-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CO392P3zwMAiyoTZS76PtHp+jGOZzaZ6SmWfS23HIFVylW8fZJGru4zJ8SbmPUyX iFM26f1eXh6+Vv2DtzBYtQ== 0000912057-97-009620.txt : 19970325 0000912057-97-009620.hdr.sgml : 19970325 ACCESSION NUMBER: 0000912057-97-009620 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970321 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HALF ROBERT INTERNATIONAL INC /DE/ CENTRAL INDEX KEY: 0000315213 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HELP SUPPLY SERVICES [7363] IRS NUMBER: 941648752 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-10427 FILM NUMBER: 97560260 BUSINESS ADDRESS: STREET 1: 2884 SAND HILL ROAD STREET 2: STE 200 CITY: MENLO PARK STATE: CA ZIP: 94025 BUSINESS PHONE: 4158549700 MAIL ADDRESS: STREET 1: 2884 SAND HILL ROAD STREET 2: STE 200 CITY: MENLO PARK STATE: CA ZIP: 94025 FORMER COMPANY: FORMER CONFORMED NAME: BOOTHE FINANCIAL CORP /DE/ DATE OF NAME CHANGE: 19870721 FORMER COMPANY: FORMER CONFORMED NAME: BOOTHE INTERIM CORP DATE OF NAME CHANGE: 19600201 10-K405 1 10-K405 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ COMMISSION FILE NUMBER 1-10427 ROBERT HALF INTERNATIONAL INC. (Exact name of registrant as specified in its charter) DELAWARE 94-1648752 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2884 SAND HILL ROAD, SUITE 200, MENLO PARK, CALIFORNIA 94025 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (415) 234-6000 ------------------------ Securities registered pursuant to Section 12(b) of the Act: NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED Common Stock, Par Value $.001 per Share New York Stock Exchange Preferred Share Purchase Rights New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None ------------------------ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _X_ No ____ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ As of February 28, 1997, the aggregate market value of the Common Stock held by non-affiliates of the registrant was approximately $2,262,309,000 based on the closing sale price on that date. This amount excludes the market value of 5,673,627 shares of Common Stock held by registrant's directors and officers and their affiliates. As of February 28, 1997, there were outstanding 60,023,397 shares of the registrant's Common Stock. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Proxy Statement to be mailed to stockholders in connection with the registrant's annual meeting of stockholders, scheduled to be held in May 1997, are incorporated by reference in Part III of this report. Except as expressly incorporated by reference, the registrant's Proxy Statement shall not be deemed to be part of this report. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART I ITEM 1. BUSINESS Robert Half International Inc. is the world's largest specialized provider of temporary and permanent personnel in the fields of accounting and finance. Its divisions include ACCOUNTEMPS-Registered Trademark- and ROBERT HALF-Registered Trademark-, providers of temporary and permanent personnel, respectively, in the fields of accounting and finance. The Company, utilizing its experience as a specialized provider of temporary and permanent personnel, has expanded into additional specialty fields. In 1991, the Company formed OFFICETEAM-Registered Trademark- to provide skilled temporary administrative and office personnel. In 1994, the Company established RHI CONSULTING-Registered Trademark- to concentrate on providing temporary and contract information technology professionals in positions ranging from PC support technician to chief information officer. In 1992, the Company acquired THE AFFILIATES-Registered Trademark-, which focuses on placing temporary and permanent employees in paralegal, legal administrative and other legal support positions. The Company's business was originally founded in 1948. Prior to 1986, the Company was primarily a franchisor of ACCOUNTEMPS and ROBERT HALF offices. Beginning in 1986, the Company and its current management embarked on a strategy of acquiring franchised locations and other local or regional independent providers of specialized temporary service personnel. The Company has acquired all but three of the ACCOUNTEMPS and ROBERT HALF franchises in 47 separate transactions, and has acquired 17 other local or regional providers of specialized temporary service personnel. Since 1986, the Company has significantly expanded operations at many of the acquired locations and has opened many new locations. The Company believes that direct ownership of offices allows it to better monitor and protect the image of the ACCOUNTEMPS and ROBERT HALF names, promotes a more consistent and higher level of quality and service throughout its network of offices and improves profitability by centralizing many of its administrative functions. The Company currently has more than 200 offices in 37 states and 5 foreign countries and placed approximately 129,000 employees on temporary assignment with clients in 1996. ACCOUNTEMPS The ACCOUNTEMPS temporary services division offers customers a reliable and economical means of dealing with uneven or peak work loads for accounting, tax and finance personnel caused by such predictable events as vacations, taking inventories, tax work, month-end activities and special projects and such unpredictable events as illness and emergencies. Businesses increasingly view the use of temporary employees as a means of controlling personnel costs and converting such costs from fixed to variable. The cost and inconvenience to clients of hiring and firing permanent employees are eliminated by the use of ACCOUNTEMPS temporaries. The temporary workers are employees of ACCOUNTEMPS and are paid by ACCOUNTEMPS only when working on customer assignments. The customer pays a fixed rate only for hours worked. ACCOUNTEMPS clients may fill their permanent employment needs by using an ACCOUNTEMPS employee on a trial basis and, if so desired, "converting" the temporary position to a permanent position. The client typically pays a one-time fee for such conversions. OFFICETEAM The Company's OFFICETEAM division, which commenced operations in 1991, places temporary and permanent office and administrative personnel, ranging from word processors to office managers, from over 150 locations in the United States and Canada. OFFICETEAM operates in much the same fashion as the ACCOUNTEMPS and ROBERT HALF divisions. 1 ROBERT HALF The Company offers permanent placement services through its office network under the name ROBERT HALF. The Company's ROBERT HALF division specializes in placing accounting, financial, tax and banking personnel. Fees for successful permanent placements are paid only by the employer and are generally a percentage of the new employee's annual compensation. No fee for permanent placement services is charged to employment candidates. RHI CONSULTING The Company's RHI CONSULTING division, which commenced operations in 1994, specializes in providing information technology contract consultants in areas ranging from multiple platform systems integration to end-user support, including specialists in programming, networking, systems integration, database design and help desk support. RHI Consulting conducts its activities from over 60 locations in the United States, Canada and Europe. THE AFFILIATES In 1992, the Company acquired THE AFFILIATES, a small operation involving only a limited number of offices, which places temporary and permanent employees in paralegal, legal administrative and legal secretarial positions. The legal profession's requirements (the need for confidentiality, accuracy and reliability, a strong drive toward cost-effectiveness, and frequent peak workload periods) are similar to the demands of the clients of the ACCOUNTEMPS division. MARKETING AND RECRUITING The Company markets its services to clients as well as employment candidates. Local marketing and recruiting are generally conducted by each office or related group of offices. Advertising directed to clients and employment candidates consists primarily of yellow pages advertisements, classified advertisements and radio. Direct marketing through mail and telephone solicitation also constitutes a significant portion of the Company's total advertising. National advertising conducted by the Company consists primarily of print advertisements in national newspapers, magazines and certain trade journals. Joint marketing arrangements have been entered into with Microsoft, Lotus Development Corporation, WordPerfect Corporation, Peachtree Software, Inc., and Computer Associates International, Inc. and typically provide for cooperative advertising, joint mailings and similar promotional activities. The Company also actively seeks endorsements and affiliations with professional organizations in the business management, office administration and professional secretarial fields. The Company also conducts public relations activities designed to enhance public recognition of the Company and its services. Local employees are encouraged to be active in civic organizations and industry trade groups. The Company owns many trademarks, service marks and tradenames, including the ROBERT HALF-Registered Trademark-, ACCOUNTEMPS-Registered Trademark-, OFFICETEAM-Registered Trademark-, THE AFFILIATES-Registered Trademark- and RHI CONSULTING-Registered Trademark- marks, which are registered in the United States and in a number of foreign countries. ORGANIZATION Management of the Company's operations is coordinated from its headquarters in Menlo Park, California. The Company's headquarters provides support and centralized services to its offices in the administrative, marketing, accounting, training and legal areas, particularly as it relates to the standardization of the operating procedures of its offices. The Company has more than 200 offices in 37 states and five foreign countries. Office managers are responsible for most activities of their offices, including sales, local advertising and marketing and recruitment. 2 COMPETITION The Company faces competition in its efforts to attract clients as well as high-quality specialized employment candidates. The temporary and permanent placement businesses are highly competitive, with a number of firms offering services similar to those provided by the Company on a national, regional or local basis. In many areas the local companies are the strongest competitors. The most significant competitive factors in the temporary and permanent placement businesses are price and the reliability of service, both of which are often a function of the availability and quality of personnel. The Company believes it derives a competitive advantage from its long experience with and commitment to the specialized employment market, its national presence, and its various marketing activities. EMPLOYEES The Company has approximately 2,900 full-time staff employees. The Company's offices placed approximately 129,000 employees on temporary assignments with clients during 1996. Temporary employees placed by the Company are the Company's employees for all purposes while they are working on assignments. The Company pays the related costs of employment, such as workers' compensation insurance, state and federal unemployment taxes, social security and certain fringe benefits. The Company provides voluntary health insurance coverage to interested temporary employees. OTHER INFORMATION The Company's current business constitutes a single business segment. (See Item 8. Financial Statements and Supplementary Data for financial information about the Company.) The Company is not dependent upon a single customer or a limited number of customers. The Company's operations are generally more active in the first and fourth quarters of a calendar year. Order backlog is not a material aspect of the Company's business and no material portion of the Company's business is subject to government contracts. The Company does not have any material expenditures for research and development. Compliance with federal, state or local environmental protection laws has no material effect on the capital expenditures, earnings or competitive position of the Company. Information about foreign operations is contained in Note M of Notes to Consolidated Financial Statements in Item 8. The Company does not have export sales. ITEM 2. PROPERTIES The Company's headquarters is located in Menlo Park, California. Placement activities are conducted through more than 200 offices located in the United States, Canada, the United Kingdom, Belgium, France and the Netherlands. All of the offices are leased. ITEM 3. LEGAL PROCEEDINGS The Company is not a party to any material pending legal proceedings other than routine litigation incidental to its business. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted to a vote of the Company's security holders during the fourth quarter of the fiscal year covered by this report. 3 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's Common Stock is listed for trading on the New York Stock Exchange under the symbol "RHI". On December 31, 1996, there were approximately 1,600 holders of record of the Common Stock. Following is a list by fiscal quarters of the sales prices of the stock as quoted on the New York Stock Exchange, adjusted, as appropriate, to reflect the two-for-one stock split effected in the form of a stock dividend in June 1996:
SALES PRICES -------------------- 1996 HIGH LOW -------------------------------- -------- --------- 4th Quarter..................... $41 1/2 $32 5/8 3rd Quarter..................... $40 1/4 $24 1/8 2nd Quarter..................... $30 7/16 $24 3/8 1st Quarter..................... $24 7/8 $19 1/2 SALES PRICES -------------------- 1995 HIGH LOW -------------------------------- -------- --------- 4th Quarter..................... $22 5/16 $15 15/16 3rd Quarter..................... $17 15/16 $12 5/8 2nd Quarter..................... $14 5/16 $ 9 13/16 1st Quarter..................... $13 5/16 $10 1/2
No cash dividends were paid in 1996 or 1995. The Company, as it deems appropriate, may continue to retain all earnings for use in its business or may consider paying a dividend in the future. 4 ITEM 6. SELECTED FINANCIAL DATA Following is a table of selected financial data of the Company for the last five years:
YEAR ENDED DECEMBER 31, ---------------------------------------------------------- 1996 1995 1994 1993 1992 ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS) INCOME STATEMENT DATA: Net service revenues................................. $ 898,635 $ 628,526 $ 446,328 $ 306,166 $ 220,179 Direct costs of services, consisting of payroll, payroll taxes and insurance costs for temporary employees........................................... 545,343 384,449 273,327 188,292 131,875 ---------- ---------- ---------- ---------- ---------- Gross margin......................................... 353,292 244,077 173,001 117,874 88,304 Selling, general and administrative expenses......... 246,485 170,684 121,640 88,074 72,136 Amortization of intangible assets.................... 5,405 4,767 4,584 4,251 3,961 Interest (income) expense............................ (2,243) (463) 1,570 3,992 4,301 ---------- ---------- ---------- ---------- ---------- Income before income taxes........................... 103,645 69,089 45,207 21,557 7,906 Provision for income taxes........................... 42,543 28,791 19,090 9,834 3,524 ---------- ---------- ---------- ---------- ---------- Net income........................................... $ 61,102 $ 40,298 $ 26,117 $ 11,723 $ 4,382 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
YEAR ENDED DECEMBER 31, ---------------------------------------------------------- 1996 1995 1994 1993 1992 ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) INCOME PER SHARE:.................................... $ 1.00 $ .68 $ .46 $ .23 $ .09 WEIGHTED AVERAGE NUMBER OF SHARES:................... 61,178 59,417 56,969 50,520 48,014
DECEMBER 31, ---------------------------------------------------------- 1996 1995 1994 1993 1992 ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS) BALANCE SHEET DATA: Intangible assets, net............................... $ 174,663 $ 155,441 $ 152,824 $ 152,156 $ 143,757 Total assets......................................... 416,012 301,140 227,761 204,598 181,999 Debt financing....................................... 6,611 5,725 4,214 32,740 61,855 Stockholders' equity................................. 308,445 227,930 176,995 133,602 90,972
All shares and per share amounts have been restated to retroactively reflect the two-for-one stock splits effected in the form of a stock dividend in both June 1996 and August 1994. 5 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS FOR THE THREE YEARS ENDED DECEMBER 31, 1996 Temporary services revenues were $829 million, $577 million and $406 million for the years ended December 31, 1996, 1995 and 1994, respectively, increasing by 44% during 1996 and 42% during 1995. The increase in revenues during these periods reflected in part revenues generated from the Company's OFFICETEAM-REGISTERED TRADEMARK- and RHI CONSULTING-REGISTERED TRADEMARK- divisions, which were started in 1991 and 1994, respectively. Permanent placement revenues were $70 million, $52 million and $40 million for the years ended December 31, 1996, 1995 and 1994, respectively, increasing by 35% during 1996 and 30% during 1995. Overall revenue increases reflect continued improvement in demand for the Company's services, which the Company believes is a result of increased acceptance in the use of professional staffing services. Revenues from companies acquired during 1996, 1995 and 1994 were not material. The Company currently has more than 200 offices in 37 states and five foreign countries. Domestic operations represented 90% of revenues for both the years ended December 31, 1996 and 1995 and 91% of revenues for the year ended December 31, 1994. Foreign operations represented 10% of revenues for both the years ended December 31, 1996 and 1995 and 9% of revenues for the year ended December 31, 1994. Gross margin dollars from the Company's temporary services represent revenues less direct costs of services, which consists of payroll, payroll taxes and insurance costs for temporary employees. Gross margin dollars from permanent placement services are equal to revenues, as there are no direct costs associated with such revenues. Gross margin dollars for the Company's temporary services were $283 million, $192 million and $133 million for the years ended December 31, 1996, 1995 and 1994, respectively, increasing by 47% in 1996 and 44% in 1995. Gross margin amounts equaled 34% of revenues for temporary services for the year ended December 31, 1996, and 33% for both the years ended December 31, 1995 and 1994, which the Company believes reflects its ability to adjust billing rates and wage rates to underlying market conditions. Gross margin dollars for the Company's permanent placement division were $70 million, $52 million and $40 million for each of the years ended December 31, 1996, 1995 and 1994, respectively, increasing by 35% and 30% in 1996 and 1995, respectively. Selling, general and administrative expenses were $246 million during 1996 compared to $171 million in 1995 and $122 million in 1994. Selling, general and administrative expenses as a percentage of revenues were 27% in all three of the years ended December 31, 1996, 1995 and 1994. Selling, general and administrative expenses consist primarily of staff compensation, advertising and occupancy costs, most of which generally follow changes in revenues. The Company allocates the excess of cost over the fair market value of the net tangible assets first to identifiable intangible assets, if any, and then to goodwill. Although management believes that goodwill has an unlimited life, the Company amortizes these costs over 40 years. Management believes that its strategy of making acquisitions of established companies in established markets and maintaining its presence in these markets preserves the goodwill for an indeterminate period. The carrying value of intangible assets is periodically reviewed by the Company and impairments are recognized when the expected future operating cash flows derived from such intangible assets is less than their carrying value. Based upon its most recent analysis, the Company believes that no material impairment of intangible assets existed at December 31, 1996. Intangible assets represented 42% of total assets and 57% of total stockholders' equity at December 31, 1996. Interest income for the years ended December 31, 1996, 1995 and 1994 was $2,948,000, $1,237,000 and $144,000, respectively. Interest expense for the years ended December 31, 1996, 1995 and 1994 was $705,000, $774,000 and $1,714,000, respectively. These changes reflect an increase in cash and cash equivalents. 6 The provision for income taxes was 41% for the year ended December 31, 1996 and 42% for both the years ended December 31, 1995 and 1994. The decrease in 1996 is the result of a smaller percentage of non-deductible intangible expenses. LIQUIDITY AND CAPITAL RESOURCES The change in the Company's liquidity during the past three years is the net effect of funds generated by operations and the funds used for the personnel services acquisitions, capital expenditures and principal payments on outstanding notes payable. No open market purchases of the Company's stock were made during the year ended December 31, 1996 and in November 1996 the Company formally terminated its previously approved 2 million share repurchase program. For the year ended December 31, 1996, the Company generated $54 million from operations, used $23 million in investing activities and provided $7 million from financing activities. The Company's working capital at December 31, 1996 included $80 million in cash and cash equivalents. In addition at December 31, 1996, the Company had available $66 million of its $75 million bank revolving line of credit. The Company's working capital requirements consist primarily of the financing of accounts receivable. While there can be no assurances in this regard, the Company expects that internally generated cash plus the bank revolving line of credit will be sufficient to support the working capital needs of the Company, the Company's fixed payments and other obligations on both a short-and long-term basis. As of December 31, 1996, the Company had no material capital commitments. The Company's revolving bank line has scheduled reductions in availability through 2001 when the agreement terminates. 7 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
DECEMBER 31, ---------------------- 1996 1995 ---------- ---------- ASSETS: Cash and cash equivalents................................................................. $ 80,181 $ 41,346 Accounts receivable, less allowances of $4,016 and $3,067................................. 125,383 84,955 Other current assets...................................................................... 12,184 7,349 ---------- ---------- Total current assets.................................................................... 217,748 133,650 Intangible assets, less accumulated amortization of $39,461 and $33,071................... 174,663 155,441 Other assets.............................................................................. 23,601 12,049 ---------- ---------- Total assets............................................................................ $ 416,012 $ 301,140 ---------- ---------- ---------- ---------- LIABILITIES AND STOCKHOLDERS' EQUITY: Accounts payable and accrued expenses..................................................... $ 15,049 $ 12,631 Accrued payroll costs..................................................................... 66,087 33,853 Income taxes payable...................................................................... 3,883 5,157 Current portion of notes payable and other indebtedness................................... 1,542 4,239 ---------- ---------- Total current liabilities............................................................... 86,561 55,880 Notes payable and other indebtedness, less current portion................................ 5,069 1,486 Deferred income taxes..................................................................... 15,937 15,844 ---------- ---------- Total liabilities....................................................................... 107,567 73,210 ---------- ---------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common Stock, $.001 par value, 100,000,000 shares authorized, 59,748,171 and 57,784,622 shares issued and outstanding in 1996 and 1995, respectively.......................... 60 58 Capital surplus......................................................................... 140,473 99,768 Deferred compensation................................................................... (26,802) (9,642) Accumulated translation adjustments..................................................... 23 51 Retained earnings....................................................................... 194,691 137,695 ---------- ---------- Total stockholders' equity............................................................ 308,445 227,930 ---------- ---------- Total liabilities and stockholders' equity............................................ $ 416,012 $ 301,140 ---------- ---------- ---------- ----------
All share amounts have been restated to retroactively reflect the two-for-one stock split effected in the form of a stock dividend in June 1996. The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 8 ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED DECEMBER 31, ---------------------------------- 1996 1995 1994 ---------- ---------- ---------- Net service revenues......................................................... $ 898,635 $ 628,526 $ 446,328 Direct costs of services, consisting of payroll, payroll taxes and insurance costs for temporary employees.............................................. 545,343 384,449 273,327 ---------- ---------- ---------- Gross margin................................................................. 353,292 244,077 173,001 Selling, general and administrative expenses................................. 246,485 170,684 121,640 Amortization of intangible assets............................................ 5,405 4,767 4,584 Interest (income) expense.................................................... (2,243) (463) 1,570 ---------- ---------- ---------- Income before income taxes................................................... 103,645 69,089 45,207 Provision for income taxes................................................... 42,543 28,791 19,090 ---------- ---------- ---------- Net income................................................................... $ 61,102 $ 40,298 $ 26,117 ---------- ---------- ---------- ---------- ---------- ---------- Income per share............................................................. $ 1.00 $ .68 $ .46 ---------- ---------- ---------- ---------- ---------- ----------
All per share amounts have been restated to retroactively reflect the two-for-one stock split effected in the form of a stock dividend in June 1996. The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 9 ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS)
YEARS ENDED DECEMBER 31, ------------------------------- 1996 1995 1994 --------- --------- --------- COMMON STOCK--SHARES: Balance at beginning of period................................................ 57,785 56,304 53,674 Issuance of common stock...................................................... -- -- 1,267 Issuance of restricted stock.................................................. 659 468 665 Repurchases of common stock................................................... (197) (228) (229) Exercises of stock options.................................................... 1,139 1,241 927 Issuance of common stock for acquisitions..................................... 362 -- -- --------- --------- --------- Balance at end of period.................................................... 59,748 57,785 56,304 --------- --------- --------- --------- --------- --------- COMMON STOCK--PAR VALUE: Balance at beginning of period................................................ $ 58 $ 56 $ 53,674 Issuance of common stock...................................................... -- -- 1 Issuances of restricted stock................................................. 1 1 668 Repurchases of common stock................................................... -- -- (118) Exercises of stock options.................................................... 1 1 427 Change in par value........................................................... -- -- (54,596) --------- --------- --------- Balance at end of period.................................................... $ 60 $ 58 $ 56 --------- --------- --------- --------- --------- --------- CAPITAL SURPLUS: Balance at beginning of period................................................ $ 99,768 $ 82,626 $ 6,335 Issuance of common stock--excess over par value............................... -- -- 12,588 Issuances of restricted stock--excess over par value.......................... 24,019 6,886 4,615 Exercises of stock options--excess over par value............................. 4,120 3,818 1,948 Tax benefits from exercises of stock options and restricted stock vesting..... 12,566 6,438 2,544 Change in par value........................................................... -- -- 54,596 --------- --------- --------- Balance at end of period.................................................... $ 140,473 $ 99,768 $ 82,626 --------- --------- --------- --------- --------- --------- DEFERRED COMPENSATION: Balance at beginning of period................................................ $ (9,642) $ (5,533) $ (2,113) Issuances of restricted stock................................................. (24,020) (6,887) (5,283) Amortization.................................................................. 6,860 2,778 1,863 --------- --------- --------- Balance at end of period.................................................... $ (26,802) $ (9,642) $ (5,533) --------- --------- --------- --------- --------- --------- ACCUMULATED TRANSLATION ADJUSTMENTS: Balance at beginning of period................................................ $ 51 $ (541) $ (589) Translation adjustments....................................................... (28) 592 48 --------- --------- --------- Balance at end of period.................................................... $ 23 $ 51 $ (541) --------- --------- --------- --------- --------- --------- RETAINED EARNINGS: Balance at beginning of period................................................ $ 137,695 $ 100,386 $ 76,295 Issuance of common stock for acquisition...................................... 1,285 -- -- Repurchases of common stock--excess over par value............................ (5,391) (2,989) (2,026) Net income.................................................................... 61,102 40,298 26,117 --------- --------- --------- Balance at end of period.................................................... $ 194,691 $ 137,695 $ 100,386 --------- --------- --------- --------- --------- ---------
1995 and 1994 share amounts have been restated to retroactively reflect the two-for-one stock split effected in the form of a stock dividend in June 1996. The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 10 ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
YEARS ENDED DECEMBER 31, -------------------------------- 1996 1995 1994 --------- --------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income.................................................................... $ 61,102 $ 40,298 $ 26,117 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of intangible assets......................................... 5,405 4,767 4,584 Depreciation expense...................................................... 6,457 3,564 2,673 Provision for deferred income taxes....................................... (1,702) (683) 1,096 Changes in assets and liabilities, net of effects of acquisitions: Increase (decrease) in accounts receivable................................ (38,565) (24,289) (18,292) Increase (decrease) in accounts payable, accrued expenses and accrued payroll costs........................................................... 17,893 15,106 5,795 Increase (decrease) in income taxes payable............................... (1,274) 2,976 389 Change in other assets, net of change in other liabilities................ 5,109 432 2,997 --------- --------- ---------- Total adjustments........................................................... (6,677) 1,873 (758) --------- --------- ---------- Net cash and cash equivalents provided by operating activities................ 54,425 42,171 25,359 CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES: Acquisitions, net of cash acquired............................................ (4,620) (1,024) (4,406) Capital expenditures.......................................................... (18,027) (8,417) (4,768) --------- --------- ---------- Net cash and cash equivalents used in investing activities.................... (22,647) (9,441) (9,174) CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES: Proceeds from issuance of common stock, net................................... -- -- 12,589 Borrowings under credit agreement............................................. -- -- 104,900 Repayments under credit agreement............................................. -- -- (135,200) Principal payments on notes payable and other indebtedness.................... (4,239) (1,289) (384) Proceeds and tax benefits from exercise of stock options and restricted stock vesting..................................................................... 16,687 10,256 4,919 Repurchases of common stock and common stock equivalents...................... (5,391) (2,989) (2,144) --------- --------- ---------- Net cash and cash equivalents provided by (used in) financing activities...... 7,057 5,978 (15,320) --------- --------- ---------- Net increase in cash and cash equivalents..................................... 38,835 38,708 865 Cash and cash equivalents at beginning of period.............................. 41,346 2,638 1,773 --------- --------- ---------- Cash and cash equivalents at end of period.................................... $ 80,181 $ 41,346 $ 2,638 --------- --------- ---------- --------- --------- ---------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for: Interest.................................................................... $ 521 $ 405 $ 1,420 Income taxes................................................................ $ 32,163 $ 21,853 $ 14,609 Acquisitions: Assets acquired-- Intangible assets......................................................... $ 9,932 $ 4,697 $ 5,452 Other..................................................................... 2,180 753 1,694 Liabilities incurred-- Notes payable and contracts............................................... (5,125) (2,800) (2,158) Other..................................................................... (1,082) (1,626) (582) Common stock issued......................................................... (1,285) -- -- --------- --------- ---------- Cash paid, net of cash acquired............................................. $ 4,620 $ 1,024 $ 4,406 --------- --------- ---------- --------- --------- ----------
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS. Robert Half International Inc. (the "Company") provides specialized staffing services through such divisions as ACCOUNTEMPS-REGISTERED TRADEMARK-, ROBERT HALF-REGISTERED TRADEMARK-, OFFICETEAM-REGISTERED TRADEMARK- and RHI CONSULTING-REGISTERED TRADEMARK-. The Company, through its ACCOUNTEMPS and ROBERT HALF divisions, is the world's largest specialized provider of temporary and permanent personnel in the fields of accounting and finance. OfficeTeam specializes in skilled temporary administrative personnel and RHI Consulting provides contract information technology professionals. Revenues are predominantly from temporary services. The Company operates in the United States, Canada and Europe. The Company is a Delaware corporation. PRINCIPLES OF CONSOLIDATION. The Consolidated Financial Statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All significant intercompany balances have been eliminated. Certain reclassifications have been made to the 1995 and 1994 financial statements to conform to the 1996 presentation. REVENUE RECOGNITION. Temporary services revenues are recognized when the services are rendered by the Company's temporary employees. Permanent placement revenues are recognized when employment candidates accept offers of permanent employment. Allowances are established to estimate losses due to placed candidates not remaining employed for the Company's guarantee period, typically 90 days. CASH AND CASH EQUIVALENTS. The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. INTANGIBLE ASSETS. Intangible assets primarily consist of the cost of acquired companies in excess of the fair market value of their net tangible assets at acquisition date, which are being amortized on a straight-line basis over a period of 40 years. The carrying value of intangible assets is periodically reviewed by the Company and impairments are recognized when the expected future operating cash flows derived from such intangible assets is less than their carrying value. Based upon its most recent analysis, the Company believes that no material impairment of intangible assets exists at December 31, 1996. INCOME TAXES. Deferred taxes are computed based on the difference between the financial statement and income tax bases of assets and liabilities using the enacted marginal tax rates. FOREIGN CURRENCY TRANSLATION. The results of operations of the Company's foreign subsidiaries are translated at the monthly average exchange rates prevailing during the period. The financial position of the Company's foreign subsidiaries are translated at the current exchange rates at the end of the period, and the related translation adjustments are recorded as part of Stockholders' Equity. Gains and losses resulting from foreign currency transactions are included in the Consolidated Statements of Income. USE OF ESTIMATES. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. NOTE B--ACQUISITIONS In July 1986, the Company acquired all of the outstanding stock of Robert Half Incorporated, the franchisor of the ACCOUNTEMPS and ROBERT HALF operations. Subsequently, in 64 separate transactions the Company acquired all of the outstanding stock of certain corporations operating ACCOUNTEMPS and ROBERT HALF franchised offices in the United States, the United Kingdom and Canada as well as other personnel 12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE B--ACQUISITIONS (CONTINUED) services businesses. The Company has paid approximately $206 million in cash, stock, notes and other indebtedness in these acquisitions, excluding transaction costs and cash acquired. These acquisitions were primarily accounted for as purchases, and the excess of cost of the acquired companies in excess of the fair market value of the net tangible assets acquired is being amortized over 40 years using the straight-line method. Results of operations of the acquired companies are included in the Consolidated Statements of Income from the dates of acquisition. The acquisitions made during 1996, 1995 and 1994 had no material pro forma impact on the results of operations. NOTE C--NOTES PAYABLE AND OTHER INDEBTEDNESS The Company issued promissory notes as well as other forms of indebtedness in connection with certain acquisitions. These are due in varying installments, carry varying interest rates and in aggregate amounted to $6,611,000 at December 31, 1996 and $5,725,000 at December 31, 1995. At December 31, 1996, $5,965,000 of the notes was secured by a standby letter of credit (see Note D). The following table shows the schedule of maturities for notes payable and other indebtedness at December 31, 1996 (in thousands): 1997................................................................ $ 1,542 1998................................................................ 2,370 1999................................................................ 46 2000................................................................ 53 2001................................................................ 57 Thereafter.......................................................... 2,543 --------- $ 6,611 --------- ---------
At December 31, 1996, all of the notes carried fixed rates and the weighted average interest rate for the above was approximately 6.9%, 7.3% and 8.2% for the years ended December 31, 1996, 1995 and 1994, respectively. NOTE D--BANK LOAN (REVOLVING CREDIT) The bank loan is an unsecured credit facility which provides a line of credit of up to $75,000,000, which is available to fund the Company's general business and working capital needs, including acquisitions and the purchase of the Company's common stock, and to cover the issuance of debt support standby letters of credit up to $15,000,000. As of December 31, 1996 and 1995, the Company had no borrowings on the line of credit outstanding and had used $8,683,000 and $3,408,000 in debt support standby letters of credit, respectively. There is a commitment fee on the unused portion of the entire credit facility of .175%. The loan is subject to certain financial covenants which also affect the interest rates charged. 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE D--BANK LOAN (REVOLVING CREDIT) (CONTINUED) The credit facility has the following scheduled reduction in availability (in thousands): 1997............................................................... $ 15,000 1998............................................................... $ 15,000 1999............................................................... $ 15,000 2000............................................................... $ 15,000 2001............................................................... $ 15,000
The final maturity date for the credit facility is August 31, 2001. NOTE E--ACCRUED PAYROLL COSTS Accrued payroll costs consists of the following at December 31, 1996 and 1995 (in thousands):
1996 1995 --------- --------- Payroll and bonuses..................................................... $ 28,374 $ 15,856 Employee benefits and workers' compensation............................. 30,126 11,182 Payroll taxes........................................................... 7,587 6,815 --------- --------- $ 66,087 $ 33,853 --------- --------- --------- ---------
NOTE F--STOCKHOLDERS' EQUITY In June 1996, the Company effected a two-for-one stock split in the form of a stock dividend. 1995 and 1994 share and per share amounts have been restated to retroactively reflect the two-for-one stock split. In August 1994, the Company effected a two-for-one stock split in the form of a stock dividend. 1994 share and per share amounts have been restated to retroactively reflect the two-for-one stock split. NOTE G--INCOME TAXES The provision for income taxes for the years ended December 31, 1996, 1995 and 1994 consisted of the following (in thousands):
YEARS ENDED DECEMBER 31, ------------------------------- 1996 1995 1994 --------- --------- --------- Current: Federal.................................................... $ 34,392 $ 22,061 $ 14,072 State...................................................... 7,457 4,728 3,155 Foreign.................................................... 2,396 2,685 767 Deferred--principally domestic............................... (1,702) (683) 1,096 --------- --------- --------- $ 42,543 $ 28,791 $ 19,090 --------- --------- --------- --------- --------- ---------
14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE G--INCOME TAXES (CONTINUED) The income taxes shown above varied from the statutory federal income tax rates for these periods as follows:
YEARS ENDED DECEMBER 31, ---------------------------- 1996 1995 1994 ---- ---- ---- Federal U.S. income tax rate................................ 35.0% 35.0% 35.0% State income taxes, net of federal tax benefit.............. 4.5 4.5 4.7 Amortization of intangible assets........................... 1.0 1.5 2.0 Other, net.................................................. .5 .7 .5 ---- ---- ---- Effective tax rate.......................................... 41.0% 41.7% 42.2% ---- ---- ---- ---- ---- ----
The deferred portion of the tax provisions consisted of the following (in thousands):
YEARS ENDED DECEMBER 31, ------------------------------- 1996 1995 1994 --------- --------- --------- Amortization of franchise rights............................... $ 691 $ 1,650 $ 1,629 Accrued expenses, deducted for tax when paid................... (2,468) (2,068) (524) Other, net..................................................... 75 (265) (9) --------- --------- --------- $ (1,702) $ (683) $ 1,096 --------- --------- --------- --------- --------- ---------
The net deferred income tax liability shown on the balance sheet is comprised of the following (in thousands):
DECEMBER 31, -------------------- 1996 1995 --------- --------- Deferred income tax assets.............................................. $ (2,536) $ (1,304) Deferred income tax liabilities......................................... 18,473 17,148 --------- --------- $ 15,937 $ 15,844 --------- --------- --------- ---------
No valuation allowances against deferred tax assets were required for the years ended December 31, 1996 and 1995. The components of the net deferred income tax liability at December 31, 1996 and 1995, were as follows (in thousands):
DECEMBER 31, -------------------- 1996 1995 --------- --------- Amortization of intangible assets....................................... $ 16,954 $ 16,216 Foreign taxes........................................................... 151 200 Other................................................................... (1,168) (572) --------- --------- $ 15,937 $ 15,844 --------- --------- --------- ---------
15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE H--COMMITMENTS Rental expense, primarily for office premises, amounted to $13,315,000, $11,027,000 and $9,183,000 for the years ended December 31, 1996, 1995 and 1994, respectively. The approximate minimum rental commitments for 1997 and thereafter under non-cancelable leases in effect at December 31, 1996, are as follows (in thousands): 1997............................................................... $ 14,429 1998............................................................... 13,636 1999............................................................... 11,936 2000............................................................... 9,110 2001............................................................... 6,442 Thereafter......................................................... 14,481
NOTE I--STOCK PLANS Under various stock plans, officers, employees and outside directors may receive grants of restricted stock or options to purchase common stock. Grants are made at the discretion of the Compensation Committee of the Board of Directors. Grants vest between four and seven years. Options granted under the plans have exercise prices ranging from 85% to 100% of the fair market value of the Company's common stock at the date of grant, consist of both incentive stock options and nonstatutory stock options under the Internal Revenue Code, and generally have a term of ten years. Recipients of restricted stock do not pay any cash consideration to the Company for the shares, have the right to vote all shares subject to such grant, and receive all dividends with respect to such shares, whether or not the shares have vested. Compensation expense is recognized on a straight-line basis over the vesting period. Vesting is accelerated upon the death or disability of the recipients. The Company accounts for these plans under APB Opinion 25. Therefore, no compensation cost has been recognized for its stock option plans. Had compensation cost for the stock options granted subsequent to January 1, 1995 been based on the estimated fair value at the award dates, as prescribed by Statement of Financial Accounting Standards No. 123 (SFAS 123), the Company's pro forma net income and earnings per share would been as follows:
YEARS ENDED DECEMBER 31, ----------------------------- 1996 1995 ------------- ------------- Net Income (in thousands) As Reported........................ $ 61,102 $ 40,298 Pro forma............................ $ 59,666 $ 40,174 Income per Share As Reported......................... $ 1.00 $ .68 Pro forma............................ $ .98 $ .68
1995 per share amounts have been restated to retroactively reflect the two-for-one stock split effected in the form of a stock dividend in June 1996. Since the pro forma amounts do not include amounts for stock options granted before January 1, 1995, the pro forma amounts may not be representative of the disclosed effects on pro forma net income and income per share for future years. The fair value of each option is estimated, as of the grant date, using the Black-Scholes option pricing model with the following assumptions used for grants in 1996 and 1995, respectively: no dividend yield for both years; expected volatility of 32% to 33%; risk free interest rates of 5.3% to 6.7% and 5.4% to 7.9%; and expected lives of 5.5 to 7.2 years for both years. 16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE I--STOCK PLANS (CONTINUED) The following table reflects activity under all stock plans from January 1, 1994 through December 31, 1996, and the exercise prices:
STOCK OPTION PLANS ------------------------------- WEIGHTED RESTRICTED NUMBER OF AVERAGE PRICE STOCK PLANS SHARES PER SHARE ------------- ---------- ------------------- Outstanding, January 1, 1994.................................. 903,202 5,885,000 $ 3.61 Granted..................................................... 689,628 1,673,768 $ 10.38 Exercised................................................... -- (927,030) $ 2.56 Restrictions lapsed......................................... (312,200) -- -- Forfeited................................................... (27,294) (365,616) $ 4.02 ------------- ---------- -------- Outstanding, December 31, 1994................................ 1,253,336 6,266,122 $ 5.55 Granted..................................................... 496,784 1,381,262 $ 19.01 Exercised................................................... -- (1,240,814) $ 3.08 Restrictions lapsed......................................... (375,542) -- -- Forfeited................................................... (28,564) (361,338) $ 7.18 ------------- ---------- -------- Outstanding, December 31, 1995................................ 1,346,014 6,045,232 $ 9.06 Granted..................................................... 665,661 1,126,429 $ 31.41 Exercised................................................... -- (1,139,021) $ 3.61 Restrictions lapsed......................................... (274,886) -- -- Forfeited................................................... (6,066) (258,286) $ 14.90 ------------- ---------- -------- Outstanding, December 31, 1996 1,730,723 5,774,354 $ 14.29 ------------- ---------- -------- ------------- ---------- --------
All share and per share amounts have been restated to retroactively reflect the two-for-one stock split effected in the form of a stock dividend in June 1996. The options outstanding at December 31, 1996 have a weighted average exercise price of $14.29 and a weighted average remaining life of approximately 8 years. As of December 31, 1996, an aggregate of 2,317,777 options to purchase common stock were vested with a weighted average exercise price of $6.75. At December 31, 1996, the total number of available shares to grant under the plans (consisting of either restricted stock or options) was 860,388. NOTE J--PREFERRED SHARE PURCHASE RIGHTS Pursuant to the Company's stockholder rights agreement, each share of common stock carries one right to purchase one one-hundredth of a share of preferred stock. The rights become exercisable in certain limited circumstances involving a potential business combination transaction or an acquisition of shares of the Company and are exercisable at a price of $100 per right, subject to adjustment. Following certain other events after the rights become exercisable, each right entitles its holder to purchase for $100 an amount of common stock of the Company, or, in certain circumstances, securities of the acquiror, having a then-current market value of twice the exercise price of the right. The rights are redeemable and may be amended at the Company's option before they become exercisable. Until a right is exercised, the holder of a right has no rights as a stockholder of the Company. The rights expire on July 23, 2000. 17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE K--INCOME PER SHARE Income per fully diluted share has been computed using the weighted average number of shares of fully diluted common stock and common stock equivalents outstanding during each period (61,178,000, 59,417,000 and 56,969,000 shares for the years ending December 31, 1996, 1995 and 1994, respectively). NOTE L--QUARTERLY FINANCIAL DATA (UNAUDITED) The following tabulation shows certain quarterly financial data for 1996 and 1995 (in thousands, except per share amounts):
QUARTER ---------------------------------------------- 1996 1 2 3 4 YEAR - ----------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Net service revenues................................. $ 196,239 $ 210,649 $ 232,950 $ 258,797 $ 898,635 Gross margin......................................... 76,642 83,921 91,788 100,941 353,292 Income before income taxes........................... 22,478 24,234 27,058 29,875 103,645 Net income........................................... 13,239 14,224 15,946 17,693 61,102 Income per share..................................... $ .22 $ .23 $ .26 $ .29 $ 1.00 QUARTER ---------------------------------------------- 1995 1 2 3 4 YEAR - ----------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Net service revenues................................. $ 144,739 $ 148,570 $ 159,303 $ 175,914 $ 628,526 Gross margin......................................... 56,039 57,732 62,196 68,110 244,077 Income before income taxes........................... 15,502 16,053 17,865 19,669 69,089 Net income........................................... 9,005 9,350 10,463 11,480 40,298 Income per share..................................... $ .15 $ .16 $ .18 $ .19 $ .68
All share and per share amounts have been restated to retroactively reflect the two-for-one stock split effected in the form of a stock dividend in June 1996. 18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE M--SEGMENT REPORTING Information about the Company's operations in different geographic locations for each of the three years in the period ended December 31, 1996, is shown below. The Company's areas of operations outside of the United States include Canada, the United Kingdom, Belgium, France and the Netherlands. Revenues represent total net revenues from the respective geographic areas. Operating income is net revenues less operating costs and expenses pertaining to specific geographic areas. Foreign operating income reflects charges for U.S. management fees and amortization of intangible assets of $1,533,000, $992,000 and $956,000 for the years ended December 31, 1996, 1995 and 1994, respectively. Domestic operating income reflects charges for amortization of intangibles of $4,935,000 and $4,307,000 and $4,137,000 for the years ended December 31, 1996, 1995 and 1994, respectively. Identifiable assets are those assets used in the geographic areas and are after elimination of intercompany balances.
YEARS ENDED DECEMBER 31, ---------------------------------- 1996 1995 1994 ---------- ---------- ---------- (IN THOUSANDS) Revenues Domestic............................................... $ 812,751 $ 564,564 $ 404,852 Foreign................................................ 85,884 63,962 41,476 ---------- ---------- ---------- $ 898,635 $ 628,526 $ 446,328 ---------- ---------- ---------- ---------- ---------- ---------- Operating Income Domestic............................................... $ 94,260 $ 63,861 $ 44,700 Foreign................................................ 7,142 4,765 2,077 ---------- ---------- ---------- $ 101,402 $ 68,626 $ 46,777 ---------- ---------- ---------- ---------- ---------- ---------- Assets Domestic............................................... $ 375,576 $ 267,487 $ 200,329 Foreign................................................ 40,436 33,653 27,432 ---------- ---------- ---------- $ 416,012 $ 301,140 $ 227,761 ---------- ---------- ---------- ---------- ---------- ----------
19 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders and the Board of Directors of Robert Half International Inc.: We have audited the accompanying consolidated statements of financial position of Robert Half International Inc. (a Delaware corporation) and subsidiaries as of December 31, 1996 and 1995, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Robert Half International Inc. and subsidiaries as of December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP San Francisco, California January 24, 1997 20 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III The information required by Items 10 through 13 of Part III is incorporated by reference from the registrant's Proxy Statement, under the captions "NOMINATION AND ELECTION OF DIRECTORS," "BENEFICIAL STOCK OWNERSHIP," "COMPENSATION OF DIRECTORS," "COMPENSATION OF EXECUTIVE OFFICERS" AND "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION AND CERTAIN TRANSACTIONS," which Proxy Statement will be mailed to stockholders in connection with the registrant's annual meeting of stockholders which is scheduled to be held in May 1997. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (A) 1. FINANCIAL STATEMENTS The following consolidated financial statements of the Company and its subsidiaries are included in Item 8 of this report: Consolidated statements of financial position at December 31, 1996 and 1995. Consolidated statements of income for the years ended December 31, 1996, 1995 and 1994. Consolidated statements of stockholders' equity for the years ended December 31, 1996, 1995 and 1994. Consolidated statements of cash flows for the years ended December 31, 1996, 1995 and 1994. Notes to consolidated financial statements. Report of independent public accountants. Selected quarterly financial data for the years ended December 31, 1996 and 1995 are set forth in Note L--Quarterly Financial Data (Unaudited) included in Item 8 of this report. 2. FINANCIAL STATEMENT SCHEDULES Schedules I through V have been omitted as they are not applicable. 3. EXHIBITS
EXHIBIT NO. EXHIBIT - ------- --------------------------------------------------------------------------- 3.1 Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1996. 3.2 By-Laws. 4.1 Indenture dated as of October 1, 1972, as amended, between IDS Realty Trust and First National Bank of Minneapolis, incorporated by reference to Exhibits 6(t) and 6(v) to the Form S-14 Registration Statement of the Registrant (formerly known as Boothe Interim Corporation) filed with the Securities and Exchange Commission on December 31, 1979. 4.2 Restated Certificate of Incorporation of Registrant (filed as Exhibit 3.1). 4.3 Rights Agreement, dated as of July 23, 1990, between the Registrant and The Chase Manhattan Bank (formerly Manufacturers Hanover Trust Company of California), as amended and restated effective August 15, 1996, incorporated by reference to Exhibit 1 to Registrant's Form 8-A/A Amendment No. 3 filed on August 16, 1996.
21
EXHIBIT NO. EXHIBIT - ------- --------------------------------------------------------------------------- 10.1 Credit Agreement dated as of November 1, 1993, among the Registrant, NationsBank of North Carolina, N.A. and Bank of America National Trust and Savings Association. The Second Amendment to the Credit Agreement is filed with this Annual Report on Form 10-K for the fiscal year ended December 31, 1995. The original Credit Agreement and the First Amendment thereto are incorporated by reference to Exhibit 10 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1993 and Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1995. *10.2 Employment Agreement dated as of October 2, 1985, between the Registrant and Harold M. Messmer, Jr. The Eleventh Amendment to the Employment Agreement is filed with this Annual Report on Form 10-K for the fiscal year ended December 31, 1996. The original Employment Agreement and the first ten amendments thereto are incorporated by reference to (i) Exhibit 10.(c) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1985, (ii) Exhibit 10.2(b) to Registrant's Registration Statement on Form S-1 (No. 33-15171), (iii) Exhibit 10.2(c) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987, (iv) Exhibit 10.2(d) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1988, (v) Exhibit 28.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1990, (vi) Exhibit 10.8 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, (vii) Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1993, (viii) Exhibit 10.7 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, (ix) Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1995 and (x) Exhibit 10.7 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1995. *10.3 Key Executive Retirement Plan--Level II, as amended. *10.4 Restated Retirement Agreement between the Registrant and Harold M. Messmer, Jr. *10.5 1985 Stock Option Plan, as amended, incorporated by reference to Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1996. *10.6 Excise Tax Restoration Agreement dated November 5, 1996. *10.7 Outside Directors' Option Plan, as amended. *10.8 1989 Restricted Stock Plan, as amended. *10.9 StockPlus Plan, as amended, incorporated by reference to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1996. *10.10 1993 Incentive Plan, as amended. *10.11 Deferred Compensation Plan, incorporated by reference to Exhibit 10.24 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989. *10.12 Annual Performance Bonus Plan, incorporated by reference to Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1996. *10.13 Form of Severance Agreement, incorporated by reference to (i) Exhibit 10.26 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 and (ii) Exhibit 19.2 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1990. *10.14 Form of Indemnification Agreement for Directors of the Registrant, incorporated by reference to (i) Exhibit 10.27 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 and (ii) Exhibit 10.19 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993. *10.15 Form of Indemnification Agreement for Executive Officers of Registrant, incorporated by reference to Exhibit 10.28 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989. *10.16 Senior Executive Retirement Plan, as amended. *10.17 Collateral Assignment of Split Dollar Insurance Agreement.
22
EXHIBIT NO. EXHIBIT - ------- --------------------------------------------------------------------------- 11 Statement re computation of per share earnings. 21 Subsidiaries of the Registrant. 23 Accountants' Consent 27 Financial Data Schedule.
- ------------------------ * Management contract or compensatory plan required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K. (b) Reports on Form 8-K The Registrant filed the following report on Form 8-K during the fiscal quarter ending December 31, 1996:
DATE ITEM REPORTED - ---------------------- ------------------------- November 15, 1996 Item 5--Other Events
23 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ROBERT HALF INTERNATIONAL INC. (Registrant) Date: March 20, 1997 By: /S/ M. KEITH WADDELL ------------------------------------ M. Keith Waddell Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) 24 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: March 20, 1997 By: /S/ HAROLD M. MESSMER, JR. ------------------------------------------ Harold M. Messmer, Jr. Chairman of the Board, President, Chief Executive Officer, and a Director (Principal Executive Officer) Date: March 20, 1997 By: /S/ ANDREW S. BERWICK, JR. ------------------------------------------ Andrew S. Berwick, Jr., Director Date: March 20, 1997 By: /S/ FREDERICK P. FURTH ------------------------------------------ Frederick P. Furth, Director Date: March 20, 1997 By: /S/ EDWARD W. GIBBONS ------------------------------------------ Edward W. Gibbons, Director Date: March 20, 1997 By: /S/ FREDERICK A. RICHMAN ------------------------------------------ Frederick A. Richman, Director Date: March 20, 1997 By: /S/ THOMAS J. RYAN ------------------------------------------ Thomas J. Ryan, Director Date: March 20, 1997 By: /S/ J. STEPHEN SCHAUB ------------------------------------------ J. Stephen Schaub, Director Date: March 20, 1997 By: /S/ M. KEITH WADDELL ------------------------------------------ M. Keith Waddell Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) Date: March 20, 1997 By: /S/ BARBARA J. FORSBERG ------------------------------------------ Barbara J. Forsberg Vice President and Controller (Principal Accounting Officer)
25 EXHIBIT INDEX
EXHIBIT NO. EXHIBIT - ------- --------------------------------------------------------------------------- 3.1 Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1996. 3.2 By-Laws. 4.1 Indenture dated as of October 1, 1972, as amended, between IDS Realty Trust and First National Bank of Minneapolis, incorporated by reference to Exhibits 6(t) and 6(v) to the Form S-14 Registration Statement of the Registrant (formerly known as Boothe Interim Corporation) filed with the Securities and Exchange Commission on December 31, 1979. 4.2 Restated Certificate of Incorporation of Registrant (filed as Exhibit 3.1). 4.3 Rights Agreement, dated as of July 23, 1990, between the Registrant and The Chase Manhattan Bank (formerly Manufacturers Hanover Trust Company of California), as amended and restated effective August 15, 1996, incorporated by reference to Exhibit 1 to Registrant's Form 8-A/A Amendment No. 3 filed on August 16, 1996. 10.1 Credit Agreement dated as of November 1, 1993, among the Registrant, NationsBank of North Carolina, N.A. and Bank of America National Trust and Savings Association. The Second Amendment to the Credit Agreement is filed with this Annual Report on Form 10-K for the fiscal year ended December 31, 1995. The original Credit Agreement and the First Amendment thereto are incorporated by reference to Exhibit 10 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1993 and Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1995. *10.2 Employment Agreement dated as of October 2, 1985, between the Registrant and Harold M. Messmer, Jr. The Eleventh Amendment to the Employment Agreement is filed with this Annual Report on Form 10-K for the fiscal year ended December 31, 1996. The original Employment Agreement and the first ten amendments thereto are incorporated by reference to (i) Exhibit 10.(c) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1985, (ii) Exhibit 10.2(b) to Registrant's Registration Statement on Form S-1 (No. 33-15171), (iii) Exhibit 10.2(c) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1987, (iv) Exhibit 10.2(d) to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1988, (v) Exhibit 28.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1990, (vi) Exhibit 10.8 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, (vii) Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1993, (viii) Exhibit 10.7 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, (ix) Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1995 and (x) Exhibit 10.7 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1995. *10.3 Key Executive Retirement Plan--Level II, as amended. *10.4 Restated Retirement Agreement between the Registrant and Harold M. Messmer, Jr. *10.5 1985 Stock Option Plan, as amended, incorporated by reference to Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1996. *10.6 Excise Tax Restoration Agreement dated November 5, 1996. *10.7 Outside Directors' Option Plan, as amended. *10.8 1989 Restricted Stock Plan, as amended. *10.9 StockPlus Plan, as amended, incorporated by reference to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1996. *10.10 1993 Incentive Plan, as amended. *10.11 Deferred Compensation Plan, incorporated by reference to Exhibit 10.24 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989. *10.12 Annual Performance Bonus Plan, incorporated by reference to Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1996.
EXHIBIT NO. EXHIBIT - ------- --------------------------------------------------------------------------- *10.13 Form of Severance Agreement, incorporated by reference to (i) Exhibit 10.26 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 and (ii) Exhibit 19.2 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1990. *10.14 Form of Indemnification Agreement for Directors of the Registrant, incorporated by reference to (i) Exhibit 10.27 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 and (ii) Exhibit 10.19 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1993. *10.15 Form of Indemnification Agreement for Executive Officers of Registrant, incorporated by reference to Exhibit 10.28 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1989. *10.16 Senior Executive Retirement Plan, as amended. *10.17 Collateral Assignment of Split Dollar Insurance Agreement. 11 Statement re computation of per share earnings. 21 Subsidiaries of the Registrant. 23 Accountants' Consent 27 Financial Data Schedule.
- ------------------------ * Management contract or compensatory plan required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K. EX-3.2 2 EXHIBIT 3.2 EXHIBIT 3.2 BY-LAWS OF ROBERT HALF INTERNATIONAL INC. ARTICLE I OFFICES Section 1. REGISTERED OFFICE. The registered office of the Corporation in the State of Delaware shall be at 1209 Orange Street, City of Wilmington, County of New Castle. Section 2. PRINCIPAL OFFICE FOR TRANSACTION OF BUSINESS. The principal office for the transaction of the business of the Corporation shall be at 2884 Sand Hill Road, in the City of Menlo Park, County of San Mateo, State of California. The Board of Directors may change said principal office from one location to another within or without said City, County or State. Section 3. OTHER OFFICES. The Corporation may have offices at such other place or places, within or without the State of Delaware, as from time to time the Board of Directors may determine or the business of the Corporation may require. ARTICLE II MEETING OF STOCKHOLDERS Section 1. PLACE OF MEETINGS. Meetings of the stockholders shall be held at such place either within or without the State of Delaware as shall be fixed by the Board of Directors and stated in the notice or waiver of notice of the meeting. Section 2. ANNUAL MEETING. The annual meeting of stockholders for the election of directors and for the transaction of such other business as may come before the meeting shall be held on such date in each year as the Chairman of the Board shall designate. The Board of Directors shall present at each annual meeting a full and clear statement of the business and condition of the Corporation. Section 3. SPECIAL MEETINGS. A special meeting of the stockholders for any purpose or purposes, unless otherwise prescribed by statute, may be called at any time by the Chairman of the Board, or the President or by order of the Board of Directors. Section 4. NOTICE OF MEETINGS. Except as otherwise provided by law or the Certificate of Incorporation, written notice of each meeting of stockholders shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting, directed to his address as it appears upon the books of the corporation, said notice to specify the place, date and hour and purpose or purposes of the meeting. Notice of the time, place and purpose of any meeting of stockholders may be waived in writing, either before or after such meeting, and will be waived by any stockholder by his attendance thereat in person or by proxy. Any stockholder so waiving notice of such meeting shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given. Any previously scheduled meeting of the stockholders may be postponed, and (unless the Certificate of Incorporation otherwise provides) any special meeting of the stockholders may be cancelled, by resolution of the Board of Directors upon public notice given prior to the date previously scheduled for such meeting of stockholders. Section 5. QUORUM AND ADJOURNMENT. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Certificate of Incorporation. The Chairman of the meeting may adjourn the meeting from time to time, 1 whether or not there is such a quorum. No notice of the time and place of adjourned meetings need be given except as required by law. The stockholders present at a duly called meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Section 6. VOTING. Except as otherwise provided in the Certificate of Incorporation, each stockholder of voting common stock shall, at each meeting of the stockholders, be entitled to one vote in person or by proxy for each share of stock of the Corporation held by him on the date fixed pursuant to the provisions of Section 3 of Article IX of the By-Laws as the record date and registered in his name on the books of the Corporation for the determination of stockholders who shall be entitled to notice and to vote at such meeting. Any vote of stock of the Corporation may be given at any meeting of the stockholders by the stockholder entitled thereto in person or by proxy but no proxy shall be voted three years after its date, unless said proxy shall provide for a longer period. At all meetings of the stockholders all matters including election of directors, except where other provision is made by law, by the Certificate of Incorporation or by these By-Laws, shall be decided by the vote of a majority in voting interest of the stockholders present in person or by proxy and entitled to vote thereat, a quorum being present. Unless demanded by a stockholder of the Corporation present in person or by proxy at any meeting of the stockholders and entitled to vote thereat or so directed by the chairman of the meeting, the vote thereat on any question or matter, including the election of directors, need not be by ballot. Upon a demand of any such stockholder for a vote by ballot on any question or at the direction of such chairman that a vote by ballot be taken on any question, such vote shall be taken. On a vote by ballot each ballot shall be signed by the stockholder voting, or by his proxy, and shall state the number of shares voted. No holder of Preferred Stock shall be entitled to vote at any meeting of the stockholders, except as provided by law, by the Certificate of Incorporation or by the Certificate of Determination of Preferences creating such Preferred Stock. Section 7. LIST OF STOCKHOLDERS. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order, showing the address of and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held and which place shall be specified in the notice of the meeting, or, if not specified, at the place where said meeting is to be held, and the list shall be produced and kept at the time and place of meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 8. INSPECTORS OF VOTES. At each meeting of the stockholders the chairman of such meeting may appoint one or three Inspectors of Votes to act thereat. Each Inspector of Votes so appointed shall first subscribe an oath or affirmation faithfully to execute the duties of an Inspector of Votes at such meeting with strict impartiality and according to the best of his ability. Such Inspectors of Votes shall take charge of the ballots at such meeting and after the balloting thereat on any question shall count the ballots cast thereon and shall make a report in writing to the secretary of such meeting of the results thereof. An Inspector of Votes need not be a stockholder of the Corporation, and any officer of the Corporation may be an Inspector of Votes on any question other than a vote for or against his election to any position with the Corporation or on any other question in which he may be directly interested. If there are three Inspectors of Votes, the determination, report or certificate of two such Inspectors shall be as effective as if unanimously made by all Inspectors. Section 9. NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS. (a) Annual Meetings of Stockholders. (1) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (a) pursuant to the Corporation's notice of meeting, (b) by or at the direction of the 2 Board of Directors or (c) by any stockholder of the Corporation who was a stockholder of record at the time of giving of notice provided for in this By-Law, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this By-Law. (2) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of paragraph (a)(1) of this By-Law, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder's notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 60th day nor earlier than the close of business on the 90th day prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder's notice as described above. Such stockholder's notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule 14a-11 thereunder (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation's books, and of such beneficial owner and (ii) the class and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner. (3) Notwithstanding anything in the second sentence of paragraph (a)(2) of this By-Law to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least 70 days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice required by this By-Law shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation. (b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation's notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation's notice of meeting (a) by or at the direction of the Board of Directors or (b) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice provided for in this By-Law, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this By-Law. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as 3 the case may be), for the election to such position(s) as specified in the Corporation's notice of meeting, if the stockholder's notice required by paragraph (a)(2) of this By-Law shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 90th day prior to such special meeting and not later than the close of business on the later of the 60th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a stockholder's notice as described above. (c) General. (1) Only such persons who are nominated in accordance with the procedures set forth in this By-Law shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this By-Law. Except as otherwise provided by law, the Certificate of Incorporation or these By-Laws, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this By-Law and, if any proposed nomination or business is not in compliance with this By-Law, to declare that such defective proposal or nomination shall be disregarded. (2) For purposes of this By-Law, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. (3) Notwithstanding the foregoing provisions of this By-Law, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this By-Law. Nothing in this By-Law shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of Preferred Stock to elect directors under specified circumstances. Section 10. RECORD DATE FOR ACTION BY WRITTEN CONSENT. In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within 10 days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within 10 days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business or to any officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action. 4 Section 11. INSPECTORS OF WRITTEN CONSENT. In the event of the delivery, in the manner provided by Section 10, to the Corporation of the requisite written consent or consents to take corporate action and/or any related revocation or revocations, the Corporation shall engage nationally recognized independent inspectors of elections for the purpose of promptly performing a ministerial review of the validity of the consents and revocations. For the purpose of permitting the inspectors to perform such review, no action by written consent without a meeting shall be effective until such date as the independent inspectors certify to the Corporation that the consents delivered to the Corporation in accordance with Section 10 represent at least the minimum number of votes that would be necessary to take the corporate action. Nothing contained in this paragraph shall in any way be construed to suggest or imply that the Board of Directors or any stockholder shall not be entitled to contest the validity of any consent or revocation thereof, whether before or after such certification by the independent inspectors, or to take any other action (including, without limitation, the commencement, prosecution, or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation). Section 12. EFFECTIVENESS OF WRITTEN CONSENT. Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within 60 days of the earliest dated written consent received in accordance with Section 10, a written consent or consents signed by a sufficient number of holders to take such action are delivered to the Corporation in the manner prescribed in Section 10. ARTICLE III DIRECTORS Section 1. GENERAL POWERS. The property, business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. Section 2. NUMBER, QUALIFICATION AND TERM OF OFFICE. (a) The number of directors which shall constitute the whole Board shall not be less than six nor more than eleven. The number of directors shall be fixed at such number, within the limits specified in the preceding sentence, as determined from time to time by resolution of the Board of Directors, upon approval by two-thirds (2/3) of the directors in office. (b) At the 1994 Annual Meeting of Stockholders, the directors shall be divided into three classes, as nearly equal in number as possible, with the term of office of the first class to expire at the 1997 Annual Meeting of Stockholders, the term of office of the second class to expire at the 1996 Annual Meeting of Stockholders and the term of office of the third class to expire at the 1995 Annual Meeting of Stockholders. At each Annual Meeting of Stockholders following such initial classification and election, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding Annual Meeting of Stockholders after election. (c) If the stockholders of the Company do not approve the continuing classification of the Board of Directors at the 1999 Annual Meeting of Stockholders, then Section 2(b) hereof shall be of no further force or effect and, notwithstanding anything to the contrary in Section 2(b), the terms of all directors shall expire at the 2000 Annual Meeting of Stockholders and all directors elected at the 1999 Annual Meeting of Stockholders or any subsequent meeting of stockholders shall hold office for a one-year term. (d) Except as provided in Sections 4 and 5 to this Article III, each director shall hold office until the end of his term and until his successor shall be elected and qualified or until his death, resignation or removal. Directors need not be stockholders. This Section 2 shall not be amended to change the two-thirds (2/3) approval requirement set forth above except with the approval of two-thirds (2/3) of the directors in office. 5 Section 3. RESIGNATIONS. Any director may resign at any time by giving written notice of his resignation to the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time when it shall become effective shall not be specified therein, then it shall take effect immediately upon its receipt by the Secretary; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 4. REMOVAL OF DIRECTORS. Any director may be removed, with cause, at any time, by the affirmative vote of a majority in interest of the stockholders of record of the Corporation entitled to vote, given at a special meeting of the stockholders called for the purpose, and the vacancy in the Board of Directors caused by any such removal may be filled by the stockholders at such meeting or, if the stockholders shall fail to fill such vacancy, by the Board of Directors as provided in Section 5 of this Article III. In no case will a decrease in the number of directors shorten the term of any incumbent director. Section 5. VACANCIES. In case of any vacancy in the Board of Directors caused by death, resignation, disqualification, removal, an increase in the number of directors, or any other cause, the successor to fill the vacancy may be elected by the holders of shares of stock entitled to vote at an annual meeting of said holders or by two-thirds (2/3) of the directors in office, though less than a quorum, and each director so elected shall hold office for a term expiring at the Annual Meeting of Stockholders at which the term of the class to which he was elected expires and until his successor shall be duly elected and qualified, or until his death or until he shall resign or until he shall have been removed. Additional directorships resulting from an increase in the number of directors shall be apportioned among the three classes as equally as possible. This section shall not be amended to change the requirement of a vote of two-thirds (2/3) of the directors set forth above except upon the approval of two-thirds (2/3) of the directors in office. Section 6. PLACE OF MEETING. The Board of Directors may hold its meetings at such place or places within or without the State of Delaware as the Board of Directors may from time to time determine. Section 7. ORGANIZATION MEETING. The Board of Directors shall meet immediately following the annual meeting of stockholders and at the place where the stockholders' meeting was held, for the purpose of electing officers and transacting such other business as may lawfully come before it. No notice of such meeting shall be required. Section 8. REGULAR MEETINGS. Regular meetings of the Board of Directors shall be held at such times as the Board of Directors shall from time to time by resolution determine. If any day fixed for a regular meeting shall be a legal holiday, then the meeting which would otherwise be held on that day shall be held at the same hour on the next succeeding business day. Except as otherwise provided by law, notices of regular meetings need not be given. Section 9. SPECIAL MEETINGS. Special meetings of the Board of Directors shall be held when called by the Chairman of the Board, the Chairman of the Executive Committee, the President, the Secretary, Assistant Secretary or a majority of the Directors. Section 10. NOTICE OF MEETINGS. Notice of the time and place of all special meetings of the Board of Directors or any committee thereof, and of any regular meeting as to which notice is given, shall be given to each director either by telephone or by written notice delivered personally to each director or sent to each director by mail or by other form of written communication at least one day before the date of the meeting. Notice of any meeting may be waived in writing at any time before or after the meeting and will be waived by any director by attendance at such meeting. Section 11. QUORUM AND MANNER OF ACTING. Except as otherwise provided by statute or by these By-Laws, a majority of the total number of directors (but not less than two) shall be required to constitute a quorum for the transaction of business at any meeting, and the act of a majority of the directors present at any meeting at which a quorum shall be present shall be the act of the Board of Directors. In the absence of a quorum, a majority of the directors present may adjourn any meeting from time to time until a quorum be had. Notice of any adjourned meeting need not be given. 6 Section 12. ACTION WITHOUT MEETING. Unless otherwise restricted by the Certificate of Incorporation or by these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof, may be taken without a meeting, if all members of the Board or of such committee, as the case may be, consent thereto in writing, and such writing or writings are filed with the minutes of proceedings of the Board or Committee. Section 13. MEETING BY TELEPHONE. Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. Section 14. COMPENSATION. The Board of Directors may at any time or from time to time by resolution provide that a specified sum shall be paid to any director of the Corporation, either as his annual compensation as such director or member of any committee of the Board of Directors or as compensation for his attendance at each meeting of the Board of Directors or any such committee. The Board of Directors may also likewise provide that the Corporation shall reimburse each director for any expense paid by him on account of his attendance at any meeting. Nothing in this Section shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. ARTICLE IV EXECUTIVE COMMITTEE Section 1. APPOINTMENT. The Board of Directors may by resolution passed by a majority of the whole Board, appoint an Executive Committee of not less than three members, all of whom shall be directors. The Chairman of the Executive Committee shall be elected by the Board of Directors. Section 2. POWERS. The Executive Committee shall have and may exercise, when the Board is not in session, the power of the Board of Directors in the management of the business and affairs of the Corporation; but neither the Executive Committee nor any other committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the By-Laws of the Corporation, nor shall it have the power or authority to declare a dividend, to authorize the issuance of stock or to fill vacancies in the Board of Directors or the Executive Committee. Section 3. TERM. The term of the Executive Committee shall be coexistent with that of the Board of Directors which shall have appointed such Committee. The Board may at any time for any reason remove any individual member of the Executive Committee and the Board may fill a Committee vacancy created by death, resignation or removal or increase in the number of members of the Executive Committee. The Board of Directors may designate one or more directors as alternate members of the Executive Committee who may replace any absent or disqualified member at any meeting of the Committee. Section 4. MEETINGS. Regular meetings of the Executive Committee, of which no notice shall be required, may be held on such days and at such places as shall be fixed by resolution adopted by a majority of the Committee and communicated to all of its members. Special meetings of the Executive Committee shall be held whenever called by the Chairman of the Executive Committee, the Chairman of the Board, the President, the Vice President, or a majority of the members of the Executive Committee then in office and shall be held at such time and place as shall be designated in the notice of the meeting. Section 5. QUORUM AND MANNER OF ACTION. A majority of the Executive Committee shall constitute a quorum for the transaction of business and the act of a majority of those present at a meeting thereof at which a quorum is present shall be the act of the Committee. 7 ARTICLE V OTHER COMMITTEES Section 1. COMMITTEES OF THE BOARD OF DIRECTORS. The Board of Directors may, by resolution passed by a majority of the whole Board, from time to time appoint other committees of the Board of Directors. Each such committee, to the extent permitted by law and these By-Laws, shall have and may exercise such of the powers of the Board of Directors in the management and affairs of the Corporation as may be prescribed by the resolution creating such committee. A majority of all of the members of any such committee may determine its action and fix the time and place of its meetings and specify what notice thereof, if any, shall be given, unless the Board of Directors shall otherwise prescribe. The Board of Directors shall have power to change the members of any such committee at any time, to fill vacancies and to discontinue any such committee at any time. Section 2. NON-BOARD COMMITTEES. The authority conferred upon the Board of Directors by Section 1 of this Article V to appoint committees of the Board of Directors shall not be deemed to preclude the appointment by either the Board of Directors or the Executive Committee of committees whose members need not be directors of the Corporation provided that such committees may not exercise any of the powers of the Board of Directors. ARTICLE VI OFFICERS Section 1. NUMBER. The officers of the Corporation shall be the Chairman of the Board, the Vice Chairman of the Board, the Chairman of the Executive Committee, the President, one or more Vice Presidents, a Secretary and a Treasurer. The Board of Directors may also appoint one or more Assistant Vice Presidents, Assistant Secretaries or Assistant Treasurers and such other officers and agents with such powers and duties as it shall deem necessary. Assistant Vice Presidents may also be appointed by the Chairman of the Board. Any of the Vice Presidents may be given such specific designation as may be determined from time to time by the Board of Directors. Any two or more offices except those of President and Secretary may be held by the same person. Section 2. ELECTION AND TERM OF OFFICE. The officers shall be elected annually by the Board of Directors at its organization meeting following the annual meeting of the stockholders and each shall hold office until the next annual election of officers and until his successor is elected and qualified, or until his death, resignation or removal. Any officer may be removed at any time, with or without cause, by a vote of the majority of the whole Board. Any vacancy occurring in any office may be filled by the Board of Directors. Section 3. CHAIRMAN AND VICE CHAIRMAN OF THE BOARD. (a) The Chairman of the Board shall exercise such powers and perform such duties as may be assigned to him by these By-Laws or by the Board of Directors. The Chairman of the Board shall preside at meetings of the stockholders and Board of Directors and, in the absence of the Chairman of the Executive Committee, shall preside at meetings of the Executive Committee. He shall be ex officio a member of all standing committees of the Board other than any standing audit committee or compensation committee. (b) The Vice Chairman of the Board, in the absence of the Chairman of the Board, shall preside at meetings of the stockholders and Board of Directors. He shall exercise such other powers and perform such other duties as may be assigned to him by these By-Laws or by the Board of Directors. Section 4. CHAIRMAN OF THE EXECUTIVE COMMITTEE. The Chairman of the Executive Committee shall preside at all meetings of the Executive Committee and, in the absence of the Chairman of the Board and the Vice Chairman of the Board, shall preside at meetings of the Board of Directors. The Chairman of the Executive Committee shall perform such other duties and may exercise such other powers as from time to time may be assigned to him by these By-Laws or by the Board of Directors. 8 Section 5. PRESIDENT. The President, subject to the general control of the Board of Directors, shall be the chief executive officer of the Corporation and, as such, shall be responsible for the management and direction of the affairs of the Corporation, its officers, employees and agents and shall supervise generally the affairs of the Corporation. He shall exercise such other powers and perform such other duties as may be assigned to him by these By-Laws or by the Board of Directors. In the absence of the Chairman of the Board and the Vice Chairman of the Board, he shall preside at meetings of the stockholders and, in the absence of the Chairman of the Board, the Vice Chairman of the Board and the Chairman of the Executive Committee, he shall preside at meetings of the Board of Directors and the Executive Committee. He shall be ex officio a member of all standing committees of the Board other than any standing audit committee or compensation committee. Section 6. VICE PRESIDENTS. In the absence of the Chairman of the Board and the President, the Vice President designated by the Board of Directors shall have all of the powers and duties conferred upon the President. Except where by law the signature of the Chairman of the Board or the President is required, each of the Vice Presidents shall have the same power as the Chairman of the Board or the President to sign certificates, contracts and other instruments of the Corporation. Any Vice President shall perform such other duties and may exercise such other powers as may from time to time be assigned to him by these By-Laws, the Board of Directors, the Chairman of the Board or the President. Section 7. SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall record or cause to be recorded in books provided for the purpose the minutes of the meetings of the stockholders, the Board of Directors, the Executive Committee and all other committees of the Board of Directors, if any; shall see that all notices are duly given in accordance with the provisions of these By-Laws and as required by law; shall be custodian of all corporate records (other than financial) and of the seal of the Corporation and see that the seal is affixed to all documents, the execution of which on behalf of the Corporation under its seal is duly authorized in accordance with the provisions of these By-Laws; shall keep the list of stockholders which shall include the post office address of each stockholder and make all proper changes therein, retaining and filing his authority for all such entries; shall see that the books, reports, statements, certificates and all other documents and records required by law are properly kept and filed, and, in general, shall perform all duties incident to the office of Secretary and such other duties as may, from time to time, be assigned to him by the Board of Directors, the Chairman of the Board or the President. At the request of the Secretary, or in his absence or disability, any Assistant Secretary shall perform any of the duties of the Secretary and, when so acting, shall have all the powers and be subject to all the restrictions upon, the Secretary. Except where by law the signature of the Secretary is required, each of the Assistant Secretaries shall possess the same power as the Secretary to sign certificates, contracts, obligations and other instruments of the Corporation, and to affix the seal of the Corporation to such instruments, and attest the same. Section 8. TREASURER AND ASSISTANT TREASURER. The Treasurer shall keep or cause to be kept the books of account of the Corporation and shall render statements of the financial affairs of the Corporation in such form and as often as required by the Board of Directors, the Chairman of the Board or the President. The Treasurer, subject to the order of the Board of Directors, shall have the custody of all funds and securities of the Corporation. The Treasurer shall perform all other duties commonly incident to his office and shall perform such other duties and have such other powers as the Board of Directors, the Chairman of the Board or the President shall designate from time to time. At the request of the Treasurer, or in his absence or disability, the Assistant Treasurer or, in case there shall be more than one Assistant Treasurer, the Assistant Treasurer designated by the Board of Directors, the Chairman of the Board, the President or the Treasurer, may perform any of the duties of the Treasurer and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Treasurer. Except where by law the signature of the Treasurer is required, each of the Assistant Treasurers shall possess the same power as the Treasurer to sign all certificates, contracts, obligations and other instruments of the Corporation. Section 9. ASSISTANT VICE PRESIDENTS. The Assistant Vice Presidents shall perform such duties as shall be determined by the Board of Directors, the Chairman of the Board or the President of the Corporation. 9 ARTICLE VII EXECUTION OF INSTRUMENTS The Board of Directors may, in its discretion, determine the method and designate the signatory officer or officers, or other person or persons, to execute any corporate instrument or document or to sign the corporate name without limitation, except where otherwise provided by law or in these By-Laws, and such designation may be general or confined to specific instances. ARTICLE VIII VOTING OF SECURITIES OWNED BY THE CORPORATION All stock and other securities of other corporations held by the Corporation shall be voted, and all proxies with respect thereto shall be executed, by the person authorized so to do by resolution of the Board of Directors, or, in the absence of such authorization, by the Chairman of the Board, the Chairman of the Executive Committee, the President or any Vice President. ARTICLE IX SHARES OF STOCK Section 1. FORM AND EXECUTION OF CERTIFICATES. The certificates of stock of the Corporation shall be numbered and shall be entered in the books of the Corporation as they are issued. They shall exhibit the holder's name and number of shares and shall be signed by the Chairman of the Board, the President or any Vice President and the Secretary or an Assistant Secretary. Any or all of the signatures on such certificate may be a facsimile. In case any officer of the Corporation who shall have signed, or whose facsimile signature shall have been placed upon, such certificate shall cease to be such officer before such certificate shall have been issued, such certificate may nevertheless be issued by the Corporation with the same effect as though such person were such officer at the date of issuance. Section 2. TRANSFER. Transfer of stock shall be made on the books of the Corporation only by the person named in the certificate or by attorney lawfully constituted in writing, and upon surrender of the certificate. Section 3. FIXING RECORD DATE. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholder or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. Section 4. RECORD OWNER. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of Delaware. Section 5. LOST CERTIFICATES. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the 10 same in such manner as it shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed. ARTICLE X DIVIDENDS Subject to the provisions of law and of the Certificate of Incorporation, the Board of Directors, at any regular or special meeting, may declare and pay dividends upon the shares of its stock either (a) out of its surplus as defined in and computed in accordance with the provisions of law or (b) in case it shall not have any such surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year, whenever and in such amount as, in the opinion of the Board of Directors, the condition of the affairs of the Corporation shall render advisable. Before payment of any dividend or making any distribution of profits, there may be set aside out of the surplus or net profits of the Corporation such sum or sums as the directors may from time to time, in their absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the directors shall think conducive to the interests of the Corporation. ARTICLE XI CORPORATE SEAL The corporate seal shall consist of a die bearing the name of the Corporation and the inscription "Corporate Seal -- Delaware." Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. ARTICLE XII AMENDMENTS All By-Laws of the Corporation shall be subject to alterations or repeal, and new By-Laws may be made, by the stockholders at any annual or special meeting, or except as otherwise provided by these By-Laws or by law, by the affirmative vote of a majority of the directors then in office given at any regular or special meeting of the Board of Directors. 11 EX-10.2 3 EX-10.2 EXHIBIT 10.2 ELEVENTH AMENDMENT TO EMPLOYMENT AGREEMENT This Eleventh Amendment to Employment Agreement is made and entered into as of January 1, 1997, by and between Robert Half International Inc. (formerly Boothe Financial Corporation), a Delaware corporation, ("Corporation") and Harold M. Messmer, Jr. ("Officer"). 1. Section 2.1(d) of the Employment Agreement is amended by replacing the words "Section 8.1 of Corporation's 1985 Stock Option Plan ("Option Plan")" with the words "the Corporation's 1993 Incentive Plan". 2. The last sentence of Section 3.1 of the Employment Agreement dated as of October 2, 1985, as amended, between Corporation and Officer (the "Employment Agreement") is hereby amended to read in its entirety as follows: "Effective as of January 1, 1997, the Base Salary shall in no event be less than $500,000 per annum." 3. Section 3.2 of the Employment Agreement is amended by deleting the words "of up to 100% of Officer's Base Salary". 4. Section 3.4 of the Employment Agreement is amended by replacing the words "Option Plan" with the words "1985 Stock Option Plan ("Option Plan")". 5. In all other respects, the Employment Agreement is hereby ratified and confirmed. IN WITNESS WHEREOF, the parties hereto have executed this agreement effective as of the day and year first written above. ROBERT HALF INTERNATIONAL INC. By /s/ M. Keith Waddell ----------------------------- M. Keith Waddell Senior Vice President /s/ Harold M. Messmer, Jr. ------------------------------- Harold M. Messmer, Jr. EX-10.3 4 EXHIBIT 10.3 EXHIBIT 10.3 ROBERT HALF INTERNATIONAL INC. KEY EXECUTIVE RETIREMENT PLAN - LEVEL II (AS AMENDED EFFECTIVE NOVEMBER 5, 1996) SECTION 1. ESTABLISHMENT AND PURPOSES OF PLAN. The Boothe Financial Corporation Key Executive Retirement Plan - Level II (the "Plan") was established effective November 1, 1978, and subsequently amended effective September 13, 1984 and again effective November 14, 1985 to read as set forth herein. The purpose of the Plan is to provide retirement benefits to certain key senior executives of Boothe Financial Corporation (the "Company"). The Plan is not intended to qualify under the provisions of section 401(a) of the Internal Revenue Code. The Company reserves the right, subject to and as provided in Section 6, to amend or terminate the Plan at any time. SECTION 2. DEFINITIONS. Capitalized words and phrases used in the text of the Plan shall have the following meanings: (a) "Board" means the Board of Directors of the Company. (b) "Change in Control" means the occurrence of any of the following: (i) Any person or group (as such terms are defined in Section 13(d)(3) of the Securities Exchange Act of 1934 ("the Exchange Act")), other than an employee benefit plan sponsored by the Company or a subsidiary thereof or a corporation owned (directly or indirectly), by the stockholders of the Company in substantially the same proportions of the ownership of stock of the Company, shall become the beneficial owner of securities of the Company representing 20% or more, or commences a tender or exchange offer following the successful consummation of which the offerer and its affiliates would beneficially own securities representing 20% or more, of the combined voting power of then outstanding securities ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise; PROVIDED, HOWEVER, that a Change in Control shall not be deemed to include the acquisition by any such person or group of securities representing 20% or more of the Company if such party has acquired such securities not with the purpose nor with the effect of changing or influencing the control of the Company, nor in connection with or as a participant in any transaction having such purposes or effect, including, without limitation, not in connection with such party (A) making any public announcement with respect to the voting of such shares at any meeting to consider a merger, consolidation, sale of substantial assets or other business combination or extraordinary transaction involving the Company, (B) making, or in any way participating in, any "solicitation" of "proxies" (as such terms are defined or used in Regulation 14A under the Exchange Act) to vote any voting securities of the Company (including, without limitation, any such solicitation subject to Rule 14a-11 under the Exchange Act) or seeking to advise or influence any party with respect to the voting of any voting securities of the Company, directly or indirectly, relating to a merger or other business combination involving the Company or the sale or transfer of substantial assets of the Company, (C) forming, joining or in any way participating in any "group" within the meaning of Section 13(d)(3) of the Exchange Act with respect to any voting securities of the Company, directly or indirectly, relating to a merger or other business combination involving the Company or the sale or transfer of any substantial assets of the Company, or (D) otherwise acting, alone or in concert with others, to seek control of the Company or to seek to control or influence the management or policies of the Company. 1 (ii) The stockholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company. (iii) A change in the composition of the Board of Directors of the Company occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors. "Incumbent Directors" shall mean directors who either (A) are directors of the Company as of the date hereof, or (B) are elected, or nominated for election, to the Board of Directors of the Company with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company). As a result of or in connection with any cash tender offer, merger, or other business combination, sale of assets or contested election, or combination of the foregoing, the persons who were directors of the Company just prior to such event shall cease within one year to constitute a majority of the Board. (iv) The Company's stockholders approve a definitive agreement providing for a transaction in which the Company will cease to be an independent publicly owned corporation. (v) The stockholders of the Company approve a definitive agreement (A) to merge or consolidate the Company with or into another corporation in which the holders of the Stock immediately before such merger or reorganization will not, immediately following such merger or reorganization, hold as a group on a fully-diluted basis both the ability to elect at least a majority of the directors of the surviving corporation and at least a majority in value of the surviving corporation's outstanding equity securities, or (B) to sell or otherwise dispose of all or substantially all of the assets of the Company. (c) "Commencement Date" means (i) for an Original Participant, the last day of the month following the month in which the Participant's employment terminates, and (ii) for any other Participant, the last day of the month following the later of the date on which the Participant's employment terminates and his or her fiftieth birthday. (d) "Company" means Boothe Financial Corporation, a Delaware corporation. (e) "Consumer Price Index" means, as of any date, the Consumer Price Index For All Urban Consumers (1985 base) for all commodities and services in the San Francisco-Oakland Area for the December immediately preceding such date as issued by the Bureau of Labor Statistics of the U.S. Department of Labor or, if such index ceases to exist, a similar index to be selected by the Board; and the annual percentage increase in the Consumer Price Index, as of any date, shall be equal to the quotient of the then current Consumer Price Index less the Consumer Price Index for the year immediately preceding divided by said Consumer Price Index for the year immediately preceding. (f) "Designated Beneficiary" means the person or persons designated by the Participant in a written form acceptable to and delivered to the Company. Any such designation may be changed by the Participant's execution and delivery to the Company of such change on a written form acceptable to the Company. No form designating a Designated Beneficiary shall be effective unless received by the Company before the Participant's death. If a Designated Beneficiary has not been properly designated or is deceased at the time any amount due hereunder is payable, the Designated Beneficiary shall be the Participant's spouse or, if there is no surviving spouse, then the Designated Beneficiary shall be the Participant's then living children (in equal shares). If there is neither a surviving spouse nor surviving children and the Participant has not otherwise properly designated a Designated Beneficiary, the Participant's Designated Beneficiary shall be his or her estate. 2 (g) "Misconduct" means that the Company sustains the burden of demonstrating that the Company has suffered material injury by reason of the fact that the Participant, while employed by the Company: (i) has willfully and knowingly committed an act of embezzlement, fraud, or theft, with respect to the property of the Company or any person with whom the Company does a material amount of business; (ii) has made any knowing and willful unauthorized disclosure of any material trade secret or material confidential information of the Company; (iii) has wrongfully and willfully caused any customer of the Company to breach a material contract with the Company; or (iv) has performed substantial services in any capacity for any corporation, partnership, entity or other person which is engaged in direct competition with the Company; provided, however, that Misconduct shall not be based upon any act or omission believed by the Participant in good faith to be in the best interest of the Company. For purposes of this Section 2(g) the term "Company" includes any subsidiary, joint venture, partnership or other entity in which the Company has a material financial interest. In making any determination hereunder, the Company shall act fairly and in a nondiscriminatory manner, and shall give the Participant an opportunity to be heard and present evidence. (h) "Original Participant" means any one of those designated a Participant as of September 13, 1984. All of the Original Participants are listed on Exhibit 3(b)(2) hereto. (i) "Participant" means an eligible individual who is designated a Participant by action of the Board. (j) "Plan" means the Boothe Financial Corporation Key Executive Retirement Plan - Level II, as set forth herein and as it may be amended from time to time. (k) "Salary" means one-twelfth of the highest annual base salary rate of Participant in effect within 18 months prior to the date his or her employment with the Company terminates. Salary shall not include bonuses, commissions, expense reimbursements, stock option gains or other special payments not included in the Participant's annual base salary rate. SECTION 3. ELIGIBILITY AND PARTICIPATION. (a) ELIGIBILITY. Any individual who is employed by the Company or one of its subsidiaries in a senior executive capacity is eligible to be designated as a participant in the Plan. (b) DESIGNATION OF PARTICIPANTS. An eligible individual may become a Participant in the Plan solely by designation as such by action of the Board. The Board shall take any such action in its sole discretion and shall have no obligation to designate as a Participant any individual who satisfies the eligibility criteria described in Section 3(a) above. Within a reasonable period of time thereafter the Company and the Participant shall enter into an agreement substantially in the form of Exhibit 3(b)(1) hereto, or such other forms as the Company may adopt, reflecting the Participant's designation as such and providing, among other things, that the Participant relinquishes all rights to severance pay under any Company policy and that no future severance pay shall accrue to the Participant, except that such relinquishment shall not apply to any severance benefits accorded under a written agreement between the Participant and the Company relating to the Participant's employment generally. 3 SECTION 4. BENEFITS. (a) ELIGIBILITY. A Participant shall be eligible to receive the benefits provided by the Plan if his or her employment with the Company and any of its subsidiaries and affiliates is terminated, so that he or she is no longer employed by the Company or any subsidiary or affiliate of the Company, where such termination occurs after the Participant has attained such age as shall be designated by the Board (age 47 for all Original Participants), whether such termination is voluntary, involuntary, by reason of his or her death or disability, or for any reason other than Misconduct, and without regard to his or her activities (including employment by another) following such termination. If a Participant's employment with the Company is terminated by reason of Misconduct, then he or she shall forfeit any and all right to the payment of benefits hereunder unless the Company determines that only a partial forfeiture is appropriate. If Misconduct is not discovered until after the Participant's employment is terminated, the Misconduct shall not affect any payments theretofore made but no further payments shall be made to the Partcipant or his or her Designated Beneficiary. In the event of the termination of a Participant's employment (i) after the Participant has attained the age of his or her eligibility for benefits designated by the Board in accordance with this Section 4(a), and (ii) either prior to or within six (6) months following a Change in Control, such termination shall be deemed to have been not by reason of Misconduct unless a majority of those persons who were directors of the Company continuously for a period of six (6) months immediately prior to the Change in Control determine and confirm in writing that the termination was for Misconduct, in which case the other provisions of the Plan regarding terminations for Misconduct shall apply. (b) AMOUNT AND DURATION OF BENEFITS. Subject to any limitations imposed by written agreement entered into between a Participant and the Company, a Participant's benefits under the Plan shall be equal to twenty-five percent (25%) of his or her Salary, increased on a compound basis on each anniversary of the Participant's Commencement Date by a percentage equal to the annual per-centage increase in the Consumer Price Index, if any, for the last calendar year, but not more than 7 1/2%; there shall be no reductions in benefits as a result of any decrease in the Consumer Price Index. Benefits shall be payable on the last day of each month, commencing with the Participant's Commencement Date and ending with the last day of the month in which the Participant dies; provided, however, that if the Participant dies before termination of employment or after his or her employment terminates but before receiving 180 monthly payments, benefits shall be paid to the Participant's Designated Beneficiary until a total of 180 monthly payments has been made to the Participant and/or his or her Designated Beneficiary. Notwithstanding the foregoing, additional benefits may be provided in any written agreement entered into between the Company and any Participant. SECTION 5. UNFUNDED NATURE OF BENEFITS Benefits and administrative expenses of the Plan shall be paid as needed solely from the general assets of the Company. The obligation of the Company under the Plan shall represent only its unfunded and unsecured promise to pay the benefits provided herein. While the Company reserves the right to provide for its liabilities through the purchase of one or more insurance contracts, the creation of a trust or otherwise, the adoption of the Plan, the execution of an individual agreement pursuant to the Plan and the Company's action in providing for such liabilities shall not give a Participant any interest in any specific asset of the Company, including such insurance contracts and interests in any such trusts, and with respect to the Company's obligations under the Plan or any agreement executed pursuant thereto, the Participant shall have the status of a general creditor of the Company. SECTION 6. AMENDMENT AND TERMINATION OF THE PLAN. The Company reserves the right to amend or terminate the Plan at any time by action of the Board; provided, however, that no such action by the Company shall reduce, eliminate, or otherwise affect the Company's obligation to pay benefits to or on behalf of an individual who had been designated as a 4 Participant prior to the taking of such action without the express written consent of such Participant, such consent to be given or withheld in the exercise of such Participant's absolute discretion. SECTION 7. GENERAL PROVISIONS. (a) NO ASSIGNMENT OF INTEREST. No right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be void. (b) NO EMPLOYMENT RIGHTS. Neither the Plan nor any individual agreement entered into pursuant to the Plan nor any right created under the Plan or any such agreement shall in any way affect the right of the Company to terminate a Participant's employment with or without cause; provided, however, that this Section 7(b) shall not affect any employment rights granted under an agreement relating to a Participant's employment generally. (c) GOVERNING LAW. The Plan and all rights and obligations hereunder shall be interpreted and construed in accordance with the laws of the State of California applicable to contracts entered into and wholly to be performed within the State of California by California residents. (d) BINDING EFFECT OF PLAN. The Plan shall be binding upon and shall inure to the benefit of the heirs, executors and administrators of a Participant and the successors and assigns of the Company. The Company's obligations hereunder shall not be terminated by reason of any liquidation, dissolution, bankruptcy, cessation of business, or similar event relating to the Company nor by reason of any merger, consolidation or other reorganization of the Company. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform its obligations under the Plan in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. 5 EX-10.4 5 EXHIBIT 10.4 EXHIBIT 10.4 ROBERT HALF INTERNATIONAL INC. RESTATED RETIREMENT AGREEMENT This agreement ("Agreement'), made effective as of July 1, 1996, by and between Robert Half International Inc., a Delaware corporation (the "Company") and Harold M. Messmer, Jr. ("Participant"). WITNESSETH: WHEREAS, the Board of Directors designated Participant as a Participant (as defined therein) in the Boothe Financial Corporation Key Executive Retirement Plan -- Level II (the "Plan") and the parties entered into a previous agreement to set forth the terms of such participation as of November 14, 1985; and WHEREAS, since that initial agreement, there have been 8 amendments; and WHEREAS, Company and Participant desire to enter into the Agreement, which both constitutes the 9th amendment to the original agreement and a complete restatement of the original agreement, as amended; NOW, therefore, pursuant to the Plan and in consideration of the premises and other valuable consideration, the parties hereto agree as follows to this restated retirement agreement. Section 1. DEFINITIONS As used herein, the following terms shall have the meanings set forth below; (a) "Annual Percentage Increase in the CPI" for any calendar year shall be equal to the quotient of (1) the CPI for December of that year less the CPI for the December of the year immediately preceding divided by (2) the CPI for the year immediately preceding, which quotient shall be rounded to the nearest tenth of a percent. (b) "Base Percentage" shall be the sum of (1) 30% and (2) the product of .25% and the number determined by subtracting 600 from Participant's age, expressed in completed months, on the Commencement Date. In no event, however, shall the Base Percentage be greater than 66%. Notwithstanding the foregoing, if a Change in Control occurs prior to the Commencement Date, then, effective upon the occurrence of such Change in Control, the Base Percentage shall be 66%. (c) "Basic Benefit" means the benefit described in Section 2(b). (d) "Bonus" with respect to any year means (1) any cash bonus paid to Participant with respect to such year and (2), if pursuant to any contract, plan or agreement, noncash compensation (including but not limited to shares of stock) is paid in lieu of all or a portion of an earned cash bonus, the amount of cash that would otherwise have been paid. (e) "Change in Control" has the same meaning as that term is defined in the Company's 1993 Incentive Plan. (f) "Commencement Date" means the last day of the month following the later of (1) the date of termination of Participant's employment with the Company and all of its subsidiaries and affiliates and (2) Participant's fiftieth birthday. (g) "Covered Compensation" means (1) $2,500 plus (2) one-twelfth of the combination of Salary and Bonus paid to Participant with respect to the calendar year for which the combination is the highest in the five calendar years prior to the date his employment with the Company and all of its subsidiaries and affiliates terminates. 1 (h) "CPI" means, for any month, the Consumer Price Index for All Urban Consumers (1982-84 base) for all commodities and services in the San Francisco-Oakland-San Jose Area for that month as issued by the Bureau of Labor Statistics of the U. S. Department of Labor or, if such index ceases to exist, a similar index to be selected by the Board. (i) "CPI-Based Rate" means a variable percentage rate, adjusted each calendar year, equal to 3% plus the Annual Percentage Increase in the CPI for the previous calendar year. (j) (1) (A) The term "Current Actuarial Value of the Company's Obligations" refers to the single premium required to purchase an annuity contract to cover the Company's obligations under this Agreement from an insurance company as described below. The Company shall solicit bids from all insurance companies rated AAA by both Moody's and Standard and Poor's, and the average of the bids obtained shall be the single premium required. (B) If two bids cannot be obtained from insurance companies with an AAA rating, at least two bids shall be obtained by soliciting bids from insurance companies that have lower rankings and have indicated a willingness to bid. For the purpose of ranking insurance companies by ratings, a company shall be ranked by the rating from the rating agency that gives it the lower rating; companies that have the same ranking based on this criterion, shall then be further ranked by referring to the rating given them by the other rating agency (so, for example, a company ranked AA+ by Standard & Poor's and Aa3 by Moody's would be ranked above a company rated AA by Standard & Poor's and Aa3 by Moody's). The bids that shall be taken into account are those from the two insurance companies with the highest rankings that have submitted bids (more than two bids shall be taken into account and averaged if more than two bids are received from companies with a ranking equal to or higher than the ranking that must be considered in order to obtain two bids); provided that, a bid shall be taken into account only if the insurance company has a rating of at least Aa3 from Moody's and AA- from Standard & Poor's. (C) In general, the Company shall solicit bids from all insurance companies that have indicated a willingness to bid and that have rankings equal to or above the ranking of any insurance company that submits a bid. Notwithstanding the preceding sentence, the Company may determine to request bids from fewer than all insurance companies of a particular ranking; provided that, (i) bids are received from at least three insurance companies of that ranking and (ii) the Participant has the right to designate three of the insurance companies of that ranking from which bids will be requested. (D) In the case of any insurance company from which bids are requested, the bid that shall be taken into account is the last bid submitted. (E) In the event that less than two bids are received under subparagraphs (A) or (B), the "Current Actuarial Value of the Company's Obligations" shall be based on the interest, mortality, and other assumptions of the insurance company bids that were last taken into account when bids were obtained that met the criteria of subparagraph (A) or (B); provided that these assumptions shall be appropriately adjusted to reflect any change in interest rates that has occurred since such bids were obtained. The Company and the Participant shall agree upon the hiring of an actuarial consulting firm that has no prior relationship with the Company to make the calculations described in the preceding sentence. This firm shall be one of the ten largest actuarial consulting firms. (2) Solely for the purpose of the annuity bids and purchases described in the subsection, the Basic Benefit described in Section 2(b) shall be treated as modified so that, in lieu of an annual increase in the Basic Benefit based on the Annual Percentage Increase in the CPI, the Basic Benefit as of the point at which the Current Actuarial Value of the Company's Obligations is being determined shall be treated as an amount increasing each year by a fixed percentage equal to the Annual 2 Percentage Increase in the CPI for the calendar year preceding the year for which the single premium is being determined (but not to exceed 7 1/2%). (k) "Designated Beneficiary" means the person or persons designated by Participant in a written form acceptable to and delivered to the Company. Any such designation may be changed by Participant's execution and delivery to the Company of such change on a written form acceptable to the Company. No form designating a Designated Beneficiary shall be effective unless received by the Company before Participant's death. If a Designated Beneficiary has not been properly designated or is deceased at the time any amount due hereunder is payable, the Designated Beneficiary shall be Participant's spouse, or, if there is no surviving spouse, then the Designated Beneficiary shall be Participant's then living children (in equal shares). If there is neither a surviving spouse nor surviving children and Participant has not otherwise properly designated a Designated Beneficiary, Participant's Designated Beneficiary shall be his estate. (l) "Salary" with respect to any calendar year means the greater of (1) the actual cash base salary paid to Participant during such year or (2) the Participant's "deemed base salary" for the calendar year in question. For calendar year 1995 Participant's deemed base salary was $413,019 (which was based on Participant's base salary of $345,000 at May 31, 1991 with CPI adjustments to December 31, 1995 in the manner described in the following sentence). For each calendar year subsequent to 1995 Participant's deemed base salary shall equal the deemed base salary for the prior year increased by (1) the Annual Percentage Increase for the year in question if the Annual Percentage Increase in the CPI is from 4% through 10%, (2) 4%, if the Annual Percentage Increase in the CPI is less than 4%, or (3) 10%, if the Annual Percentage Interest in the CPI is greater than 10%. (m) "Supplemental Benefit" means the benefit described in Section 2(c). Section 2. BENEFITS. (a) ELIGIBILITY. Participant shall be eligible to receive the benefits provided by this Agreement upon his termination of employment (whether voluntary or involuntary, by reason of Participant's death or disability, or otherwise) with the Company and any of its subsidiaries and affiliates so that Participant is no longer employed by the Company or any subsidiary or affiliate of the Company for any reason. (b) BASIC BENEFIT. (1) Participant's benefits pursuant to this Agreement shall be equal to the Base Percentage of his Covered Compensation, increased on a compound basis on each anniversary of Participant's Commencement Date by a percentage equal to the Annual Percentage Increase in the CPI, if any, for the prior calendar year, but not more than 7 1/2%; there shall be no reduction in benefits as a result of any decrease in the CPI. Benefits shall be payable on the last day of each month, commencing with the Participant's Commencement Date and ending with the last day of the month in which Participant dies. (2) If Participant dies after his employment terminates but before receiving 180 monthly payments, benefits shall continue to be paid to Participant's Designated Beneficiary until a total of 180 monthly payments have been made to Participant and/or his Designated Beneficiary. Moreover, if Participant's Designated Beneficiary at the time of his death is his wife, then, after the aforesaid total of 180 monthly payments have been made, she shall continue to receive thereafter monthly payments in an amount equal to 50% of the payment that Participant would have received if then living until (A) her death, if she is the person who was Participant's wife at the time of execution of this Agreement, or (B) the earlier of her death or July 31, 2031, if she was not his wife at the time of execution of this Agreement. (3) If Participant dies prior to termination of employment, payments shall commence to be paid to Participant's Designated Beneficiary commencing as of the last day of the month following Participants' death in the same manner as if Participant had terminated employment and died 3 immediately after the Commencement Date, thus entitling the Designated Beneficiary to a minimum of 180 monthly payments. (c) SUPPLEMENTAL BENEFIT. (1) In addition to the Basic Benefit, Participant shall also receive a monthly Supplemental Benefit beginning on the Commencement Date, which benefit shall be determined in accordance with this subsection (c) and subject to the conditions stated herein. (2) The Supplemental Benefit shall be $6,240.63 if Participant retires at the earliest possible Commencement Date. For each month that Participant delays his retirement beyond the earliest possible Commencement Date (but not beyond age 62), however, the Supplemental Benefit shall be increased at the rate of 8% per annum, compounded monthly. If Participant retires after age 62, the Supplemental Benefit shall be the same as if Participant had retired at age 62. (3) The Supplemental Benefit shall be paid for each of the first 180 months following termination. If Participant should die prior to the completion of such payments, any remaining payments shall be made to Participant's Designated Beneficiary. (4) If Participant dies prior to termination of employment, payments shall commence to be paid to Participant's Designated Beneficiary commencing as of the last day of the month following Participant's death in the same manner as if Participant had terminated employment and died immediately after the Commencement Date, thus entitling the Designated Beneficiary to 180 payments. Section 3. UNFUNDED PROMISE. The obligation of the Company under this Agreement shall represent only its unfunded and unsecured promise to pay the benefits provided herein. While the Company reserves the right to provide for its liabilities through the purchase of one or more insurance contracts, the creation of a trust or otherwise, neither the execution of this Agreement nor the Company's action in providing for such liabilities shall give Participant any interest in any specific asset of the Company, including such insurance contracts and interest in any such trusts, and with respect to the Company's obligations under this Agreement, Participant shall have the status of a general creditor of the Company. Section 4. DISPUTES. The parties agree that any dispute, controversy or question arising under the Plan or this Agreement shall be definitively resolved by arbitration conducted in San Francisco, California under the rules of the California Arbitration Act. If any such arbitration or action at law or in equity is brought to enforce or interpret the terms of the Plan or this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs, and necessary disbursements in addition to any other relief to which it may be entitled. Upon written request by Participant, the Company shall advance to Participant amounts equal to all reasonable attorneys' fees, costs, and necessary disbursements incurred by Participant in seeking to obtain, enforce, or retain any right, benefit, or payment provided for in the Plan or this Agreement or in otherwise pursuing or settling any claim hereunder. If the Company is the prevailing party in any arbitration or action to enforce or interpret the Plan or this Agreement, Participant shall reimburse the Company in the full amount of the advances made pursuant to the preceding sentence. If there is no such arbitration or action or such action is concluded without a determination of a prevailing party, Participant shall have no obligation to reimburse the Company for such advances. Section 5. CODE SECTION 280G LIMITATIONS. If, as a result of a Change in Control, the increase in benefits resulting therefrom causes Participant to incur an excise tax obligation pursuant to Section 4999 of the Internal Revenue Code, then the Company shall reimburse Participant for such excise tax and for any additional federal, state, or local income or 4 excise taxes resulting from such reimbursement, such that there is no net reduction in benefits to Participant due to Section 4999. For purposes of the foregoing sentence, the excise tax resulting from the increase in benefits shall be deemed to be the excess of the excise tax imposed by such Section 4999 over the excise tax that would have been imposed by such Section 4999, if any, had there been no increase in benefits hereunder as a result of the Change in Control. Section 6. RABBI TRUST; PURCHASE OF ANNUITIES; CASH LUMP SUMS. (a) Prior to June 30, 1996, the Company shall establish an irrevocable "grantor trust" in a form acceptable to Company and Participant. Upon the establishment of the irrevocable trust, the Company will deposit with the trustee cash or property (reasonably acceptable to the Participant) in the amount necessary to fund the then Current Actuarial Value of the Company's Obligations under this Agreement. Thereafter, within 60 days prior or subsequent to each subsequent June 30, the Company will deposit with the trustee additional cash or property (reasonably acceptable to the Participant) necessary to fund the then Current Actuarial Value of the Company's Obligations that have not been previously satisfied by the purchase of annuities, funding of the trust, or otherwise. (b) (1) Upon termination of Participant's employment, the Company shall purchase and deliver to Participant an annuity to fund the obligations of the Company to Participant pursuant hereto, as such obligations exist as of the date of termination. The annuity to be purchased shall be determined by obtaining bids from insurance companies that meet the requirements set forth in the definition of "Current Actuarial Value of the Company's Obligations," and taking into account those bids that would be taken into account if the Company were soliciting bids to satisfy its funding obligation under subsection (a). For the purpose of determining the specifications for the annuity to be purchased, there shall be applied the modification to the definition of "Annual Percentage Increase in CPI" described in Section 1(j)(2). The annuity contract to be purchased shall be the middle bid of the bids obtained (if an even number of bids are obtained, the least expensive bid shall be ignored if an annuity contract is to be purchased). Alternatively, at the request of Participant, the Company shall pay Participant in a lump sum an amount equal to the average of all the bids that are taken into account. If no annuity bid can be obtained from an insurance company that meets the criteria of Section 1(j)(1)(A) or (B), the Participant shall be paid a lump sum calculated in accordance with Section 1(j)(1)(E). (2) As a condition to the purchase of an annuity or the payment of a lump sum, Participant shall execute an agreement affirming that benefits pursuant to this Agreement shall be reduced by reason of the benefits payable pursuant to the annuity or lump sum, as provided therein. Upon the delivery of an annuity or lump sum payment following termination of employment in satisfaction of the Company's obligations hereunder, the Company may recover the assets of the trust established pursuant to subsection (a) and the trust shall thereupon terminate. (3) (A) Subsequent to the annuity purchase or lump sum cash payment described in subsection (b)(1), further payments may be due from the Company to the Participant or his Designated Beneficiary, if the Annual Percentage Increase in the CPI exceeds the fixed percentage used to determine the annuity to be purchased at the time of termination of employment. The additional payments, if any, shall be determined on an annual basis by comparing the payments to be received by the Participant and his Designated Beneficiary under the annuity contract described in subsection (b)(1) that was available at termination of employment (the "Annuity Payments") to the value of the payments described in Section 2 that would have been paid directly by the Company to the Participant and his Designated Beneficiary if no settlement had occurred under subsection (b)(1) (the "Hypothetical Payments"). The comparison shall be made as of December 31 of each year and the value of each Hypothetical Payment and each Annuity Payment shall be increased from the date of hypothetical payment or the date that the Annuity Payment would have been received (based on the assumption that Participant elected to receive an annuity contract with the features described in this Agreement) to such December 31 using the CPI-Based Rate as it exists during the period of time for which an 5 interest rate is being determined, compounded monthly. If the value of the Hypothetical Payments exceed the value of the Annuity Payments as of any December 31, an additional lump sum payment equal to such excess shall be payable as soon as practicable to either Participant or his Designated Beneficiary (as may be appropriate) at that time. Such additional payment shall be taken into account in determining whether, as of any future December 31, further payments are due from the Company. Each year the Company shall deliver a statement to Participant or his Designated Beneficiary (as may be appropriate) showing the calculations set forth in this paragraph. The statement shall be prepared by an independent public accounting firm satisfactory to both Company and the person to whom the statement is to be delivered. In no event shall the operation of this subsection (b)(3)(A) require payments to the Company. (B) The calculations described in this subsection (b)(3) shall be performed on a cumulative basis, so that the Company is given credit for any periods in which the Annuity Payments are more than the Hypothetical Payments (this could occur if Annual Percentage Increases in the CPI are less than the assumed Annual Percentage Increase in the CPI taken into account at the time that bids for the annuity contract were solicited). (C) By way of example, assume Participant had terminated employment in February 1996 (so that his commencement date was March 31, 1996), his monthly Basic Benefit payment as of March 31, 1996 was $27,470 (based on a Basic Percentage of 30.25% and Covered Compensation of $90,809), and the Annual Percentage Increase in the CPI for 1995 was 1.8%. Under these circumstances, the annuity purchased for Participant would have provided a 1.8% annual increase in the Basic Benefit. Suppose that the Annual Percentage Increases in the CPI for 1996, 1997, and 1998 were 3%, 0%, and 3% respectively. Under these circumstances, the monthly payments of the Basic Benefit under the annuity commencing March 31, 1997, March 31, 1998, and March 31, 1999 would be $27,964, $28,468, and $28,980 respectively, reflecting an annual increase of 1.8%. Based on the actual Annual Percentage Increases in the CPI, the Hypothetical Payments commencing March 31, 1997, March 31, 1998, and March 31, 1999 would be $28,294, $28,294, and $29,143 respectively. Under these circumstances, the Participant would be underpaid by $330 a month as of March 31, 1997, overpaid by $174 a month as of March 31, 1998, and underpaid by $163 a month as of March 31, 1999. (D) Based on the numbers in the example in subparagraph (C) above, the following payments should be made. For the period ending December 31, 1997, the Participant should receive an additional payment of $3,375, representing the value as of December 31, 1997 of the 10 underpayments of $330, compounded monthly at a 6% annual rate. For the period ending December 31, 1998, no payment is owed to the Participant, because the two underpayments of $330 (for January 31 and February 28, 1998) have been followed by 10 overpayments of $174. Using a 3% annual interest rate, compounded monthly, it is determined that the Participant has been overpaid by $1,084 as of December 31, 1998. As provided in the last sentence of subparagraph (A), however, no payment is due from the Participant to the Company. Finally, for the period ending December 31, 1999 the Participant has been overpaid for the first two months by $174 and then underpaid for the last ten months by $163. As of December 31, 1999, the net underpayment to Participant based on these 12 payments and using a 6% annual interest rate, compounded monthly, is $1,302. However, there must be credited against this underpayment the value as of December 31, 1999 of the $1,084 overpayment as of December 31, 1998. The December 31, 1999 value of the $1,084 overpayment is $1,151, reducing the net underpayment to Participant to $151, which is the amount payable to Participant as of that date. (4) The settlement mechanism in this subsection (b) shall apply in the event of Participant's death prior to termination of employment except that Participant's Designated Beneficiary shall have the right to make the decisions that would otherwise be reserved to Participant. 6 Section 7. MISCELLANEOUS. (a) NO ASSIGNMENT OF INTEREST. No right or benefit under this Agreement shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge the same shall be void. (b) NO EMPLOYMENT RIGHTS. None of this Agreement, any provision hereof, and any right created hereunder shall in any way affect the right of the Company to terminate Participant's employment with or without cause. (c) GOVERNING LAW. This Agreement and all rights and obligations hereunder shall be interpreted and construed in accordance with the laws of the State of California applicable to contracts entered into and wholly to be performed within the State of California by California residents. (d) ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire agreement between the parties hereto regarding the specific subject matter hereof, and supersedes all prior agreements, understandings or commitments, whether oral or written, with respect thereto to the specific subject matter hereof. Participant hereby acknowledges and agrees that, as partial consideration for the benefits to be received by Participant hereunder, Participant is relinquishing any and all rights to severance pay under any severance policy of the Company (which rights on the date of this Agreement would have been for three weeks of severance pay for each year of employment with the Company) and that no future severance pay under any Company policy shall accrue to Participant; provided, however, that such relinquishment shall not apply to any severance benefits accorded under a written agreement between Participant and the Company relating to Participant's employment generally. No amendment, modification or supplement of this Agreement may be made except by a writing signed by both the Company and the Participant. (e) BINDING EFFECT OF AGREEMENT. This Agreement shall be binding upon and shall inure to the benefit of the heirs, executors and administrators of Participant and the successors and assigns of the Company. The Company's obligations hereunder shall not be terminated by reason of any liquidation, dissolution, bankruptcy, cessation of business, or similar event relating to the Company nor any reason of any merger, consolidation or other reorganization of the Company. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company, by agreement in form and substance satisfactory to Participant, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. Executed on February 27, 1997 to be effective as of July 1, 1996. ROBERT HALF INTERNATIONAL INC. By M. KEITH WADDELL ------------------------------------------ HAROLD M. MESSMER, JR. ------------------------------------------ 7 EX-10.6 6 EXHIBIT 10.6 EXHIBIT 10.6 ROBERT HALF INTERNATIONAL INC. EXCISE TAX RESTORATION AGREEMENT (EFFECTIVE NOVEMBER 5, 1996) In consideration of the willingness of the individual executives and directors of Robert Half International Inc. (the "Company") who are listed in Attachment A to continue to serve the Company until a change of control of the Company, the Company agrees to pay to each of such individuals (the "Employees") the following amount: (a) EXCISE TAX RESTORATION PAYMENT. In the event that it is determined that any payment or distribution of any type to or for the benefit of the Employee made by the Company, by any of its affiliates, by any person who acquires ownership or effective control of the Company or ownership of a substantial portion of the Company's assets (within the meaning of section 280G of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the "Code")) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of an employment agreement or otherwise (the "Total Payments"), would be subject to the excise tax imposed by section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest or penalties, are collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment (an "Excise Tax Restoration Payment") in an amount that shall fund the payment by the Employee of any Excise Tax on the Total Payments as well as all income taxes imposed on the Excise Tax Restoration Payment, any Excise Tax imposed on the Excise Tax Restoration Payment and any interest or penalties imposed with respect to taxes on the Excise Tax Restoration Payment or any Excise Tax. (b) DETERMINATION BY AUDITORS. All mathematical determinations and all determinations of whether any of the Total Payments are "parachute payments" (within the meaning of section 280G of the Code) that are required to be made under this agreement, including all determinations of whether an Excise Tax Restoration Payment is required, of the amount of such Excise Tax Restoration Payment and of amounts relevant to the last sentence of this agreement, shall be made by the independent auditors retained by the Company most recently prior to the change in control (the "Auditors"), who shall provide their determination (the "Determination"), together with detailed supporting calculations regarding the amount of any Excise Tax Restoration Payment and any other relevant matters, both to the Company and to the Employee within seven business days of the Employee's termination date, if applicable, or such earlier time as is requested by the Company or the Employee (if the Employee reasonably believes that any of the Total Payments may be subject to the Excise Tax). If the Auditors determine that no Excise Tax is payable by the Employee, it shall furnish the Employee with a written statement that such Auditors have concluded that no Excise Tax is payable (including the reasons therefor) and that the Employee has substantial authority not to report any Excise Tax on the Employee's federal income tax return. If an Excise Tax Restoration Payment is determined payable, it shall be paid to the Employee within five business days after the Determination is delivered to the Company or the Employee. Any determination by the Auditors shall be binding upon the Company and the Employee, absent manifest error. (c) UNDERPAYMENTS AND OVERPAYMENTS. As a result of uncertainty in the application of section 4999 of the Code at the time of initial determination by the Auditors hereunder, it is possible that Excise Tax Restoration Payments not made by the Company should have been made ("Underpayments") or that Excise Tax Restoration Payments will have been made by the Company which should not have been made ("Overpayments"). In either event, the Auditors shall determine the amount of the Underpayment or Overpayment that has occurred. In the case of an Underpayment, the amount of such Underpayment shall promptly be paid by the Company to or for the benefit of the Employee. In the case of an Overpayment, the Employee shall, at the direction and expense of the Company, take such steps as are reasonably 1 necessary (including the filing of returns and claims for refund), follow reasonable instructions from, and procedures established by, the Company and otherwise reasonably cooperate with the Company to correct such Overpayment; PROVIDED, HOWEVER, that (i) the Employee shall in no event be obligated to return to the Company an amount greater than the net after-tax portion of the Overpayment that the Employee has retained or has recovered as a refund from the applicable taxing authorities and (ii) this provision shall be interpreted in a manner consistent with the intent of this agreement, which is to make the Employee whole, on an after-tax basis, for the application of the Excise Tax, it being understood that the correction of an Overpayment may result in the Employee's repaying to the Company an amount which is less than the Overpayment. (d) This agreement amends and supersedes provisions concerning parachute payments under section 280G of the Code and excise taxes under section 4999 of the Code in any other employment agreements or other agreements between the Employee and the Company. This agreement is adopted this 5th day of November 1996. ROBERT HALF INTERNATIONAL INC. By: /s/ M. KEITH WADDELL ----------------------------------------- M. Keith Waddell SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER 2 EXCISE TAX RESTORATION AGREEMENT ATTACHMENT A INDIVIDUALS COVERED BY THIS AGREEMENT NOVEMBER 5, 1996 Harold M. Messmer, Jr. Andrew S. Berwick, Jr. Fredrick P. Furth Edward W. Gibbons Frederick A. Richman Thomas J. Ryan J. Stephen Schaub M. Keith Waddell Robert W. Glass Steven Karel Barbara J. Forsberg Kirk E. Lundburg Paul F. Gentzkow
3 EX-10.7 7 EXHIBIT 10.7 EXHIBIT 10.7 OUTSIDE DIRECTORS' OPTION PLAN OF ROBERT HALF INTERNATIONAL INC. (AS AMENDED AND RESTATED EFFECTIVE NOVEMBER 5, 1996) 1. DEFINITIONS. As used in this Plan, the following terms have the following meanings: 1.1. ADMINISTRATOR means the Board or a committee appointed by the Board. 1.2. AFFILIATE means a "parent" or "subsidiary" corporation, as defined in Sections 425(e)and 425(f), respectively, of the Code. 1.3. ANNUAL ORGANIZATIONAL MEETING means the first meeting of the Board after the annual meeting of the Company's stockholders. 1.4. BOARD means the Board of Directors of the Company. 1.5. CHANGE IN CONTROL. A Change in Control means any of the following events: 1.5.1. Any person or group (as such terms are defined in Section 13(d)(3) of the Exchange Act), other than an employee benefit plan sponsored by the Company or a subsidiary thereof or a corporation owned (directly or indirectly), by the stockholders of the Company in substantially the same proportions of the ownership of stock of the Company, shall become the beneficial owner of securities of the Company representing 20% or more, or commences a tender or exchange offer following the successful consummation of which the offerer and its affiliates would beneficially own securities representing 20% or more, of the combined voting power of then outstanding securities ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise; PROVIDED, HOWEVER, that a Change in Control shall not be deemed to include the acquisition by any such person or group of securities representing 20% or more of the Company if such party has acquired such securities not with the purpose nor with the effect of changing or influencing the control of the Company, nor in connection with or as a participant in any transaction having such purposes or effect, including, without limitation, not in connection with such party (i) making any public announcement with respect to the voting of such shares at any meeting to consider a merger, consolidation, sale of substantial assets or other business combination or extraordinary transaction involving the Company, (ii) making, or in any way participating in, any "solicitation" of "proxies" (as such terms are defined or used in Regulation 14A under the Exchange Act) to vote any voting securities of the Company (including, without limitation, any such solicitation subject to Rule 14a-11 under the Exchange Act) or seeking to advise or influence any party with respect to the voting of any voting securities of the Company, directly or indirectly, relating to a merger or other business combination involving the Company or the sale or transfer of substantial assets of the Company, (iii) forming, joining or in any way participating in any "group" within the meaning of Section 13(d)(3) of the Exchange Act with respect to any voting securities of the Company, directly or indirectly, relating to a merger or other business combination involving the Company or the sale or transfer of any substantial assets of the Company, or (iv) otherwise acting, alone or in concert with others, to seek control of the Company or to seek to control or influence the management or policies of the Company. 1.5.2. The stockholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company. 1.5.3. A change in the composition of the Board of Directors of the Company occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors. "Incumbent Directors" shall mean directors who either (i) are directors of the Company as of the date hereof, or (ii) are elected, or nominated for election, to the Board of Directors of the Company with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company). As a result of or in connection with any cash tender offer, merger, or other business combination, sale of assets or contested election, or combination of the foregoing, the persons who were directors of the Company just prior to such event shall cease within one year to constitute a majority of the Board. 1.5.4. The Company's stockholders approve a definitive agreement providing for a transaction in which the Company will cease to be an independent publicly owned corporation. 1.5.5. The stockholders of the Company approve a definitive agreement (i) to merge or consolidate the Company with or into another corporation in which the holders of the Stock immediately before such merger or reorganization will not, immediately following such merger or reorganization, hold as a group on a fully-diluted basis both the ability to elect at least a majority of the directors of the surviving corporation and at least a majority in value of the surviving corporation's outstanding equity securities, or (ii) to sell or otherwise dispose of all or substantially all of the assets of the Company. 1.6. CODE means the Internal Revenue Code of 1986, as amended. 1.7. COMPANY means Robert Half International Inc. 1.8. DIRECTOR means a member of the Board. 1 1.9. ELIGIBLE DIRECTOR means a Director who is not also an employee of the Company or an Affiliate. 1.10. EXCHANGE ACT means the Securities Exchange Act of 1934, as amended. 1.11. GRANT DATE means the date on which an Option is granted. 1.12. OFFER means a tender offer or an exchange offer for shares of the Company's Stock. 1.13. OPTION means an option to purchase Stock as described in Section 5.1 hereof. An Option granted under this Plan is a nonstatutory option to purchase Stock which does not meet the requirements set forth in Section 422A of the Code. 1.14. OPTION AGREEMENT means a written agreement evidencing an Option, in form satisfactory to the Company, duly executed on behalf of the Company and delivered to and executed by an Optionee. 1.15. OPTIONEE means an Eligible Director who has been granted an Option. 1.16. PLAN means the Outside Directors' Option Plan. 1.17. SECURITIES ACT means the Securities Act of 1933, as amended. 1.18. STOCK means the Common Stock, $.001 par value, of the Company. 1.19. STOCK PURCHASE AGREEMENT means a written agreement, in form satisfactory to the Company, duly executed by the Company and an Optionee who has exercised an Option to purchase Stock. 1.20. TERMINATION DATE means the date on which an Optionee ceases to be a Director of the Company. 1.21. VESTING DATE means, with respect to each calendar year, the last day of the month in which the Annual Organization Meeting is held; provided, however, that the "Vesting Date" with respect to a particular Option shall not include the last day of the month in which such Option is granted. 1.22. VOTING SHARES means the outstanding shares of the Company entitled to vote for the election of directors. 2. PURPOSES OF THE PLAN. The purposes of the Plan are to attract and retain the best available candidates for the Board, to provide additional equity incentives to Eligible Directors through their participation in the growth value of the Stock, and to promote the success of the Company's business. To accomplish the foregoing objectives, this Plan provides a means whereby Eligible Directors will receive Options to purchase Stock. 3. STOCK SUBJECT TO THE PLAN. The number of authorized but previously unissued shares of the Company's Stock available for issuance hereunder shall equal the number of shares of Stock with respect to which Options are granted pursuant to Section 5 hereof. 4. ADMINISTRATION. The Administrator shall have the authority to grant Options upon the terms and conditions of this Plan, and to determine all other matters relating to this Plan. The Administrator may delegate ministerial duties to such employees of the Company as it deems proper. All questions of interpretation, implementation and application of this Plan shall be determined by the Administrator, and such determinations shall be final and binding on all persons. 2 5. TERMS AND CONDITIONS OF OPTIONS. 5.1. GRANT OF OPTION. Options shall be granted pursuant to this Plan as follows: 5.1.1. GRANT ON EFFECTIVE DATE. Upon the effective date of this Plan, an Option for 20,000 shares of Stock shall be granted to each Eligible Director who shall not previously have been granted an option by the Company for the purchase of shares of Stock. 5.1.2. SUBSEQUENT GRANTS. On the date of each Annual Organizational Meeting subsequent to the effective date of this Plan, an Option shall be granted to each Eligible Director. With respect to any Eligible Director who, prior to such date, shall not have been granted an option by the Company, whether pursuant to this Plan or any other plan or arrangement with the Company, the Option shall be for 10,000 shares of Stock. Otherwise, the Option shall be for 8,000 shares of Stock. 5.2. EXERCISE PRICE. The exercise price of an Option shall be 100% of the value of the Stock on the Grant Date, determined in accordance with Section 6 hereof. 5.3. OPTION TERM. Each Option granted under this Plan shall expire ten (10) years from the Grant Date. 5.4. OPTION EXERCISE. 5.4.1. INITIAL EXERCISE. No Option may be exercised in whole or in part until the later to occur of (i) the first Vesting Date following the Grant Date of such Option and (ii) six months after the Grant Date of such Option. 5.4.2. STOCKHOLDER APPROVAL. If stockholder approval of this Plan is required (a) under the rules and regulations promulgated under Section 16 of the Exchange Act in order to exempt any transaction contemplated by this Plan from Section 16(b) of the Exchange Act, or (b) by the rules of the New York Stock Exchange, if the Company's securities are listed thereon, or (c) by the rules of the National Association of Securities Dealers automated quotation system ("NASDAQ"), National Market System, if the Company's securities are quoted thereon, then no Option may be exercised in whole or in part until the stockholders of the Company have approved this Plan. 5.4.3. COMPLIANCE WITH SECURITIES LAWS. Stock shall not be issued pursuant to the exercise of an Option unless the exercise of the Option and the issuance and delivery of Stock pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act, the Exchange Act, applicable state securities laws, the rules and regulations promulgated under each of the foregoing, the requirements of the New York Stock Exchange (if the Company's securities are listed thereon) and the requirements of NASDAQ pertaining to the National Market System (if the Company's securities are quoted thereon), and shall be further subject to the approval of counsel for the Company with respect to such compliance. 5.5. REGISTRATION AND RESALE. If the Stock subject to this Plan is not registered under the Securities Act and under applicable state securities laws, the Administrator may require that the Participant deliver to the Company such documents as counsel for the Company may determine are necessary or advisable in order to substantiate compliance with applicable securities laws and the rules and regulations promulgated thereunder. 5.6. VESTING SCHEDULE. An Optionee's right to exercise an Option shall vest, as to twenty-five percent (25%) of the Stock (as adjusted, pursuant to Section 5.8.1 hereof, if applicable) initially subject to the Option, on each of the first through fourth Vesting Dates following the Grant Date. 3 5.7. PAYMENT UPON EXERCISE. At the time written notice of exercise of an Option is given to the Company, the Optionee shall make payment in full, in cash or check or by one of the methods specified in Section 5.7.1 or Section 5.7.2 below, for all Stock purchased pursuant to the exercise of such Option. Proceeds of any such payment shall constitute general funds of the Company. 5.7.1. PROMISSORY NOTE. An Option may be exercised by delivery of the Optionee's full recourse promissory note for any portion or all of the aggregate exercise price of the Stock as to which the Option is being exercised. Such note shall (a) bear interest at the lowest rate which will not result in interest being imputed pursuant to the Internal Revenue Code, (b) mature four years after the date of exercise and (c) be on such other terms as determined by the Administrator. Such promissory note shall be secured by a security interest in the Stock purchased pursuant to the Option and in such other manner, if any, as the Administrator shall approve. 5.7.2. DELIVERY OF STOCK. An Option may be exercised by delivery by the Optionee of Stock already owned by the Optionee for all or part of the aggregate exercise price of the Stock as to which the Option is being exercised, so long as (i) the value of such Stock (determined as provided in Section 6) is equal on the date of exercise to the aggregate exercise price of the shares of Stock as to which the Option is being exercised, or such portion thereof as the Optionee is authorized to pay by delivery of Stock and (ii) such previously owned shares have been held by the Optionee for at least six months. 5.8. ADJUSTMENTS. 5.8.1. CHANGES IN CAPITAL STRUCTURE. If the Stock is changed by reason of a stock split, reverse stock split, stock dividend, or recapitalization, or is converted into or exchanged for other securities other than as a result of a Change of Control, the Administrator shall make such appropriate adjustments in (i) the number of shares of Stock to be covered by options granted under Section 5.1.2 hereof, (ii) each Option outstanding under this Plan, and (iii) the exercise price of each outstanding Option; provided, however, that the Company shall not be required to issue fractional shares as a result of any such adjustment. Each such adjustment shall be determined by the Administrator in its sole discretion, which determination shall be final and binding on all persons. Any new or additional Stock to which an Optionee may be entitled under this Section 5.8.1 shall be subject to all of the terms and conditions set forth in Section 5 of this Plan. 5.8.2. CHANGE OF CONTROL. In the event of a Change of Control, all Options shall vest immediately. 5.9. NO ASSIGNMENT. No right or benefit under, or interest in, the Plan shall be subject to assignment or transfer (other than by will or the laws of descent and distribution), and no such right, benefit or interest shall be subject to attachment or legal process for or against Participant or his or her beneficiaries, as the case may be. During the life of the Optionee, an Option shall be exercisable only by the Optionee or, in the event of disability of the Optionee, by the Optionee's guardian or legal representative. 5.10. TERMINATION; EXPIRATION OF UNVESTED OPTIONS. Options granted to an Optionee under this Plan, to the extent such rights have not expired or been exercised, shall terminate on such Optionee's Termination Date; provided, however, that an Option may be exercised, to the extent vested and exercisable on the Termination Date, for a period of thirty (30) days after such Optionee's Termination Date; and, provided further, that if exercise of an Option during such thirty (30) day period would subject such Optionee to liability under Section 16(b) of the Exchange Act, such thirty (30) day period shall not begin to run until six (6) months from the date of the last Stock transaction made, indirectly or directly, by such Optionee prior to such Optionee's Termination Date. 4 6. DETERMINATION OF VALUE. For purposes of this Plan, the value of the Stock shall be the closing sales price on the New York Stock Exchange or the NASDAQ National Market System, as the case may be, on the date the value is to be determined as reported in THE WALL STREET JOURNAL (Western Edition). If there are no trades on such date, the closing sale price on the last preceding business day upon which trades occurred shall be the fair market value. If the Stock is not listed on the New York Stock Exchange or quoted on the NASDAQ National Market System, the fair market value shall be determined in good faith by the Administrator. 7. MANNER OF EXERCISE. An Optionee wishing to exercise an Option shall give written notice to the Company at its principal executive office, to the attention of the Secretary of the Company, accompanied by an executed Stock Purchase Agreement and by payment of the Option exercise price in accordance with Section 5.7. The date the Company receives written notice of an exercise hereunder accompanied by payment of the Option exercise price will be considered the date such Option was exercised. Promptly after receipt of such written notice and payment, the Company shall deliver to the Optionee or such other person permitted to exercise such Option under Section 5.9, a certificate or certificates for the requisite number of shares of Stock. The Company shall pay any stock issue or transfer tax incurred with respect to such exercise and issuance. 8. RIGHTS. 8.1. RIGHTS AS OPTIONEE. No Eligible Director shall acquire any rights as an Optionee unless and until an Option Agreement has been duly executed on behalf of the Company, delivered to the Optionee and executed by the Optionee. 8.2. RIGHTS AS STOCKHOLDER. No person shall have any rights as a stockholder of the Company with respect to any Stock subject to an Option until the date that a stock certificate has been issued and delivered to the Optionee. 8.3. NO RIGHT TO REELECTION. Nothing contained in the Plan or any Option Agreement shall be deemed to create any obligation on the part of the Board to nominate any Director for reelection by the Company's stockholders, or confer upon any Director the right to remain a member of the Board for any period of time, or at any particular rate of compensation. 9. REGISTRATION AND RESALE. The Board may, but shall not be required to, cause the Plan, the Options, and Stock subject to the Plan to be registered under the Securities Act and under the securities laws of any state. No Option may be exercised, and the Company shall not be obliged to grant Stock upon exercise of an Option, unless, in the opinion of counsel for the Company, such exercise and grant is in compliance with all applicable federal and state securities laws and the rules and regulations promulgated thereunder. As a condition to the grant of an Option for the issuance of Stock upon the exercise of an Option, the Administrator may require that the Optionee agree to comply with such provisions and federal and state securities laws as may be applicable to such grant or the issuance of Stock, and that the Optionee delivers to the Company such documents as counsel for the Company may determine are necessary or advisable in order to substantiate compliance with applicable securities laws and the rules and regulations promulgated thereunder. 10. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN. The Board or the Administrator may at any time amend, alter, suspend, or discontinue this Plan, except to the extent that stockholder approval is required for any amendment or alteration (a) by Rule 16b-3 or applicable law in order to exempt from Section 16(b) of the Exchange Act any transaction contemplated by this Plan, or (b) by the rules of the New York Stock Exchange, if the Company's securities are listed thereon, or (c) by the rules of NASDAQ pertaining to the National Market System, if the Company's securities are quoted thereon; provided, however, no amendment, alteration, suspension or discontinuation shall be made that would impair the rights of any Optionee under an Option without such Optionee's consent; and provided further, any provision in this Plan relating to the eligibility of Directors to participate in this Plan, the timing of Option grants made under this Plan or the amount of Options granted to a Director under this Plan shall not be amended, to the extent so provided by Rule 16b-3, more than once every six months, other 5 than to comport with the changes in the Code or the rules thereunder. Subject to the foregoing, the Administrator shall have the power to make such changes in the regulations and administrative provisions hereunder, or in any Option (with the Optionee's consent), as in the opinion of the Administrator may be appropriate from time to time. 11. INDEMNIFICATION OF ADMINISTRATOR. Members of the group constituting the Administrator shall be indemnified for actions with respect to the Plan to the fullest extent permitted by the Certificate of Incorporation, as amended, and the By-laws of the Company and by the terms of any indemnification agreement that has been or shall be entered into from time to time between the Company and any such person. 12. HEADINGS. The headings used in this Plan are for convenience only, and shall not be used to construe the terms and conditions of the Plan. 13. EFFECTIVE DATE. This Plan shall become effective upon adoption by the Board. If stockholder approval is required (a) under the General Rules and Regulations promulgated under Section 16 of the Exchange Act in order to exempt any transaction contemplated by this Plan from Section 16(b) of the Exchange Act or (b) by the rules of the New York Stock Exchange, if the Company's securities are listed thereon, or (c) by the rules of NASDAQ pertaining to the National Market System, if the Company's securities are quoted thereon, then this Plan shall be submitted to the stockholders of the Company for consideration at the next annual meeting of stockholders. The Administrator may make Options conditioned on such approval, and any Option so made shall be effective as of the date of grant, subject only to such approval. 6 EX-10.8 8 EXHIBIT 10.8 EXHIBIT 10.8 ROBERT HALF INTERNATIONAL INC. 1989 RESTRICTED STOCK PLAN (AS AMENDED AND RESTATED EFFECTIVE NOVEMBER 5, 1996) 1. DEFINITIONS. As used in this Plan, the following terms shall have the meanings set forth below: 1.1. ADMINISTRATOR means the Board or a committee appointed by the Board, the composition and size of which shall cause such committee to satisfy the requirements of Rule 16b-3 of the Exchange Act with respect to officers and directors. 1.2. BOARD means the Board of Directors of the Company. 1.3. COMPANY means Robert Half International Inc., a Delaware corporation. 1.4. CONTINUOUS EMPLOYMENT means employment with the Company or any Subsidiary without any termination or leave of absence, except for a leave of absence approved by the Company or any Subsidiary which is less than six consecutive months in duration. 1.5. DISABILITY OR DISABLED shall mean (i) a physical or mental condition which, in the judgment of the Administrator based on competent medical evidence satisfactory to the Administrator (including, if required by the Administrator, medical evidence obtained by an examination conducted by a physician selected by the Administrator), renders Participant unable to engage in any substantial gainful activity for the Company and which condition is likely to result in death or to be of long, continued and indefinite duration, or (ii) a judicial declaration of incompetence. 1.6. ELIGIBLE EMPLOYEE means an employee of the Company or any Subsidiary (including an employee who is a director and/or officer) who, as determined by the Administrator in its sole discretion, has and exercises management functions and responsibilities. 1.7. EXCHANGE ACT means the Securities Exchange Act of 1934, as amended. 1.8. GRANT DATE means the date on which a Restricted Stock Grant is granted to an Eligible Employee. 1.9. ISSUE DATE means the date on which shares of Stock subject to a Restricted Stock Grant are issued or transferred by the Company to the account of an Eligible Employee who has received such grant. 1.10. OFFER means a tender offer or an exchange offer for the Company's Stock. 1.11. PARTICIPANT means an individual to whom a Restricted Stock Grant is granted under the Plan. 1.12. PLAN means this 1989 Restricted Stock Plan. 1.13. RESTRICTED STOCK GRANT means a grant described in Section 8 of the Plan which is made by the Company and approved by the Administrator under and pursuant to the Plan. 1.14. SECURITIES ACT means the Securities Act of 1933, as amended. 1.15. STOCK means the Common Stock, $.001 par value, of the Company. 1 1.16. SUBSIDIARY means a "subsidiary" corporation as defined in Section 425(f) of the Internal Revenue Code of 1986, as amended. 1.17. VESTING DATE means the last day of the calendar month in which the annual organizational Board meeting following the annual meeting of the stockholders of the Company is held, or such other date as shall be established by the Administrator; provided, however, that the "Vesting Date" with respect to a particular Restricted Stock Grant shall not include the last day of the month in which such Restricted Stock Grant is granted. 1.18. VOTING SHARES means the outstanding shares of the Company entitled to vote for the election of Directors. 1.19. WITHHOLDING TAXES means any applicable federal, state and local income and other employment taxes which the Company is required to withhold in connection with the lapse of restrictions on Stock subject to a Restricted Stock Grant. 2. PURPOSE. The purpose of the Plan is to aid the Company and its Subsidiaries in attracting, retaining and motivating management employees with outstanding ability, competence and potential. The Plan provides such employees with a proprietary interest in the Company's success and progress by granting to them shares of Stock in accordance with the terms and conditions set forth below. 3. STOCK SUBJECT TO THE PLAN. A total of 1,200,000 shares of Stock, subject to adjustment as provided in Section 9 of the Plan, all of which shall be treasury shares, shall be reserved for issuance under this Plan. If, on or before termination of the Plan, any shares of Stock shall be reacquired by the Company pursuant to the termination provisions described in Section 11 of the Plan or in the instruments evidencing the making of Restricted Stock Grants, such shares may again be granted under the Plan. 4. ADMINISTRATION. The Plan shall be administered by the Administrator. Subject to all the applicable provisions of the Plan, the Administrator is authorized to make Restricted Stock Grants in accordance with the Plan, to construe and interpret the Plan, to prescribe, amend, and rescind rules and regulations relating to the Plan, and to make all determinations and to take all actions necessary or advisable for the Plan's administration. Whenever the Plan authorizes or requires the Administrator to take any action, make any determination or decision, or form any opinion, then any such action, determination, decision or opinion by or of the Administrator shall be in the absolute discretion of the Administrator and shall be final and binding upon all persons in interest, including the Company, its shareholders, and all Participants. 5. PARTICIPANTS. From time to time the Administrator shall, in its sole discretion, but subject to all of the provisions of the Plan, determine which Eligible Employees will be granted Restricted Stock Grants under the Plan, the number of shares of Stock to be granted to each such Eligible Employee and the terms, conditions and restrictions of each such Restricted Stock Grant. In making such determinations, the Administrator shall take into account the nature of services rendered and to be rendered by the respective recipients, their present and potential contribution to the Company's success and such other factors as the Administrator in its discretion deems relevant to the accomplishment of the purposes of the Plan. In any year, the Administrator may approve Restricted Stock Grants to Eligible Employees subject to differing terms and conditions. 6. RIGHTS WITH RESPECT TO SHARES OF STOCK. The Administrator shall notify each Eligible Employee to whom a Restricted Stock Grant has been granted of such grant. Upon written acceptance by the Eligible Employee of restrictions and other terms and conditions described in the Plan and in the instrument evidencing such Restricted Stock Grant, the Eligible Employee shall be a Participant, and the Company shall cause to be issued or transferred to the name of the Participant a certificate or certificates for the number of shares of Stock granted, subject to the provisions of Section 8.6 hereof. From and after the Issue Date, the Participant shall have absolute ownership of such shares of Stock, 2 including the right to vote and to receive dividends thereon, subject to the terms, conditions and restrictions described in the Plan and in the instrument evidencing the grant of such Restricted Stock Grant. 7. EMPLOYMENT. No grant of a Restricted Stock Grant to a Participant under the Plan shall affect any right of the Company or any Subsidiary to terminate, with or without cause, the Participant's employment at any time. 8. TERMS AND CONDITIONS OF RESTRICTED STOCK GRANT. Each Restricted Stock Grant made under the Plan shall contain the following terms, conditions and restrictions and such additional terms, conditions and restrictions as may be determined by the Administrator at the time of grant. 8.1. TERMINATION OF CONTINUOUS EMPLOYMENT. If the Participant's Continuous Employment with the Company or any Subsidiary shall terminate for any reason, except as provided in Section 8.3, all the rights of the Participant to such shares of Stock as to which restrictions have not lapsed pursuant to this Section or under Sections 8.2, 8.3 or 8.4 hereof shall immediately terminate; provided, however, that the Administrator, in its sole discretion, within ninety (90) days of such termination of Continuous Employment, may notify the Participant in writing that the Participant's rights in such shares will not terminate and that the Participant shall continue to be the owner of such shares, subject to such continuing restrictions as the Administrator may prescribe in such notice. 8.2. LAPSE OF RESTRICTIONS. The restrictions imposed on any Restricted Stock Grant shall lapse as to twenty-five percent (25%) of the Stock granted pursuant to such grant on each of first through fourth Vesting Dates which occur following the related Grant Date of such Restricted Stock Grant. Notwithstanding the foregoing, the Administrator may accelerate the lapsing of restrictions on a Restricted Stock Grant, in whole or in part, (i) as permitted by Section 8.1; (ii) as required by any employment or other agreement with the Company or any Subsidiary to which a Participant hereunder is a party; or (iii) under such terms and conditions as the Administrator deems appropriate. 8.3. TERMINATION OF CONTINUOUS EMPLOYMENT BY REASON OF DEATH OR DISABILITY. Any provisions of Section 8.1 to the contrary notwithstanding, if a Participant (i) has been in the Continuous Employment of the Company or a Subsidiary since the Grant Date of a Restricted Stock Grant and (ii) the employment of such Participant is terminated as a result of death or Disability, then, on the date of such termination, the restrictions imposed on any Restricted Stock Grant shall lapse as to all shares of Stock granted to such Participant pursuant to such Restricted Stock Grant. 8.4. CHANGE IN CONTROL. In the event of a Change in Control (as defined in this Section 8.4), all restrictions on any and all Restricted Stock Grants then outstanding shall immediately lapse. For purposes of this Plan, a "Change in Control" shall occur in the event of any of the following: 3 8.4.1. Any person or group (as such terms are defined in Section 13(d)(3) of the Exchange Act), other than an employee benefit plan sponsored by the Company or a subsidiary thereof or a corporation owned (directly or indirectly), by the stockholders of the Company in substantially the same proportions of the ownership of stock of the Company, shall become the beneficial owner of securities of the Company representing 20% or more, or commences a tender or exchange offer following the successful consummation of which the offerer and its affiliates would beneficially own securities representing 20% or more, of the combined voting power of then outstanding securities ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise; PROVIDED, HOWEVER, that a Change in Control shall not be deemed to include the acquisition by any such person or group of securities representing 20% or more of the Company if such party has acquired such securities not with the purpose nor with the effect of changing or influencing the control of the Company, nor in connection with or as a participant in any transaction having such purposes or effect, including, without limitation, not in connection with such party (i) making any public announcement with respect to the voting of such shares at any meeting to consider a merger, consolidation, sale of substantial assets or other business combination or extraordinary transaction involving the Company, (ii) making, or in any way participating in, any "solicitation" of "proxies" (as such terms are defined or used in Regulation 14A under the Exchange Act) to vote any voting securities of the Company (including, without limitation, any such solicitation subject to Rule 14a-11 under the Exchange Act) or seeking to advise or influence any party with respect to the voting of any voting securities of the Company, directly or indirectly, relating to a merger or other business combination involving the Company or the sale or transfer of substantial assets of the Company, (iii) forming, joining or in any way participating in any "group" within the meaning of Section 13(d)(3) of the Exchange Act with respect to any voting securities of the Company, directly or indirectly, relating to a merger or other business combination involving the Company or the sale or transfer of any substantial assets of the Company, or (iv) otherwise acting, alone or in concert with others, to seek control of the Company or to seek to control or influence the management or policies of the Company. 8.4.2. The stockholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company. 8.4.3. A change in the composition of the Board of Directors of the Company occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors. "Incumbent Directors" shall mean directors who either (i) are directors of the Company as of the date hereof, or (ii) are elected, or nominated for election, to the Board of Directors of the Company with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company). As a result of or in connection with any cash tender offer, merger, or other business combination, sale of assets or contested election, or combination of the foregoing, the persons who were directors of the Company just prior to such event shall cease within one year to constitute a majority of the Board. 8.4.4. The Company's stockholders approve a definitive agreement providing for a transaction in which the Company will cease to be an independent publicly owned corporation. 8.4.5. The stockholders of the Company approve a definitive agreement (i) to merge or consolidate the Company with or into another corporation in which the holders of the Stock immediately before such merger or reorganization will not, immediately following such merger or reorganization, hold as a group on a fully-diluted basis both the ability to elect at least a majority of the directors of the surviving corporation and at least a majority in value of the surviving corporation's outstanding equity securities, or (ii) to sell or otherwise dispose of all or substantially all of the assets of the Company. 8.5. AGREEMENT BY PARTICIPANT REGARDING WITHHOLDING TAXES. Each Participant granted a Restricted Stock Grant shall represent in writing that such Participant acknowledges that, with respect to each Restricted Stock Grant held by such Participant, (i) on each Vesting Date, Withholding Taxes become due with respect to shares of Stock as to which restrictions lapse, (ii) payment of Withholding Taxes to the Company is the responsibility of Participant and (iii) payment of such Withholding Taxes may require a significant cash outlay by Participant. In addition, each Participant granted a Restricted Stock Grant shall be subject to the following rules: 8.5.1. PAYMENT OF TAXES. Within five (5) business days following any lapsing of restrictions pursuant to the operation of Sections 8.1, 8.2, 8.3 or 8.4 hereof, the Company shall notify each affected Participant or, if applicable under Section 8.3, his or her estate, as to the amount of Withholding Taxes required to be withheld by the Company as a result of the lapse of restrictions. Within five (5) business days of receipt of such notice, Participant shall make full payment of Withholding Taxes to the Company. Such payment may be made in cash or by check or by reduction in the number of shares deliverable to Participant. If Withholding Taxes are paid by reduction of the number of shares deliverable to Participant, such shares shall be valued as of the date that the restrictions lapsed. In the event that such payment is not made within the specified time period, to the extent permitted by law the Company shall have the right to cause such Participant's Withholding Taxes obligation to be satisfied by reducing the number of shares of Stock deliverable or by offsetting such Withholding Taxes against amounts otherwise due from the Company to such Participant. The Company may instruct its transfer agent to withhold delivery of certificates evidencing such shares of Stock until Participant's Withholding Taxes obligation has been satisfied in full. 8.5.2. ELECTION TO RECOGNIZE GROSS INCOME IN THE YEAR OF GRANT. If any Participant properly elects within thirty (30) days of the Grant Date, to include in gross income for federal income tax purposes an amount equal to the fair market value of the shares of Stock on the Grant Date, such Participant shall pay to the Company in the calendar month of such Grant Date, or make arrangements satisfactory to the Administrator to pay to the Company, any Withholding Taxes required to be withheld with respect to such shares. 8.6. RESTRICTIVE LEGENDS; TRANSFER RESTRICTIONS; CUSTODY. Each certificate evidencing shares of Stock granted pursuant to a Restricted Stock Grant may bear an appropriate legend referring to the terms, conditions and restrictions described in the Plan and in the instrument evidencing the Restricted Stock Grant. In addition, if required under this Plan or applicable securities laws, the Company may instruct its transfer agent that shares of Stock evidenced by such certificates may not be transferred without the written consent of the Company. Any attempt to dispose of such shares of Stock in contravention of such terms, conditions and 4 restrictions shall be invalid. Until the restrictions thereon have lapsed and the related Withholding Taxes obligations have been satisfied, such certificates will be held in custody by the Company or such bank or other institution designated by the Administrator. 8.7. NO ASSIGNMENT. Except as specifically provided by law (including the laws of descent and distribution), no right or benefit under, or interest in, the Plan shall be subject to assignment, and no such right, benefit or interest shall be subject to attachment or legal process for or against Participant or his or her beneficiaries, as the case may be. 8.8. COMPLIANCE WITH SECURITIES LAWS. Stock shall not be issued pursuant to a Restricted Stock Grant unless the issuance and delivery of Stock pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act, the Exchange Act, applicable state securities laws, and rules and regulations promulgated under each of the foregoing, and the requirements of any stock exchange upon which the Stock may then be listed or quotation system upon which the Stock may be quoted, and shall be further subject to the approval of counsel for the Company with respect to such compliance. 8.9. REGISTRATION AND RESALE. If the Stock subject to this Plan is not registered under the Securities Act and under applicable state securities laws, the Administrator may require that the Participant deliver to the Company such documents as counsel for the Company may determine are necessary or advisable in order to substantiate compliance with applicable securities laws and the rules and regulations promulgated thereunder. 8.10. HOLDING PERIOD. Deleted. 8.11. PERFORMANCE CONDITIONS. If so determined by the Administrator, any grant of Restricted Shares shall be made subject to a Performance Condition in addition to any other restrictions imposed pursuant to this Section 8. Such Performance Condition shall operate as specified in this Section 8.11. 8.11.1 As used in this Section 8.11, the following terms shall have the indicated meanings: CERTIFICATION DATE means the date that the Administrator makes its written certification of a Final Restricted Stock Award. ACTUAL EPS means fully diluted earnings per share for the Performance Period, determined in accordance with generally accepted accounting principles. For purposes of the foregoing sentence, earnings shall mean income before extraordinary items, discontinued operations and cumulative effect of changes in accounting principles and after full accrual for the bonuses paid under this Plan. EPS RATIO means the result obtained by dividing Actual EPS by Target EPS. FINAL RESTRICTED STOCK AWARD means the product of the Multiplier and the Unvested Restricted Stock Award. MULTIPLIER means (a) the sum of 0.1 and the EPS Ratio, if the EPS Ratio is greater than or equal to 0 and less than 0.9, (b) 1, if the EPS Ratio is greater than or equal to 0.9, or (c) 0, if the EPS Ratio is less than 0. PERFORMANCE PERIOD means the period of service to which the Performance Condition relates. 5 TARGET EPS means the EPS goal set with respect to a Restricted Stock Award made subject to a Performance Condition. UNVESTED RESTRICTED STOCK AWARD means the number of shares of a Restricted Stock Award made subject to a Performance Condition with respect to which the restrictions otherwise imposed by this Section 8 have not lapsed pursuant to Section 8.2, 8.3 or 8.4. 8.11.2 A Restricted Stock Award shall be subject to a Performance Condition only if (a) the Administrator makes such a determination on the Grant Date or (b) the Participant consents to the Performance Condition. 8.11.3 If a Restricted Stock Award is made subject to a Performance Condition, the Administrator shall establish the Performance Period and Target EPS for such award no later than the time permitted by section 162(m) of the Internal Revenue Code. 8.11.4 After the public release by the Company of its unaudited results for the last fiscal quarter of the Performance Period, the Chief Financial Officer shall, with respect to each Restricted Stock Award made subject to a Performance Condition, (a) calculate the Actual EPS, (b) determine the Multiplier, (c) calculate the Final Restricted Stock Award, and (d) deliver such calculation to the Administrator. 8.11.5 The Administrator shall review the information submitted by the Chief Financial Officer and certify, in writing, each Final Restricted Stock Award. 8.11.6 To the extent that a Final Restricted Stock Award is less than the Unvested Restricted Stock Award, the number of shares of the Unvested Restricted Stock Award representing the difference shall be forfeited by the Holder. The Final Restricted Stock Award shall bear the same vesting schedule as the Unvested Restricted Stock Award, and on each Vesting Date the percentage of the Final Restricted Stock Award that vests shall be the same as the percentage of the Unvested Restricted Stock Award that would have vested had no shares been forfeited as a result of the Performance Condition. 8.11.7 If all or a portion of an Unvested Restricted Stock Award made subject to a Performance Condition shall have the restrictions otherwise imposed by this Section 8 removed by operation of Section 8.3 or 8.4, then the Performance Condition shall be cancelled and none of such shares shall be subject to reduction or forfeiture as provided by the Performance Condition. Such shares shall be released to the Participant in accordance with the terms of this plan relating to shares with respect to which no restrictions remain. 8.11.8 If all or a portion of an Unvested Restricted Stock Award made subject to a Performance Condition shall have the restrictions otherwise imposed by this Section 8 removed for any reason other than by operation of Section 8.3 or 8.4, no shares shall be released to the Participant until after the Certification Date. No such removal of restrictions prior to the Certification Date shall in any way be deemed a satisfaction, waiver or cancellation of the Performance Condition, and such Unvested Restricted Stock Award shall remain subject to reduction and forfeiture as provided by the Performance Condition. 9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. If the Stock is changed by reason of a stock split, reverse stock split, stock dividend, or recapitalization, or is converted into or exchanged for other securities, other than as a result of a Change of Control, appropriate adjustments shall be made in the number and class of shares of Stock subject to this Plan and each Restricted Stock Grant made pursuant to this Plan; provided, however, that if fractional shares become due to any Participant as a result of any such adjustment, the Company may, at its option, pay cash in lieu thereof. Each such adjustment shall be determined by the Administrator in its sole discretion, which determination shall be final and binding on all persons. Any new or additional Stock to which a Participant may be entitled under this Section 9 shall be subject to all the terms and conditions set forth in Section 8 of this Plan. 6 10. DURATION OF PLAN. Unless sooner terminated, the Plan shall remain in effect for a period of ten years from its effective date. Termination of the Plan shall not affect any Restricted Stock Grants previously granted pursuant thereto, which shall remain in effect until their restrictions shall have lapsed, all in accordance with their terms. 11. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN. The Board or the Administrator may at any time amend, alter, suspend, or discontinue this Plan, except to the extent that stockholder approval is required for any amendment or alteration (a) by Rule 16b-3 or applicable law in order to exempt from Section 16(b) of the Exchange Act any transaction contemplated by this Plan, (b) by the rules of the New York Stock Exchange, if the Company's securities are listed thereon, or (c) by the rules of National Association of Securities Dealers automated quotation system pertaining to the National Market System, if the Company's securities are quoted thereon; provided, however, no amendment, alteration, suspension or discontinuation shall be made that would impair the rights of any Participant under a Restricted Stock Grant without such Participant's consent. Subject to the foregoing, the Administrator shall have the power to make such changes in the regulations and administrative provisions hereunder, or in any Restricted Stock Grant (with the Participant's consent), as in the opinion of the Administrator may be appropriate from time to time. 12. INDEMNIFICATION OF ADMINISTRATOR. Members of the group constituting the Administrator shall be indemnified for actions with respect to the Plan to the fullest extent permitted by the Certificate of Incorporation, as amended, and the By-laws of the Company and by the terms of any indemnification agreement that has been or shall be entered into from time to time between the Company and any such person. 13. HEADINGS. The headings used in this Plan are for convenience only, and shall not be used to construe the terms and conditions of the Plan. 14. EFFECTIVE DATE. This Plan shall become effective upon adoption by the Board. If stockholder approval is required (a) under the General Rules and Regulations promulgated under Section 16 of the Exchange Act in order to exempt any transaction contemplated by this Plan from Section 16(b) of the Exchange Act or (b) by the rules of the New York Stock Exchange, if the Company's securities are listed thereon, or (c) by the rules of National Association of Securities Dealers automated quotation system pertaining to the National Market System, if the Company's securities are quoted thereon, then this Plan shall be submitted to the stockholders of the Company for consideration at the next annual meeting of stockholders. The Administrator may make Restricted Stock Grants conditioned on such approval, and any Restricted Stock Grant so made shall be effective as of the date of grant, subject only to such approval. 7 EX-10.10 9 EXHIBIT 10.10 EXHIBIT 10.10 ROBERT HALF INTERNATIONAL INC. 1993 INCENTIVE PLAN (AS AMENDED AND RESTATED EFFECTIVE NOVEMBER 5, 1996) 1. PURPOSES. The principal purposes of the Robert Half International Inc. 1993 Incentive Plan (the "Plan") are: (a) to improve individual employee performance by providing long-term incentives and rewards to key employees of the Company, (b) to assist the Company in attracting, retaining and motivating key employees with experience and ability, and (c) to align the interests of such employees with those of the Company's stockholders. 2. DEFINITIONS. Unless the context clearly indicates otherwise, the following terms, when used in this Plan, shall have the meanings set forth below: (a) "ADMINISTRATOR" means either the Board of Directors or a committee of the Board of Directors of the Company, the composition and the size of which shall cause such committee to satisfy the requirements of Rule 16b-3 of the Exchange Act with respect to officers and directors. (b) "BOARD" means the Board of Directors of the Company. (c) "CHANGE IN CONTROL" means the occurrence of any of the following: (i) Any person or group (as such terms are defined in Section 13(d)(3) of the Exchange Act), other than an employee benefit plan sponsored by the Company or a subsidiary thereof or a corporation owned (directly or indirectly), by the stockholders of the Company in substantially the same proportions of the ownership of stock of the Company, shall become the beneficial owner of securities of the Company representing 20% or more, or commences a tender or exchange offer following the successful consummation of which the offerer and its affiliates would beneficially own securities representing 20% or more, of the combined voting power of then outstanding securities ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise; PROVIDED, HOWEVER, that a Change in Control shall not be deemed to include the acquisition by any such person or group of securities representing 20% or more of the Company if such party has acquired such securities not with the purpose nor with the effect of changing or influencing the control of the Company, nor in connection with or as a participant in any transaction having such purposes or effect, including, without limitation, not in connection with such party (A) making any public announcement with respect to the voting of such shares at any meeting to consider a merger, consolidation, sale of substantial assets or other business combination or extraordinary transaction involving the Company, (B) making, or in any way participating in, any "solicitation" of "proxies" (as such terms are defined or used in Regulation 14A under the Exchange Act) to vote any voting securities of the Company (including, without limitation, any such solicitation subject to Rule 14a-11 under the Exchange Act) or seeking to advise or influence any party with respect to the voting of any voting securities of the Company, directly or indirectly, relating to a merger or other business combination involving the Company or the sale or transfer of substantial assets of the Company, (C) forming, joining or in any way participating in any "group" within the meaning of Section 13(d)(3) of the Exchange Act with respect to any voting securities of the Company, directly or indirectly, relating to a merger or other business combination involving the Company or the sale or transfer of any substantial assets of the Company, or (D) otherwise acting, alone or in concert with others, to seek control of the Company or to seek to control or influence the management or policies of the Company. (ii) The stockholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company. (iii) A change in the composition of the Board of Directors of the Company occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors. "Incumbent Directors" shall mean directors who either (A) are directors of the Company as of the date hereof, or (B) are elected, or nominated for election, to the Board of Directors of the Company with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company). As a result of or in connection with any cash tender offer, merger, or other business combination, sale of assets or contested election, or combination of the foregoing, the persons who were directors of the Company just prior to such event shall cease within one year to constitute a majority of the Board. (iv) The Company's stockholders approve a definitive agreement providing for a transaction in which the Company will cease to be an independent publicly owned corporation. (v) The stockholders of the Company approve a definitive agreement (A) to merge or consolidate the Company with or into another corporation in which the holders of the Stock immediately before such merger or reorganization will not, immediately following such merger or reorganization, hold as a group on a fully-diluted basis both the ability to elect at least a majority of the directors of the surviving corporation and at least a majority in value of the surviving corporation's outstanding equity securities, or (B) to sell or otherwise dispose of all or substantially all of the assets of the Company. (d) "COMMON STOCK" or "STOCK" means Robert Half International Inc. Common Stock, par value $.001 per share. 1 (e) "COMPANY" means Robert Half International Inc., its divisions and direct and indirect subsidiaries. (f) "CONTINUOUS EMPLOYMENT" means employment with the Company or any Subsidiary without any termination or leave of absence, except for a leave of absence approved by the Company or any Subsidiary which is less than six consecutive months in duration. (g) "DISABILITY" or "DISABLED" shall mean (i) a physical or mental condition which, in the judgment of the Administrator based on competent medical evidence satisfactory to the Administrator (including, if required by the Administrator, medical evidence obtained by an examination conducted by a physician selected by the Administrator), renders Holder unable to engage in any substantial gainful activity for the Company and which condition is likely to result in death or to be of long, continued and indefinite duration, or (ii) a judicial declaration of incompetence. (h) "ELIGIBLE EMPLOYEE" means an employee of the Company or any Subsidiary (including an employee who is a director and/or officer) who, as determined by the Administrator in its sole discretion, has and exercises management functions and responsibilities. (i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. (j) "FAIR MARKET VALUE" means the closing sales price on the New York Stock Exchange or the NASDAQ National Market System, as the case may be, on the date the value is to be determined as reported in THE WALL STREET JOURNAL (Western Edition). If there are no trades on such date, the closing price on the latest preceding business day upon which trades occurred shall be the Fair Market Value. If the Stock is not listed in the New York Stock Exchange or quoted on the NASDAQ National Market System, the Fair Market Value shall be determined in good faith by the Administrator. (k) "GRANT" shall mean an Option or a Restricted Stock Award. (l) "GRANT DATE" means the date a Grant is made under the Plan. (m) "HOLDER" means the recipient of a Grant pursuant to this Plan. (n) "ISSUE DATE" means the date on which shares of Stock subject to a Restricted Stock Award are issued or transferred by the Company to the account of an Eligible Employee who has received such grant. (o) "MINIMUM WITHHOLDING TAXES" means any applicable federal, state and local income and other employment taxes which the Company is required to withhold in connection with (i) the lapse of restrictions on Stock subject to a Restricted Stock Award, (ii) the exercise of an Option, or (iii) the making of an election under Section 83(b) of the Internal Revenue Code with respect to a Restricted Stock Award. (p) "OFFER" means a tender offer or an exchange offer for the Company's Stock. (q) "OPTION" or "STOCK OPTION" means a right granted under the Plan to a Holder to purchase shares of Common Stock at a fixed price for a specified period of time. (r) "OPTION PRICE" means the price at which a share of Common Stock covered by an Option granted hereunder may be purchased. (s) "OPTIONEE" means an Eligible Employee who has received a Stock Option granted under the Plan. (t) "RESTRICTED STOCK AWARD" means a grant described in Section 6 of the Plan. (u) "SECURITIES ACT" means the Securities Act of 1933, as amended. (v) "SUBSIDIARY" means a "SUBSIDIARY" corporation as defined in Section 424(f) of the Internal Revenue Code of 1986, as amended. 2 (w) "VESTED" means that portion of a Grant with respect to which the Vesting Date has arrived or passed. (x) "VESTING DATE" means the date specified in Section 5 or 6 hereof, as the case may be, or such other date as shall be established by the Administrator or otherwise on the Grant Date or thereafter. (y) "VOTING SHARES" means the outstanding shares of the Company entitled to vote for the election of Directors. 3. STOCK AVAILABLE. The number of shares of Stock for which Grants may be made during any calendar year shall be that number which is equal to 1.5% of the number of issued and outstanding shares of Common Stock of the Company (excluding treasury shares) as of January 1 of such year (January 1, 1993, in the case of the first year). Any shares of Common Stock covered by Options which have terminated or expired prior to exercise or have been cancelled without value shall not be counted against the annual limit and shall be available for further grants hereunder and shares constituting the portion of a Restricted Stock Award that is forfeited before any dividends are paid upon such forfeited shares shall not be counted against the annual limit and shall be available for further grants hereunder. The foregoing number of shares available for Grants shall be subject to any adjustments which may be made pursuant to Section 12 hereof. Shares of Stock used for Options may be either shares of authorized but unissued Common Stock or treasury shares or both. Shares of Stock used for Restricted Stock Awards shall be treasury shares to the extent that treasury shares are available, and, if no treasury shares are available, Restricted Stock Awards shall be authorized but unissued Common Stock. 4. PARTICIPANTS. From time to time the Administrator shall, in its sole discretion, but subject to all of the provisions of the Plan, determine which Eligible Employees will be given Grants under the Plan, the number of Options or shares of Restricted Stock to be granted to each such Eligible Employee and the terms, conditions and restrictions of each such Grant. In making such determinations, the Administrator shall take into account the nature of services rendered and to be rendered by the respective recipients, their present and potential contribution to the Company's success and such other factors as the Administrator in its discretion deems relevant to the accomplishment of the purposes of the Plan. In any year, the Administrator may approve Options to Eligible Employees subject to differing terms and conditions and Restricted Stock Awards to Eligible Employees subject to differing terms and conditions. During any calendar year, the number of shares of Stock with respect to which Options or Restricted Stock are granted to any one individual may not exceed 75% of the number of shares of Stock available for Grants during 1994, subject to adjustment pursuant to Section 12 hereof. 5. OPTIONS. Each Option granted hereunder shall be in writing and shall contain such terms and conditions as the Administrator may determine, subject to the following: (a) PRICE. The Option Price shall be not less than 85% of the Fair Market Value of Common Stock on the Grant Date. (b) TERM AND EXERCISE. Options granted hereunder shall have a term of no longer than ten years from the Grant Date. An Option may be exercised only as to those portions of the Option that have Vested. Stock Options must be exercised for full shares of Common Stock. (c) INCENTIVE STOCK OPTIONS. No Option granted hereunder shall be deemed an Incentive Stock Option (as such term is defined in the Internal Revenue Code) unless (a) such Option is designated as an Incentive Stock Option at the time of grant by the Administrator and (b) such Option otherwise meets the requirements for Incentive Stock Options specified in the Internal Revenue Code. However, no Option designated as an Incentive Stock Option shall contain any restrictions upon the ability of the Holder to dispose of Stock acquired upon the exercise thereof other than as provided elsewhere in this Plan. During the life of the Plan, the total number of 3 shares for which Incentive Stock Options may be granted may not exceed ten times the number of shares available for Grants under the Plan during the first calendar year in which the Plan is in effect. (d) VESTING. Unless otherwise determined by the Administrator on the Grant Date, each Option shall Vest as to twenty-five percent (25%) of the Stock covered by such Option on each of the first through fourth anniversaries of the Grant Date. Notwithstanding the foregoing, the Administrator may accelerate Vesting, in whole or in part, under such terms and conditions as the Administrator deems appropriate. (e) EXERCISE OF OPTION. To exercise an Option, the Holder shall give written notice of exercise to the Company, specifying the number of shares of Common Stock to be purchased and identifying the specific Options that are being exercised. From time to time the Administrator may establish procedures relating to such exercises. An Option is exercisable during a Holder's lifetime only by the Holder or, with respect to options that are not designated as Incentive Stock Options, under such other circumstances as may be permitted by Rule 16b-3, or any successor rule, under the Exchange Act and all interpretations of the staff of the Securities and Exchange Commission thereunder. (f) PAYMENT OF OPTION PRICE. The purchase price for Options being exercised must be paid in full at time of exercise. Payment shall be, at the option of the holder at the time of exercise, by any combination of cash, check or delivery of shares of Common Stock that have been owned by Holder for at least six months. If all or a portion of the purchase price is paid by delivery of shares, the shares shall be valued at the Fair Market Value of such shares on the date of exercise. In addition, unless the Administrator determines otherwise at the time of grant, payment of the Option Price and of Minimum Withholding Taxes may be made by (i) full recourse promissory note (secured or unsecured), payable on such terms and bearing such interest as the Administrator may determine or (ii) delivery (on a form acceptable to the Administrator) of an irrevocable direction to a securities broker to sell shares of Common Stock and to deliver part of the sales proceeds to the Company in payment of the full exercise price and Minimum Withholding Taxes and receipt of written confirmation from the securities broker of receipt of such irrevocable direction, the number of shares sold, the price at which sold and the date of sale. (g) NONTRANSFERABILITY OF OPTIONS. Options are not transferable except by will, by the laws of descent and distribution, or, with respect to options that are not designated as Incentive Stock Options, pursuant to a domestic relations order or under such other circumstances as the Administrator may determine. 6. RESTRICTED STOCK AWARDS. Each Restricted Stock Award made under the Plan shall contain the following terms, conditions and restrictions and such additional terms, conditions and restrictions as may be determined by the Administrator at the time of grant. (a) RIGHTS WITH RESPECT TO SHARES OF STOCK. Upon written acceptance by the Eligible Employee of restrictions and other terms and conditions described in the Plan and in the instrument evidencing such Restricted Stock Award, the Eligible Employee shall be a Holder, and the Company shall cause to be issued or transferred to the name of the Holder a certificate or certificates for the number of shares of Stock granted. From and after the Issue Date, the Holder shall have absolute ownership of such shares of Stock, including the right to vote and to receive dividends thereon, subject to the terms, conditions and restrictions described in the Plan and in the instrument evidencing the grant of such Restricted Stock Award. 4 (b) RESTRICTIONS ON TRANSFER. Shares covered by a Restricted Stock Award may not be sold, assigned, pledged, transferred or otherwise conveyed in any manner until the Vesting Date for such shares. (c) VESTING. Unless otherwise determined by the Administrator on the Grant Date, each Restricted Stock Award shall Vest as to twenty-five percent (25%) of the Stock covered by such grant on each of the first through fourth Vesting Dates which occur following the related Grant Date of such Restricted Stock Award. Notwithstanding the foregoing, the Administrator may accelerate the lapsing of restrictions on a Restricted Stock Award, in whole or in part under such terms and conditions as the Administrator deems appropriate. (d) AUTOMATIC VESTING IN SPECIAL CIRCUMSTANCES. Any provisions herein to the contrary notwithstanding, a Restricted Stock Award shall automatically become Vested upon (a) the Death or Disability of the Holder or (b) the occurrence of a Change in Control. (e) AGREEMENT BY HOLDER REGARDING WITHHOLDING TAXES. Each Holder granted a Restricted Stock Award shall represent in writing that such Holder acknowledges that, with respect to each Restricted Stock Award held by such Holder, (i) Minimum Withholding Taxes shall be due with respect to shares of Stock covered by such award, (ii) payment of Minimum Withholding Taxes to the Company is the responsibility of Holder and (iii) payment of such Minimum Withholding Taxes may require a significant cash outlay by Holder. (f) ELECTION TO RECOGNIZE GROSS INCOME IN THE YEAR OF GRANT. If any Holder properly elects within thirty (30) days of the Grant Date to include in gross income for federal income tax purposes an amount equal to the fair market value of the shares of Stock on the Grant Date, such Holder shall pay in cash to the Company in the calendar month of such Grant Date, or make arrangements satisfactory to the Administrator to pay to the Company, any Minimum Withholding Taxes required to be withheld with respect to such shares. (g) CONSIDERATION. Recipients of Restricted Stock Awards made in treasury shares shall not be required to pay any consideration to the Company. Recipients of Restricted Stock Awards made in the form of previously unissued shares shall be required to pay such minimum consideration, if any, as may be required by applicable law. The Administrator shall determine the form of consideration at the time of the award, which may include services rendered prior to the award. (h) PERFORMANCE CONDITIONS. If so determined by the Administrator, any grant of Restricted Shares shall be made subject to a Performance Condition in addition to any vesting requirements imposed upon such grant. Such Performance Condition shall operate as specified in this paragraph (h). (1) As used in this paragraph (h), the following terms shall have the indicated meanings: CERTIFICATION DATE means the date that the Administrator makes its written certification of a Final Restricted Stock Award. EPS means fully diluted earnings per share, determined in accordance with generally accepted accounting principles. For purposes of the foregoing sentence, earnings shall mean income before extraordinary items, discontinued operations and cumulative effect of changes in accounting principles and after full accrual for the bonuses paid under this Plan. EPS RATIO means the result obtained by dividing Preliminary EPS by Target EPS. FINAL RESTRICTED STOCK AWARD means the product of the Multiplier and the Original Restricted Stock Award. 5 MEASUREMENT YEAR means (a) in the case of a grant made in the first fiscal quarter of a fiscal year, that fiscal year or (b) in the case of a grant made in the second, third or fourth quarters of a fiscal year, the subsequent fiscal year. MULTIPLIER means (a) the sum of 0.1 and the EPS Ratio, if the EPS Ratio is greater than or equal to 0 and less than 0.9, (b) 1, if the EPS Ratio is greater than or equal to 0.9, or (c) 0, if the EPS Ratio is less than 0. NINE-MONTH PERIOD means the first three fiscal quarters of the Measurement Year. ORIGINAL RESTRICTED STOCK AWARD means the number of shares initially granted pursuant to a Restricted Stock Award made subject to a Performance Condition. PRELIMINARY EPS means 1.334 multiplied by EPS for a Nine-Month Period. TARGET EPS means the EPS goal set with respect to a Restricted Stock Award made subject to a Performance Condition. (2) A Restricted Stock Award shall be subject to a Performance Condition only if the Administrator makes such a determination on the Grant Date or if the Holder consents thereto. (3) If a Restricted Stock Award is made subject to a Performance Condition, the Administrator shall, not later than the end of the second calendar month of the Measurement Year, determine the Target EPS for such award. (4) After the public release by the Company of its unaudited results for the third fiscal quarter of the Measurement Year, the Chief Financial Officer shall, with respect to each Restricted Stock Award made subject to a Performance Condition, (a) calculate the Preliminary EPS, (b) determine the Multiplier, (c) calculate the Final Restricted Stock Award, and (d) deliver such calculation to the Administrator. (5) The Administrator shall, prior to the end of the Measurement Year, review the information submitted by the Chief Financial Officer and certify, in writing, each Final Restricted Stock Award. (6) To the extent that a Final Restricted Stock Award is less than the Original Restricted Stock Award, the number of shares of the Original Restricted Stock Award representing the difference shall be forfeited by the Holder. The Final Restricted Stock Award shall bear the same vesting schedule as the Original Restricted Stock Award, and on each Vesting Date the percentage of the Final Restricted Stock Award that vests shall be the same as the percentage of the Original Restricted Stock Award that would have vested had no shares been forfeited as a result of the performance condition. (7) If all or a portion of a Restricted Stock Award made subject to a Performance Condition shall vest prior to the Certification Date by reason of death, Disability or a Change in Control, then the Performance Condition shall be cancelled and none of such shares shall be subject to reduction or forfeiture as provided by the Performance Condition. Such shares shall be released to Holder in accordance with the terms of this plan relating to vested shares. (8) If all or a portion of a Restricted Stock Award made subject to a Performance Condition shall vest prior to the Certification Date for any reason other than death, Disability or a Change in Control, no shares shall be released to the Holder until after the Certification Date. No such vesting prior to the Certification Date shall in any way be deemed a 6 satisfaction, waiver or cancellation of the Performance Condition, and such Restricted Stock Award shall remain subject to reduction and forfeiture as provided by the Performance Condition. (i) ALTERNATIVE PERFORMANCE CONDITIONS. If so determined by the Administrator, any grant of Restricted Shares shall be made subject to an Alternative Performance Condition in addition to any vesting requirements imposed upon such grant. Such Alternative Performance Condition shall operate as specified in this paragraph (i). (1) As used in this paragraph (i), the following terms shall have the indicated meanings: CERTIFICATION DATE means the date that the Administrator makes its written certification of a Final Restricted Stock Award. ACTUAL EPS means fully diluted earnings per share for the Performance Period, determined in accordance with generally accepted accounting principles. For purposes of the foregoing sentence, earnings shall mean income before extraordinary items, discontinued operations and cumulative effect of changes in accounting principles and after full accrual for the bonuses paid under this Plan. EPS RATIO means the result obtained by dividing Actual EPS by Target EPS. FINAL RESTRICTED STOCK AWARD means the product of the Multiplier and the Original Restricted Stock Award. MULTIPLIER means (a) the sum of 0.1 and the EPS Ratio, if the EPS Ratio is greater than or equal to 0 and less than 0.9, (b) 1, if the EPS Ratio is greater than or equal to 0.9, or (c) 0, if the EPS Ratio is less than 0. ORIGINAL RESTRICTED STOCK AWARD means the number of shares initially granted pursuant to a Restricted Stock Award made subject to an Alternative Performance Condition. PERFORMANCE PERIOD means the period of service to which the Alternative Performance Condition relates. TARGET EPS means the EPS goal set with respect to a Restricted Stock Award made subject to an Alternative Performance Condition. (2) A Restricted Stock Award shall be subject to an Alternative Performance Condition only if the Administrator makes such a determination on the Grant Date or if the Holder consents thereto. (3) If a Restricted Stock Award is made subject to an Alternative Performance Condition, the Administrator shall establish the Performance Period and Target EPS for such award no later than the time permitted by section 162(m) of the Internal Revenue Code. (4) After the public release by the Company of its unaudited results for the last fiscal quarter of the Performance Period, the Chief Financial Officer shall, with respect to each Restricted Stock Award made subject to an Alternative Performance Condition, (a) calculate the Actual EPS, (b) determine the Multiplier, (c) calculate the Final Restricted Stock Award, and (d) deliver such calculation to the Administrator. (5) The Administrator shall review the information submitted by the Chief Financial Officer and certify, in writing, each Final Restricted Stock Award. (6) To the extent that a Final Restricted Stock Award is less than the Original Restricted Stock Award, the number of shares of the Original Restricted Stock Award representing the difference shall be forfeited by the Holder. The Final Restricted Stock Award shall bear the same vesting schedule as the Original Restricted Stock Award, and on each 7 Vesting Date the percentage of the Final Restricted Stock Award that vests shall be the same as the percentage of the Original Restricted Stock Award that would have vested had no shares been forfeited as a result of the Alternative Performance Condition. (7) If all or a portion of a Restricted Stock Award made subject to an Alternative Performance Condition shall vest prior to the Certification Date by reason of death, Disability or a Change in Control, then the Alternative Performance Condition shall be cancelled and none of such shares shall be subject to reduction or forfeiture as provided by the Alternative Performance Condition. Such shares shall be released to Holder in accordance with the terms of this plan relating to vested shares. (8) If all or a portion of a Restricted Stock Award made subject to an Alternative Performance Condition shall vest prior to the Certification Date for any reason other than death, Disability or a Change in Control, no shares shall be released to the Holder until after the Certification Date. No such vesting prior to the Certification Date shall in any way be deemed a satisfaction, waiver or cancellation of the Alternative Performance Condition, and such Restricted Stock Award shall remain subject to reduction and forfeiture as provided by the Alternative Performance Condition. 7. WITHHOLDING TAXES. In order to enable the Company to meet any applicable foreign, federal (including FICA), state and local withholding tax requirements, a Holder shall be required to pay the Minimum Withholding Taxes. No share of stock will be delivered to any Holder until Minimum Withholding Taxes have been paid. At the option of the Holder, withholding taxes may be paid by reduction in the number of shares deliverable to Holder (in the case of an Option) or by surrendering a portion of the Restricted Stock Award to the Company (in either case "Share Reduction"). If withholding taxes are paid by Share Reduction, such shares shall be valued at the Fair Market Value as of the date of exercise or vesting. A Holder may elect to have additional shares withheld above the amount required to satisfy Minimum Withholding Taxes. However, total Share Reduction may not exceed the total taxes that Holder will have to pay (assuming Federal and state taxes are imposed at his marginal rate) by reason of the exercise or vesting. In the event that Minimum Withholding Taxes are not paid by Holder, to the extent permitted by law the Company shall have the right, but not the obligation, to cause such withholding taxes to be satisfied by Share Reduction or by offsetting such withholding taxes against amounts otherwise due from the Company to the Holder. 8. RESTRICTIVE LEGENDS; TRANSFER RESTRICTIONS; CUSTODY. So long as any restrictions or obligations imposed pursuant hereto shall apply to a share of Stock (including, but not limited to, the restrictions or obligations imposed pursuant to Sections 5(f), 5(h), 6(b), 6(e), 6(f) and 7 hereof), each certificate evidencing such share shall bear an appropriate legend referring to the terms, conditions and restrictions. In addition, the Company may instruct its transfer agent that shares of Stock evidenced by such certificates may not be transferred without the written consent of the Company. Any attempt to dispose of such shares of Stock in contravention of such terms, conditions and restrictions shall be invalid. Certificates representing shares that have not Vested or with respect to which Minimum Withholding Taxes have not been paid will be held in custody by the Company or such bank or other institution designated by the Administrator. 9. TERMINATION OF CONTINUOUS EMPLOYMENT. If the Holder's Continuous Employment with the Company or any Subsidiary shall terminate for any reason, then, with respect to any portion of a Grant that has not Vested prior to or concurrently with such termination (a) in the case of an Option, all rights to such portion that has not Vested shall terminate and (b) in the case of a Restricted Stock Award, all rights to the shares covered by any portion thereof that has not Vested shall be forfeited; provided, however, that the Administrator, in its sole discretion within ninety (90) days of such termination of Continuous Employment, may notify the Holder in writing that the Holder's rights in such portion that has not Vested will not terminate or be forfeited and that the Holder shall continue to be the owner thereof, subject to such continuing restrictions as the Administrator may prescribe in 8 such notice. Options then held by the Holder which are Vested at the date of termination shall continue to be exercisable by the Holder, or, if applicable, Holder's estate, until the earlier of 90 days after such date or the expiration of such Options in accordance with their terms. Notwithstanding the foregoing, (i) the Administrator may in its sole discretion extend the period during which an Option may be exercised following termination of employment at any time, provided that any such extension does not exceed the Option's normal termination date, and (ii) if exercise of an Option during the 90-day period described in the previous sentence would subject the Holder to liability under Section 16 of the Exchange Act, such Option shall be exercisable until the earliest of (a) its normal termination date and (b) seven months after the last transaction in Common Stock by the Holder prior to termination. 10. ADMINISTRATION. The Plan shall be administered by the Administrator, which shall have full power and authority to administer and interpret the Plan and to adopt such rules, regulations, agreements, guidelines and instruments for the administration of the Plan as the Administrator deems necessary or advisable. The Administrator's powers include, but are not limited to (subject to the specific limitations described herein), authority to determine the employees who shall receive Grants under the Plan, determine the size and applicable terms and conditions of Grants to be made to such employees, determine the time when Grants will be made and authorize Grants to Eligible Employees. The Administrator's interpretations of the Plan, and all actions taken and determinations made by the Administrator concerning any matter arising under or with respect to the Plan or any Grants hereunder, shall be final, binding and conclusive on all interested parties. The Administrator may delegate ministerial functions hereunder, such delegation to be subject to such terms and conditions as the Administrator in its discretion shall determine. The Administrator may as to all questions of accounting rely conclusively upon any determinations made by the independent public accountants of the Company. 11. COMPLIANCE WITH SECURITIES LAWS. No Option may be exercised and no Stock may be issued pursuant to an Option or transferred pursuant to a Restricted Stock Award unless the Administrator shall determine that such exercise, issuance or transfer complies with all relevant provisions of law, including, without limitation, the Securities Act, the Exchange Act, applicable state securities laws, and rules and regulations promulgated under each of the foregoing, and the requirements of any stock exchange upon which the Stock may then be listed or quotation system upon which the Stock may be quoted, and shall be further subject to the approval of counsel for the Company with respect to such compliance. If the Stock subject to this Plan is not registered under the Securities Act and under applicable state securities laws, the Administrator may require that the Holder deliver to the Company such documents as counsel for the Company may determine are necessary or advisable in order to substantiate compliance with applicable securities laws and the rules and regulations promulgated thereunder. 12. ADJUSTMENT FOR CHANGE IN STOCK SUBJECT TO PLAN. In the event of any change in the outstanding shares of Common Stock by reason of any stock split, stock dividend, recapitalization, merger, consolidation, combination, spin-off or exchange of shares or other similar corporate change, appropriate adjustments shall be made by the Administrator in the number of shares of Stock subject to this Plan, the number of shares of Stock covered by each Grant and, in the case of Options, the Option Price of such Option. Any such adjustment shall be determined by the Administrator in its sole discretion, which determination shall be conclusive and binding for all purposes of the Plan. Any new or additional Stock to which a Holder of a Restricted Stock Award may be entitled shall be subject to all the terms and conditions set forth in Section 6 of this Plan. If fractional shares become due to any Holder as a result of any adjustment, the Company may, at its option, pay cash in lieu thereof. 13. NO RIGHTS TO GRANTS OR EMPLOYMENT. No employee or other person shall have any claim or right to a Grant under the Plan. Receipt of a Grant under the Plan shall not give an employee any 9 rights to receive any other Grant under the Plan. Neither the Plan nor any action taken hereunder shall be construed as giving any employee any right to be retained in the employ of the Company or any Subsidiary. 14. RIGHTS AS SHAREHOLDER. A Holder under the Plan shall have no rights as a holder of Common Stock with respect to Options granted hereunder, unless and until certificates for shares of Common Stock are issued to such Holder. 15. PLAN UNFUNDED. The Plan shall be unfunded. Except for reserving a sufficient number of authorized shares to the extent required by law to meet the requirements of the Plan, the Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any grant under the Plan. 16. NO ASSIGNMENT. Except as specifically provided by law (including the laws of descent and distribution) and elsewhere herein, no right or benefit under, or interest in, the Plan shall be subject to assignment, and no such right, benefit or interest shall be subject to attachment or legal process for or against Holder or his or her beneficiaries, as the case may be. 17. GOVERNING LAW. This Plan shall be governed by and construed in accordance with the laws of the State of Delaware. 18. INDEMNIFICATION OF ADMINISTRATOR. Members of the group constituting the Administrator shall be indemnified for actions with respect to the Plan to the fullest extent permitted by the Certificate of Incorporation, as amended, and the By-laws of the Company and by the terms of any indemnification agreement that has been or shall be entered into from time to time between the Company and any such persons. 19. HEADINGS. The headings used in this Plan are for convenience only, and shall not be used to construe the terms and conditions of the Plan. 20. AMENDMENT. The Administrator may, at any time, amend, suspend or terminate the Plan, in whole or in part, provided that no such action shall adversely affect any rights or obligations with respect to any Grants theretofore made hereunder. The Administrator may amend or cancel the terms and conditions of any outstanding Grant, determine whether cash will be paid or Grants will be made in replacement of, or as alternatives to, outstanding Grants or grants under any other incentive compensation plan; provided, however, that no such change shall be adverse to the Holder thereof without such Holder's consent. 21. EFFECTIVE DATE, TERMINATION. This Plan shall become effective upon approval by the stockholders of the Company, and shall remain in effect until terminated by the Board of Directors or Administrator. 10 EX-10.16 10 EXHIBIT 10.16 EXHIBIT 10.16 ROBERT HALF INTERNATIONAL INC. SENIOR EXECUTIVE RETIREMENT PLAN 1. INTRODUCTION. This Plan was adopted by the Company to provide retirement benefits to those individuals, other than any individual holding the office of Chief Executive Officer or President, who participated in the Company's Deferred Compensation Plan and, with respect to those individuals, this Plan shall supersede the Deferred Compensation Plan. The Administrator or the Chief Executive Officer may also select other Participants to be eligible for benefits hereunder. 2. DEFINITIONS. As used in this Plan, the following terms have the meanings set forth below: 2.1 ADMINISTRATOR means the Compensation Committee of the Board. 2.2 BOARD means the Board of Directors of the Company. 2.3 CHANGE IN CONTROL means the occurrence of any of the following: (a) Any person or group (as such terms are defined in Section 13(d)(3) of the Exchange Act), other than an employee benefit plan sponsored by the Company or a subsidiary thereof or a corporation owned (directly or indirectly), by the stockholders of the Company in substantially the same proportions of the ownership of stock of the Company, shall become the beneficial owner of securities of the Company representing 20% or more, or commences a tender or exchange offer following the successful consummation of which the offerer and its affiliates would beneficially own securities representing 20% or more, of the combined voting power of then outstanding securities ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise; PROVIDED, HOWEVER, that a Change in Control shall not be deemed to include the acquisition by any such person or group of securities representing 20% or more of the Company if such party has acquired such securities not with the purpose nor with the effect of changing or influencing the control of the Company, nor in connection with or as a participant in any transaction having such purposes or effect, including, without limitation, not in connection with such party (i) making any public announcement with respect to the voting of such shares at any meeting to consider a merger, consolidation, sale of substantial assets or other business combination or extraordinary transaction involving the Company, (ii) making, or in any way participating in, any "solicitation" of "proxies" (as such terms are defined or used in Regulation 14A under the Exchange Act) to vote any voting securities of the Company (including, without limitation, any such solicitation subject to Rule 14a-11 under the Exchange Act) or seeking to advise or influence any party with respect to the voting of any voting securities of the Company, directly or indirectly, relating to a merger or other business combination involving the Company or the sale or transfer of substantial assets of the Company, (iii) forming, joining or in any way participating in any "group" within the meaning of Section 13(d)(3) of the Exchange Act with respect to any voting securities of the Company, directly or indirectly, relating to a merger or other business combination involving the Company or the sale or transfer of any substantial assets of the Company, or (iv) otherwise acting, alone or in concert with others, to seek control of the Company or to seek to control or influence the management or policies of the Company. (b) The stockholders of the Company shall approve any plan or proposal for the liquidation or dissolution of the Company. (c) A change in the composition of the Board of Directors of the Company occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors. "Incumbent Directors" shall mean directors who either (i) are directors of the Company as of the date 1 hereof, or (ii) are elected, or nominated for election, to the Board of Directors of the Company with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company). As a result of or in connection with any cash tender offer, merger, or other business combination, sale of assets or contested election, or combination of the foregoing, the persons who were directors of the Company just prior to such event shall cease within one year to constitute a majority of the Board. (d) The Company's stockholders approve a definitive agreement providing for a transaction in which the Company will cease to be an independent publicly owned corporation. (e) The stockholders of the Company approve a definitive agreement (i) to merge or consolidate the Company with or into another corporation in which the holders of the Stock immediately before such merger or reorganization will not, immediately following such merger or reorganization, hold as a group on a fully-diluted basis both the ability to elect at least a majority of the directors of the surviving corporation and at least a majority in value of the surviving corporation's outstanding equity securities, or (ii) to sell or otherwise dispose of all or substantially all of the assets of the Company. 2.4 COMPANY means Robert Half International Inc., a Delaware corporation. 2.5 EXCHANGE ACT means the Securities Exchange Act of 1934, as amended. 2.6 OFFER means a tender offer or an exchange offer for shares of the Company's Stock. 2.7 PARTICIPANT means any elected executive officer or any key executive, other than any individual holding the office of Chief Executive Officer or President, approved by the Administrator or the Chief Executive Officer for participation in the Plan. The benefits of individuals (other than any individual holding the office of Chief Executive Officer or President) who had accounts (whether or not vested) under the Deferred Compensation Plan shall be transferred to this Plan, effective December 31, 1995, with interest for 1995 credited at the rate and as provided in Section 7 hereof instead of at the rate and as provided in the Deferred Compensation Plan. With respect to the year ended December 31, 1995 those individuals will thereafter be Participants hereunder and will no longer participate in the Deferred Compensation Plan. 2.8 PLAN means the Senior Executive Retirement Plan. 2.9 VOTING SHARES means the outstanding shares of the Company entitled to vote for the election of directors. 3. PURPOSE OF THE PLAN. The purpose of the Plan is to attract, retain and reward Participants by providing them with supplemental income for use after their retirement. The Plan is designed to qualify as an unfunded ERISA "top-hat" plan for a select group of management or highly compensated employees of the Company and its subsidiaries designated by the Administrator. 4. ADMINISTRATION. The Administrator shall have full power to interpret, construe and administer the Plan, except as otherwise provided in the Plan. The expense of administering the Plan shall be borne by the Company and shall not be charged against benefits payable hereunder. 5. DEFERRED COMPENSATION FORMULA. Each Participant shall receive the base salary and annual cash bonus payable to that Participant for services rendered in his capacity as an employee of the Company or a designated subsidiary during the calendar year of participation, plus fifteen percent (15%) of such base salary and annual cash bonus as deferred compensation pursuant to this Plan, provided he is employed by the Company on the last day of such calendar year (December 31, 1995 for the first year). A Participant's allocation of deferred compensation hereunder shall be deemed to have been made, for all purposes relating to this Plan, as of the first business day of the year following the year with respect to which the deferred compensation has been earned. 2 The Administrator or the Chief Executive Officer may at any time designate any Participant as entitled to receive a Change in Control Allocation. Once a Participant is so designated, such designation may not be rescinded. With respect to any Participant who has been designated as entitled to receive a Change in Control Allocation, there shall be allocated to such Participant's account promptly following a Change in Control (if such Participant is employed by the Company on the date of the Change in Control) an amount equal to the product of (a) the number of whole years remaining until the Participant attains age 62 and (b) the last annual allocation made under the Plan. After such Change in Control Allocation has been made, each subsequent annual allocation under the Plan for such Participant following the Change in Control and prior to such Participant's 62nd birthday shall be reduced by an amount equal to the last annual allocation made to such Participant prior to the Change in Control. 6. SEPARATE ACCOUNTS. The Administrator shall maintain an individual account under the name of each Participant entitled to allocations pursuant to the Plan. Each such account shall be adjusted to reflect any amounts transferred from the Deferred Compensation Plan, deferred compensation credited hereunder, interest credited on such amounts and any distribution of such amounts hereunder. The establishment and maintenance of a separate account for each Participant shall not be construed as giving any person any interest in any assets of the Company or any right to payment other than as provided hereunder or any right to participate hereunder or in future years of employment. Such accounts shall be unfunded and maintained only for bookkeeping convenience; provided, however, the Company may establish an irrevocable grantor trust and contribute amounts to such trust to support its obligations hereunder. 7. INVESTMENT PERFORMANCE. Each account shall be credited on the last day of each calendar year with interest on the balance of such account as of the first day of the calendar year. Interest credited for a calendar year shall be at a rate equal to one hundred twenty-five percent (125%) of the Moody's Corporate bond Yield Average reported in THE WALL STREET JOURNAL on the last business day of the calendar year (or the valuation date selected by the Administrator preceding a distribution). 8. VESTING. Each Participant's interest under the Plan shall be forfeitable upon such Participant's termination of employment for any reason, except to the extent it becomes vested hereunder. Each Participant's interest, regardless of when allocated, will be deemed unvested unless and until such Participant has completed ten years of service with the Company. "Years of Service" shall be based on the anniversary of the later of the Participant's date of hire or his or her transfer to Company headquarters. At such time as the Participant has completed ten years service with the Company, the amount vested at any given time shall be (a) 50%, if Participant is age 50 or younger, (b) the sum of (i) 50% and (ii) 4 1/6% times the difference between Participant's age and 50, if Participant is between age 51 and age 62, or (c) 100%, if Participant is age 62 or older. In the event of a Change in Control, all amounts credited under the Plan to each affected Participant shall become fully vested and nonforfeitable as a result of such event. Notwithstanding the foregoing, amounts shall vest hereunder in accordance with the terms of any severance agreement or other written arrangement between the Participant and the Company. In addition and notwithstanding the foregoing, the accounts transferred to this Plan from the Company's Deferred Compensation Plan, including any and all investment performance hereunder, shall continue to vest under the terms of the Deferred Compensation Plan. 9. TIME OF DISTRIBUTION. No vested amounts shall be payable hereunder until the first to occur of the following events: (a) The date of the Participant's complete and total disability, as determined by the Administrator in its sole discretion (without regard to eligibility for benefits under any disability plan or program of the Company and/or its subsidiaries); (b) The Participant's death; or (c) The date of the Participant's separation from employment with the Company and/or its subsidiaries for any reason. 3 Notwithstanding the foregoing, distribution may occur at an earlier date as provided in Section 10 hereunder. All vested amounts will be valued and paid within 90 days following the occurrence of any such event. If distribution occurs before the end of a year a Participant shall receive a pro rata amount of deferred compensation under Section 5 hereof. 10. WITHDRAWALS. The Administrator may direct payment of all or any vested portion of amounts credited to the account of a Participant upon application by the Participant. Any such application must show demonstrable financial need for distribution in order to meet extraordinary medical or medically related expenses, substantial costs related to residential requirements of the Participant, family educational expenses in an amount considered by the Administrator burdensome in relation to the Participant's other available financial resources for meeting such expenses, extraordinary expenses related to an unanticipated casualty, accident or other misfortune or any other similar need approved by the Administrator. Any such distribution shall be made in the sole discretion of the Administrator. 11. METHOD OF DISTRIBUTION. Upon termination from the Company, each Participant shall receive a lump sum distribution of all amounts payable to the Participant hereunder, unless prior to termination of employment the Participant elects, and the Administrator consents to, payment upon termination to be made in the form of installments over a period of time approved by the Administrator and not extending beyond the life expectancy of the Participant. 12. DEATH OF PLAN PARTICIPANT. In the event that a Participant shall die at any time prior to complete distribution of all amounts payable to him hereunder, the remaining unpaid amounts shall be paid to the beneficiary or beneficiaries designated by the Participant, or in the absence of any such designation, to his estate in a lump sum distribution, unless the Administrator consents to installments. 13. PAYMENT IN THE EVENT OF DISABILITY. If a person entitled to any payment hereunder shall be under a legal disability, or in the sole judgment of the Administrator shall otherwise be unable to apply such payment to his own interest and advantage, the Administrator in the exercise of its discretion may direct the Company to make any such payment in any one (1) or more of the following ways: (a) Directly to such person; (b) To his legal guardian or conservator; or (c) To his spouse or to any person charged with his support; to be expended for the benefit of Participant. The decision of the Administrator shall in each case be final and binding upon all persons in interest. Any such payment shall completely discharge the obligations of the Administrator and Company with regard to such payment. 14. ASSIGNMENT. No Participant or beneficiary of a Participant shall have any right to assign, pledge, hypothecate, anticipate or in any way create a lien upon any amounts payable hereunder. No amounts payable hereunder shall be subject to assignment or transfer or otherwise be alienable, either by voluntary or involuntary act or by operation of law, or subject to attachment, execution, garnishment, sequestration or other seizure under any legal, equitable or other process, or be liable in any way for the debts or defaults of Participants and their beneficiaries, except to the extent permitted by applicable law and pursuant to the Administrator's receipt and approval of a "qualified domestic relations order." 15. WITHHOLDING. Any taxes required to be withheld from deferrals or payments to Participants hereunder shall be deducted and withheld by the Company. 16. AMENDMENT AND TERMINATION. This Plan may be amended in whole or in part by action of the Administrator and may be terminated at any time by action of the Administrator; provided, however, that no such amendment or termination shall reduce any amount credited hereunder to the extent such amount 4 was credited prior to the date of amendment or termination; and provided, further, that the duties and liabilities of the members of the Administrator hereunder shall not be increased without their consent. 17. RIGHTS OF PARTICIPANTS. The Company's sole obligation to Participants and their beneficiaries shall be to make payment as provided hereunder. All payments shall be made from the general assets of the Company, and no Participant shall have any right hereunder to any specific assets of the Company or to be retained in the employment of the Company. All amounts of compensation allocated under this Plan, any property purchased therewith and all income attributable thereto shall remain the property and rights of the Company subject to the claims of the Company's general creditors. 18. BINDING PROVISIONS. All of the provisions of this Plan shall be binding upon all persons who shall be entitled to any benefits hereunder, and their heirs, and personal representatives. 19. EFFECTIVE DATE. This Plan shall be effective December 31, 1995. 20. GOVERNING LAW. This Plan and all determinations made and actions taken pursuant hereto shall, to the extent not preempted by ERISA, be governed by the law of the State of California and construed accordingly. 21. SEVERABILITY. If any provision of this Plan is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the extent possible. In any event, all other provisions of this Plan shall be deemed valid and enforceable to the full extent possible. 5 EX-10.17 11 EXHIBIT 10.17 EXHIBIT 10.17 The Collateral Assignment of Split Dollar Insurance Agreement has been entered into with the following executive officers: Harold M. Messmer, Jr. M. Keith Waddell Robert W. Glass Steven Karel Barbara J. Forsberg COLLATERAL ASSIGNMENT SPLIT DOLLAR INSURANCE AGREEMENT THIS AGREEMENT made the 15th day of November, 1996, by and between Robert Half International Inc. (hereinafter called "the Corporation") and (hereinafter called the "Trust"). WHEREAS, ("the Employee") is a valued employee of the Corporation, and the loss of Employee would impair the Corporation's operations; WHEREAS, in order to retain the services of Employee, the Corporation is willing to enter into a split dollar plan with the Trust so that it may carry insurance on Employee's life; WHEREAS, the Trust will be the owner of the policy of insurance on the Employee's life acquired pursuant to the terms of this Agreement and the policy will be assigned to the Corporation as security for the repayment of all or part of the amounts which the Corporation will contribute toward payment of the premiums due on the policy; NOW, THEREFORE, in consideration of the mutual covenants contained herein, it is agreed between the parties as follows: 1. APPLICATION FOR INSURANCE. The Trust will apply to ITT Hartford Life and Annuity Insurance Company ("Hartford") for a policy on Employee's life in the face amount of $ and the Trust and the Employee will do everything reasonably necessary to cause the policy to be issued. When the policy is issued, the policy number, face amount, and policy of insurance shall be recorded on Schedule A attached hereto and the policy of insurance shall then be subject to the terms of this Agreement. 2. OWNERSHIP OF INSURANCE. The Trust shall be the owner of the policy on Employee's life acquired pursuant to the terms of this Agreement, and the Trust may exercise all the rights of ownership with respect to the policy except as otherwise hereinafter provided. Notwithstanding the terms of the policy, the Trust hereby agrees that at least 25% of the policy's cash value shall at all times be invested in one or more of the policy's bond funds. 3. PAYMENT OF PREMIUMS ON POLICY. The Trust will pay Hartford the portion of the annual premium that is equal to the value of the "economic benefit" of the life insurance protection that would otherwise be imputed income for federal income tax purposes to the Employee for the year, i.e., the cost of such protection determined using the lesser of the IRS' "P.S. 58 rates" (or such successor rates) or Hartford's term insurance rates. The Corporation will pay Hartford the balance of the annual premium. Each year the Corporation shall provide a written statement to the Trust showing the Corporation's current contribution to Hartford and its aggregate contributions. 4. COLLATERAL ASSIGNMENT OF POLICY. The Trust hereby collaterally assigns the policy on Employee's life, acquired pursuant to the terms of this Agreement, to the Corporation as security for the obligations under Sections 6, 7 and 8 hereof. This collateral assignment will not be altered or changed without the consent of the Corporation. 5. SURRENDER OR TERMINATION OF POLICY. Subject to Section 7, while this Agreement is in force and effect, the Trust will neither sell, surrender nor otherwise terminate the policy on Employee's life, acquired pursuant to the terms of this Agreement, without the Corporation's consent. 6. DEATH CLAIMS. (a) When the Employee dies, the Corporation shall be entitled to receive from the policy an amount equal to the lesser of (i) the aggregate amount of its contributions pursuant to Section 3 (without any interest) or, (ii) the policy's death benefit. Upon receipt of such amount, the Corporation releases the collateral assignment of the policy made by the Trust pursuant to Section 4 of this Agreement. 1 (b) When the Employee dies, the Trust shall be entitled to receive any amount of the death benefits provided under the policy on the Employee's life in excess of the amount payable to the Corporation under paragraph (a) of this Section 6. This amount shall be paid under the policy settlement option elected by the Trust. 7. TERMINATION OF AGREEMENT. This Agreement shall terminate on the occurrence of any of the following events: (a) cessation of the Corporation's business; (b) written notice given by either party to the other; (c) termination of the employment of the Employee; (d) bankruptcy, receivership or dissolution of the Corporation; (e) upon the election of the aggrieved party if either the Corporation or the Trust fails for any reason to make the contribution required by Section 3 of this Agreement toward payment of any premium due on the policy on the Employee's life acquired pursuant to the terms of this Agreement, provided that any election to terminate this Agreement under this clause must be made within ninety days after the failure to make the required contribution occurs; (f) repayment by the Trust of the contributions made by the Corporation under Section 3 of this Agreement (without interest) or, if less, the policy's then cash value, provided that upon receipt of such repayment the Corporation releases the collateral assignment of the policy made by the Trust pursuant to Section 4 of this Agreement. 8. DISPOSITION OF POLICY ON TERMINATION OF AGREEMENT. If this Agreement is terminated under paragraph (a), (b), (c), (d) or (e) of Section 7 of this Agreement, the Trust shall have thirty days in which to repay the Corporation the lesser of (a) the amount which the Corporation has contributed toward payment of the premiums due on the policy (without any interest) or, (b) the policy's then cash value. The Corporation shall take all reasonable steps necessary or desirable to assist the Trust in making the repayment including, but not limited to, consenting to the Trust's borrowing from or encumbering the policy. Upon receipt of this amount, the Corporation shall release the collateral assignment of the policy; if the Trust does not repay such amount, the Corporation may enforce any rights which it has under the collateral assignment of the policy. 9. INVESTMENT REPRESENTATIONS. The Corporation makes no representations to the Employee or Trust regarding the suitability of the Hartford insurance policy as an investment, its income or estate tax consequences, the tax consequences of this Agreement or the solvency of Hartford. The Corporation further makes no representations that the policy will be sufficient to provide any benefits. The Employee and the Trust are not relying on the Corporation in entering into this Agreement and acknowledge that they have consulted their own tax and financial advisors regarding any and all associated risk factors. 10. INDIVIDUAL LIABILITY. The only liability of the Trust hereunder is to make the payments specified in Sections 6, 7 and 8 hereof and such liability is limited to the amounts specified in such sections. In addition, such amounts shall be satisfied solely from the policy. The Trust shall have no liability if the policy is insufficient to satisfy such obligations. Neither the Employee, any heirs, beneficiaries or assigns shall have any liability under this Agreement. 11. INSURANCE COMPANY NOT A PARTY. The Hartford (a) shall not be deemed to be a party to this Agreement for any purpose nor in any way responsible for its validity; (b) shall not be obligated to inquire as to the distribution of any monies payable or paid by it under the policy on the Employee's life acquired pursuant to the terms of this Agreement; 2 (c) shall be fully discharged from any and all liability under the terms of any policy issued by it, which is subject to the terms of this Agreement, upon payment or other performance of its obligations in accordance with the terms of such policy. 12. AMENDMENT OF AGREEMENT. This Agreement shall not be modified or amended except by a writing signed by the Corporation and the Trust. This Agreement shall be binding upon the heirs, administrators or executors and the successors and assigns of each party to this Agreement. In Witness Whereof, the parties hereto have executed this Agreement as of the date above first written. TRUST By: --------------------------------- ROBERT HALF INTERNATIONAL INC. By: --------------------------------- Corporate Seal Attest: - ---------------------------------------- Secretary 3 EX-11 12 EXHIBIT 11 EXHIBIT 11 EXHIBIT 11 TO FORM 10-K ROBERT HALF INTERNATIONAL INC. AND SUBSIDIARIES COMPUTATION OF PER SHARE EARNINGS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED DECEMBER 31, ------------------------- 1996 1995 1994 ------- ------- ------- Net income....................................................................... $61,102 $40,298 $26,117 ------- ------- ------- ------- ------- ------- Weighted average number of shares outstanding Primary: Common stock................................................................. 58,845 56,990 54,730 Common stock equivalents -- stock options (A)................................ 2,138 2,080 1,941 ------- ------- ------- Primary shares outstanding................................................... 60,983 59,070 56,671 ------- ------- ------- ------- ------- ------- Fully Diluted: Common stock................................................................. 58,845 56,990 54,730 Common stock equivalents -- stock options (A)................................ 2,333 2,427 2,239 ------- ------- ------- Fully diluted shares outstanding............................................. 61,178 59,417 56,969 ------- ------- ------- ------- ------- ------- Net income per share: Primary........................................................................ $ 1.00 $ .68 $ .46 Fully diluted.................................................................. $ 1.00 $ .68 $ .46
(A) The treasury stock method was used to determine the weighted average number of shares of common stock equivalents outstanding during the periods. EX-21 13 EXHIBIT 21 EXHIBIT 21 LIST OF SUBSIDIARIES
JURISDICTION OF NAME OF SUBSIDIARY INCORPORATION - ------------------------------------------------------------------------ -------------------- RH Holding Company, Inc. California LegalTeam, Inc. California Benchmark Staffing, Inc. California Benchmark Resources, Inc. California Sylar, Inc. California Temporary Specialties, Inc. California Robert Half Licensing, Inc. California Robert Half of California, Inc. California Robert Half of Texas G.P. Ltd. Delaware XYZ-II, Inc. Delaware Robert Half Incorporated Florida R-H International Advertising Fund, Inc. Florida Robert Half of Atlanta, Inc. Georgia OfficeTeam Inc. Louisiana Robert Half Corporation Nevada Robert Half Nevada Staff, Inc. Nevada R-H Franchises Western Hemisphere, Inc. New York Tripoli Associates Corporation New York Robert Half of Philadelphia, Inc. Pennsylvania Robert Half of Pittsburgh, Inc. Pennsylvania RHT, L.P. (a limited partnership) Texas Fontaine Archer Van de Voorde S.A./N.V. Belgium S.A. Robert Half N.V. Belgium Accountemps S.A./N.V. Belgium Robert Half Canada Inc. Canada Norman Parsons S.A. (96% owned) France Accountemps S.A.R.L. France Robert Half S.A. France Robert Half Limited United Kingdom Robert Half Personnel (Midlands) Limited United Kingdom Envaward Limited United Kingdom Hatlon Limited United Kingdom Smiths Recruitment Limited United Kingdom
EX-23 14 EXHIBIT 23 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants we hereby consent to the incorporation by reference of our report dated January 24, 1997 into the Company's Registration Statements on Form S-8 (nos. 33-14706, 33-32622, 33-32623, 33-39187, 33-39204, 33-40795, 33-52617, 33,56639, 33-56641, 33-57763, 33-62138, 33-62140, 33-65401, 33-65403, 333-05743, 333-05745, 333-18283 and 333-18339). ARTHUR ANDERSEN LLP San Francisco, California March 20, 1997 EX-27 15 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN THIS ENIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR YEAR DEC-31-1996 DEC-31-1995 JAN-01-1996 JAN-01-1995 DEC-31-1996 DEC-31-1995 80,181 41,346 0 0 129,399 88,022 4,016 3,067 0 0 217,748 133,650 0 0 0 0 416,012 301,140 86,561 55,880 5,069 1,486 0 0 0 0 60 58 308,385 301,082 416,012 301,140 0 0 898,635 828,526 0 0 545,343 384,449 5,405 4,767 0 0 (2,243) (463) 103,645 69,089 42,543 28,791 61,102 40,296 0 0 0 0 0 0 61,102 40,298 1.00 .68 1.00 .68
-----END PRIVACY-ENHANCED MESSAGE-----