i) ERISA. With respect to Borrower's or any Subsidiary's employee benefit
         -----
plans, except as disclosed to Bank in writing, (a) Borrower and all Subsidiaries
are in compliance in all material respects with the applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and the
Internal Revenue Code of 1986, as amended (the "CODE"); (B) no "reportable
event" within the meaning of Section 4043 of ERISA ("REPORTABLE EVENT") has
occurred that has not been timely reported or that, whether or not reported,
would authorize the involuntary termination of one of such plans; (c) there are
no "accumulated funding deficiencies" within the meaning of Section 412(a) of
the Code exceeding $250,000 in the

                                      -10-

<PAGE>
 
aggregate and no waiver of the minimum funding standards of Code Section 412 has
been requested or granted by the Internal Revenue Service.



                                  ARTICLE IV

                           COVENANTS OF THE BORROWER

     Section 4.01. AFFIRMATIVE COVENANTS. So long as the Notes shall remain
                   ---------------------                                   
unpaid or the Bank shall have any Commitment hereunder, the Borrower will,
unless the Bank shall otherwise agree in writing:

     (a)  COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its Subsidiaries
          -------------------------                                            
to comply, in all material respects with all applicable laws, rules, regulations
and orders (the failure to comply with which would have a material adverse
effect upon the Borrower), such compliance to include, without limitation, the
payment of, before the same become delinquent, all taxes, assessments and
governmental charges imposed upon it or upon its property except to the extent
contested in good faith.

     (b)  INSURANCE. Maintain and cause each of its Subsidiaries to maintain
          ---------                                                         
insurance to such extent and covering such risks as is usual for companies
engaged in the same or similar businesses and on request will advise the Bank of
all insurance so carried.

     (c)  REPORTING REQUIREMENTS. Furnish to the Bank:
          ----------------------                      

          (i) as soon as available and in any event within seventy-five (75)
days after the end of each quarter of each fiscal year of the Borrower,
consolidated balance sheets of the Borrower and its Subsidiaries as of the end
of such quarter and consolidated statements of income and

                                      -11-

<PAGE>
 
retained earnings of the Borrower and its Subsidiaries for the period commencing
at the end of the previous fiscal year and ending with the end of such quarter,
certified by the Chief Financial Officer or President of the Borrower, subject
to year end audit adjustments;

          (ii)  As soon as available and in any event within one hundred twenty
(120) days after the end of each fiscal year projected consolidated statements
of income and retained earnings for the succeeding year in an acceptable form to
the Bank.

          (iii) As soon as available and in any event within one hundred twenty
(120) days after the end of each fiscal year of the Borrower, a copy of the
annual consolidated audit report for such year for the Borrower and its
Subsidiaries, containing financial statements for such year, certified in a
manner acceptable to the Bank by Arthur Andersen & Co., or other independent
certified public accountants acceptable to the Bank;

          (iv)  Promptly after the filing or receiving thereof, copies of all
reports and notices with respect to any employee benefit plan maintained by the
Borrower disclosing: (a) any Reportable Event; (b) any "prohibited transaction"
within the meaning of Section 4975 of the Code; or (c) the voluntary or
involuntary termination of any such plan that is subject to Title IV of ERISA;

          (v)   no later than seventy-five (75) days after the end of each of
the first three fiscal quarters of each fiscal year of the Borrower in the case
of Sections 4.02(a)-(d) and (f)-(m), and one hundred and twenty (120) days after
the end of each fiscal year of the Borrower in the case of Sections 4.02(a)-(m),
a statement in form and substance satisfactory to Bank evidencing

                                      -12-

<PAGE>
 
compliance with the appropriate requirements of Section 4.02, certified by the
Chief Financial Officer or President of Borrower; and

          (vi)   such other information respecting the condition or operations,
financial or otherwise, of the Borrower or any of its Subsidiaries as the Bank
may from time to time reasonably request.

     (d)  INSPECTION OF BOOKS AND RECORDS. Allow the Bank and its agents to
          -------------------------------                                  
inspect the Borrower's properties and examine, audit, and make copies of books
and records at any reasonable time. If any of the Borrower's properties, books
or records are in the possession of a third party to permit the Bank or its
agents to have access to perform inspections or audits and to respond to the
Bank's requests for information concerning such properties, books and records.

     (e)  NOTICE OF EVENTS. Give the Bank, promptly upon the Borrower's
          ----------------
obtaining such knowledge, written notice of any condition or event which has
resulted or would with the giving of notice, lapse of time or both, result in:

          (i)    a material adverse change in the Borrower's consolidated
financial condition or operations, or

          (ii)   a breach of or noncompliance with any material term,
representation, warranty, condition or covenant contained herein or in any
document delivered pursuant hereto, or

          (iii)  a breach of or noncompliance with any material term,
representation, warranty, condition or covenant of any material contract to
which the Borrower or any of its Subsidiaries is a party or by which they or
their property may be bound.

                                      -13-

<PAGE>
 
     (f)  NOTICE OF DISPUTES. Give the Bank, promptly upon the Borrower's
          ------------------                                             
obtaining such knowledge, written notice of any legal, judicial or regulatory
proceedings affecting the Borrower or any of its Subsidiaries in which the
amount involved is material and not covered by insurance and which, if adversely
determined, would have a material adverse effect upon the Borrower.

     (g)  FORMATION OF SUBSIDIARIES. Advise the Bank promptly of the formation,
          -------------------------                                            
restructuring, sale, transfer or liquidation of any Subsidiary and update
Exhibit C to this Agreement accordingly.

     (h)  GUARANTEES. Within ninety (90) days of the date hereof, deliver to the
          ----------
Bank guarantees of the Borrower's obligations hereunder by all Subsidiaries of
the Borrower listed in Exhibit C hereto, all in form and substance satisfactory
to the Bank.

     Section 4.02. NEGATIVE COVENANTS. So long as the Notes shall remain unpaid
                   ------------------                                          
or the Bank shall have any Commitment hereunder, the Borrower will not, without
the written consent of the Bank:

     (a)  DEBT. Create or suffer to exist, or permit any of its Subsidiaries to
          ----
create or suffer to exist, any Debt, including Debt secured by the cash
surrender value of any life insurance policy owned by the Borrower, whether or
not such debt is recognized on the Borrower's financial statements as prepared
in accordance with generally accepted accounting principles; other than:

          (i)    Debt described on Exhibit D hereto;

          (ii)   the Loan contemplated hereby;

          (iii)  purchase money obligations which are secured by security
interests in the equipment or fixtures so acquired, and capital leases entered
into for the use and acquisition of

                                      -14-

<PAGE>
 
equipment, in the ordinary course of business, and guarantees of any such Debt;
provided that such security interests shall not extend to other assets of the
Borrower or its Subsidiaries;

          (iv)   trade debt incurred in the ordinary course of business and on
normal and customary trade terms;

          (v)    Debt arising out of the issuance of letters of credit issued
by Bank or with the consent of Bank, in support of Borrower or its Subsidiaries;

          (vi)   notes payable for a term not in excess of five (5) years,
issued in connection with the purchase of shares of stock of the Borrower owned
by shareholders or in connection with the payment of benefits due to Persons who
leave the employment of the Borrower; provided however, that the issuance of
such notes by the Borrower shall not otherwise create an Event of Default
hereunder or an event which, with the passage of time or the giving of notice,
would constitute an Event of Default hereunder;

          (vii)  Debt incurred by the Borrower to its Subsidiaries or incurred
by Subsidiaries to the Borrower; and

          (viii) Debt secured by the cash surrender value of life insurance
policies owned by the Borrower, whether or not such debt is recognized on the
Borrower's financial statements, providing that the proceeds of such Debt are
either used solely for the purpose of making scheduled premium payments
currently due on such policies or making investments in liquid marketable
securities.

     (b)  NET WORTH RATIO. Permit its Net Worth Ratio (after taking into account
          ---------------                                                       
all Restricted Cash) to be greater than the ratio of 2.5:1.0 at all times or
permit its net worth to be

                                      -15-

<PAGE>
 
greater than the ratio of 2.25:1.0 after excluding the accrued liability,
"Accrued Bonuses," from "outstanding Indebtedness," as defined in Section 6.01.

     (c)  CONSOLIDATED TANGIBLE NET WORTH. Permit its Consolidated Tangible Net
          -------------------------------                                      
Worth to be less than Forty Million Dollars ($40,000,000) at all times.

     (d)  WORKING CAPITAL & CURRENT RATIO. Permit its Net Working Capital to be
          -------------------------------                                      
less than Seventeen Million Dollars ($17,000,000)or permit its ratio of Current
Assets to Current Liabilities to be less than 1.20 to 1.0, both on a
consolidated basis.

     (e)  NET INCOME. Permit its Consolidated Net Income in any fiscal year
          ----------
to be less than Two Million Dollars ($2,000,000).

     (f)  SALES OF ASSETS. Permit any Subsidiary to sell, lease, abandon or
          ---------------
otherwise dispose of, directly or indirectly, a material amount of the assets of
the Borrower or the Borrower and its Subsidiaries, taken as a whole, except for
sales, leases or transfers to the Borrower or any wholly-owned Subsidiary.

     (g)  CONSOLIDATION, MERGER. Permit any Subsidiary to, consolidate with or
          ---------------------                                               
merge into any other corporation or entity, except (i) any Subsidiary may
consolidate with or merge into the Borrower or a wholly-owned Subsidiary; and
(ii) any Subsidiary the value of whose assets are not material may consolidate
or merge with any other entity provided that the terms of such consolidation or
merger are negotiated at arm's length and constitute fair value under the
circumstances.

     (h)  COVERAGE. Permit its Consolidated Pre interest expense and pre-tax
          --------                                                          
income during any consecutive twelve (12) month period (computed on a quarterly
basis) to be less than the sum

                                      -16-

<PAGE>
 
of two hundred percent (200%) of consolidated current maturities of long term
debt, and consolidated interest expense for the preceding twelve month period.
(This ratio will be calculated at the end of each fiscal quarter, using the
results of that quarter and each of the three immediately preceding quarters.)

     (i)  GUARANTIES. Permit any Subsidiary to, guarantee, endorse or otherwise
          ----------                                                           
become or be contingently liable upon any Indebtedness or obligations of any
person, firm or corporation (other than Indebtedness or obligations of the
Borrower or any Subsidiary permitted under this Agreement), in excess of
$250,000 on an unsecured basis and $500,000 on a secured basis, at any time in
the aggregate, except in the ordinary course of business as may be necessary to
support its Subsidiaries.

     (j)  LIENS, ETC. And will not permit any Subsidiary to create or suffer
          ----------
to exist any lien, security interest or other charge or encumbrance, or any
other type of preferential arrangement, upon or with respect to any of its
accounts receivable and properties, whether now owned or hereafter acquired,
except:

          (i)    liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty or being
contested in good faith;

          (ii)   liens of carriers, warehousemen, mechanics, materialmen,
landlords and other liens imposed by law, incurred in the ordinary course of
business for sums not yet delinquent or being contested in good faith;

          (iii)  liens securing Debt permitted under Section 4.02(a) and
4.02(i); and

                                      -17-

<PAGE>
 
          (iv)   other liens or encumbrances which in the aggregate are
immaterial to the Borrower and its Subsidiaries on a consolidated basis and are
incurred in the ordinary course of the Borrower's business.


     (k)  INVESTMENT AND ADVANCES. Permit any Subsidiary (i) to advance, lend or
          -----------------------                                               
contribute funds to any Person (other than Borrower or any Subsidiary), whether
by way of loan, stock purchase, capital contribution or otherwise, or (ii) to
acquire by purchase of stock or by purchase of assets, in exchange for cash or
shares of capital stock or other securities of the Borrower, any Subsidiary or
any other Person, all or substantially all of any division or portion of the
assets and business of any other Person (other than the Borrower or any
Subsidiary or Strategic Compensation Associates); (iii) provided, however, that
the Borrower may lend funds (excluding payments to employees against future
bonuses) to employees for the sole purpose of purchasing shares of common stock
of the Borrower and the Borrower may loan or provide guarantees up to but not in
excess of at any one time One Million Five Hundred Thousand Dollars ($1,500,000)
in the aggregate to employees of the Borrower for other purposes.

     (1)  ERISA COMPLIANCE. And with respect to any employee benefit plan
          ----------------                                               
maintained by it or any Subsidiary, permit:

          (i)    any "prohibited transaction" as such term is defined in
Section 4975 of the Code;

          (ii)   any "accumulated funding deficiency" as such term is defined in
Section 412(a) of the Code;

                                      -18-

<PAGE>
 
          (iii)  the voluntary or involuntary termination of any such Plan under
circumstances that could result in material liability of the Borrower; or

          (iv)   the imposition of a lien on the property of the Borrower
pursuant to Section 4068 of ERISA or Section 412(a) of the Code.

     (m)  Other Business Activities. Engage in any business activities
          -------------------------- ---------------------------------
substantially different from the Borrower's present business.
- ------------------------------------------------------------ 



                                   ARTICLE V

                               EVENTS OF DEFAULT

     Section 5.01. EVENTS OF DEFAULT. The occurrence of any one of the following
                   --------- -------                                            
events shall be an "Event of Default" hereunder:

     (a)  The Borrower shall fail to pay any installment of principal of, or
interest on, the Notes when due; or

     (b)  Any representation or warranty made by the Borrower herein or by the
Borrower (or any of its officers) in connection with this Agreement shall prove
to have been incorrect in any material respect when made; or

     (c)  The Borrower shall fail to perform or observe any of the terms,
covenants or agreements contained in Article IV of this Agreement; or

     (d)  The Borrower shall fail to perform or observe any other term, covenant
or agreement contained in any other section of this Agreement and any such
failure shall remain unremedied for thirty (30) days thereafter; or

                                      -19-

<PAGE>
 
     (e)  The Borrower or any of its Subsidiaries shall:

          (i)    fail to pay any material Debt (excluding Debt evidenced by the
Notes) of the Borrower or such Subsidiary (as the case may be), or any interest
or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or

          (ii)   fail to perform any term, covenant or condition on its part to
be performed under any agreement or instrument relating to any such material
Debt, when required to be performed, and such failure shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such failure to perform is to accelerate, or to permit the
acceleration of, the maturity of such Debt; or any such Debt shall be declared
to be due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof; or

     (f)  The Borrower or any of its Subsidiaries shall admit in writing its
inability to pay its debts, or shall make a general assignment for the benefit
of creditors; or any proceeding shall be instituted by or against the Borrower
or any of its Subsidiaries seeking to adjudicate it bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property, and any
such proceeding instituted against the Borrower or such Subsidiary shall not
have

                                      -20-

<PAGE>
 
been dismissed after sixty (60) days; or the Borrower or any of its Subsidiaries
shall take any corporate action to authorize any of the actions set forth above
in this subsection (f); or

     (g) A judgment or order for the payment of money in an amount in excess of
$500,000 shall be rendered against the Borrower or any of its Subsidiaries and
such judgment or order shall continue unsatisfied or unstayed, and in effect for
a period of thirty (30) consecutive days; or

     (h) The institution of a voluntary or involuntary termination of any
employee benefit plan maintained by the Borrower or any Subsidiary pursuant to
Title IV of ERISA if, as of the date thereof, the amount of unfunded "benefit
liabilities" is (after giving effect to the tax consequences thereof), in the
good faith judgment of the Bank, material.

     (i) A material adverse change occurs in the Borrower's financial condition,
properties, or ability to repay the Revolving Loan.

     Section 5.02. UPON AN EVENT OF DEFAULT. If any Event of Default shall have
                   ------------------------                                    
occurred and be continuing, then:

     (a) if the Event of Default is described in Section 5.01(f), the Commitment
shall forthwith terminate and the Notes, all interest thereon, and all other
amounts payable under this Agreement shall become forthwith due and payable,
without presentment, demand, protest, or notice of any kind, all of which are
hereby expressly waived by the Borrower, and

     (b) if the Event of Default is described in any Section other than Section
5.01(f), the Bank, may by notice to the Borrower, (i) declare the Commitment to
be terminated, whereupon the same shall forthwith terminate, or (ii) declare the
                                                             --
Notes, all interest thereon and all other amounts payable under this Agreement
to be forthwith due and payable, whereupon the Notes, all such

                                    - 21 -

<PAGE>
 
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower;



                                  ARTICLE VI

                              CERTAIN DEFINITIONS

     Section 6.01 CERTAIN DEFINITIONS. As used herein, and unless otherwise
                  -------------------                                      
defined herein, the following terms have the following respective meanings:

     "Business Day". Unless otherwise provided in this Agreement, a business day
is a day other than a Saturday or a Sunday on which the Bank is open for
business in California. All payments and disbursements which would be due on a
day which is not a Business Day will be due on the next Business Day. All
payments received on a day which is not a business day will be applied to the
credit on the next business day.

     "Commitment" shall mean the amount of $5,000,000 which the Borrower is,
     ------------
at any time permitted to borrow in accordance with Section 1.01 and Section
1.02.

     "Consolidated Gross Expenses" means the annual total of all costs and 
     -----------------------------    
expenses of the Borrower and each Subsidiary determined in accordance with
generally accepted accounting principles consistent with those applied in the
preparation of the financial statements referred to in Section 3.01(f) as such
principles may be modified from time to time.

     "Consolidated Gross Revenues" means the annual total of all items of income
     ----------------------------- 
and revenues of the Borrower and each Subsidiary, determined in accordance with
generally accepted accounting

                                    - 22 -

<PAGE>
 
principles consistent with those applied in the preparation of the financial
statements referred to in Section 3.01(f) as such principles may be modified
from time to time.

     "Consolidated Net Income" means Consolidated Gross Revenues less 
     -------------------------
Consolidated Gross Expenses (adding or subtracting, as appropriate extraordinary
income or expenses) and less all taxes.

     "Consolidated Tangible Net Worth" means the total of all assets of the
     ---------------------------------                                      
Borrower and its Subsidiaries, determined on a consolidated basis, less the sum
of (i) all liabilities of the Borrower and its Subsidiaries, determined on a
consolidated basis, except for such amounts which are specifically subordinated
to the Bank in a form satisfactory to the Bank and (ii) the amount, if any, of
intangible assets such as goodwill, trademarks, trademark rights, trade name
rights, copyrights, patents, patent rights and licenses, unamortized debt
discounts and expenses which appear on the asset side of the consolidated
balance sheet of the Borrower and its Subsidiaries, and (iii) all amounts due
from officers, directors, or shareholders of the Borrower where the Borrower
retains no rights of offset against other indebtedness.

     "Current Assets" and "Current Liabilities", means those assets and 
     ----------------     --------------------- 
liabilities which are so classified by the Borrower's certified public
accountant in accordance with generally accepted accounting principles, except
that deferred taxes shall be excluded from Current Liabilities for purpose of
this calculation.

     "Debt" means:
     ------

          (i) Indebtedness for borrowed money or for the deferred purchase price
of property or services (other than trade debt to vendors and suppliers in the
ordinary course of

                                    - 23 -

<PAGE>
 
business and not more than ninety (90) days overdue) in respect of which such
corporation is liable, contingently or otherwise, as obligor, guarantor or
otherwise, or in respect of which such corporation otherwise assures a creditor
against loss;

          (ii)  obligations of such corporation under leases which shall have
been or should be, in accordance with generally accepted accounting principles,
included in determining liabilities as shown on the liability side of a balance
sheet of such Person as of the date as of which Indebtedness is to be
determined.

          (iii) unfunded benefit liabilities under each employee benefit plan
maintained for employees of such corporation and covered by Title IV or ERISA.

     "Indebtedness" of any Person, means all items of indebtedness which, in
     --------------
accordance with generally accepted accounting principles, would be included in
determining liabilities as shown on the liability side of a balance sheet of
such Person as of the date as of which Indebtedness is to be determined.

     "LIBOR Rate" means for each Advance under the LIBOR-Rate Option, the rate 
     ------------
per annum determined by the Bank by dividing (the resulting quotient to be
rounded upward to the nearest 1/100 of 1%) (x) the rate of interest (which shall
be the same for each day of such LIBOR-Rate Advance) determined in good faith by
the Bank by reference to the Wall street Journal or otherwise (which
determination shall be presumed correct absent obvious error) to be the average
of the rates per annum for deposits in U.S. Dollars offered to banks in the
London Interbank market at approximately 11:00 o'clock a.m., London time, two
London Business Days prior to the first day of

                                    - 24 -

<PAGE>
 
such Advance for delivery on the first day of such Advance by (y) a number equal
to 1.00 minus the LIBOR-Rate Reserve Percentage.

     The "LIBOR-Rate Reserve Percentage" for any date is the maximum effective
percentage (expressed as a decimal fraction, rounded upward to the nearest 1/100
of 1%), as determined in good faith by the Bank (which determination shall be
conclusive absent manifest error), which is in effect on such day as prescribed
by the Board of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including, with limitation, supplemental,
marginal and emergency reserve requirements) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency liabilities") of a member bank
in such System but only to the extent actually incurred by the Bank, the Bank's
determination thereof to be presumed correct in the absence of obvious error.
The LIBOR-Rate shall be adjusted automatically as of the effective date of each
change in the LIBOR-Rate Reserve Percentage.

     Advances bearing interest under the LIBOR-Rate Option shall be referred to
as "LIBOR-Rate Advances".

     "London Business Day" means a Business Day which is also a day for dealing 
     --------------------- 
in deposits of U.S. dollars by and among banks in the London Interbank Market.

     "Long Term Debt" means any Debt which does not finally mature within twelve
     ---------------- 
(12) months.

     "Material" means, in reference to payments or liabilities, an amount equal
     ----------
to or exceeding five percent (5%) of Consolidated Tangible Net Worth; in
reference to other matters a condition or

                                    - 25 -

<PAGE>
 
event which creates a change or which with the giving of notice or lapse of
time, or both, would create a change in the financial condition of the Borrower
and its Subsidiaries in this amount.

     "Month" with respect to a LIBOR-Rate Interest Period has the following
     -------
meaning unless a calendar month is specified or the context otherwise clearly
requires:

          (i) if the first day of such LIBOR-Rate Interest Period is the last
day of a calendar month, a "month" is the interval between the last days of
consecutive calendar months;

          (ii) otherwise, a "month" is the interval between the days in
consecutive calendar months numerically corresponding to the first day of such
LIBOR-Rate Interest Period or, if there is no such numerically corresponding day
in a particular calendar month, then the last day of such calendar month.

     "Net Working Capital" means the excess of Current Assets over Current
     ---------------------                                                 
Liabilities of the Borrower and its Subsidiaries (after taking into account all
Restricted Cash).

     "Net Worth Ratio" means the ratio of (i) outstanding Indebtedness of the
     -----------------                                                        
Borrower and its Subsidiaries including outstanding standby letters of credit
less outstanding borrowings which are secured by said letters of credit on a
consolidated basis, less subordinated debt, to (ii) Consolidated Tangible Net
Worth plus subordinated debt and shall be expressed as a ratio, so that, for
example, if the amount of such Indebtedness is twice the amount of Consolidated
Tangible Net Worth, then the Net Worth Ratio is 2 to 1.

     "Person" means any natural person, corporation, firm, association,
     --------
government, governmental agency or any other entity and whether acting in an
individual, fiduciary or other capacity.

                                    - 26 -

<PAGE>
 
     "Restricted Cash" means all cash of the Borrower or any Subsidiary which is
     ----------------- 
not available for the payment of principal or interest hereunder.

     "Subsidiary" means as to any parent corporation, any other corporation
     ------------
of which at least a majority of the outstanding shares having by the terms
thereof ordinary voting power to elect a majority of the Board of Directors of
such corporation (irrespective of whether or not at the time shares of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such parent corporation and/or one or more of
its Subsidiaries and also means any partnership in which such parent corporation
has directly or indirectly an interest sufficient to control the management or
operations of the partnership.

     "Unused Commitment" means the Commitment amount minus the sum of the 
     -------------------    
aggregate amount of all Advances outstanding hereunder.



                                  ARTICLE VII

                                 MISCELLANEOUS

     SECTION 7.01 AMENDMENTS, ETC. No amendment or waiver of any provision of
                  ---------------                                            
this Agreement or of the Notes, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Bank, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.

                                    - 27 -

<PAGE>
 
     Section 7.02 NOTICES, ETC. All notices and other communications provided
                  ------------
for hereunder shall be in writing (including telegraphic communication) and
mailed, transmitted by facsimile transmission, telegraphed or delivered, if to
the Borrower, at its address at 1800 Century Park East, Suite 900, Los Angeles,
Calif