SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended DECEMBER 31, 1999
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____to_____
Commission file no.0-15152
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FIND/SVP, INC.
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(Exact name of Registrant as specified in its charter)
NEW YORK 13-2670985
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(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
625 AVENUE OF THE AMERICAS, NEW YORK, NY 10011
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 645-4500
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Securities registered pursuant to Section 12(b) of the Act: NONE
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Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $.0001 per share
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Title of Class
******************************
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
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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 the 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.
As of March 1, 2000 the aggregate market value of the voting stock held by
non-affiliates of the registrant was $13,491,916.00.
As of March 1, 2000 there were 7,394,949 shares of Common Stock, par value
$.0001 per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Not applicable.
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PART I
ITEM 1
BUSINESS
GENERAL
FIND/SVP, Inc. ("FIND/SVP" or the "Company") provides broad consulting,
advisory and business intelligence services substantially by telephone primarily
to executives and other decision-making employees. The Company's strategy is to
build a base of regular clients who will utilize the Company's people and
resources for their research, business intelligence and information needs.
The Company was formed under the laws of New York in 1969. In 1971, the
Company became affiliated with SVP International S.A. ("SVP International")
through a licensing agreement which gave the Company the right to the SVP name
and provided access to the resources of what is currently 13 additional SVP
affiliated companies located around the world.
Through its Quick Consulting and Research Service ("QCS"), FIND/SVP
provides retainer clients with access to the subject and technical expertise of
its staff as well as the resources of a large information center. Within each
retainer client's organization, specific individuals receive a Membership Card,
which entitles them to make requests via the telephone and the Internet for
consultation and research assistance. In response, the staff of QCS provides
customized answers in rapid turnaround time, generally within two business days
or less of the request. The QCS service is positioned to be an indispensable
daily partner for decision-makers by providing, on a retainer basis, a
cost-effective "quick consulting" service accessible by telephone or the
Internet. The service is designed to be a valuable resource to small and medium
sized corporations that do not maintain in-house information centers and as a
supplement to in-house resource centers of large corporations. At December 31,
1999, there were 2,006 QCS retainer clients and 12,959 Membership Cardholders.
The Company intends to seek to expand its base of QCS retainer clients, and to
offer these clients an expanded array of business intelligence, research and
advisory services.
In addition to QCS, the Company offers the market research services of
its Strategic Consulting and Research Group ("SCRG"), which is designed to
handle more extensive, in-depth custom market research and competitive
intelligence requests, as well as customer satisfaction and loyalty programs.
The QCS and SCRG businesses represent the core competencies of the Company,
which is to provide the expertise of its staff in an on-demand, consulting and
business advisory relationship with small, medium and large sized corporations.
The Company also produces The Information Advisor newsletter.
FIND/SVP's research resources include access to approximately 4,000
computer databases and subscription-paid web sites, approximately 8,000 of its
own files organized by subject and by company, current and back issues of
approximately 1,500 periodicals and journals and approximately 3,500 books and
reference works. Through a licensing agreement, the Company is associated with
the international SVP network of companies and correspondents providing similar
services. This enables FIND/SVP to obtain information through approximately
1,000 additional consultants in the SVP worldwide network.
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SERVICES AND PRODUCTS
The Company's services and products offer business executives fully
integrated research, business intelligence and management advisory services in a
broad range of industries and disciplines. The Company provides services to help
clients acquire, interpret and use knowledge.
FIND/SVP's research resources at December 31, 1999 include a staff of
86 consultants and researchers in its QCS and SCRG divisions, a reference center
which contains approximately 8,000 of its own subject and company files, access
to approximately 4,000 computer databases, current and back issues of
approximately 1,500 titles, and approximately 3,500 books and reference works,
and a field investigation team with entree into public and private libraries in
the New York area. Through a licensing agreement, the Company is associated with
the international SVP network of companies and correspondents, which enables it
to obtain information worldwide. See "SVP Network; Licensing Agreement With SVP
International." The materials used in the generation of the Company's services
and products are updated and checked by staff members. The Company has its own
training program in which its employees participate.
SERVICES
QUICK CONSULTING AND RESEARCH SERVICE ("QCS"). QCS provides clients
with access to the staff and resources of a large information center, which
seeks to handle research inquiries and requests for business assistance in rapid
turnaround time. Through QCS, the Company is in the business of providing, on a
volume basis, customized answers to business questions on a wide variety of
topics. The service is offered only on a retainer basis. Retainer client
organizations pay in advance, either monthly, quarterly, semi-annually or
annually, a retainer fee. In return, the client organizations receive Membership
Cards for their designated executives or employees. The Membership Card entitles
each cardholder to use QCS and also offers preferential use of, and/or discounts
on, the Company's other services and products. The Company has several fixed and
adjustable fee retainer programs in effect. Out-of-pocket expenses incurred to
answer questions are invoiced in addition to retainer fees.
Retainer clients call FIND/SVP with their business issues and research
needs, give their card number and explain their request to consultants who are
divided into the following six practice groups and three support teams:
(a) THE CONSUMER PRODUCTS AND SERVICES GROUP is responsible for
research on retailing and apparel, home furnishings, cosmetics and
toiletries, food and beverages, media and entertainment, publishing,
sports and leisure, education, philanthropy, restaurants, food
services, household products, appliances and furniture;
(b) THE TECHNOLOGY, INFORMATION AND COMMUNICATIONS GROUP covers
computers, software, electronic media and office equipment, and
provides expert help with Internet research, hands-on training, on-site
seminars, competitive intelligence, Web marketing/trends and Internet
user demographics.
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(c) THE HEALTHCARE AND PHARMACEUTICALS GROUP covers products and
services manufactured by and marketed to businesses in healthcare
fields, including pharmaceuticals, medical and diagnostic equipment,
biotechnology, health resources and clinical information;
(d) THE FINANCIAL AND BUSINESS SERVICES GROUP handles requests on
banking, insurance, mergers and acquisitions, real estate and
mortgages, the securities and investment industries, customer
satisfaction and corporate management theory, and provides credit
reports on specific companies and Securities and Exchange Commission
documents on public companies;
(e) THE INDUSTRIAL PRODUCTS AND SERVICES GROUP covers manufacturing,
energy, chemicals, plastics, pulp and paper, metals and mining,
transportation, environment, construction and agriculture;
(f) THE MANAGEMENT ADVISORY GROUP handles requests on legal research,
human resources research and accounting and tax issues;
(g) THE INTERNATIONAL TEAM addresses executive's needs for
international finance and trade, global corporate competitive
intelligence and worldwide management strategies;
(h) THE DOCUMENTS TEAM locates and obtains copies of articles,
documents, patents, books, pamphlets, catalogs, conference proceedings,
government reports and product samples;
(i) THE MARKETING TEAM covers direct marketing, advertising, sales
promotions and demographics; and
Client cardholders discuss their research needs with the
Company's consultants and may obtain assistance in formulating their requests.
After the request has been clarified, FIND/SVP's specialists find the needed
information using a combination of the Company's available resources. After
reviewing the findings, the consultants select what appears most relevant to the
client's need and report, with commentary, as needed. Documentation of the
findings can be sent by any one or a combination of the following methods:
facsimile, courier, messenger, mail or electronic mail. QCS allows customers to
benefit from a fast, convenient and confidential way to gather knowledge and use
the multitude of research resources available today. Cardholders may ask
questions on virtually any subject.
Those requests requiring business intelligence from overseas are
answered by one or more of the information centers in 13 SVP companies worldwide
or by using special SVP correspondents in selected countries where no official
SVP company exists.
QCS is designed to handle client questions requiring less than
approximately three hours of actual staff time. These are automatically covered
by the retainer fee. Requests requiring a more extensive search or a lengthy
written report are not covered by the QCS retainer program and are referred to
the Company's Strategic Consulting and Research Group to be handled separately.
QCS activity is tracked and controlled by a proprietary management
information system called QUESTRAC, which uses recently upgraded
state-of-the-art software technology. The program is based on the know-how
provided by SVP France, the founders of the SVP concept of quick business
advisory services by telephone. Input into the QUESTRAC system provides an
exclusive and confidential database of information about each client, and the
information requested and handled for clients.
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At December 31, 1999, there were 2,006 retainer clients, a 0.9%
decrease from December 31, 1998, and 12,959 holders of the Membership Card, a
12.8% decrease from December 31, 1998. During 1999, monthly fees billed to
retainer clients (the retainer base) increased by 2.5% to $1,507,782.
Approximately 50% of the top Fortune 100 industrial companies are QCS retainer
clients. Revenues generated by QCS represented 82%, 74% and 64% of the Company's
total revenues for the years ended December 31, 1999, 1998 and 1997,
respectively.
STRATEGIC CONSULTING AND RESEARCH GROUP ("SCRG"). SCRG is designed to
handle more in-depth custom market research and competitive intelligence
assignments. The service is most often used by the Company's QCS retainer
clients as a supplement to that service. Common project requests include
customized market and industry studies, telephone surveys, competitive
intelligence data-gathering and analysis assignments, acquisition studies and
large information collection projects. Additionally, through the Customer
Satisfaction and Loyalty Group, SCRG provides customer satisfaction and loyalty
programs. Through SCRG, the Company provides research as well as interpretation
and analysis. All projects are quoted in advance and billed separately. Revenues
generated by SCRG represented 17%, 17% and 17% of the Company's total revenues
for each of the years ended December 31, 1999, 1998 and 1997.
NON-CONTINUING PRODUCTS AND SERVICES
On July 2, 1998, the Company completed the sale of substantially all of
the assets of FIND/SVP Published Products, Inc. ("Published Research") pursuant
to an Asset Purchase Agreement dated as of June 26, 1998. The Company recorded a
$20,000 gain related to this sale. The assets included, among other things, the
tangible and intangible assets, properties, rights and business of Published
Research relating to the following product lines: (I) FIND/SVP Market
Intelligence Reports; (II) Packaged Facts Market Intelligence Reports; (III)
Specialists in Business Information Market Intelligence Reports; (IV)
MarketLinks; (V) Ice Cream Report: The Newsletter for Ice Cream Executives; (VI)
How to Find Market Research Online; (VII) Analyzing Your Competition; (VIII)
Finding Business Research on the Web; and (IX) ShareFacts.
On November 4, 1997, the Company sold certain assets held in its
Emerging Technologies Research Group ("ETRG"), a division of Published Research.
The assets consisted of the Company's Multi-client Study business, its
Continuous Advisory service and its Interactive Consumer newsletter. The Company
retained the rights to its then published off-the-shelf studies produced from
data contained within previously issued multi-client studies.
Revenues generated from the divested activities represented 9% and 19%
of the Company's total revenues for the years ended December 31, 1998 and 1997,
respectively.
During the fourth quarter of 1997, the Company ceased the
consumer-oriented operations of its FIND/SVP Internet Services, Inc. subsidiary.
Accordingly, the Company recorded a charge of $500,000 in the fourth quarter of
1997 related to the closing of the subsidiary.
Revenues from FIND/SVP Internet Services, Inc. represented less than 1%
of the Company's revenues for 1997.
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Based on the decisions to effectuate the sale and the discontinuance of
various product lines and services, the Company reduced its general and
administrative staff as of December 31, 1997. Accordingly, the Company recorded
a $155,000 restructuring charge as of December 31, 1997.
POTENTIAL RELATED SERVICES AND PRODUCTS
The Company plans to expand its services through continued internal
development during 2000. This includes various initiatives aimed at both
business-to-business and consumer users of the Internet. Additionally, the
Company will consider exploring possible alliances with and/or acquisitions of
consulting, research or information properties and companies whose primary
markets are the same as FIND/SVP's market and which would be accretive to the
Company's earnings. There are no commitments or understandings in this regard
and no assurance can be given that the Company will in fact conclude any
acquisitions or internally develop any related services. The foregoing plans are
subject to, among other things, the availability of funds for these purposes.
SVP NETWORK; LICENSING AGREEMENT WITH SVP INTERNATIONAL
Through licensing agreements with SVP ("S'il Vous Plait")
International, 14 companies (the "SVP companies"), including FIND/SVP, form an
international network of information centers. Since each SVP company is based in
a different country, the network has provided the means by which the Company can
obtain international information requested by its clients which it may not
maintain in its library or have access to if generated by or located in another
country. When an SVP company accesses the information center of another SVP
company it is charged a fee for the services provided thereby. Each SVP company
is linked to the SVP network primarily by virtue of its licensing agreement. In
1971, the Company entered into its licensing agreement with SVP International
(formerly SVP Conseil), which was amended in 1981, and obtained the U.S. rights,
in perpetuity, to the SVP name and know-how and access to the SVP International
network. Pursuant thereto, SVP International assisted in the creation,
implementation, development and operation of the Company. The Company has
agreed, pursuant to such licensing agreement, to use its best efforts to have a
person selected by SVP International elected to the Board of Directors of the
Company; pursuant to such provision, Brigitte de Gastines, General Manager of
SVP International, is also Chairperson of the Board for the Company. In
addition, Jean-Louis Bodmer, Vice President-Finance and New Technologies for SVP
Group and Eric Cachart, SVP Group's Vice President of Development and Client
Services, are directors of the Company. Historically, SVP International has
engaged in periodic telephonic conversations and meetings with the Company. By
virtue thereof, the Company has benefited from exchanges of knowledge with SVP
International with respect to any enhancements made to SVP International's
information retrieval or billing systems or other proprietary know-how.
During the first quarter of 1998, SVP International (including
affiliates) increased its ownership in the Company to approximately 37% of the
then outstanding common shares, excluding outstanding warrants, from 18.7% of
the outstanding common shares, excluding outstanding warrants. Concurrent with
the increased ownership, SVP International increased their management
involvement in and physical presence at the Company during 1998, and it is
expected that this will continue into the future. (See "Directors and Executive
Officers of the Registrant - Directors and Officers")
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The license agreement provides that SVP International will not compete
with the Company in the United States or enter into any agreement or arrangement
with respect to services similar to those offered by the Company with any entity
which operates or proposes to operate such services in the United States. The
Company, in return, agreed to pay SVP International royalties of $18,000 per
year, plus 2% of the amount of FIND/SVP's gross revenues for each such year,
excluding publishing revenues, derived from certain of its services in excess of
$2,000,000 but less than $4,000,000 and 1% of the amount of such non-publishing
gross revenues in excess of $4,000,000 but less than $10,000,000, and 1.2% of
the gross profit from all publications included in FIND/SVP's gross revenue less
than $10,000,000 for such year. Royalty expense to SVP International totaled
$119,000, $126,000 and $131,000 in 1999, 1998 and 1997, respectively.
MARKETS AND CUSTOMERS
The market for FIND/SVP's services and products is comprised primarily
of business executives in a variety of functions, including top management and
marketing, planning, marketing research, sales, information/library, legal,
accounting, tax and new products. FIND/SVP's primary market, in terms of client
organizations, consists of medium to small sized companies. Larger corporations
are, however, among the Company's clients. In certain cases, the service is sold
to more than one department or division of a large corporation. The Company's
appeal to medium to small sized corporations is primarily based on the fact that
these companies do not ordinarily maintain their own research staff and resource
libraries and when they do, they are generally not comprehensive. Large
corporations, on the other hand, often maintain in-house resource centers.
Consequently, these corporations may perceive the Company's QCS service as
unnecessary. The Company believes, however, that in-house corporate libraries
are generally not as comprehensive. Therefore, QCS may be perceived as a
valuable supplemental resource. In addition, in-house centers are good prospects
for the Company's other services. Overall, the factors that will affect the
growth of the Company's potential market and its ability to penetrate it
include: (1) the market's perception of the need for and value of consulting,
business intelligence and research services; (2) the trends in the use of
internal information centers and databases; and (3) the Company's ability to
extend its personal selling efforts throughout the country.
SALES AND MARKETING
The Company's primary marketing focus is to expand its QCS retainer
client base. In addition to generating revenues from the QCS services, the
retainer client base serves as a ready-made marketplace for SCRG and other
potential services of the Company. QCS is marketed through a combination of
advertising, direct mail, exhibits, sales promotion activities and the Company's
web site. Qualified leads are followed up by FIND/SVP's sales force. These leads
are supplemented by referrals and cold-call selling efforts. The cost of the
Company's advertising and public relations efforts is modest.
COMPETITION
The Company faces competition from three distinct sources: (1) other
research and information services, (2) in-house corporate research centers, and
(3) institutions that sell information directly to end-users.
The Company is aware of several other smaller fee-based on-demand
business information services in the United States. The Company believes that of
these companies it is the largest in terms of revenues and staff size. The
Company believes that the competition may be more significant from organizations
such as Arthur D.
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Little, Stanford Research Institute and The Conference Board, which have
research capabilities with call-in-service for reference type questions. To
date, however, the call-in-service feature has not been emphasized by these
companies. Although the Company is not aware of direct competitive companies
with larger staffs and revenues, there is no assurance that as the information
industry expands, more competitive companies will not enter the market. In
addition, there is no assurance that a competitive company will not develop a
superior product or service. The Company believes, however, that by reason of
its experience in the industry, its association with the SVP network and its
intent to closely monitor the consulting industry, it will be able to compete
effectively with any potential competitors.
In-house corporate information and research centers present perhaps the
most significant source of competition for the Company today. Large
corporations, in an effort to stay on top of the vast amount of information
available, began to develop in increasing numbers, in-house libraries and
information centers for their employees. While the Company believes that its own
information center serves the added functions of analysis and generation of
information and is larger and better staffed than a majority of these corporate
resource centers, there is no assurance that a significant number of these large
companies will choose to utilize the Company's services and products.
The advent of on-line databases, the Internet and CD-ROM products has
increased the ability of companies to perform information searches and other
research for themselves. Consequently, to the extent companies perceive they can
directly access information from the Internet, on-line databases and acquire
CD-ROM products, FIND/SVP competes with information producers that sell to
end-users. The Company believes, however, that its consultants deliver a
value-added service based on their technical expertise and their ability to
search more information products more quickly than most end users, thereby
delivering a more thorough and economical service. There is no assurance,
however, that companies which develop extensive resource centers will not
accordingly staff them with equally productive personnel.
EMPLOYEES
As of December 31, 1999, the Company had 160 full-time employees,
including 5 executive officers, 36 marketing and sales employees, 86 consultants
and research employees, and 33 administrative and general personnel.
The Company's ability to develop, market and sell its services and to
establish and maintain its competitive position will depend, in part, on its
ability to attract and retain qualified personnel. While the Company believes
that it has been successful to date in attracting such personnel, there can be
no assurance that it will continue to do so in the future. The Company is not a
party to any collective bargaining agreements with its employees. It considers
its relations with its employees to be good.
ITEM 2
PROPERTIES
At December 31, 1999, the Company has a lease on approximately 32,000
square feet of office space at 625 Avenue of the Americas, New York, New York,
which became the main offices of the Company in 1987. The lease is subject to
standard escalation clauses, and expires in June 2005. Basic annual rent
expense, determined on the straight-line basis over the term of the lease, is
approximately $694,000.
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The Company has additional leased office space for approximately 30,000
square feet at 641 Avenue of the Americas, New York, New York. Such lease
arrangements are subject to standard escalation clauses, and expire in June
2005. Basic annual rent expense, determined on the straight-line basis over the
term of the lease, is approximately $650,000. Of this space, approximately
10,000 square feet is being sublet to a third party as of December 31, 1999.
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ITEM 3
LEGAL PROCEEDINGS
None.
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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PART II
ITEM 5
MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
PRICE RANGE OF COMMON STOCK
The Company's common stock, par value $.0001 per share ("Common
Stock"), is traded on the NASDAQ Small Cap Market under the symbol "FSVP". The
following table sets forth the high and low closing sale prices for the Common
Stock for the periods indicated.
PRICE RANGE HIGH LOW
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1999
- ----
COMMON STOCK
- ------------
1st Quarter 1 25/32 3/4
2nd Quarter 1 19/32
3rd Quarter 1 9/16 23/32
4th Quarter 2 2/32 3/4
1998
- ----
COMMON STOCK
- ------------
1st Quarter 1 3/16 11/16
2nd Quarter 1 3/8 29/32
3rd Quarter 1 7/16 13/16
4th Quarter 1 1/8 19/32
On December 31, 1999, there were approximately 890 holders of record of
the Common Stock. Such numbers do not include shares held in "street name."
In the first quarter of 1998, by letter dated January 21, 1999, and by
letter dated November 16, 1999, the Company received notification from the
NASDAQ Stock Market, Inc. ("NASDAQ") that the Company was not in compliance with
NASDAQ's $1.00 minimum bid price requirement; the shares of the Common Stock
having closed below the minimum bid price for 30 consecutive business days. To
regain compliance with this standard the Common Stock was required to have a
closing bid price at or above $1.00 for ten consecutive trading days within the
90-calendar day period following the advent of non-compliance. With respect to
all notifications, the Common Stock subsequently met the required minimum bid
price for ten consecutive trading days, and the Company's Common Stock is
currently in compliance with the NASDAQ minimum bid requirement. Had compliance
not been achieved, NASDAQ could have issued a delisting letter.
The Company's failure to meet NASDAQ's maintenance criteria in the
future may result in the discontinuance of the inclusion of its securities in
NASDAQ. In such event, trading, if any, in the securities may then continue to
be conducted in the non-NASDAQ over-the-counter market in what are commonly
referred to as the electronic bulletin board and the "pink sheets". As a result,
an investor may find it more difficult to dispose of or to obtain accurate
quotations as to the market value of the securities. In addition, the
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Company would be subject to a Rule promulgated by the Securities and Exchange
Commission that, if the Company fails to meet criteria set forth in such Rule,
imposes various practice requirements on broker-dealers who sell securities
governed by the Rule to persons other than established customers and accredited
investors. For these types of transactions, the broker-dealer must make a
special suitability determination for the purchaser and have received the
purchaser's written consent to the transactions prior to sale. Consequently, the
Rule may have an adverse effect on the ability of brokers-dealers to sell the
securities, which may affect the ability of shareholders to sell the securities
in the secondary market.
DIVIDEND HISTORY AND POLICY
The Company has never paid cash dividends on its Common Stock and
anticipates that, for the foreseeable future, it will continue to follow a
policy of retaining earnings to finance the expansion and development of its
business. The Company's debt agreements restrict the payment of dividends.
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ITEM 6
SELECTED FINANCIAL DATA
The following financial data set forth below is derived from the
consolidated financial statements of the Company.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------
(in thousands, except per share amounts)
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $22,738 $28,175 $32,027 $30,525 $28,606
Operating Income (Loss) 348 1,329 (3,136) (824) 1,050
Net Income (Loss) 883 756 (2,852) (719) 476
Net Income (Loss) Per Share:
Basic .12 .11 (.43) (.11) .08
Diluted .12 .11 (.43) (.11) .07
Weighted Average Number of Shares:
Basic 7,121 7,094 6,593 6,434 6,217
Diluted 7,213 7,100 6,593 6,434 6,672
Cash Dividends Paid Per
Common Share - - - - -
BALANCE SHEET DATA
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31
------------
(in thousands)
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Working Capital (Current assets $3,199 $2,569 $1,016 $3,930 $3,854
less current liabilities)
Total Assets 11,278 11,899 12,481 12,946 11,445
Long-Term Notes Payable
excluding current amounts 3,039 3,523 3,801 3,826 2,896
Shareholders' Equity 3,889 2,988 1,218 4,059 4,659
</TABLE>
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ITEM 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
GENERAL
FIND/SVP, Inc. provides a broad consulting, advisory and business
intelligence service to executives and other decision-making employees of client
companies, primarily in the United States. The Company currently operates
primarily in one business segment, providing consulting and business advisory
services including: the Quick Consulting and Research Service ("QCS") which
provides retainer clients with access to the expertise of the Company's staff
and information resources; and the Strategic Consulting and Research Group
("SCRG") which provides more extensive, in-depth custom market research and
competitive intelligence information, as well as customer satisfaction and
loyalty programs. Prior to the third quarter of 1998, the Company had one
additional significant operating segment, Published Research Products. The
Company considers its QCS and SCRG service businesses, which operate as
"consulting and business advisory" businesses, to be its core competency.
The Company had operating income of $348,000 for the year ended
December 31, 1999. The net income for the year ended December 31, 1999 was
$883,000 versus $756,000 for the year ended December 31, 1998.
Revenues for 1999 were $22,700,000 and revenues for 1998 were
$28,200,000. On a comparable basis, 1998 revenues were $25,500,000 after
deducting revenues of $2,700,000 related to the sale of the Published Research
business unit. The decline in comparable revenues was a result of a decline in
the Company's retainer base (recurring monthly income) in late 1998 and early
1999.
Net income in 1999 was positively affected by a pre-tax gain of
$1,200,000 (approximately $672,000 after tax) resulting from a collaboration
agreement between FIND/SVP and Idealab!, a leading creator and operator of
Internet businesses, to develop find.com, a new Internet site.
Selling, general and administrative expenses were $10,800,000 in 1999,
a decrease of $1,500,000 from 1998. Direct costs in 1999 were 50.8% of revenue
as compared to 50.6% for the year ended December 31,1998. Additionally, selling,
general and administrative expenses were 47.7% of revenue for 1999 as compared
to 43.5% for the year ended December 31, 1998. Selling, general and
administrative expenses as a percentage of revenue increased due to increased
costs and the Company's emphasis on increasing retainer revenue. Both selling,
general and administrative expenses, as well as total direct costs, decreased in
1999 from 1998 as a function of lower than expected revenue levels, coupled with
a decrease due to the sale of the Published Research unit and the reduction in
staff that occurred during 1998.
A $1,000,000 capital stock investment from SVP, a major shareholder of
the Company, received during the first quarter of 1998, coupled with cash flow
provided by operating activities, enabled the Company to pay off its outstanding
balance under the Commercial Revolving Promissory Note during the
15
<PAGE>
first quarter of 1998. As of December 31, 1999, the balance outstanding remains
at zero. The Company ended 1999 with a cash balance of $2,096,000.
During the year ended December 31, 1998, the Company reduced operating
expenses, primarily due to the Published Research activities. Accordingly, there
was a reduction in direct costs as a percentage of revenues to 50.6% for the
year ended December 31, 1998, as compared to 57.5% for the year ended December
31, 1997. Additionally, selling, general and administrative expenses were 43.5%
of revenues for the year ended December 31, 1998, versus 47.0% for the year
ended December 31, 1997.
SEGMENT REPORTING
The Company operated in one segment during 1999. Segment data for 1998
and 1997, which is useful in understanding results for such years, is as
follows:
- --------------------------------------------------------------------------------
(in thousands) YEARS ENDED DECEMBER 31
-----------------------
1998 1997
---- ----
REVENUES
- --------
Consulting and Business Advisory $ 25,457 $ 25,959
Published Research Products 2,718 6,018
All other -- 50
----------------------------
$ 28,175 $ 32,027
============================
OPERATING INCOME (LOSS)
- -----------------------
Consulting and Business Advisory (1) $ 1,313 $ (165)
Published Research Products 16 (2,295)
All other -- (676)
----------------------------
Segment operating income 1,329 (3,136)
Corporate and other (2) (368) (612)
----------------------------
Income (loss) before provision
(benefit) for income taxes $ 961 $ (3,748)
============================
DEPRECIATION AND AMORTIZATION
- -----------------------------
Consulting and Business Advisory $ 1,002 $ 885
Published Research Products 96 238
All other 46 68
----------------------------
$ 1,144 $ 1,191
============================
TOTAL ASSETS
- ------------
Consulting and Business Advisory $ 11,194 $ 10,595
Published Research Products 705 1,886
All other -- --
----------------------------
$ 11,899 $ 12,481
============================
CAPITAL EXPENDITURES
- --------------------
Consulting and Business Advisory $ 618 $ 1,897
Published Research Products -- 42
All other -- --
============================
$ 618 $ 1,939
- - ============================
(1) Operating income for the years ended December 31, 1998 and 1997 include a
restructuring charge for severance and related costs of $321,000 and $155,000,
respectively.
16
<PAGE>
- --------------------------------------------------------------------------------
(2) Consists of interest income, other income, gain on sale of net assets,
interest expense and other expense.
- --------------------------------------------------------------------------------
PRODUCT AND SERVICE REVENUES
The Company's revenues decreased by $5,437,000, or 19.3%, from
$28,175,000 in 1998 to $22,738,000 in 1999 and decreased by $3,852,000, or
12.0%, from $32,027,000 in 1997 to $28,175,000 in 1998. The decreases were
primarily due to the sale of Published Research Products completed during the
third quarter of 1998, coupled with a decline in revenues in QCS and SCRG during
1999 as described below.
QCS revenues decreased by $2,137,000, or 10.3%, from $20,713,000 in
1998 to $18,576,000 in 1999 and grew by $197,000, or 1.0%, from $20,516,000 in
1997 to $20,713,000 in 1998. The decrease from 1998 to 1999 was the result of a
0.9% decline in the number of retainer clients and a 12.8% decline in the number
of retainer cardholders. The increase from 1997 to 1998 was due to an increase
in the average retainer fee paid per client, partially offset by a 10.7%
reduction in the number of clients and an 8.4% reduction in the retainer base
(monthly fees billed to clients). The reduction in the retainer base was
primarily due to an increase in the number of rate reductions granted to clients
based on their recent usage history, coupled with a slow-down in new retainer
sales during 1998, as compared to recent years. The slow down in sales was due
primarily to staff turnover in the Business Development area that was
experienced throughout 1998. The reduction in the retainer base began during the
third quarter of 1998, and this was the first time in the Company's history that
there had been a reduction in the retainer base during a full calendar year. The
decline continued through the first quarter of 1999 and, on a dollar value
basis, was reversed in the second quarter of 1999. The Company experienced a
growth in the dollar value of the retainer base in both the third and fourth
quarters of 1999, and for the full year ended December 31, 1999.
As a result, the monthly fees billed to retainer clients (the retainer
base) increased from the beginning of 1999 to the end of 1999 by 2.5% to
$1,507,782. However, until the retainer base is brought back to previous levels
attained in 1998, retainer revenue in QCS will be lower. In 1999, QCS revenue
was lower due to client cancellations exceeding new client acquisitions.
SCRG revenues decreased by $856,000, or 18.1%, from $4,743,000 in 1998
to $3,887,000 in 1999 and by $700,000, or 12.9%, from $5,443,000 in 1997 to
$4,743,000 in 1998. The decrease from 1998 to 1999 was a continuation of the
impact felt by staff turnover in the second half of 1998. The decrease from 1997
to 1998 was due to a significant fall-off in revenue in the third and fourth
quarters of 1998, as compared to the like quarters in 1997, primarily due to
staff turnover which affected the marketing efforts of SCRG.
During the fourth quarter of 1998, staff turnover in SCRG slowed and
since then has moderated. As a result, the Company experienced a decline in
revenues during the first two quarters of 1999, as compared to the like quarters
of 1998. The Customer Satisfaction and Loyalty Division accounted for 22.7%,
28.9% and 15.7% of SCRG's revenue for 1999, 1998 and 1997, respectively.
The Company earned $91,000 and $39,000 in royalties in 1999 and 1998,
respectively, as a result of the sale of the Published Research unit.
17
<PAGE>
DIRECT COSTS
Direct costs decreased by $2,721,000, or 19.1%, from $14,263,000 in
1998 to $11,542,000 in 1999 and decreased by $4,139,000, or 22.5%, from
$18,402,000 in 1997 to $14,263,000 in 1998. Direct costs represented 50.8%,
50.6% and 57.5% of revenues, respectively, in 1999, 1998 and 1997. The decreases
were primarily due to the aforementioned sale of Published Research Products,
coupled with a general reduction in direct operating expenses. The general
reduction in direct operating expenses was primarily the result of a reduced
headcount and a decrease in the expenses incurred on behalf of clients.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses decreased by $1,415,000,
or 11.5%, from $12,262,000, or 43.5% of revenues, in 1998 to $10,847,000, or
47.7% of revenues, in 1999 and decreased by $2,797,000, or 18.6%, from
$15,059,000, or 47.0% of revenues, in 1997 to $12,262,000, or 43.5% of revenues,
in 1998. The decrease from 1998 to 1999 was primarily due to a reduction in
labor costs and reduced sales commissions during 1999, partially offset by an
increased emphasis on marketing. The decrease from 1997 to 1998 was primarily
due to reduction in administrative labor and reduced sales labor, primarily due
to turnover, coupled with reduced sales commissions during 1998.
IMPAIRMENT LOSS
During the fourth quarter of 1997, the Company decided to sell
Published Research Products. As a result, the Company reported the carrying
value of the assets held for sale at the lower of cost or their estimated net
realizable values, and an impairment loss of $1,047,000 was recorded in December
1997. The sale of these assets was completed during the third quarter of 1998.
The aforementioned non-cash charge included write-downs of inventory of
$517,000, fixed assets of $405,000, goodwill of $102,000 and deferred charges of
$23,000.
RESTRUCTURING CHARGE
On March 27, 1998, the Company reduced its full-time labor force in its
core business by 20 positions. As a result, the Company recorded a restructuring
charge of $321,000 during the quarter ended March 31, 1998. The charge consisted
mainly of severance payments, which were fully paid by February 15, 1999,
outplacement services and legal costs associated with the elimination of the
positions. As of December 31, 1999, all costs related to this charge had been
paid.
In conjunction with the Company's decision to re-focus its efforts on
its core competencies, the Company reduced its general and administrative staff
in December 1997. Accordingly, the Company recorded a $155,000 restructuring
charge, primarily for severance costs, during the fourth quarter of 1997, all of
which was paid in 1998.
Due to lower than expected revenues and profits in Published Research
Products during the third quarter of 1996, and due to the anticipation of a more
aggressive growth strategy which integrated the products and services of the
Company, the Company reorganized its operating units and changed its method of
marketing and cross-selling its various services. As of December 31, 1999, all
costs related to this charge had been paid.
18
<PAGE>
OPERATING INCOME (LOSS)
The Company's operating income was $348,000 in 1999, compared to an
operating income of $1,329,000 in 1998, a decrease of $981,000. The decrease was
primarily related to the sale of Published Research Products, coupled with the
decline in revenue from its QCS and SCRG activities.
The Company's operating income was $1,329,000 in 1998, compared to an
operating loss of $3,136,000 in 1997, an improvement of $4,465,000. The increase
was due primarily to decreased direct costs and SG&A expenses, coupled with a
$2,311,000 improvement in Published Research Products due primarily to the
non-recurring impairment loss of $1,047,000 recorded in 1997.
INTEREST INCOME AND EXPENSE; OTHER ITEMS
In 1999, the Company earned $88,000 in interest income, which increased
from $85,000 in 1998 and $13,000 in 1997. The increase in 1999 was a result of
higher cash balances throughout 1999, coupled with interest earned on notes
receivable.
Interest expense in 1999 was $464,000, which was a decrease from
$522,000 in 1998, and from $597,000 in 1997. The decrease in interest expense
for 1999 compared to 1998 was primarily due to the reduction in bank borrowings.
On December 30, 1999, the Company entered into an agreement with
idealab! and Find.com, Inc. whereby the Company assigned the domain name
"find.com" and licensed the use of certain rights to the trademarks "find.com"
and "find" to Find.com, Inc. idealab! and Find.com, Inc. are not otherwise
related to the Company. Under the terms of the agreement, the Company received
consideration in the form of cash and preferred shares amounting to
approximately $1,200,000, net of related expenses. The Company is also entitled
to certain future royalties. The preferred shares are classified as
available-for-sale marketable securities at December 31, 1999. No royalty income
was earned during 1999.
On January 20, 1998, the Company entered into a settlement agreement
regarding a shareholder lawsuit which began during 1997, pursuant to which the
suit was dismissed with prejudice. As part of the settlement, the Company
purchased 274,400 shares of the Common Stock from the plaintiff for $1.25 per
share, totaling $343,000. The purchase price contained a premium of $0.50 per
share over the closing trade price of the Common Stock on the date of
settlement, or $137,000. As a result of the above, the Company recorded treasury
stock of $206,000 and expense of $137,000. The Company used proceeds from its
insurance company of $495,000 to purchase the shares and to pay plaintiff and
Company legal fees in the amount of $110,000 and $42,000, respectively.
Accordingly, the Company recorded other income and other expense of $289,000,
respectively, related to this matter, with the remaining balance of $206,000
offset against the aforementioned treasury stock repurchase amount, thus
reducing the net treasury stock transaction to zero.
19
<PAGE>
INCOME TAXES
The $289,000 income tax provision for the year ended December 31, 1999
represents 24.7% of pre-tax income. Income tax expense for 1999 was favorably
reduced due to the reversal of a $280,000 valuation reserve placed upon deferred
tax assets in prior years.
The $205,000 tax provision recognized for 1998 represents 21.3% of the
1998 pre-tax income. Income tax expense for 1998 was favorably reduced due to
the reversal of $239,000 of the valuation reserve placed upon deferred tax
assets in the prior year.
The $896,000 tax benefit recognized for 1997 represents 23.9% of the
1997 loss before benefit for income taxes. The 1997 benefit includes a net
operating loss carryback for federal purposes, a deferred tax benefit from a net
operating loss carryforward for federal, state and local taxes and a net
deferred tax benefit for temporary items, partially offset by establishing a
valuation allowance of $519,000, and expired tax credits.
Based on the Company's history of prior operating earnings relating to
its consulting and business advisory businesses, management has determined that
a valuation allowance of $280,000 and $519,000 was necessary at December 31,
1998 and 1997, respectively, due to the uncertainty of future earnings to
realize the entire net deferred tax asset. Of the deferred tax asset as of
December 31, 1998, $322,000 was classified as current.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's primary sources of liquidity and capital
resources have been cash flow from operations, borrowings, and prepaid retainer
fees provided by clients. Cash balances were $2,096,000 and $2,307,000 at
December 31, 1999 and 1998, respectively. The Company's working capital position
(current assets, less current liabilities) at December 31, 1999 was $3,199,000,
as compared to $2,569,000 at December 31, 1998.
The Company believes that its cash generated from operations, together
with its existing cash balances, will be sufficient to meet its operating cash
needs and expected capital expenditures for the near term. To supplement
possible short-term cash needs, the Company has a $1,000,000 line of credit at
the prime commercial lending rate plus one-half percent. The line is renewable
annually, and was put in place on December 30, 1999. No amounts were borrowed
under the line of credit as of December 31, 1999.
Cash provided by operating activities was $1,093,000, $2,166,000 and
$236,000 in the years ended December 31, 1999, 1998 and 1997, respectively.
Cash provided by (used in) investing activities was ($472,000),
$737,000 and ($1,889,000) in the years ended December 31, 1999, 1998 and 1997,
respectively. Capital expenditures for the migration of the Company's
10-year-old management information system to a new computer system platform were
a significant component of the amounts invested in all three years. This new
system improves the consultants' ability to communicate with clients, access the
internet, and to integrate the Company's products, as well as to expand the
Company's enterprise network. Total capital expenditures were $672,000,
$618,000, and $1,939,000 in the years ended December 31, 1999, 1998 and 1997,
respectively. In 1998, another significant factor was the receipt of $1,250,000
in cash received upon the sale of assets. During the year ending December 31,
2000, the
20
<PAGE>
Company expects to spend approximately $650,000 for capital items, the major
portions of which will be used to complete the migration of the information
systems to the new platform, and for leasehold improvements related to
mechanical heating and cooling systems at one of its locations.
Cash (used in) provided by financing activities was ($832,000),
($735,000), and $1,158,000 in the years ended December 31, 1999, 1998 and 1997,
respectively. In 1999, the most significant item related to the early repayment
of two bank borrowings aggregating $850,000, which were otherwise due in
installments in the years 2000 and 2001. In connection with the repayment of
such bank borrowings, the bank released two $1,000,000 standby letters of credit
that had been provided by a shareholder, SVP, S.A. In 1998, significant
financing activities included the Company's repayment of bank borrowings of
$1,749,000 and the proceeds obtained from the issuance of common shares of
$1,000,000. The share proceeds related to an equity purchase by SVP S.A., a
subsidiary of Amalia S.A. After the transaction, Amalia was the beneficial owner
of approximately 40.7% of the Company's common shares. In 1997, significant
financing activities included bank borrowings of $1,719,000 and repayments of
bank borrowings of $516,000.
In January and February 2000, 216,945 warrants were exercised. Under
the terms of the related agreements, $488,126 of face value of the Senior
Subordinated Note due October 31, 2001 was surrendered as payment.
In accordance with the terms of the Senior Subordinated Notes, the
payment of portions of accrued interest may be deferred. Accrued deferred
interest of $76,000 and $216,000 at December 31, 1999 and 1998, respectively,
was accrued and deferred under such terms. Such amounts compound and accrue
interest at the 12% rate of such Notes.
The Company is currently negotiating with several financial
institutions regarding the possible refinancing of a portion of its long-term
notes payable with the intention of reducing future interest expense.
INFLATION
The Company has in the past been able to increase the price of its
products and services sufficiently to offset the effects of inflation on wages
and other expenses, and anticipates that it will be able to do so in the future.
"YEAR 2000" ISSUE
The Year 2000 ("Y2K") issue is the result of computer programs that
were written using only two digits, rather than four, to represent a year, which
may result in errors or miscalculations. No problems were encountered as of
December 31,1999 or subsequent thereto.
The Company had developed a remediation plan involving the following
three overlapping phases: (1) creation of an inventory of all applications and
information technology equipment, non-information technology systems and vendor
relationships; (2) evaluation of the inventoried items for Y2K compliance,
determination of the remediation method and the resources required, and the
development of an implementation plan and (3) execution of the implementation
plan, including testing the inventoried items in a Y2K environment.
The Company completed all phases, and all hardware, software and
systems are Y2K compliant.
21
<PAGE>
As part of its remediation plan, the Company requested and received
representations from certain financial institutions and third party vendors that
indicated their progress towards Y2K compliance. This survey did not indicate
any Y2K compliance issues.
The Company addressed these Y2K issues using internal staff members. The
Company incurred approximately $40,000 in expenses related to remediation
software and hardware. All costs were expensed as incurred and were funded
through operations. The costs incurred through December 31, 1999 did not have a
material affect on the Company's financial position or results of operations.
The Company considered its most likely worst-case scenario to be the
failure of third party vendors to remediate their Y2K issues in a timely manner.
The Company relies on various vendors to deliver a broad range of services. The
Company's inability to receive certain services from current vendors would
affect its ability to provide services to its clients. The Company would be able
to replace those vendors that would not be able to perform due to Y2K
deficiencies.
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In June 1998, Statement of Financial Accounting Standards ("SFAS") No.
133, "Accounting for Derivative Instruments and Hedging Activities", was issued.
SFAS No. 133 established accounting and reporting standards for derivative
instruments and for hedging activities. The Company will adopt SFAS No. 133 on
January 1, 2001. At the current time the Company does not utilize derivative
instruments, and accordingly it is anticipated that the adoption of SFAS No. 133
will not affect the Company's consolidated financial position and results of
operations.
FORWARD LOOKING INFORMATION: CERTAIN CAUTIONARY STATEMENTS
This Annual Report on Form 10-K (and any other reports issued by the
Company from time to time) contains certain forward-looking statements made in
reliance upon the safe harbor provisions of the Private Securities Litigation
Act of 1995. Such forward-looking statements, including statements regarding the
Company's dependence on regulatory approvals, its future cash flows, sales,
gross margins and operating costs, the effect of conditions in the industry and
the economy in general, and legal proceedings, are based on current expectations
that involve numerous risks and uncertainties. Actual results could differ
materially from those anticipated in such forward-looking statements as a result
of various known and unknown factors, including, without limitation, future
economic, competitive, regulatory, and market conditions, future business
decisions, and those factors discussed under Management's Discussion and
Analysis of Financial Condition and Results of Operations. Words such as
"believes", "anticipates", "expects", "intends", "may", and similar expressions
are intended to identify forward-looking statements, but are not the exclusive
means of identifying such statements. The Company undertakes no obligation to
revise and of these forward-looking statements. Subsequent written and oral
forward looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by cautionary statements in
this paragraph and elsewhere in this Form 10-K, and in other reports filed by
the Company with the Securities and Exchange Commission.
22
<PAGE>
ITEM 7A
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The financial position of the Company is subject to market risk
associated with interest rate movements on outstanding debt. The Company has
debt obligations with both fixed and variable terms. The carrying value of the
Company's variable rate debt obligations approximates fair value as the market
rate is based on prime. An increase in the underlying interest rates would
result in a corresponding increase in interest expense, based on the then
outstanding borrowings.
ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is submitted in a separate section of this
report on pages F-1 through F-29.
ITEM 9
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
On April 22, 1999, the Company dismissed KMPG LLP ("KPMG") as its
independent accountants. The decision to change independent accountants was
approved by the Board of Directors upon the recommendation of the Audit
Committee.
During the two most recent fiscal years and through April 22, 1999,
there had been no disagreements with KMPG on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedure or
any reportable events.
On May 4, 1999, the Company engaged Deloitte & Touche LLP ("D&T") as
its new certifying accountant. Management has not previously consulted with D&T
on any accounting, auditing or financial reporting matters.
23
<PAGE>
PART III
ITEM 10
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
MANAGEMENT
DIRECTORS AND OFFICERS
On October 5, 1998, the Board of Directors of the Company established
an Office of Managing Directors ("OMD") (a) responsible for (I) the conduct of
the ordinary business affairs and operations of the Company and (II) defining
operating policies in alignment with SVP International to take advantage of its
know-how and technological efficiencies, (b) comprised of four members, three of
whom shall be elected by the Board of Directors, upon the advice of the
Chairperson of the Board of Directors, and designated Senior Officers with the
title of Managing Directors, and the Chief Executive Officer, and (c) reporting
to the Board of Directors. Each Managing Director must be a member of the Board
of Directors or hold another executive position with the Company.
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Andrew P. Garvin (1) 54 President, Chief Executive Officer and Director
Brigitte de Gastines 56 Managing Director and Chairperson of the Board of Directors
Howard S. Breslow 60 Director
Frederick H. Fruitman 49 Director
Jean-Louis Bodmer 58 Managing Director and Director
Eric Cachart 43 Managing Director and Director
Stephan B. Sigaud (1) 43 Vice President - Client Services
Kenneth A. Ash (1) 55 Vice President - International Strategic Research
Peter Carley (1) 37 Vice President - Human Resources
</TABLE>
- -----------------------
(1) Member of an Operating Management Group ("OMG") responsible for
applying the Company's overall policies and strategies and for
proposing initiatives and supplemental strategies for the growth of the
Company.
24
<PAGE>
Each director is elected for a period of one year at the Company's
annual meeting of shareholders and serves until his successor is duly elected by
shareholders. Officers are elected by and serve at the will of the Board of
Directors.
Mr. Garvin is a founder of the Company and has served as its Chief
Executive Officer since 1972 and as its President since 1978. Mr. Garvin has
been a director of the Company since its inception and treasurer until 1997.
From 1979 to 1982, Mr. Garvin was a member of the Board of Directors of the
Information Industry Association and served as Chairman of the 1979 National
Information Conference and Exposition. Mr. Garvin is the author of THE ART OF
BEING WELL INFORMED, an information resource handbook for executives. Mr. Garvin
received a B.A. degree in political science from Yale University and an M.S.
degree in journalism from the Columbia Graduate School of Journalism.
Ms. de Gastines was elected a director of the Company in accordance
with the Company's licensing agreement with SVP International. See "Item 1.
Business - SVP Network; Licensing Agreement with SVP International." She has
been a director of the Company since 1982 and Chairperson of the Board since
October 1998. She has served as the General Manager of SVP International since
1985 and SVP S.A. since 1976.
Mr. Breslow has been a director of the Company since 1986. He has been
a practicing attorney in New York for more than 25 years and a member of the law
firm of Breslow & Walker, LLP, New York, New York for more than 20 years.
Breslow & Walker, LLP is currently the Company's general counsel. Mr. Breslow
currently serves as a director of Cryomedical Sciences, Inc., a publicly held
company engaged in the research, development and sale of products for use in low
temperature medicine, Vikonics Inc., a publicly held company engaged in the
design and sale of computer-based security systems, Lucille Farms, Inc., a
publicly held company engaged in the manufacturing and marketing of cheese
products, and Excel Technologies, Inc., a publicly held company engaged in the
development and sale of laser products.
Mr. Fruitman has been a director of the Company since 1989. Since 1990,
Mr. Fruitman has been a Managing Director of Loeb Partners Corporation, an
investment banking firm. Mr. Fruitman is a director of Micro Warehouse, Inc., a
publicly held company which markets computer products.
Mr. Bodmer has served as General Manager of SVP France since 1974.
Other positions which he currently holds are Chief Executive Director of SVP,
S.A., President and Chief Executive Officer of SVP Participation, President of
SVP Belgium, and President of SVP United Kingdom.
Mr. Cachart is the Associate General Manager of SVP, S.A. and has
served as President of SVP Multi-info since 1995. He was named President of SVP
Network in 1998. Prior to 1995 he was a journalist and news commentator for
French television networks.
Mr. Sigaud has been the Company's Vice President of Client Services
since October 1998, and was Vice President and Managing Director of the
Company's Customer Satisfaction and Loyalty Group from May 1994 to October 1998.
From 1989 to 1994 Mr. Sigaud was the owner and President of IDSI, Inc., a
consulting firm specializing in Customer Satisfaction Measurement for companies
in the industrial sector. From 1986 to 1989 he functioned as Executive Vice
President for BMES, Inc., a business-to-business marketing research firm. He was
employed from 1982 to 1986 in the Recruiting Department of Renault in France.
Prior thereto he was in International Sales and Marketing and worked as Business
Development Manager for an engineering firm in East Africa and as Trade Attache
in the French Trade Office in Madagascar. Mr. Sigaud holds a B.S. in Math
25
<PAGE>
and Physics from Marseilles University and an MBA in Marketing from ESSEC,
the leading business school in France.
Mr. Ash joined FIND/SVP in March 1992 as Vice President & Managing
Director of the Strategic Consulting & Research Group and became Vice President
International Strategic Research on October 5, 1998. From 1985 to 1992, Mr. Ash
directed his own consulting firm specializing in marketing and acquisition
engagements. In 1991 and 1992, Mr. Ash served as President and CEO of CallTrack
Systems, a start-up company offering a network-based, long distance call
accounting system geared to small and medium-sized organizations. Mr. Ash served
as Vice President of Marketing of Satellite Television Corporation, a COMSAT
subsidiary and major communications start-up venture between 1983 and 1985. From
1973 to 1983, Mr. Ash held progressively senior account management positions at
J. Walter Thompson and Ogilvy & Mather advertising agencies. Mr. Ash served as a
U.S. Navy Officer from 1969 to 1972, earned an MBA from the Wharton School of
the University of Pennsylvania in 1969 and a BA from Princeton University in
1967.
Mr. Carley has been the Company's Vice President of Human Resources
from July 1998 to March 2000, and was Director of Human Resources from December
1997 to July 1998. He joined the company as Manager of Human Resources in
September of 1997. Prior to joining FIND/SVP, he was employed by The Washington
Post Company from February 1996 until September of 1997, where he was most
recently a Director, Human Resources for MLJ, a telecommunications engineering
consulting company. Mr. Carley also worked in training and development,
recruiting, employee relations, and other Human Resources roles at Cost Plus
World Market, a California-based retail firm. He has a Bachelor of Arts degree
from San Francisco State University.
26
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's officers, directors and beneficial owners of more than
10% of any class of its equity securities registered pursuant to Section 12 of
the Securities Exchange Act of 1934 ("Reporting Persons") are required under
that Act to file reports of ownership and changes in beneficial ownership of the
Company's equity securities with the Securities and Exchange Commission. Copies
of those reports must also be furnished to the Company. Based solely on a review
of the copies of reports furnished to the Company pursuant to that Act, the
Company believes that during fiscal year ended December 31, 1999, all filing
requirements applicable to Reporting Persons were complied with.
27
<PAGE>
ITEM 11
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding
compensation paid by the Company during each of the Company's last three years
to (I) the Company's Chief Executive Officer, and (II) each of the Company's
executive officers who received salary and bonus payments in excess of $100,000
during the year ended December 31, 1999 (collectively the "Named Executive
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------- ---------------------------------- -----------
SECURITIES
NAMES AND OTHER RESTRICTED UNDERLYING LTIP ALL
--------- ------ ----------- ---------- ---- ---
PRINCIPAL SALARY BONUS ANNUAL STOCK OPTIONS PAYOUT OTHER
---------- ------ ----- ------ ----- ------- ------ -----
POSITIONS YEAR ($) ($) COMP. AWARDS ($) (#) (1) ($) COMP.
--------- ---- --- --- ----- ---------- ------- --- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ANDREW P. GARVIN 1999 267,679 - - - - - -
PRESIDENT, CHIEF 1998 264,171 50,000 - - - - -
EXECUTIVE OFFICER 1997 253,867 50,000 - - - - -
AND DIRECTOR
VICTOR L. CISARIO 1999 152,885 50,000 - - - - -
VICE PRESIDENT, 1998 118,333 8,500 - - 60,000 - -
CHIEF FINANCIAL 1997 109,144 7,660 - - 5,000 - -
OFFICER, SECRETARY,
TREASURER (2)
STEPHAN B. SIGAUD 1999 175,000 18,611 - - - - -
VICE PRESIDENT - 1998 133,958 200 - - 50,000 - -
CLIENT SERVICES 1997 114,227 39,160 - - - - -
KENNETH A. ASH 1999 150,000 20,000 - - - - -
VICE PRESIDENT - 1998 143,750 83,647 - - 60,000 - -
INTERNATIONAL STRATEGIC 1997 125,000 50,000 - - - - -
RESEARCH
PETER CARLEY 1999 99,719 10,600 - - - - -
VICE PRESIDENT - 1998 - - 55,000 - -
HUMAN RESOURCES 1997 - - - - -
</TABLE>
- ------------------------
(1) Options to acquire Common Stock.
(2) Employment terminated on December 31, 1999.
28
<PAGE>
OPTION GRANTS DURING 1999
No stock options were granted to the Named Executive Officers during
1999.
AGGREGATED OPTION EXERCISES IN 1999 AND YEAR-END OPTION VALUES
The following table provides information related to options exercised
by each of the Named Executive Officers during the year ended December 31, 1999
and the number and value of options held at fiscal year end. The Company does
not have any outstanding stock appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY
OPTIONS OPTIONS
AT FISCAL YEAR END (#) AT FISCAL YEAR END ($)(1)
---------------------- -------------------------
SHARES
ACQUIRED ON VALUE
EXERCISE REALIZED
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
ANDREW P. GARVIN - - 99,000 170,000 - -
VICTOR L. CISARIO 14,000 10,500 13,000 45,000 4,680.00 52,382.50
STEPHAN B. SIGAUD - - 14,000 36,000 17,920.00 46,080.00
KENNETH A. ASH - - 18,000 42,000 21,321.25 51,181.88
PETER CARLEY 1,000 1,219 15,000 39,000 18,731.25 48,513.75
</TABLE>
- -------------------------
(1) The closing sale price of the Common Stock as reported by NASDAQ on December
31, 1999 was $2.03. Value is calculated on the difference between the option
exercise price of in-the-money options and $2.03 multiplied by the number of
shares of Common Stock underlying the option.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On January 25, 1999, the Company formed a Compensation Committee
currently consisting of Jean-Louis Bodmer, Andrew P. Garvin, Howard S. Breslow
and Frederick H. Fruitman. The purpose of the Compensation Committee is to
review, structure and set the Company's Executive Compensation and to align
management's interest with the success of the Company. The Company has no
nominating or other committees performing similar functions. There were no
interlocking relationships between the Company and other entities that might
affect the determination of the compensation of the executive officers of the
Company.
EMPLOYMENT AND RELATED AGREEMENTS
On January 1, 1996, the Company entered into an Employment Agreement
with Andrew P. Garvin commencing on January 1, 1996 and terminating on December
31, 2001 (the "Employment Agreement"). Such Employment Agreement was amended and
restated on December 12, 1996. The Employment Agreement provides for a base
salary of $250,000 which will be adjusted each January 1 for a cost of living
increase based
29
<PAGE>
on the Consumer Price Index for New York City for the twelve month period
immediately preceding such January 1 date. Mr. Garvin will also be entitled to
additional increases in base salary as may be determined from time to time by
the Board of Directors or any compensation committee appointed by the Board of
Directors. Mr. Garvin received a $12,500 signing bonus upon execution of the
Employment Agreement. In addition, Mr. Garvin will be entitled to receive
performance bonuses equal to 10% per annum of the pre-tax profits of the Company
in excess of $1,000,000 for each of the years ended December 31, 1996, 1997,
1998, 1999, 2000, and 2001. The Employment Agreement limits the bonus to
$250,000 in any year, and states that Mr. Garvin is entitled to receive a cash
bonus of $50,000 in each of January 1997 and January 1998.
The Employment Agreement provides that (I) if Mr. Garvin voluntarily
leaves the employ of the Company on account of the Company being acquired and
its principal office being moved to a location which is greater than 50 miles
from New York City; and (II) if Mr. Garvin voluntarily leaves the employ of the
Company on account of a Change in Control, then, in each such case, he shall be
entitled to receive the compensation described in the immediately preceding
paragraph for the balance of the term; provided, however, that if such
termination occurs at a time when there is less than one year left in the term,
the compensation shall continue for a period of two years from the date of
termination on the same basis that the employee received compensation during the
last year of the term. Change of control is defined in the Employment Agreement
to include the acquisition by a party of 30% or more of the outstanding shares
of Common Stock of the Company or a change in the majority of the Incumbent
Board of Directors (as defined in the Employment Agreement). In the event that
the Company terminates Mr. Garvin's employment for cause, and a court of law or
other tribunal ultimately determines that such termination was without cause,
then he shall be entitled to receive double the amount of compensation described
above until the end of the term. Mr. Garvin has agreed to a non-competition
covenant for a period of two years after the term of the Employment Agreement.
During October 1998, Mr. Garvin's contract was amended to provide that
any time after 1999 Mr. Garvin may elect to voluntarily leave the employ of the
Company and receive the balance of his contract for the remaining term of his
employment contract. The term of the contract runs through 2001. Mr. Garvin's
salary for 1999 is $266,592. Additionally, concurrent with the amendment to his
contract, Mr. Garvin relinquished 75,000 options previously granted him in
connection with his employment contract. The vesting and pricing of said options
was contingent upon the Company meeting certain earnings levels over the life of
his employment contract. To date the earnings levels were not met, and
accordingly, the exercise price of those options had not yet been set.
The Company has entered into a deferred compensation agreement with Mr.
Garvin, which provides for a schedule of payments to him or his designated
beneficiary(ies). The agreement entered into in 1984 provides that in the event
during the course of employment Mr. Garvin (I) dies, (II) becomes totally
disabled or (III) elects to retire after June 30, 1994 and prior to age 65, he
or, in the event of death, his designated beneficiaries, shall receive monthly
payments ranging from $1,250 to $1,800 for a period of ten years from the date
of death, disability or retirement. In the event Mr. Garvin retires at age 65 or
over, Mr. Garvin shall receive $4,750 per month for ten years from the date of
his retirement.
The Company entered into an additional Deferred Compensation Agreement
with Mr. Garvin in 1990. Pursuant thereto, in the event during the course of
employment Mr. Garvin (I) dies, (II) becomes totally disabled or (III) elects to
retire after July 25, 1992 and prior to age 65, he or, in the event of death,
his designated beneficiary(ies), shall receive monthly payments ranging from
$618.81 to $2,351. These payments are to continue for a period of ten years from
the date of death, disability or retirement. In the event he retires at age
30
<PAGE>
65 or over, Mr. Garvin shall receive $2,475.24 per month for ten years from the
date of his retirement. The benefits under the two agreements are cumulative.
Peter J. Fiorillo resigned as a member of the Board and as the
Company's Chief Operating Officer and Chief Financial Officer, effective
September 30, 1998. In connection with his severance agreement, coupled with the
signing of a release and agreement not to compete dated October 5, 1998, and the
immediate return of his outstanding options, Mr. Fiorillo will be receiving his
then current compensation, including benefits, for the next two years.
Accordingly, the Company has accrued $475,000 for severance and related costs to
selling, general and administrative expenses at September 30, 1998.
Severance arrangements for members of the Operating Management Group
(i.e. Messrs. Sigaud, Ash and Carley) were authorized by the Board of Directors
on January 25, 1999. Severance agreements were entered into with Mssrs. Sigaud
and Ash providing for (a) a normal severance benefit of nine (9) months, which
would be increased to one (1) year after the employee has served as a member of
the OMG for a continuous period of two (2) years, in the event the employee's
services are terminated by the Company without cause, and (b) a severance
benefit of one (1) year in the event the separation from service is due to (I) a
change-in-control, and (II) the employee suffers, within one (1) year
thereafter, either (A) a discontinuation of duties, or (B) an office change of
at least 50 miles, or (C) a reduction in compensation, or (D) a termination of
employment other than for cause.
DIRECTORS' COMPENSATION
On January 25, 1999, the Board of Directors approved the payment of
$1,500 per meeting for the outside members of the Board. On April 22, 1999, the
Board agreed to pay outside directors $500 for each committee meeting attended.
During 1999, Mr. Breslow and Mr. Fruitman each received compensation in the
total amount of $10,500.
The Stock Option Plan of the Company was amended in June 1995 to
provide for the automatic grant to outside directors of five-year non-incentive
options to purchase 2,500 shares of Common Stock on the first business day of
each new year beginning in 1996, the exercise price being the fair market value
on the date of the grant.
On April 22, 1999, the Board voted to grant each outside director
additional five-year, non-incentive stock options to purchase 7,500 shares of
Common Stock on the first business day of each year, commencing with the first
business day of 2000, the exercise price being the fair market value on the date
of the grant.
31
<PAGE>
ITEM 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following sets forth, as of December 31, 1999, certain information
with respect to the beneficial ownership of the Common Stock by (I) each person
known by the Company to be the beneficial owner of more than 5% of its
outstanding Common Stock, (II) each of the directors of the Company, (III) each
of the Named Executive Officers, (IV) and by all current executive officers and
directors as a group.
NAME AND ADDRESS NUMBER OF SHARES
BENEFICIAL OWNER OWNED(1) PERCENT
---------------- -------- -------
Andrew P. Garvin
625 Avenue of the Americas
New York, NY 10011 (2) 1,040,254 14.0%
Amalia S.A.
70, rue des Rosiers
F-93585 Saint-Ouen, Cedex
FRANCE (3) 3,075,085 40.7%
Brigitte de Gastines (4) 17,500 Less than 1%
Howard S. Breslow (5)(6) 36,320 Less than 1%
Frederick H. Fruitman (6) 65,679 Less than 1%
Jean-Louis Bodmer (4) 7,500 Less than 1%
Kenneth A. Ash (7) 80,000 1.1%
Peter M. Carley (8) 56,000 Less than 1%
Victor L. Cisario (9) 79,400 1.0%
Stephan B. Sigaud (10) 50,000 Less than 1%
Furman Selz SBIC, L.P.
230 Park Avenue
New York, NY 10169 (11) 900,000 11.2%
All Current Executive Officers
and Directors as a
Group (9 persons) (12) 1,428,253 18.6%
32
<PAGE>
(1) Unless otherwise indicated below, all shares are shares of Common Stock
owned beneficially and of record.
(2) Includes 269,000 shares issuable under outstanding options.
(3) Includes the 422,222 shares issuable under outstanding warrants held by
SVP, S.A., the 2,158,100 shares of Common Stock owned by SVP, S.A. and
the 494,763 shares of Common Stock owned by SVP International, which
are subsidiaries of Amalia S.A. Brigitte de Gastines owns in excess of
99% of the stock of Amalia S.A. In addition, Ms. de Gastines is
President, General Manager and a director of SVP, S.A., and General
Manager of SVP International. The shares owned by Amalia S.A. are not
shown in the table as being owned by Ms. de Gastines.
(4) Includes 7,500 shares issuable under outstanding options.
(5) Includes all of the 18,820 shares of Common Stock owned by record of
Breslow & Walker, LLP, a law firm in which Mr. Breslow is a partner.
(6) Includes 17,500 shares issuable under outstanding options.
(7) Includes 60,000 shares issuable under outstanding options.
(8) Includes 54,000 shares issuable under outstanding options.
(9) Includes 58,000 shares issuable under outstanding options.
(10) Includes 50,000 shares issuable under outstanding options.
(11) Includes all of the 900,000 shares issuable under outstanding Warrants.
(12) Includes 541,000 shares issuable under outstanding options.
33
<PAGE>
ITEM 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since 1971, the Company has been a licensee of SVP International.
Pursuant to this license agreement, the Company pays royalties to SVP
International for the use of the SVP name and participation in the SVP
International network. For a description of the relationship of Ms. de Gastines,
Mr. Bodmer and Mr. Cachart to SVP International see "Item 10. Directors and
Executive Officers of the Registrant." The accrued royalties payable as of
December 31, 1999 to SVP International were approximately $240,000.
On January 15, 1998, the Company entered into an agreement with SVP,
S.A., an affiliate of SVP International, pursuant to which SVP, S.A. purchased
800,000 shares of Common Stock at $1.25 per share for an aggregate of
$1,000,000. The transaction was completed in two parts. The Company issued
600,000 shares of Common Stock and a $250,000 Convertible Note in January 15,
1998, pending the availability of shares for issuance. The Note converted into
200,000 shares of Common Stock on February 20, 1998, when those shares became
available for issuance. With this transaction, SVP International and its
affiliates own approximately 37% of then outstanding shares of Common Stock,
excluding outstanding warrants.
Howard S. Breslow, a director of the Company, is a member of Breslow &
Walker, LLP, general counsel to the Company. During 1999, Breslow & Walker, LLP
received legal fees of $50,535.
34
<PAGE>
PART IV
ITEM 14
EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
(a) (1) FINANCIAL STATEMENTS
The following Financial Statements are filed as part of this
10-K:
Independent Auditors' Reports.
Consolidated Balance Sheets as of December 31, 1999 and 1998.
Consolidated Statements of Operations for the years ended
December 1999, 1998 and 1997.
Consolidated Statements of Shareholders' Equity for the years
ended December 31, 1999, 1998 and 1997.
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997.
Notes to Consolidated Financial Statements.
(2) SCHEDULE
The following Financial Statement schedule is filed as part of
this 10-K:
Schedule II - Valuation and Qualifying Accounts
Other Financial Statement schedules are omitted because they
are not applicable or because the information required is
provided in the Consolidated Financial Statements or Notes
thereto included herein.
(3) EXHIBITS
EXHIBIT
NUMBER DOCUMENT
------ --------
3(a) Copy of restated Certificate of Incorporation a
amended(1), and amendment thereto.
(b) Copy of By-Laws, as amended.(3)
4(a) Copy of specimen of Common Stock Certificate.(1)
35
<PAGE>
10(a) Copy of License Agreement, dated October 11,
1971, between the Company and SVP International
(formerly SVP Conseil) and an amendment thereto,
dated March 23, 1981.(1)
(b) Copy of 1986 Stock Option Plan.(1)
(c) Copy of Deferred Compensation and Salary
Continuation Agreement, dated June 30, 1984,
between the Company and Andrew P. Garvin .(1)
(d) Copy of the lease related to premises at 625
Avenue of the Americas, NY, NY.(2) and amendment
related thereto.(6)
(e) Copy of Target Benefit Plan of the Company.(4)
(f) Copy of Deferred Compensation and Salary
Continuation Agreement, dated July 25, 1990,
between the Company and Andrew P. Garvin. (5)
(g) Copy of Lease dated July 19, 1994 related to
premises on 3rd floor at 641 Avenue of the
Americas, NY, N.Y. (8)
(h) Copy of lease dated March 15, 1995 related to
premises on 4th floor at 641 Avenue of the
Americas, NY, N.Y. (8)
(i) Copy of Commercial Revolving Loan, Term Loan and
Security Agreement dated April 27, 1995 between
State Street Bank and Trust Company and the
Company. (9)
(j) Copy of 401(k) and Profit Sharing Plan of the
Company.(10)
(k) Copy of Employment Agreement, amended and
restated as of December 12, 1996, between the
Company and Andrew P. Garvin.(13)
(l) Copy of the Note and Warrant Purchase Agreement
with Furman Selz SBIC, L.P., dated October 31,
1996. (12)
36
<PAGE>
(m) Copy of the Note and Warrant Purchase Agreement
with SVP, S.A. dated November 30, 1996. (13)
(n) FIND/SVP, Inc. 1996 Stock Option Plan. (14)
(o) Copy of ETRG Sale Agreement. (15)
(p) Copy of Commercial Revolving Loan, dated October
22, 1997, between State Street Bank and Trust,
Inc. (the "Bank") and the Company. (15)
(q) Copy of Second Modification Agreement, as of
September 30, 1997, between the Bank and the
Company. (15)
(r) January 20, 1998 Agreement between Asset Value
Fund and the Company. (16)
(s) Copy of the Third Modification Agreement as of
December 31, 1997, between the Bank and the
Company. (16)
(t) Copy of Fourth Modification Agreement, as of
January 15, 1998, between the Bank and the
Company. (16)
(u) Copy of the Fifth Modification Agreement as of
March 27, 1998 between the Bank and the Company.
(17)
(v) Copy of the Sixth Modification Agreement as of
April 3, 1998 between the Bank and the Company.
(17)
(w) Copy of the Sale Agreement for FIND/SVP Published
Products, Inc.'s assets (18)
(x) Copy of the Stock Purchase Agreement between SVP,
S.A. and the Company dated January 15, 1998. (19)
(y) Copy of Peter J. Fiorillo's Severance Agreement.
(20)
(z) Copy of the idealab! Agreement dated December 30,
1999.
(aa) Copy of the Chase Manhattan Bank Loan Agreement
dated December 30, 1999.
21 List of Subsidiaries. (11)
23 Independent Auditors' Consents.
27 Financial Data Schedule.
37
<PAGE>
(1) Incorporated by reference to the Company's Registration Statement on
Form S-18 (Reg. No. 33-8634-NY) which became effective with the
Securities and Exchange Commission on October 31, 1986.
(2) Incorporated by reference to the Company's Form 8-K filed with the
Securities and Exchange Commission on February 2, 1987.
(3) Incorporated by reference to the Company's Form 10-K filed for the year
ended December 31, 1987.
(4) Incorporated by reference to the Company's Form 10-K filed for the year
ended December 31, 1989.
(5) Incorporated by reference to the Company's Form 10-K filed for the year
ended December 31, 1990.
(6) Incorporated by reference to the Company's Form 10-K filed for the year
ended December 31, 1992.
(7) Incorporated by reference to the Company's Form 10-K filed for the year
ended December 31, 1993.
(8) Incorporated by reference to the Company's Form 10-K filed for the year
ended December 31, 1994.
(9) Incorporated by reference to the Company's Form 10-Q filed for the
Quarter ended March 31, 1995.
(10) Incorporated by reference to the Company's Form S-8 filed on March 29,
1996.
(11) Incorporated by reference to the Company's Form 10-K filed for the year
ended December 31, 1995.
(12) Incorporated by reference to the Company's Form 8-K, filed on November
13, 1996, and amended by Form 8-K/A No. 1 on November 21, 1996.
(13) Incorporated by reference to the Company's Form 10-K filed for the year
ended December 31, 1996.
(14) Incorporated by reference to the Company's Form S-8, filed on February
27, 1997.
(15) Incorporated by reference to the Company's Form 10-Q, filed for the
quarter ended September 30, 1997.
38
<PAGE>
(16) Incorporated by reference to the Company's Form 10-K filed for the year
ended December 31, 1997.
(17) Incorporated by reference to the Company's Form 10-Q filed for the
quarter ended March 31, 1998.
(18) Incorporated by reference to the Company's Form 8-K, filed on July 17,
1998.
(19) Incorporated by reference to the Company's Form 10-K filed for the year
ended December 31, 1998.
(20) Incorporated by reference to the Company's Form 10-K filed for the year
ended December 31, 1998.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed in the last quarter of the period
covered by this Form 10-K.
39
<PAGE>
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.
FIND/SVP, INC.
Date: March 30, 2000 BY: /s/ ANDREW P. GARVIN
--------------------
Andrew P. Garvin, President and Chief
Executive Officer
Principal Executive Officer)
Date: March 30, 2000 BY: /s/ FRED S. GOLDEN
------------------
Fred S. Golden
(Principal Financial Officer
and Principal Accounting Officer)
Pursuant to the requirement(s) of the Securities Exchange Act of
1934, this report has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: March 30, 2000 /s/ ANDREW P. GARVIN
---------------------
Andrew P. Garvin, Director
Date: March 30, 2000
------------------------------
Brigitte de Gastines, Director
Date: March 30, 2000 /s/ HOWARD S. BRESLOW
---------------------
Howard S. Breslow, Director
Date: March 30, 2000 /s/ FREDERICK H. FRUITMAN
-------------------------
Frederick H. Fruitman, Director
Date: March 30, 2000 /s/ ERIC CACHART
----------------------
Eric Cachart, Director
Date: March 30, 2000 /s/ JEAN-LOUIS BODMER
---------------------------
Jean-Louis Bodmer, Director
40
<PAGE>
ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FIND/SVP, INC. AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedule
PAGE
----
Independent Auditors' Reports F-2
Consolidated Balance Sheets as of December 31, 1999 and 1998 F-4
Consolidated Statements of Operations
for the years ended December 31, 1999, 1998 and 1997 F-5
Consolidated Statements of Shareholders' Equity
for the years ended December 31, 1999, 1998 and 1997 F-6
Consolidated Statements of Cash Flows
for the years ended December 31, 1999, 1998 and 1997 F-7
Notes to Consolidated Financial Statements F-8
Schedule:
Independent Auditors' Report on Supplemental Schedule F-28
Schedule II - Valuation and Qualifying Accounts F-29
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of Find/SVP, Inc.
We have audited the accompanying consolidated balance sheet of Find/SVP, Inc.
and subsidiaries (the Company) as of December 31, 1999, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
the year then ended. 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 audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 audit provides a
reasonable basis for our opinion.
In our opinion, such 1999 financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 1999, and the
results of its operations and its cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.
Deloitte & Touche LLP
Stamford, Connecticut
March 24, 2000
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
FIND/SVP, Inc.:
We have audited the accompanying consolidated balance sheet of FIND/SVP, Inc.
and subsidiaries as of December 31, 1998, and the related consolidated
statements of operations, shareholders' equity, and cash flows for the years
ended December 31, 1998 and 1997. In connection with our audits of the
consolidated financial statements, we also have audited the accompanying
financial statement schedule for the years ended December 31, 1998 and 1997.
These consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of FIND/SVP, Inc. and
subsidiaries as of December 31, 1998, and the results of their operations and
their cash flows for the years ended December 31, 1998 and 1997, in conformity
with generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material respects, the
information set forth herein.
KPMG
New York, New York
February 22, 1999
F-3
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Consolidated Balance SheetsDecember 31
(in thousands)
<TABLE>
<CAPTION>
ASSETS 1999 1998
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,096 $ 2,307
Marketable securities 500 --
Accounts receivable, less allowance for doubtful
accounts of $101,000 in 1999 and $104,000 in 1998 1,941 2,188
Note receivable 138 200
Deferred tax assets 114 322
Prepaid expenses and other current assets 323 466
--------- --------
Total current assets 5,112 5,483
Equipment and leasehold improvements, at cost, less
accumulated depreciation and amortization 3,995 4,250
Other assets:
Cash surrender value of life insurance 633 569
Accrued rent receivable 416 230
Deferred tax assets 403 440
Note receivable 275 413
Other assets 444 514
--------- --------
$ 11,278 $ 11,899
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of notes payable $ -- $ 500
Trade accounts payable 409 497
Accrued expenses and other 1,430 1,719
Accrued interest 74 198
--------- --------
Total current liabilities 1,913 2,914
--------- --------
Unearned retainer income 1,929 1,917
Notes payable, including accrued deferred interest 3,039 3,523
Accrued expenses -- 169
Deferred compensation 267 193
Accrued rent payable 241 195
Commitments and contingencies
Shareholders' equity:
Common stock, $.0001 par value. Authorized 20,000,000
shares; issued and outstanding 7,136,919 shares in
1999; issued and outstanding 7,114,169 shares in 1998 1 1
Capital in excess of par value 4,904 4,886
Accumulated deficit (1,016) (1,899)
--------- --------
Total shareholders' equity 3,889 2,988
--------- --------
$ 11,278 $ 11,899
========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended December 31
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Revenues $ 22,738 $ 28,175 $ 32,027
----------- ----------- -----------
Operating expenses:
Direct costs 11,543 14,263 18,402
Selling, general and administrative
expenses 10,847 12,262 15,059
Impairment loss -- -- 1,047
Asset disposal -- -- 500
Restructuring charge -- 321 155
----------- ----------- -----------
Operating income (loss) 348 1,329 (3,136)
Interest income 88 85 13
Other income 1,200 364 --
Gain (loss) on sale of net assets -- 20 (28)
Interest expense (464) (522) (597)
Other expense -- (315) --
----------- ----------- -----------
Income (loss) before provision
(benefit) for income taxes 1,172 961 (3,748)
Provision (benefit) for income taxes 289 205 (896)
----------- ----------- -----------
Net income (loss) $ 883 $ 756 $ (2,852)
=========== =========== ===========
Earnings (loss) per common share:
Basic $ .12 $ .11 $ (.43)
=========== =========== ===========
Diluted $ .12 $ .11 $ (.43)
=========== =========== ===========
Weighted average number of common shares outstanding:
Basic 7,121,242 7,094,273 6,592,773
=========== =========== ===========
Diluted 7,213,270 7,100,070 6,592,773
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Years ended December 31
(in thousands, except share amounts)
<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN ACCUMULATED TREASURY STOCK TOTAL
----------------- EXCESS OF EARNINGS --------------------- SHAREHOLDERS'
SHARES AMOUNT PAR VALUE (DEFICIT) SHARES AMOUNT EQUITY
------ ------ --------- ---------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1997 6,548,184 $ 1 $ 3,861 $ 197 -- $ -- $ 4,059
Net loss -- -- -- (2,852) -- -- (2,852)
Purchase of treasury stock -- -- -- -- 72,500 (88) (88)
Exercise of stock options and warrants 74,985 -- 57 -- -- -- 57
Retirement of treasury shares (72,500) -- (88) -- (72,500) 88 --
Common stock issued for services 25,000 -- 37 -- -- -- 37
Sale of warrants in connection with
Series A Senior Subordinated Notes -- -- 5 -- -- -- 5
----------- ---------- ---------- ----------- -------- -------- ----------
Balance at December 31, 1997 6,575,669 1 3,872 (2,655) -- -- 1,218
----------- ---------- ---------- ----------- -------- -------- ----------
Net income -- -- -- 756 -- -- 756
Purchase of treasury stock -- -- -- -- (274,400) -- (456)
Exercise of stock options and warrants 12,900 -- 14 -- -- -- 14
Retirement of treasury shares (74,400) -- -- -- 74,400 -- 206
Common stock issued 600,000 -- 1,000 -- 200,000 -- 1,250
----------- ---------- ---------- ----------- -------- -------- ----------
Balance at December 31, 1998 7,114,169 1 4,886 (1,899) -- -- 2,988
----------- ---------- ---------- ----------- -------- --------- ----------
Net income -- -- -- 883 -- -- 883
Exercise of stock options and warrants 22,750 -- 18 -- -- -- 18
----------- ---------- ---------- ----------- -------- --------- ----------
Balance at December 31, 1999 7,136,919 $ 1 $ 4,904 $ (1,016) -- $ -- $ 3,889
=========== ========== ========== =========== ======== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31
(in thousands)
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 883 $ 756 $(2,852)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 1,105 1,144 1,191
Non-cash portion of impairment loss -- -- 1,047
Non-cash portion of asset disposal -- -- 408
Provision for losses on accounts receivable 90 164 254
(Gain) loss on sale of net assets -- (20) 28
Increase in deferred compensation 74 20 21
Increase (decrease) in unearned retainer income 12 (106) 533
Increase in marketable securities (500) -- --
Increase in cash surrender value of life insurance (64) (132) (55)
Decrease (increase) in deferred income taxes 245 205 (668)
Decrease in assets held for sale -- 99 --
Changes in assets and liabilities, net of non-cash
effect of asset sale:
Decrease (increase) in accounts receivable 157 1,042 (799)
Decrease in prepaid and refundable income taxes -- 299 250
Decrease in inventory -- -- 413
Decrease (increase) in prepaid expenses and
other current assets 143 (138) 167
Increase in accrued rent receivable (186) (186) (44)
Increase in other assets (102) (93) (92)
(Decrease) increase in accounts payable, accrued
expenses and accrued interest (810) (927) 475
Increase (decrease) in accrued rent payable 46 39 (41)
------- ------- -------
Net cash provided by operating activities 1,093 2,166 236
------- ------- -------
Cash flows from investing activities:
Capital expenditures (672) (618) (1,939)
Surrender of life insurance -- 42 --
Repayment of notes receivable 200 63 50
Proceeds from sale of net assets -- 1,250 --
------- ------- -------
Net cash (used in) provided by investing
activities (472) 737 (1,889)
------- ------- -------
Cash flows from financing activities:
Principal borrowings under notes payable -- -- 1,719
Principal payments under notes payable (850) (1,749) (516)
Proceeds from issuance of convertible note-related party -- 250 --
Proceeds from exercise of stock options 18 14 57
Proceeds from sale of warrants in connection with Series
Senior Subordinated Notes -- -- 5
Proceeds from issuance of common stock -- 750 --
Payments to acquire treasury stock -- (206) (88)
Proceeds from insurance company, net of expenses -- 206 --
Increase in deferred financing fees -- -- (19)
------- ------- -------
Net cash (used in) provided by financing
activities (832) (735) 1,158
------- ------- -------
Net (decrease) increase in cash and
cash equivalents (211) 2,168 (495)
Cash and cash equivalents at beginning of year 2,307 139 634
------- ------- -------
Cash and cash equivalents at end of year $ 2,096 $ 2,307 $ 139
======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) ORGANIZATION AND BASIS OF PRESENTATION
Find/SVP, Inc. and its wholly owned subsidiaries (the "Company")
provide a broad consulting, advisory and business intelligence
service to executives and other decision-making employees of
client companies, primarily in the United States. The Company
currently operates in one business segment, providing consulting
and business advisory services including: the Quick Consulting and
Research Service ("QCS") which provides retainer clients with
access to the expertise of the Company's staff and information
resources; and the Strategic Consulting and Research Group
("SCRG") which provides more extensive, in-depth custom market
research and competitive intelligence information, as well as
customer satisfaction and loyalty programs. Prior to the third
quarter of 1998, the Company had one additional operating segment,
Published Research Products. The Company considers its QCS and
SCRG service businesses, which operate as "consulting and business
advisory" businesses, to be its core competencies.
As such, during July 1998, the Company completed the sale of
substantially all of the assets of its FIND/SVP Published
Products, Inc. subsidiary ("Published Research"). In consideration
of the sale the Company received $1,250,000 in cash during 1998, a
promissory note bearing interest at 8% per annum in the principal
amount of $550,000 and the purchaser assumed certain liabilities
in the amount of $85,000. The Company recorded a gain of $20,000
from this transaction. During 1997, the Company recorded an
impairment loss related to the aforementioned assets of
$1,047,000. The revenues from Published Research accounted for
approximately 9% and 19% of the Company's total revenues during
1998 and 1997, respectively.
(B) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company. All significant intercompany balances and transactions
have been eliminated in consolidation.
(C) EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements are stated at cost.
Depreciation of equipment is computed by the straight-line method
over the estimated useful lives of the assets, which are five
years for electronic equipment and ten years for the Company's
proprietary management information system. Computer software is
primarily depreciated over five years. Leasehold improvements are
amortized by the straight-line method over the shorter of the term
of the lease or the estimated life of the asset.
F-8
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(1), CONTINUED
(D) DEFERRED CHARGES AND GOODWILL
Deferred charges primarily comprise the cost of acquired library
information files and electronic databases, which are amortized to
expense over the estimated period of benefit of three years using
the straight-line method.
Goodwill arising from various acquisitions represents the excess
of purchase price over fair value of assets and liabilities
acquired and is being amortized on a straight-line basis over 15
to 40 years.
(E) DEFERRED FINANCING FEES
Deferred financing fees primarily relate to costs incurred with
respect to the issuance of the Senior Subordinated Notes ("Senior
Notes") and are being amortized on a straight-line basis over the
life of the Senior Notes. The related amortization is included in
interest expense.
(F) INCOME TAXES
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax basis and operating losses
and tax credit carryforwards. Deferred tax assets and liabilities
are measured using currently enacted tax rates. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment
date. Realization of the net deferred tax assets is dependent on
future reversals of existing taxable temporary differences and
adequate future taxable income, exclusive of reversing temporary
differences and carryforwards. Although realization is not
assured, management believes that it is more likely than not that
the net deferred tax assets will be realized.
(G) EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share are computed by dividing net
income (loss) by the weighted average number of common shares
outstanding during the year. Diluted earnings (loss) per share is
computed using a diluted weighted average number of common shares
outstanding during the year. Such dilution is computed using the
treasury stock method for the assumed conversion of stock options
and warrants whose exercise price was less than the average market
price of the common shares during the respective period, and
certain additional dilutive effects of exercised, terminated and
cancelled stock options. In 1997 there was no such dilutive
effect.
F-9
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(1), CONTINUED
Options and warrants to purchase 1,883,789, 2,530,225 and
2,723,077 common shares during the years ended December 31, 1999,
1998 and 1997, respectively, were antidilutive and were therefore
excluded from the computation of diluted earnings per share
because the exercise price of such options and warrants was
greater than the average market price of common shares during the
respective period.
(H) REVENUE RECOGNITION
Revenues from annual retainer fees are recognized ratably over the
contractual period. Other revenues are recognized as earned.
Revenues include certain out-of-pocket and other expenses billed
to clients which aggregated approximately $2,186,000, $2,875,000
and $3,191,000 in 1999, 1998 and 1997, respectively.
(I) CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes all highly liquid investments
with original maturities of three months or less.
(J) MARKETABLE SECURITIES
The Company classifies its debt and marketable equity securities
in one of three categories: trading, available-for-sale, or
held-to-maturity. Trading securities are bought and held
principally for the purpose of selling them in the near term.
Held-to-maturity securities are those securities in which the
Company has the ability and intent to hold the security until
maturity. All other securities not included in trading or
held-to-maturity are classified as available-for-sale.
Trading and available-for-sale securities are recorded at fair
value. Unrealized holding gains and losses, net of the related tax
effect, on available-for-sale securities are excluded from
earnings and are reported as a separate component of shareholders'
equity until realized. In the years ended December 31, 1999, 1998
and 1997, there were no such holding gains or losses. Realized
gains and losses from the sale of available-for-sale securities
are included in earnings and are derived using the specific
identification method for determining the cost of securities sold.
Transfers of securities between categories are recorded at fair
value at the date of transfer.
A decline in the market value of any available-for-sale security
below cost that is deemed other than temporary is charged to
earnings and results in the establishment of a new cost basis for
the security.
(K) FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used in estimating the
fair value of financial instruments:
F-10
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(1), CONTINUED
The carrying values reported in the balance sheets for cash,
marketable securities, accounts receivable, prepaid expenses and
other current assets, accounts payable and accrued expenses
approximate fair values.
The fair value of notes payable, which approximates its carrying
value, is estimated based on the current rates offered to the
Company for debt of the same remaining maturities.
(L) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE
DISPOSED OF
The Company reviews long-lived assets and certain identifiable
intangibles for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable. Recoverability of assets to be held and used
is measured by a comparison of the carrying amount of an asset to
undiscounted future net cash flows expected to be generated by the
asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceed the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.
(M) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In June 1998, Statement of Financial Accounting Standards ("SFAS")
No. 133, "Accounting for Derivative Instruments and Hedging
Activities", was issued. SFAS No. 133 established accounting and
reporting standards for derivative instruments and for hedging
activities. The Company will adopt SFAS No. 133 on January 1,
2001. At the current time the Company does not utilize derivative
instruments, and accordingly it is anticipated that the adoption
of SFAS No. 133 will not affect the Company's consolidated
financial position and results of operations.
(N) USE OF ESTIMATES
Management makes estimates and assumptions relating to the
reporting of assets and liabilities and the disclosure of
contingent assets and liabilities and the reported amounts of
revenue and expenses to prepare these consolidated financial
statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(O) RECLASSIFICATIONS
Certain prior year balances have been reclassified to conform with
current year presentation.
F-11
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(2) EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET
At December 31, 1999 and 1998, equipment and leasehold improvements
consist of the following:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Furniture, fixtures and equipment, including
computer software $8,598,000 $8,171,000
Leasehold improvements 1,796,000 1,551,000
----------------- ----------------
10,394,000 9,722,000
Less: accumulated depreciation and amortization 6,399,000 5,472,000
----------------- ----------------
$3,995,000 $4,250,000
================= ================
</TABLE>
- --------------------------------------------------------------------------------
(3) OTHER ASSETS
At December 31, 1999 and 1998, other assets consist of the following:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Deferred charges $151,000 $165,000
Security deposits 142,000 142,000
Goodwill, net 96,000 106,000
Deferred financing fees, net 55,000 101,000
----------------- ----------------
$444,000 $514,000
================= ================
</TABLE>
- --------------------------------------------------------------------------------
(4) LEASES
The Company has an operating lease agreement for its principal offices,
which expires in 2005. As a result of certain lease renegotiations,
rental expense is scheduled to decline over the term of the lease. Rental
expense under this lease is recorded on a straight-line basis. Scheduled
payments through December 31, 1999 and 1998 exceeded rental expense
recorded on this lease through such date by $416,000 and $230,000,
respectively.
The Company has two operating leases for additional office space that
expire in 2005. Rental expense is scheduled to increase over the term of
the lease. Rental expenses on these leases are recorded on a
straight-line basis. Accordingly, rent recorded through December 31, 1999
and 1998 exceeded scheduled payments by $241,000 and $195,000,
respectively. In 1998, the Company gave up its rights to part of its
leased space for which the Company received a payment of $75,000 from its
landlord, which was included in other income in 1998. As of December 31,
1999, the Company has $163,000 of cash on deposit that has been pledged
as security against Letters of Credit issued as security in connection
with these leases.
F-12
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(4), CONTINUED
The Company's leases of office space include standard escalation clauses.
Rental expenses under leases for office space and certain equipment
accounted for as operating leases were $1,676,000, $1,749,000 and
$1,903,000 in 1999, 1998 and 1997, respectively.
The future minimum lease payments under noncancellable operating leases
as of December 31, 1999 were as follows:
- --------------------------------------------------------------------------------
YEAR ENDING DECEMBER 31 OPERATING LEASES
------------------------ ----------------
2000 $1,477,000
2001 1,487,000
2002 1,247,000
2003 1,007,000
2004 1,007,000
Thereafter 503,000
-----------------
Total minimum lease payments $6,728,000
=================
- --------------------------------------------------------------------------------
(5) NOTES PAYABLE
Notes payable as of December 31, 1999 and 1998 consist of the following:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Bank borrowings $ -- $ 850,000
Borrowings under debt agreements with investors:
$2,025,000 Series A Senior Subordinated
Note, net of unamortized discount of $7,000
and $11,000 as of December 31, 1999 and
1998, respectively, due October 31, 2001 2,018,000 2,014,000
$475,000 Series A Senior Subordinated
Note - SVP, S.A., net of unamortized
discount of $2,000 and $3,000 as of
December 31, 1999 and 1998, respectively, due
November 30, 2001 473,000 472,000
$475,000 Series A Senior Subordinated
Note - SVP, S.A., net of unamortized
discount of $3,000 and $4,000 as of
December 31, 1999 and 1998, respectively, due
August 25, 2002 472,000 471,000
---------- ----------
Total notes payable 2,963,000 3,807,000
---------- ----------
Less current installments -- 500,000
---------- ----------
Plus accrued deferred interest 76,000 216,000
---------- ----------
Notes payable, excluding current
installments $3,039,000 $3,523,000
========== ==========
</TABLE>
F-13
<PAGE>
- --------------------------------------------------------------------------------
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(5), CONTINUED
(A) DEBT AGREEMENTS WITH BANK
The Company's bank borrowings were fully paid during the first
quarter of 1999.
At December 31, 1998, $850,000 was outstanding under two loans at
an average interest rate of 8.75%.
The Company has a $1,000,000 line of credit at the prime
commercial lending rate plus 0.5%. The line is renewable annually,
and was put in place on December 30, 1999. No amounts were
borrowed under the line of credit as of December 31, 1999.
(B) DEBT AGREEMENTS WITH INVESTORS
Borrowings under the debt agreements with investors accrue
interest at an annual rate of 12% on the unpaid principal balance.
Interest payments are made periodically, and the agreements allow
for the automatic deferral of some of the interest. Any interest
that is deferred, compounds and accrues interest at 12%. As of
December 31, 1999, there was approximately $150,000 of accrued but
unpaid interest of which $76,000 was deferred in accordance with
said provisions. As of December 31, 1998, there was approximately
$363,000 of accrued but unpaid interest, of which $216,000 was
deferred.
The aggregate principal maturities of long-term debt for the next five
years, including deferred interest and after full amortization of
discounts, are as follows:
- --------------------------------------------------------------------------------
YEAR ENDING DECEMBER 31,
- ------------------------
2000 $ --
2001 2,547,000
2002 504,000
-----------
$ 3,051,000
===========
- --------------------------------------------------------------------------------
(6) SHAREHOLDERS' EQUITY
(A) SALE OF COMMON STOCK
In 1998, SVP S.A. ("SVP"), a subsidiary of Amalia S.A., purchased
$1,000,000 of the Company's common stock at $1.25 per share. At
December 31, 1999 and 1998, Amalia S. A. was the beneficial owner
of approximately 40.7% and 40.8%, respectively, of the Company's
common shares.
F-14
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(6), CONTINUED
(B) COMMON STOCK WARRANTS
At December 31, 1996, warrants to purchase 1,261,111 shares of the
Company's common stock were outstanding at an exercise price of
$2.25 per share. During the year ended December 31, 1997, warrants
to purchase 211,111 shares of the Company's common stock at an
exercise price of $2.25 per share were acquired by SVP. Such
warrants remained outstanding through December 31, 1999.
All warrants may be exercised by payment to the Company in cash,
or by surrender to the Company of the equivalent face value amount
of Senior Subordinated Notes.
In January and February 2000, 216,945 of such warrants were
exercised. Under the terms of the agreement, $488,126 of face
value of the Senior Subordinated Note due October 31, 2001 was
surrendered as payment.
(C) STOCK OPTION PLAN
The Company's 1996 Stock Option Plan (the "Plan"), as amended in
1998, authorizes grants of options to purchase up to 1,150,000
shares of common stock, issuable to employees, directors and
consultants of the Company, at prices at least equal to fair
market value at the date of grant (110% of the fair market value
for holders of 10% or more of the outstanding shares of common
stock).
The options to be granted under the Plan will be designated as
incentive stock options or non-incentive stock options by the
Stock Option Committee. Options granted under the Plan are
exercisable during a period of no more than ten years from the
date of the grant (five years for options granted to holders of
10% or more of the outstanding shares of common stock). All
options outstanding at December 31, 1999 expire within the next
five years if not exercised. Options that are cancelled or expire
during the term of the Plan are eligible to be re-issued under the
Plan and, therefore, are considered available for grant.
There were 212,200 options outstanding under the 1986 Stock Option
Plan as of December 31, 1999, and there were no options available
for grant under this plan at December 31, 1999.
F-15
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(6), CONTINUED
Activity under the stock option plans is summarized as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED
--------
AVAILABLE AVERAGE
---------- -------
FOR OPTIONS EXERCISE
--- ------- ---------
GRANT GRANTED PRICE
----- ------- -----
<S> <C> <C> <C>
January 1, 1997 238,150 1,252,963 $ 1.74
Granted (140,000) 140,000 1.32
Exercised -- (76,985) 0.77
Cancelled and terminated 139,265 (139,265) 1.58
No longer available under 1986 Plan (109,315) -- --
--------- --------- --------
December 31, 1997 128,100 1,176,713 1.78
Additional authorized 500,000
Granted (366,500) 366,500 0.84
Exercised -- (12,900) 1.12
Cancelled and terminated 540,550 (540,550) 1.46
No longer available under 1986 Plan (235,000) -- --
--------- --------- --------
December 31, 1998 567,150 989,763 1.31
Granted (247,500) 247,500 0.80
Exercised -- (22,750) 0.77
Cancelled and terminated 338,613 (338,613) 1.09
No longer available under 1986 Plan (171,963) -- --
--------- --------- --------
December 31, 1999 486,300 875,900 $ 1.12
========= ========= ========
Exercisable at December 31, 1999 327,075 $ 1.40
========= ========
</TABLE>
- --------------------------------------------------------------------------------
As of December 31, 1999, there were 875,900 options outstanding,
exercisable at $0.65625 to $2.25, with a weighted average
remaining contractual life of 3.19 years. As of December 31, 1999,
there were 327,075 exercisable options, exercisable at $0.65625 to
$2.25, with a weighted average remaining contractual life of 3.09
years.
On June 30, 1998 the Stock Option Committee of the Board of
Directors voted in favor of a plan to re-price certain outstanding
options held by employees on that date. There was a total of
89,550 options with original issue dates between 1994 and 1998
that were re-priced. The original exercise price of said options
ranged from $1.21 to $2.25 and the weighted-average exercise price
of those options was $1.78. The options were re-priced at $1.0625,
the fair market value on June 30, 1998. All other aspects of the
options were not changed. The weighted average exercise prices
noted above reflect this repricing.
F-16
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(6), CONTINUED
Included in the options granted as of January 1, 1997 are 300,000
options the Company granted to the President of the Company.
Contingent upon meeting certain earnings levels over the life of
his employment agreement, these options will vest on the
certification date of the targeted earnings levels. The exercise
price of these options will be equal to the fair market value of
the common stock on the vesting date or 110% of such fair market
value if the President is a holder of 10% or more of the
outstanding shares of common stock on such date. During 1999 and
1998, the President relinquished a total of 150,000 of these
options.
The Company applies APB Opinion No. 25 in accounting for its Plan
and, accordingly, no compensation cost has been recognized for its
stock options in the financial statements. Had the Company
determined compensation cost based on the fair value at the grant
date for its stock options under SFAS No. 123, "Accounting for
Stock-Based Compensation", the Company's net income (loss) would
have been reduced (increased) to the pro forma amounts indicated
below:
- --------------------------------------------------------------------------------
1999 1998 1997
---- ---- ----
Net income (loss) As reported $883,000 $759,000 $(2,852,000)
Proforma 821,000 697,000 (2,931,000)
----------------------------------
Earnings (loss) per share Basic
As reported 0.12 0.11 (0.43)
Proforma 0.12 0.10 (0.44)
----------------------------------
Diluted
As reported 0.12 0.11 (0.43)
Proforma 0.11 0.10 (0.44)
----------------------------------
- --------------------------------------------------------------------------------
The per share weighted-average fair value of stock options granted
during 1999, 1998 and 1997 was $0.43, $0.33 and $0.57,
respectively, on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average
assumptions: 1999 - expected dividend yield of 0%, risk-free
interest rate of 6%, volatility of 75.6% and an expected life of 3
years; 1998 - expected dividend yield of 0%, risk-free interest
rate of 6%, volatility of 48.8% and an expected life of 3 years;
1997 - expected dividend yield of 0%, risk-free interest rate of
6.5%, volatility of 56.4% and an expected life of 3 years.
Volatility is calculated over the five preceding years for 1999,
1998 and 1997, respectively.
(D) COMMON STOCK ISSUED FOR SERVICES
In 1997, the Company issued 25,000 shares of common stock with a
value of $37,000 to a third party for services rendered.
F-17
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(6), CONTINUED
(E) PREFERRED STOCK
The Company has authorized and unissued preferred stock consisting
of 2,000,000 shares at $.0001 par value.
(7) SVP INTERNATIONAL - RELATED PARTY
The Company has an agreement with SVP International, a subsidiary of
Amalia S.A. The agreement provides that SVP International will aid and
advise the Company in the operation of an information service and permit
access to other global SVP information centers, and the use of the SVP
trademark and logo. The agreement shall continue in perpetuity, unless
amended by the parties. The Company pays royalties to SVP International
computed using a formula based on percentages of service and product
revenues, subject to certain limitations.
Royalty expense under the agreement was $119,000, $126,000 and $131,000
in the years ended December 31, 1999, 1998 and 1997, respectively.
Amounts due to SVP International, included in accrued expenses, were
approximately $240,000 and $142,000 at December 31, 1999 and 1998,
respectively. In 1998, SVP International charged the Company $50,000 for
management services rendered. This amount was included in accrued
expenses as of December 31, 1998.
The Company receives and renders information services to other members of
the SVP network. Charges for such services are made at rates similar to
those used for the Company's other clients.
(8) INCOME TAXES
The provision (benefit) for income taxes consists of the following:
- --------------------------------------------------------------------------------
1999 1998 1997
-------- -------- -----------
Current:
Federal $ -- $ -- $ (228,000)
State and local 20,000 -- --
-----------------------------------------
20,000 -- (228,000)
Deferred:
Federal 524,000 342,000 (983,000)
State and local 25,000 102,000 (204,000)
-----------------------------------------
549,000 444,000 (1,187,000)
Change in valuation allowance (280,000) (239,000) 519,000
-----------------------------------------
269,000 205,000 (668,000)
-----------------------------------------
$289,000 $205,000 $ (896,000)
=========================================
- --------------------------------------------------------------------------------
F-18
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(8), CONTINUED
Income tax (benefit) expense differs from the amount computed by
multiplying the statutory rate of 34% to income before income taxes due
to the following:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Income tax (benefit) expense at statutory rate $ 398,000 $ 327,000 $(1,274,000)
Increase (reduction) in income taxes resulting
from:
Change in valuation allowance (280,000) (239,000) 519,000
State and local taxes, net of federal
income tax benefit 118,000 97,000 (204,000)
Nontaxable income (18,000) (30,000) (34,000)
Nondeductible expenses 31,000 31,000 18,000
Expiring tax credits -- -- 93,000
Other 40,000 19,000 (14,000)
-------------------------------------------------
$ 289,000 $ 205,000 $ (896,000)
=================================================
</TABLE>
- --------------------------------------------------------------------------------
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets, net of deferred tax liabilities at
December 31, 1999 and 1998 are presented below:
- --------------------------------------------------------------------------------
1999 1998
--------- ----------
Deferred tax assets:
Accounts receivable, principally due to
allowance for doubtful accounts $ 44,000 $ 46,000
Leasehold improvements, principally due
to differences in amortization 256,000 221,000
Deferred compensation, principally due
to accrual for financial reporting purposes 117,000 85,000
Federal net operating loss carryforward 129,000 440,000
State and local net operating loss carryforward 182,000 303,000
Restructuring charge 26,000 38,000
Severance charges 46,000 158,000
Deferred tax liability:
Equipment, principally due to differences in
depreciation (282,000) (248,000)
Goodwill, principally due to difference in
amortization (1,000) (1,000)
--------------------------
517,000 1,042,000
Valuation allowance -- (280,000)
--------------------------
Net deferred tax asset $ 517,000 $ 762,000
==========================
F-19
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(8), CONTINUED
Management of the Company has determined, based on the Company's history
of prior years' operating earnings relating to its research-for-hire
businesses, that a valuation allowance of $280,000 as of December 31,
1998 was necessary due to the uncertainty of future earnings to realize
the net deferred tax asset. Based upon the 1999 operating results, the
valuation allowance was reversed as of December 31, 1999. Of the net
deferred tax asset, $114,000 and $322,000 as of December 31, 1999 and
December 31, 1998, respectively, has been classified as current.
(9) EMPLOYEE BENEFITS AND DEFERRED COMPENSATION
(A) EMPLOYEE BENEFIT PLANS
The Company sponsors a 401(k) and profit sharing plan under which
eligible participants may elect to defer eligible compensation up
to governmental limitations. The Company contributes 20% of the
employees' contributions up to 1% of their annual compensation and
may contribute additional profit sharing amounts at the discretion
of the Company. Expense was $61,000, $57,000 and $75,000 for the
years ended December 31, 1999, 1998 and 1997, respectively.
During 1997 the Company ceased funding its Target Benefit Pension
Plan, and is in the process of terminating the plan. As such, all
participants were declared 100% vested on January 1, 1997.
(B) DEFERRED COMPENSATION
The Company has deferred compensation agreements with two
individuals, with benefits commencing upon retirement, death or
disability. Deferred compensation expense under these agreements
was approximately $74,000, $20,000 and $21,000 in 1999, 1998 and
1997, respectively.
(C) EMPLOYMENT AGREEMENTS
The Company has an employment agreement (the "Agreement") with the
President of the Company, which expires in December 2001. The
Agreement contains certain severance provisions entitling the
President to receive compensation upon termination without cause,
or voluntary termination upon certain conditions, which includes
the acquisition by a party of 30% or more of the outstanding
shares of common stock of the Company or a change in the majority
of incumbent Board members, and certain other occurrences. If
termination occurs at a time when there is less than one year left
in the Agreement, compensation will continue for a two-year period
from the date of termination. The President waived his rights
related to the change of control provision in this Agreement as it
relates to the purchase of shares by SVP during 1998.
F-20
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(9), CONTINUED
During 1998, the Board amended the contract with the Company's
President to provide that at any time after the end of calendar
year 1999, the President may elect to voluntarily leave the employ
of the Company and receive the balance of his contract for the
remaining term on his employment contract. The term of the
contract runs through 2001.
Effective September 30, 1998, the Company accepted the resignation
of an Executive Officer. In connection with his severance
agreement, coupled with the signing of a release and agreement not
to compete dated October 5, 1998, and the cancellation of his
outstanding options, the Executive Officer will receive
compensation and benefits through September 2000. An accrual of
$475,000 was recorded in the year ended December 31, 1998 for this
obligation.
Severance arrangements for members of the Operating Management
Group ("OMG") were authorized by the Board of Directors on January
25, 1999. In the event of certain changes of control, severance
agreements with members of the OMG would be triggered. Such
agreements were signed by two members of the OMG and provide for
(a) a normal severance benefit for nine (9) months, which would be
increased to one (1) year after the employee has served as a
member of the OMG for a continuous period of two (2) years, in the
event the employee's services are terminated without cause, and
(b) a severance benefit of one (1) year in the event the
separation from service is due to (i) a change in control, and
(ii) the employee suffers, within one (1) year thereafter, either
(A) a discontinuation of duties, or (B) an office change of at
least 50 miles, or (C) a reduction in compensation, or (D) a
termination of employment other than for cause.
(10) SUPPLEMENTAL CASH FLOWS INFORMATION
Cash paid for interest and income taxes during the years ended December
31, 1999, 1998 and 1997 was as follows:
- --------------------------------------------------------------------------------
1999 1998 1997
---- ---- ----
Interest $ 644,000 $ 292,000 $ 383,000
==============================================
Income taxes $ 60,000 $ -- $ 3,000
==============================================
- --------------------------------------------------------------------------------
The Company had the following non-cash financing activities:
In connection with the Company's sale of Published Research assets during
1998, the Company received a $550,000 four-year note.
F-21
<PAGE>
In March 1998, a $250,000 convertible note with a related party was
converted into common stock.
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(10), CONTINUED
In connection with the Company's sale of the Emerging Technologies
Research Group's assets during 1997, the Company received a $125,000
two-year note.
During 1997, the Company issued 25,000 shares of common stock with a
value of $37,000 to a third party for services rendered.
During 1997, the Company recorded the cashless exercise of 8,000 options
at $0.63 in exchange for 2,000 shares of common stock at prices ranging
from $1.125 to $1.25. Such shares were held for a period of at least six
months before the respective exchange. The value of these transactions
was $2,000.
(11) ACCRUED EXPENSES
Accrued expenses at December 31, 1999 and 1998 consisted of the
following:
- --------------------------------------------------------------------------------
1999 1998
---------- ----------
Accrued bonuses and employee benefits $ 441,000 $ 477,000
Accrued severance and retirement 176,000 694,000
Accrued expenses incurred on behalf of clients 75,000 117,000
Accrued SVP royalty 240,000 142,000
Other accrued expenses 498,000 458,000
------------------------
$1,430,000 $1,888,000
========================
- --------------------------------------------------------------------------------
F-22
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(12) OTHER INCOME AND OTHER EXPENSE
Other income and other expense consist of the following:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Domain name assignment and trademark
license agreement $ 1,200,000 $ --
Other income related to settlement with Asset Value 364,000
and lease renegotiation --
Other expense related to settlement with Asset Value
and lease renegotiation -- (315,000)
--------------------------------
$ 1,200,000 $ 49,000
================================
</TABLE>
- --------------------------------------------------------------------------------
On December 30, 1999, the Company entered into an agreement with idealab!
and Find.com, Inc. whereby the Company assigned the domain name
"find.com" and licensed the use of certain rights to the trademarks
"find.com" and "find" to Find.com, Inc. idealab! and Find.com, Inc. are
not otherwise related to the Company. Under the terms of the agreement,
the Company received consideration in the form of cash and preferred
shares amounting to approximately $1,200,000, net of related expenses.
The Company is also entitled to certain future royalties. The preferred
shares are classified as available-for-sale marketable securities in the
accompanying Balance Sheets. No royalty income was earned in the year
ended December 31, 1999.
(13) LITIGATION
On May 30, 1997, Asset Value Fund Limited Partnership ("Asset Value"), a
shareholder in the Company, commenced an action in the United States
District Court for the Southern District of New York entitled Asset Value
Fund Limited Partnership v. FIND/SVP, Inc. and Andrew P. Garvin, Civil
Action No. 97 Civ. 3977 (LAK). The complaint alleged that between October
1995 and August 1996 the Company and its president made certain oral
misstatements to Paul Koether, the principal of Asset Value, concerning
the financial condition of the Company and that those misstatements
induced Asset Value to buy more shares of the Company and to refrain from
selling the shares it already held. The complaint alleged that those
misstatements give rise to causes of action for violation of Section
10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder,
and for fraud, breach of fiduciary duty and negligent misrepresentation.
The complaint demanded compensatory damages in excess of $1.5 million and
punitive damages in excess of $5 million, as well as costs and attorneys'
fees.
F-23
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(13), CONTINUED
On August 13, 1997, the Company was served with an amended complaint
which alleged that between January 1996 and August 1996, the Company and
its president made certain misstatements concerning the financial
condition of the Company and that those misstatements induced Asset Value
to buy more shares of the Company and to refrain from selling the shares
it already held. The amended complaint alleged that those misstatements
give rise to causes of action for violation of Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 thereunder and for common
law fraud. The complaint demanded compensatory and punitive damages in an
amount to be determined at trial, as well as costs and attorneys' fees.
On September 29, 1997, the Company and Mr. Garvin moved to dismiss the
amended complaint.
On December 3, 1997, Asset Value commenced an action in the Supreme Court
of the State of New York, County of New York entitled Asset Value Fund
Limited Partnership v. Brigitte De Gastines and Jean-Louis Bodmer, Index
No. 606165/97. The defendants are two of the Company's directors. The
complaint sought to remove the defendants as directors under New York
Business Corporation Law 706(d) because of their alleged failure to
attend meetings of the board and because they considered and approved
financing transactions by the Company involving Amalia, S.A. and/or SVP,
S.A which allegedly constituted self-dealing by the defendants. On
December 30, 1997, the defendants removed this action to the United
States District Court for the Southern District of New York.
On January 20, 1998, Asset Value and the Company entered into a
settlement agreement pursuant to which Asset Value dismissed with
prejudice the two pending actions described above. Furthermore, Asset
Value agreed that for five years neither Asset Value nor Paul Koether
will purchase, either directly or indirectly, any shares of stock in the
Company, or own or control, either directly or indirectly, any shares of
stock in the Company. As part of the settlement, the Company purchased
274,400 shares of the Company's common stock from the plaintiff for $1.25
per share, totaling $343,000. The purchase price contained a premium of
$0.50 per share over the closing trade price of the Company's common
stock on the date of settlement, or $137,000. As a result of the above,
the Company recorded treasury stock of $206,000 and expense of $137,000.
The Company used proceeds from its insurance company of $495,000 to
purchase the shares and to pay plaintiff and Company legal fees in the
amount of $110,000 and $42,000, respectively. Accordingly, the Company
recorded other income and other expense of $289,000, respectively, in the
year ended December 31, 1998, related to this matter, with the remaining
balance of $206,000 offset against the aforementioned treasury stock
repurchase amount, thus reducing the net treasury stock to zero.
(14) IMPAIRMENT LOSS AND ASSET DISPOSAL
During the fourth quarter of 1997, the Company decided to sell the
majority of assets held in its Published Research subsidiary. As a result
of the Company's decision, an impairment loss of $1,047,000 was recorded
in December 1997. During 1998 the Company sold such assets. The
aforementioned charge included write-downs of inventory of $517,000,
fixed
F-24
<PAGE>
assets of $405,000, goodwill of $102,000 and deferred charges of $23,000.
There are no cash implications relating to this charge.
F-25
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(14), CONTINUED
In July 1998, the Company completed the sale of substantially all of the
assets of its Published Research subsidiary and recorded a $20,000 gain.
The Company received $1,250,000 in cash, a Promissory Note (the "Note")
in the amount of $550,000 and the purchaser assumed certain liabilities
in the amount of $85,000. The Note bears interest at a rate of 8% per
annum and is payable in four equal annual installments of principal and
interest beginning in June 1999. The Company holds a subordinate security
interest in the sold assets, and has the personal guarantee of a
principal of the purchaser.
During the fourth quarter of 1997, the Company sold certain assets held
in its Emerging Technology Research Group. The Company recorded a $28,000
loss related to this sale. The Company received a $125,000 note with
interest at an annual rate of 10% and received a 5% royalty for a
two-year period on sales generated by the assets sold.
During the fourth quarter of 1997, the Company ceased the consumer
oriented operation of its FIND/SVP Internet Services, Inc. subsidiary.
Accordingly, the Company recorded a charge of $500,000 in the fourth
quarter of 1997 related to the closing of the subsidiary. The charge
included $35,000 of severance, all of which was paid by March 31, 1998.
The remainder of the charge included the write-off of certain assets of
$408,000, $16,000 of shut-down costs paid in the first quarter of 1998,
and rent expense of $41,000 for the first quarter of 1998 as the Company
intended to sublease the space or be relieved of its obligation for
10,000 square feet of office space by the landlord during the second
quarter of 1998. During the second quarter of 1998 the Company received
payment of $75,000 from the landlord in return for the forfeiture of the
lease. The Company also had rental expenses of $26,400 during the second
quarter of 1998, prior to the agreement with the landlord. The $75,000
was recorded as Other Income and the $26,400 was recorded as Other
Expense in 1998.
(15) RESTRUCTURING CHARGES
On March 27, 1998, the Company reduced its full-time labor force in its
core business by 20 positions. As a result the Company recorded a
restructuring charge of $321,000 during the quarter ended March 31, 1998.
The charge consisted mainly of severance payments, outplacement services
and legal costs associated with the elimination of the positions, all of
which was paid as of December 31, 1999.
In conjunction with the Company's decision to re-focus its efforts on its
core competencies, the Company reduced its general and administrative
staff on December 31, 1997. Accordingly, the Company recorded a $155,000
restructuring charge, primarily for severance costs, during the fourth
quarter of 1997, all of which was paid in 1998.
F-26
<PAGE>
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(16) SEGMENT REPORTING
During 1999, the Company operated in one business segment, providing
consulting and business advisory services through its quick consulting
and research service activities and its strategic consulting and research
activities. The Company operates primarily in the United States. Prior to
the divestiture in the third quarter of 1998, the Company had an
additional segment, Published Research Products. The Company considers
its consulting and business advisory services to be its core competency.
Since in 1999 the Company operated in only one segment, no segment
information is presented for that year.
- --------------------------------------------------------------------------------
(in thousands)
YEARS ENDED DECEMBER 31
-----------------------
1998 1997
---- ----
REVENUES
- --------
Consulting and Business Advisory $ 25,457 $ 25,959
Published Research Products 2,718 6,018
All other -- 50
-------------------------
$ 28,175 $ 32,027
=========================
OPERATING INCOME (LOSS)
- -----------------------
Consulting and Business Advisory (1) $ 1,313 $ (165)
Published Research Products 16 (2,295)
All other -- (676)
-------------------------
Segment operating income 1,329 (3,136)
Corporate and other (2) (368) (612)
-------------------------
Income (loss) before provision (benefit)
for income taxes
$ 961 $ (3,748)
=========================
DEPRECIATION AND AMORTIZATION
- -----------------------------
Consulting and Business Advisory $ 1,002 $ 885
Published Research Products 96 238
All other 46 68
-------------------------
$ 1,144 $ 1,191
=========================
TOTAL ASSETS
- ------------
Consulting and Business Advisory $ 11,194 $ 10,594
Published Research Products 705 1,887
All other -- --
-------------------------
$ 11,899 $ 12,481
=========================
CAPITAL EXPENDITURES
- --------------------
Consulting and Business Advisory $ 618 $ 1,897
Published Research Products -- 42
All other -- --
-------------------------
$ 618 $ 1,939
=========================
(1) Operating income for the years ended December 31, 1998 and 1997 include a
restructuring charge for severance and related costs of $321,000 and $155,000,
respectively.
(2) Consists of interest income, other income, gain on sale of net assets,
interest expense and other expense.
- --------------------------------------------------------------------------------
F-27
<PAGE>
INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTAL SCHEDULE
To the Board of Directors and Shareholders of Find/SVP, Inc.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements as of and for the year ended December 31, 1999, taken as a
whole. The data shown on the suppplemental schedule on page F-29 for the year
ended December 31, 1999 is presented for the purpose of additional analysis and
is not a required part of the basic financial statements. This schedule is the
responsibility of the Company's management. Such data has been subjected to the
auditing procedures applied in our audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects when considered in
relation to the basic financial statements taken as a whole.
Deloitte & Touche LLP
Stamford, Connecticut
March 24, 2000
F-28
<PAGE>
SCHEDULE II
-----------
FIND/SVP, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended December 31, 1999, 1998 and 1997
(in thousands of dollars)
<TABLE>
<CAPTION>
BALANCE AT ADDITIONS
BEGINNING CHARGED TO DEDUC- BALANCE AT
CLASSIFICATION OF YEAR EARNINGS TIONS (1) END OF YEAR
------- -------- --------- -----------
<S> <C> <C> <C> <C>
Year ended December 31, 1999:
Allowance for doubtful accounts $ 104 90 93 101
=== === === ===
Year ended December 31, 1998:
Allowance for doubtful accounts $ 118 164 178 104
=== === === ===
Year ended December 31, 1997:
Allowance for doubtful accounts $ 103 254 239 118
=== === === ===
</TABLE>
Note: (1) Amounts written off, net of recoveries.
F-29
EXHIBIT Z
---------
Part I
COLLABORATION AGREEMENT
-----------------------
This COLLABORATION AGREEMENT (this "AGREEMENT") is entered into as of
December ____, 1999 (the "EFFECTIVE DATE") by and among Bill Gross' idealab!, a
California corporation ("idealab!"), Find/SVP, Inc., a New York corporation
("FIND/SVP"), and find.com, Inc., a newly formed Delaware corporation wholly
owned by idealab! ("Find.com").
WHEREAS, Find/SVP is the owner of the trademarks and service marks
"find.com" and "find" (collectively, the "Marks") as set forth in Schedule A to
a Trademark License and Domain Name Assignment Agreement (the "Trademark and
Domain Name Agreement") in the form attached hereto as Exhibit A and the domain
name www.find.com (the "Domain Name"); and
WHEREAS, Find.com wishes to acquire (a) a perpetual license (the
"License") to use (i) the Marks worldwide, and (ii) the name find.com as a
corporate name (the formation of Find.com under such name having been
accomplished in contemplation of this Agreement), and (b) the Domain Name, for
use in connection with a business consisting of a new "portal" internet site
containing a search engine, general information and editorial content, directed
primarily to consumers; and
WHEREAS, Find/SVP is amenable to granting to Find.com the License and
assigning to Find.com the Domain Name in exchange for a license fee of $800,000,
a royalty, and an equity interest in the endeavor;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. GRANT OF LICENSE AND ASSIGNMENT OF DOMAIN NAME; RATIFICATION OF
CORPORATE NAME.
(a) Concurrently with entering into, and subject to the terms and
conditions of, this Agreement, Find/SVP is granting to Find.com the License and
assigning to Find.com the Domain Name by entering into the Trademark License and
Domain Name Agreement.
(b) Find/SVP hereby consents to and ratifies the use by Find.com of
the find.com name for the period of time that pre-dates the Trademark and Domain
Name Agreement.
2. CONSIDERATION FOR GRANT OF LICENSE AND ASSIGNMENT OF DOMAIN NAME.
As consideration for the grant of the License and the assignment of
the Domain Name, (a) concurrently with the execution and delivery of this
Agreement and the Trademark and Domain Name Agreement, (i) Find.com shall pay to
Find/SVP, by wire transfer or bank check, the sum of $800,000 pursuant to the
Trademark and Domain Name Agreement, and (ii) idealab! shall issue and deliver
to Find/SVP 5,000 shares of idealab!'s Series D Preferred Stock, no par value,
(such shares of preferred stock or, upon conversion of such shares, the shares
of common stock into which such shares of preferred stock are convertible, the
"IDEALAB! SHARES"),
<PAGE>
and (b) Find/SVP shall receive a royalty as set forth in the Trademark and
Domain Name Agreement.
3. EXCHANGE OPTION.
(a) Prior to a Find.com Qualified IPO (as defined below), Find/SVP
shall be entitled to exchange the idealab! Shares for 500,000 shares of Find.com
common stock, par value $.001 per share, (the "Find.com Shares"); PROVIDED,
HOWEVER, that (i) Find/SVP must exercise its option to exchange (the "EXCHANGE
OPTION") the idealab! Shares for Find.com Shares no later than 5 days prior to
the effective date of the Find.com Qualified IPO by delivering to idealab! and
Find.com written notice (the "EXCHANGE NOTICE") of Find/SVP's intention to
exercise its Exchange Option along with original certificates representing the
idealab! Shares, (ii) Find/SVP must surrender all 5,000 of the idealab! Shares
to idealab!, and (iii) Find/SVP's exercise of the Exchange Option shall be
irrevocable. Find.com shall give Find/SVP 20 days' advance written notice of the
effective date of a Find.com Qualified IPO and shall deliver to Find/SVP the
Find.com Shares within 10 business days following the receipt of the Exchange
Notice and the return of all of the idealab! Shares. A "Find.com Qualified IPO"
shall mean an initial public offering of common stock of Find.com that results
in its shares of common stock being quoted on the NASDAQ Stock Market or listed
on a national securities exchange.
(b) In the event Find/SVP exercises the Exchange Option, at the
request of Find.com, Find/SVP shall deliver to Find.com such representations,
warranties and covenants regarding the Find.com Shares as are consistent with
the covenants herein contained regarding the idealab! Shares.
(c) In connection with the Exchange Option, each of idealab! and
Find.com covenants and agrees that (i), except for 9,500,000 shares of Find.com
common stock, par value $.001 per share ("Find.com Common Stock"), initially
issued to idealab! in connection with the formation of Find.com, no further
equity in Find.com is issued to idealab! prior to the consummation of one round
of financing on an arms length basis from third parties (which may include
idealab! Capital Partners) in an amount not less than $500,000 and (ii) with
respect to any of the next two rounds of financing for Find.com following the
arm's length round of financing referred to immediately above in Section 3(c)(i)
hereof in which idealab! participates as an investor, (A) in the event Find/SVP
has exercised the Exchange Option, Find.com will exercise its commercially
reasonable efforts to allow Find/SVP to participate in such round of financing,
on the same terms and conditions offered to the other similarly situated
investors participating in such round of financing, to the extent necessary for
Find/SVP to maintain its percentage ownership interest of Find.com, and (B) in
the event Find/SVP has not exercised the Exchange Option, Find.com shall
consider, in its sole discretion, allowing Find/SVP to participate as an
investor, on the same terms and conditions offered to other similarly situated
investors in such Subsequent Financing, to the extent necessary to maintain what
would then be Find/SVP's current percentage of ownership in Find.com if the
Exchange Option was or were to be exercised.
4. Repurchase Option.
After the third anniversary of the date hereof, Find/SVP shall have
the option (the "REPURCHASE OPTION"), exercisable in Find/SVP's sole discretion,
to sell all, but no less than all,
2
<PAGE>
of the idealab! Shares or the Find.com Shares, as the case may be, to idealab!,
Find.com or, at the option of idealab! or Find.com, any of their respective
designees, for a purchase price of $1,500,000; provided, however that if
Find/SVP fails to deliver written notice (the "REPURCHASE NOTICE") of its desire
to exercise the Repurchase Option to idealab! or Find.com within 30 days
following the third anniversary of the date hereof, the Repurchase Option shall
terminate and be of no further force or effect. If Find/SVP exercises the
Repurchase Option, and idealab! or Find.com, or any of their respective
designees, desires to purchase the idealab! Shares or the Find.com Shares, as
the case may be, (i) the consummation of the sale of the idealab! Shares or the
Find.com Shares, as the case may be, shall take place on the date and in the
manner mutually agreed upon by the parties, (ii) the purchaser of the idealab!
Shares or the Find.com Shares, as the case may be, shall be entitled to receive
customary representations regarding ownership and the absence of encumbrances
with respect thereto and such representations regarding an exemption from
applicable securities law registration and qualification provisions as may be
appropriate under the circumstances, and (iii) the purchaser of the idealab!
Shares or the Find.com Shares, as the case may be, may require that Find/SVP's
signature be guaranteed. If Find/SVP exercises the Repurchase Option in
compliance with this Section 4, and none of idealab!, Find.com, or any of their
respective designees desires to purchase the idealab! Shares or the Find.com
Shares, as the case may be, Find/SVP shall have the right to terminate the
Trademark and Domain Name Agreement immediately, in which case Find.com shall
promptly reassign to Find/SVP the find.com Domain Name (as defined in the
Trademark and Domain Name Agreement) and change its corporate name to a name
that does not include "find.com" within 90 days after receiving such notice;
provided that Find.com shall be permitted a reasonable period of time within
which to deplete any existing stocks and fulfill all outstanding marketing
commitments involving its name. Notwithstanding the foregoing, (i) the
Repurchase Option shall terminate with respect to the idealab! Shares after an
idealab! Qualified IPO (as defined below) once idealab! common stock, no par
value ("idealab! Common Stock"), trades at an average closing bid price of
$60.00 (as adjusted to give effect to stock splits, stock dividends and stock
reclassifications) or more per share for 20 consecutive trading days, and, with
respect to the Find.com Shares, after a Find.com Qualified IPO once the Find.com
Common Stock trades at an average closing bid price of $6.00 (as adjusted to
give effect to stock splits, stock dividends and stock reclassifications) or
more per share for 20 consecutive trading days; and (ii) Find/SVP shall have the
right to cancel its Repurchase Option at any time prior to the third anniversary
hereof. An "idealab! Qualified IPO" shall mean an initial public offering of
common stock of idealab! that results in its shares of common stock being quoted
on the NASDAQ Stock Market or listed on a national securities exchange.
5. REPRESENTATIONS AND WARRANTIES OF IDEALAB! AND FIND.COM.
idealab! and Find.com jointly and severally represent and warrant to
Find/SVP as follows:
(a) ORGANIZATION AND GOOD STANDING. Each of idealab! and Find.com is
a corporation duly organized and validly existing under, and by virtue of, the
laws of their state of incorporation and each is in good standing under such
laws. Each of idealab! and Find.com has the requisite corporate power and
authority to own and operate its properties and assets and to carry on its
business as presently conducted and as proposed to be conducted. Each of
idealab! and Find.com is duly qualified to transact business and is in good
standing in each jurisdiction in
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which the failure so to qualify would have a material adverse effect on its
business, assets, financial condition, results of operations or properties (a
"MATERIAL ADVERSE EFFECT").
(b) CORPORATE POWER. Each of idealab! and Find.com has all requisite
legal and corporate power and authority to execute and deliver this Agreement
and to carry out and perform its obligations under the terms of this Agreement,
including, in the case of idealab!, the sale and issuance of the idealab!
Shares, and, in the case of Find.com, the issuance of the Find.com Shares.
(c) CAPITALIZATION.
(i) The authorized capital stock of idealab! consists of
1,100,000 shares of idealab! Common Stock and 38,000,000 shares of preferred
stock, no par value, of which 3,450,000 shares are designated "SERIES A
PREFERRED STOCK," 6,002,000 shares are designated "SERIES B PREFERRED STOCK,"
6,000,000 shares are designated "SERIES C PREFERRED STOCK," and 13,000,000 are
designated "SERIES D PREFERRED STOCK." There are outstanding 53,833,021 shares
of idealab! Common Stock, 3,450,000 shares of Series A Preferred Stock,
5,717,135 shares of Series B Preferred Stock, 6,000,000 shares of Series C
Preferred Stock, 5,057,020 shares of Series D Preferred Stock and no other
shares of capital stock are outstanding. All of the outstanding shares of
capital stock are duly authorized, validly issued, fully paid and nonassessable,
and were issued in compliance with applicable federal and state securities laws.
Except for (x) conversion privileges of the Series A Preferred, Series B
Preferred, Series C Preferred, and Series D Preferred and (y) outstanding
options (or options reserved for future grant) to purchase shares of idealab!
Common Stock granted to employees or consultants pursuant to idealab!'s stock
plans or arrangements, there are no outstanding options, warrants, rights
(including conversion or preemptive rights) or agreements for the purchase or
acquisition from idealab! of any shares of its capital stock, except for such
options or agreements which would not have a material dilutive effect on
Find/SVP's ownership interest in idealab!.
(ii) The authorized capital stock of Find.com consists of
5,000,000 shares of blank check preferred stock, par value $.001 per share, and
20,000,000 shares of Find.com Common Stock. There are outstanding 9,500,000
shares of Find.com Common Stock, all of which are owned by idealab! and no
shares of preferred stock. All of the outstanding shares of Find.com Common
Stock are duly authorized, validly issued, fully paid and non-assessable, and
were issued in compliance with applicable federal and state securities laws.
There are no outstanding options, warrants, rights (including conversion or
preemptive rights) or agreements for the purchase or acquisition from Find.com
of any shares of its capital stock.
(d) SALE OF SERIES D PREFERRED STOCK. idealab! has sold its Series D
Preferred Stock at the price of $100 per share. The rights, preferences and
privileges of the Series D Preferred Stock are set forth in idealab!'s Amended
and Restated Articles of Incorporation, a copy of which has been provided to
Find/SVP.
(e) AUTHORIZATION . All corporate action on the part of idealab! and
Find.com and their respective officers, directors and shareholders necessary for
the authorization, execution, delivery and performance of this Agreement, the
authorization, sale, issuance and delivery of, in the case of idealab!, the
idealab! Shares and, in the case of Find.com, the Find.com Shares, and
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the performance of their respective obligations under this Agreement has been
taken. This Agreement, when executed and delivered by idealab! and Find.com,
shall constitute their valid and binding obligation, enforceable in accordance
with its terms. The idealab! Shares, when issued in compliance with the
provisions of this Agreement, and the Find.com Shares, if and when issued in
compliance with the terms of this Agreement, will be validly issued, fully paid
and nonassessable, will have the rights, preferences and privileges described in
their respective Articles/Certificate of Incorporation attached hereto as
Exhibit B ("ARTICLES"), and will be free of any liens or encumbrances; provided,
however, that the idealab! Shares and the Find.com Shares may be subject to
restrictions on transfer under state and/or federal securities laws as set forth
herein.
(f) COMPLIANCE WITH OTHER INSTRUMENTS. Neither idealab! nor Find.com
is in violation or default of any term of its Articles or Bylaws, or any term or
provision of any material mortgage, indebtedness, indenture, contract,
agreement, instrument, judgment, order or decree, and to its knowledge is not in
violation of any applicable statute, rule or regulation where such violation
would have a Material Adverse Effect. The execution, delivery and performance of
and compliance with this Agreement, and the issuance of the idealab! Shares and
the Find.com Shares, have not resulted (in the case of the idealab! shares) and
will not result in any violation of, or conflict with, or constitute, with or
without the passage of time and the giving of notice, a default under,
idealab!'s or Find.com's, as the case may be, Articles or Bylaws or any of their
respective agreements nor result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of their respective properties or assets; and
there is no such violation or default which materially and adversely affects the
business of idealab! or Find.com or any of their respective properties or
assets.
(g) BROKERS OR FINDERS; OTHER OFFERS. Neither idealab! nor Find.com
has incurred, and neither will incur, directly or indirectly, as a result of any
action taken by it, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement.
6. REPRESENTATIONS AND WARRANTIES OF FIND/SVP.
Find/SVP represents and warrants to idealab! and Find.com as follows:
(a) ACCESS TO INFORMATION. Find/SVP hereby acknowledges that it has
had access to and is familiar with, information concerning idealab!'s business,
management and financial affairs, financial condition, and current prospects.
Find/SVP understands that idealab!'s business, management and financial affairs,
financial condition, and current prospects are constantly subject to change.
Find/SVP acknowledges that it has had an opportunity to ask questions of and
request additional information concerning idealab! from representatives of
idealab!. Find/SVP acknowledges that it received answers to such questions and
responses to such requests to its satisfaction. Find/SVP understands that such
discussions, as well as any written information issued by idealab!, were
intended to describe the aspects of idealab!'s business and prospects which it
believes to be material but were not necessarily a thorough or exhaustive
description.
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(b) INVESTMENT STATUS. Find/SVP is acquiring the idealab! Shares for
Find/SVP's own account for investment purposes only, not as a nominee or agent,
and not with a view to, or for resale in connection with, any distribution
thereof. Find/SVP shall not transfer, sell or otherwise dispose of the idealab!
Shares unless registered under applicable federal and state securities laws or
pursuant to an exemption therefrom. Find/SVP has knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of an investment in idealab!. Find/SVP can bear the economic risk of an
investment in idealab!, including the risk of a complete loss of Find/SVP's
investment. Find/SVP understands that the idealab! Shares have not been, and
will not be, registered under the Securities Act of 1933, as amended (the "Act")
by reason of a specific exemption from the registration provisions and
prospectus delivery requirements of the Act, the availability of which depends
upon, among other things, the bona fide nature of the investment intent and the
accuracy of Find/SVP's representations and warranties as expressed herein.
Find/SVP understands that idealab! has no obligation and does not presently
intend to register or qualify any of its securities. Find/SVP is an "accredited
investor" as defined in Regulation D issued under the Act and is familiar with
the requirements under said Regulation D for being deemed an accredited
investor.
(c) RULE 144. Find/SVP acknowledges that the idealab! Shares must be
held indefinitely unless subsequently registered under the Act or unless an
exemption from such registration is available. Find/SVP is aware of the
provisions of Rule 144 promulgated under the Act and the resale provisions
thereof for shares purchased in a private placement.
(d) NO PUBLIC MARKET. Find/SVP understands that no public market now
exists for any of the securities issued by idealab! and that idealab! has made
no assurances that a public market will ever exist for idealab!'s securities.
(e) ORGANIZATION AND GOOD STANDING. Find/SVP is a corporation duly
organized and validly existing under, and by virtue of, the laws of the State of
New York and is in good standing under such laws.
(f) CORPORATE POWER. Find/SVP has all requisite legal and corporate
power and authority to execute and deliver this Agreement, to acquire the
idealab! Shares hereunder and to carry out and perform its obligations under the
terms of this Agreement.
(g) AUTHORIZATION . All corporate action on the part of Find/SVP, its
officers, directors and shareholders necessary for the authorization, execution,
delivery and performance of this Agreement by Find/SVP and the performance of
Find/SVP's obligations under this Agreement has been taken. This Agreement, when
executed and delivered by Find/SVP, shall constitute a valid and binding
obligation of Find/SVP, enforceable in accordance with its terms.
(h) COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and
performance of this Agreement have not resulted and will not result in any
violation of, or conflict with, or constitute, with or without the passage of
time and the giving of notice, a default under, Find/SVP's Certificate of
Incorporation or Bylaws or any of its agreements.
(i) BROKERS OR FINDERS; OTHER OFFERS. Find/SVP has not incurred, and
will not incur, directly or indirectly, as a result of any action taken by
Find/SVP, any liability for
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brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement.
7. COVENANTS OF FIND/SVP, IDEALAB! AND FIND.COM.
(a) Find/SVP covenants and agrees that:
(i) Find/SVP shall not release any public announcement relating
to this Agreement, without the idealab!'s approval, which shall not be
unreasonably withheld. In any event, it may make such public announcement as its
counsel or accountants reasonably believe is the minimum disclosure necessary to
satisfy Find/SVP's obligations under the applicable securities laws.
(ii) Each certificate representing the securities which are the
subject of this Agreement, shall be stamped or otherwise imprinted with legends
in substantially the following form (in addition to any legends required by
agreement or by applicable state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE
TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT
AS TO SUCH TRANSFER OR SUCH TRANSFER IS MADE PURSUANT TO RULE 144 OR
REGISTRATION UNDER THE ACT OR IS OTHERWISE UNNECESSARY IN ORDER FOR
SUCH TRANSFER TO COMPLY WITH THE ACT.
Subject to Section 7(a)(iii) hereof, the following additional legend
shall be imprinted on each certificate:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOCKUP
PERIOD OF UP TO 180 DAYS FOLLOWING THE EFFECTIVE DATE OF A
REGISTRATION STATEMENT OF THE COMPANY FILED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AS SET FORTH IN AN AGREEMENT BETWEEN THE ISSUER
AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE
OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH LOCKUP PERIOD IS
BINDING ON TRANSFEREES OF THESE SHARES.
(iii) In connection with the initial offering of any securities
of idealab! or, if Find/SVP has exercised its Exchange Option, any securities of
Find.com, under the Act for the account of idealab! or Find.com, as applicable,
if so requested by any representative of the underwriters (the "MANAGING
UNDERWRITER"), Find/SVP shall not sell or otherwise transfer any securities of
idealab! or Find.com, as applicable, during the period specified by the Board of
Directors of idealab! or Find.com, as applicable, at the request of the Managing
Underwriter (the
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"MARKET STANDOFF PERIOD"), with such period not to exceed 180 days following the
effective date of a registration statement of idealab! or Find.com, as
applicable, filed under the Act. idealab! or Find.com, as applicable, may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such Market Standoff Period.
(iv) Find/SVP shall defend, indemnify, and hold harmless idealab!
and Find.com and their subsidiaries, affiliates, directors, officers, employees,
affiliates, agents and contractors from and against any and all claims,
judgments, lawsuits, liabilities, damages, penalties, losses, costs and expenses
(including, but not limited to, court costs, reasonable attorneys' fees, and
expert witness fees ) (collectively, "DAMAGES") arising out of, or in connection
with, any third party claim which results, in whole or in part, or is claimed to
result, in whole or in part, from (A) any breach by Find/SVP of any of its
representations, warranties or obligations under this Agreement or under the
Trademark and Domain Name Agreement, (B) from any actual or alleged infringement
or misappropriation by the Marks of any trademark or other rights of any third
party or (C) from use of the "Find" mark by Find/SVP.
(b) Each of idealab! and Find.com covenants and agrees to defend,
indemnify and hold harmless Find/SVP and its subsidiaries, affiliates,
directors, officers, employees, affiliates, agents and contractors from and
against any and all Damages arising out of or in connection with, any third
party claim which results in whole or in part, or is claimed to result, in whole
or in part, from (i) any breach by idealab! of its obligations under this
Agreement, (ii) any breach by Find.com of its obligations under this Agreement
or under the Trademark and Domain Name Agreement, or (iii) from use of the Marks
by Find.com; provided, however, that idealab!'s obligations to defend, indemnify
and hold harmless the Find/SVP Indemnitees with respect to Subsections (ii) and
(iii) above shall terminate and be of no further force or effect following
Find.com's receipt of financing (whether in one round or any number of rounds)
in an aggregate amount of not less than $5,000,000.
(c) Each of the parties covenants and agrees to:
(i) Work together to identify and jointly pursue mutually
beneficial Internet ventures, provided that each party shall have absolute and
sole discretion whether to enter into any such ventures and the terms of any
such ventures.
(ii) Work together in good faith to identify ways for idealab! or
its affiliates to invest in Find/SVP, provided that Find/SVP, idealab! and such
affiliates shall have absolute and sole discretion whether to enter into any
such investments and the terms of any such investments.
(d) The parties covenant and agree that, so long as Find.com, Inc.
continues to use the Marks or the Domain Name:
(i) Find/SVP shall not, directly or indirectly, whether as
owner, partner, or inventor, (A) attempt to register or acquire any internet
address containing "find," other than any top-level address beginning or ending
with findsvp.com or findout.com, or (B) use the domain name "findsvp.com" or
"findout.com" or the trademark "Find" to compete with
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Find.com's currently proposed portal Internet site containing a search engine,
general information and editorial content directed primarily to consumers; and
(ii) Find.com shall not, directly or indirectly, whether as
owner, partner, or inventor, use the Domain Name or the Marks to compete with
Find/SVP's current human delivered consulting and research services business.
8. MISCELLANEOUS.
(a) MODIFICATIONS AND AMENDMENTS. None of the terms of this Agreement
shall be deemed to be modified, and/or amended unless such a modification,
and/or amendment specifically references this Agreement and is in writing signed
by the party or parties to be bound.
(b) SEVERABILITY. If any clause or provision of this Agreement is
declared illegal, invalid or unenforceable under present or future laws
effective during the term hereof, it is the intention of the parties hereto to
reach agreement to terms that will lawfully carry out the intended purpose of
any such clause or provision, and to take such action as may be necessary to do
so. The parties further intend that the remainder of this Agreement shall not be
affected thereby, and shall remain in full force and effect.
(c) WAIVER. Any waiver of any party's rights or remedies under this
Agreement shall be effective only if made in writing signed by an authorized
officer of such party, and no failure or delay by any party in exercising any
right or remedy hereunder nor any custom or course of performance shall operate
as a waiver of any such right or remedy, nor shall any single or partial
exercise or waiver of any right preclude any other or further exercise thereof
or the exercise of any other right or remedy.
(d) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of California without regard
to the conflict of law principles thereof, except with respect to matters of law
concerning the internal corporate affairs of any corporate entity which is a
party to or the subject of this Agreement, and as to those matters the law of
the jurisdiction under which the respective entity derives its powers shall
govern.
(e) ENTIRE AGREEMENT. This Agreement and the License Agreement are
intended as the complete, final and exclusive statement of the terms of the
agreement between the parties with regard to the subject matter hereof and
thereof, and supersedes all prior oral and written agreements, understandings,
commitments, negotiations and practices among the parties relating to such
subject matter.
(f) CONSTRUCTION. The language used in this Agreement was jointly
drafted and negotiated by both parties and shall be deemed to be the language
chosen by both parties hereto to express their mutual intent and no rule of
strict construction against any party shall apply to any term or condition of
this Agreement. The headings contained in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning or
interpretation hereof.
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(g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
(h) RELATIONSHIP OF THE PARTIES. This Agreement does not create
a partnership or joint venture between the parties hereto, and does not make any
party the employee, agent or legal representative of any other party for any
purpose whatsoever. No party is granted any right or authority to assume or
create any obligation or responsibility, express or implied, on behalf of or in
the name of any other party.
(i) JURISDICTION AND VENUE. Any dispute regarding this Agreement
and the performance of any party hereunder, shall be subject to the exclusive
jurisdiction of the United States District Court for the Central District of
California. Each party hereby irrevocably and unconditionally (i) consents to
the jurisdiction of that court for any such dispute; and (ii) waives any
objection which such party may have to the laying of venue of any such dispute
in that court. In the event the United States District Court for the Central
District of California declines jurisdiction over any dispute relating to the
enforcement and/or interpretation of this Agreement, any such litigation shall
be brought in state court in California, in the County of Los Angeles, and the
parties hereto expressly consent to the jurisdiction of that court and waive any
objection thereto.
(j) NOTICES. All notices required or permitted to be given
hereunder shall be given in writing and shall be sent by prepaid first class
registered air mail, express courier, personal delivery, or facsimile to the
following addresses:
Find/SVP: Andrew P. Garvin
Find/SVP, Inc.
625 Avenue of the Americas, New York, NY 10011-2002
Fax: (212) 691-0704
With a copy to: Howard S. Breslow, Esq.
Breslow & Walker, LLP
100 Jericho Quadrangle
Jericho, NY 11753
Siegrun Kane, Esq.
Katherine McCarthy, Esq.
Morgan & Finnegan, L.L.P.
345 Park Avenue
New York, NY 10154
idealab!: Bill Gross
Douglas McPherson, Esq.
130 West Union Street,
Pasadena, CA 91103
Fax: (626) 535-2703
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With a copy to: David M. Hernand, Esq.
Latham & Watkins
633 West Fifth St., Suite 4000
Los Angeles, California 90071
Fax: (213) 891-8763
In the case of notice by facsimile transmission, notice shall be
confirmed immediately by prepaid courier service (e.g. Federal Express) or U.S.
mail. All notices shall be effective upon receipt when delivered at the address
so specified; provided, however, that any notice sent by mail shall be deemed to
have been received ten (10) business days after dispatch; any notice sent by
courier shall be deemed to have been received one (1) business day after
dispatch; and any notice sent by facsimile transmission shall be deemed to have
been received when such facsimile is confirmed electronically. Any party may
change the address to which notices are to be sent by so notifying the other
parties in writing in the manner provided herein.
(k) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Each party shall become
bound by this Agreement immediately upon affixing its signature hereto.
(l) FURTHER ASSURANCES. Each of the parties agrees to execute and
deliver such other documents and to take all such other actions as the other
parties, their successors, assigns or other legal representatives may reasonably
request to effect the terms of this Agreement, to consummate the transactions
contemplated hereunder, including, without limitation, the execution and
delivery of any and all agreements, affidavits, testimonies, declarations,
oaths, samples, exhibits, specimens and other documentation as may be reasonably
required.
[Signature page follows]
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Exhibit Z
---------
Part I
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Bill Gross' idealab!,
a California corporation
By:
-------------------------------------
Name:
Title:
Find/SVP, Inc.
a New York corporation
By:
-------------------------------------
Name:
Title:
Find.com, Inc.
a Delaware corporation
By:
-------------------------------------
Name:
Title:
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EXHIBIT Z
---------
Part II
TRADEMARK LICENSE AND DOMAIN NAME ASSIGNMENT AGREEMENT
This Trademark License and Domain Name Assignment Agreement (this
"LICENSE AGREEMENT") is entered into as of December __, 1999 (the "EFFECTIVE
DATE") by and between Find/SVP, Inc. ("FIND/SVP"), a New York corporation, with
its principal place of business at 625 Avenue of the Americas, New York, NY
10011-2002, and Find.com, Inc., a Delaware corporation ("FIND.COM"), with its
principal place of business at 130 West Union Street, Pasadena, CA 91103.
WHEREAS, Find/SVP and Find.com and Bill Gross's idealab! (a
California corporation located at 130 West Union Street, Pasadena, CA
("IDEALAB!")) have entered into that certain Collaboration Agreement, dated as
of the date hereof (the "COLLABORATION AGREEMENT");
WHEREAS, pursuant to the Collaboration Agreement, by entering into
this License Agreement, Find/SVP is (a) granting to Find.com the exclusive
perpetual license to use and sublicense the Licensed Mark (as defined herein)
within the Territory (as defined herein), including the right to use the
Licensed Mark, or any part thereof, as a corporate name, and (b) assigning to
Find.com the find.com Domain Name (as defined herein);
WHEREAS, Find/SVP is the sole and exclusive owner of the Licensed
Mark and the find.com Domain Name;
WHEREAS, the Find.com, Inc. company name was reserved and Find.com
was incorporated in anticipation of the signing of this License Agreement and
the Collaboration Agreement ("SAID AGREEMENTS") and Find/SVP agrees to and
ratifies said company name reservation and incorporation under the company name
Find.com, Inc. pursuant to the terms of said Agreements;
WHEREAS, pursuant to the Collaboration Agreement, Find/SVP desires
to grant such license and sell such find.com Domain Name to Find.com subject to
the terms and conditions of this License Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. DEFINITIONS
1.1. "FIND.COM DOMAIN NAME" shall mean the Internet domain name
"find.com", regardless of how used. However, "find.com Domain Name" shall not
include the Internet domain names "findsvp.com" or "findout.com".
1.2. "FIND.COM QUALIFIED IPO" shall have the meaning set forth for such
term in the Collaboration Agreement.
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1.3. "FIND.COM SHARES" shall have the meaning set forth for such term
in the Collaboration Agreement.
1.4. "IDEALAB! QUALIFIED IPO" shall have the meaning set forth for such
term in the Collaboration Agreement.
1.5. "IDEALAB! SHARES" shall have the meaning set forth for such term
in the Collaboration Agreement.
1.6. "LICENSED MARK" shall mean, collectively, the trademarks and
service marks "find.com" and "find," owned by Find/SVP as set forth in the
Attached Schedule A in any design, font and/or style, and any and all
registrations and applications for registration therefor, and all reissues,
renewals or extensions thereof. Without limiting the generality of the
foregoing, "Licensed Mark" does not include the trademarks/service marks
"find/svp", "findout", "findsvp.com" or "findout.com" or the designs and logos
used with said marks by Find/SVP.
1.7. "TERRITORY" shall mean the United States and all foreign
countries. Territory is intended to mean worldwide, including all foreign and
domestic jurisdictions.
1.8. "TRANSFER" shall mean any transfer (whether voluntary, involuntary
or by operation of law), including without limitation, by way of issuance, sale,
participation, pledge, hypothecation, gift, bequeath, intestate transfer,
distribution, liquidation, merger or consolidation in each case, to any person
or entity.
2. LICENSE GRANT
2.1. LICENSED MARK. Find/SVP hereby grants to Find.com an exclusive
(including as to Find/SVP, subject to Section 2.2 hereof), perpetual (subject to
termination as provided herein) license to use and, with the prior consent of
Find/SVP (which consent shall not be unreasonably withheld or delayed),
sub-license, the Licensed Mark, for use in connection with a new portal Internet
site containing a search engine, general information and editorial content, of
interest primarily to consumers, within the Territory, including, without
limitation, the reproduction of the Licensed Mark on or in association with
goods and services related thereto and, subject to Section 2.3 hereof, the use
of the Licensed Mark, or any part thereof, as a corporate name or as part of a
corporate name for Find.com. The use of the Licensed Mark by Find.com shall
inure to the benefit of Find/SVP. Find.com shall have the right to enforce the
Licensed Mark and exclude others from using the Licensed Mark in the Territory.
If Find.com notifies Find/SVP in writing that it elects not to take any such
action, Find/SVP shall have the right to enforce the Licensed Mark and exclude
others from using the Licensed Mark in the Territory.
2.2. FIND/SVP'S RETAINED RIGHTS. For so long as this License Agreement
remains in effect, Find/SVP shall hereafter have no right whatsoever to use or
reproduce the Licensed Mark except that Find/SVP may continue to use "FIND" as
said mark is currently being used as illustrated on the attached Schedule B to
operate its existing business under the name "Find/SVP" and may retain its
ownership and use of the "findsvp.com" and "findout.com" Internet domain names
and its ownership of trademark registrations covering "FIND."
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2.3. CORPORATE NAME. If, at the close of business on the last day of
the eighteenth month following the execution of this License Agreement (the
"NAME DETERMINATION DATE"), (i) in the event Find/SVP owns the Find.com Shares,
the value of the common stock of Find.com is not at least $10.00 per share (as
adjusted to give effect to stock splits, stock dividends and stock
reclassifications), or (ii) in the event Find/SVP owns the idealab! Shares,
idealab!'s common stock is not worth at least $100.00 per share (as adjusted to
give effect to stock splits, stock dividends and stock reclassifications), then
Find/SVP may direct Find.com to change the corporate name of Find.com to a name
that does not include the term "find.com;" PROVIDED that Find/SVP must notify
Find.com of such request within 30 days of the Name Determination Date or
thereafter waive any right to direct Find.com to change said corporate name. If
Find.com receives notification of the requested corporate name change from
Find/SVP within 30 days of the Name Determination Date, Find.com shall effect a
corporate name change within 90 days after receiving such notice; provided that
Find.com shall be permitted a reasonable period of time within which to deplete
any existing stocks and fulfill all outstanding marketing commitments involving
Find.com's name. For purposes of this Section 2.3, the per share value of the
common stock of Find.com on the Name Determination Date shall be equal to (x) if
Find.com is a privately held corporation, the price determined in good faith by
the Board of Directors of Find.com, or (y) if Find.com is a publicly held
corporation, the average closing bid price at which its common stock trades on
the NASDAQ Stock Market or a national stock exchange measured over 20
consecutive trading days. Notwithstanding the foregoing, Find.com shall continue
to have the right to use the Licensed Mark in commerce regardless of any name
change and nothing contained in this Section 2.3 shall in any way impair or
otherwise adversely affect the rights granted to Find.com pursuant to Sections
2.1 and 3.1 hereof with respect to the Licensed Mark or the find.com Domain
Name.
3. NAME ASSIGNMENT
3.1. NAME ASSIGNMENT. Find/SVP hereby assigns and conveys to Find.com
all of Find/SVP's worldwide right, title and interest in and to the find.com
Domain Name and the registration agreement for the find.com Domain Name, and
Find.com hereby accepts and receives all of Find/SVP's right, title and interest
in and to the find.com Domain Name and such registration agreement.
3.2. ASSIGNMENT DOCUMENTATION. As soon as the parties execute this
Agreement, Find/SVP shall execute and have notarized the current version of
Network Solutions "Registrant Name Change Agreement" in the form attached hereto
as Schedule C, and shall execute and immediately transmit, said executed and
notarized Agreement to Find.com via facsimile and via overnight courier.
Find.com shall be responsible for submitting the completed agreement to Network
Solutions and shall provide Find/SVP with a copy of the completed Agreement and
any correspondence regarding same sent to or received from Network Solutions.
Find/SVP shall execute any further papers needed to accomplish the transfer.
3.3. INTERNET ADDRESS RESTRICTIONS. Subject to Section 2.2, Find/SVP
shall not, directly or indirectly, attempt to register or acquire any internet
address containing the term "find," other than top-level Internet addresses
beginning or ending with "findsvp" or "findout."
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4. INITIAL COMPENSATION; ROYALTY PAYMENTS
4.1. INITIAL COMPENSATION. Upon execution of this License Agreement and
execution of the assignment documentation set forth in Section 3.2 hereof,
Find.com shall deliver to Find/SVP $800,000 in cash (via wire transfer to an
account designated in writing by Find/SVP).
4.2. ROYALTY PAYMENTS. Find.com shall pay to Find/SVP an ongoing
royalty equal to 1% of the total gross revenues of Find.com payable within
forty-five (45) days following the end of each quarter during the term of this
License Agreement. The obligation to pay such royalty shall terminate upon the
earlier to occur of:
4.2.1. Find/SVP's receipt of royalties pursuant to this Section 4.2 totaling
$3,000,000;
4.2.2. In the event Find/SVP owns the Find.com Shares, following a Find.com
Qualified IPO, upon such time as the common stock of Find.com trades at
an average closing bid price of $6.00 (as adjusted to give effect to
stock splits, stock dividends and stock reclassifications) or more per
share measured over 20 consecutive trading days; and
4.2.3. In the event Find/SVP owns the idealab! Shares, following an idealab!
Qualified IPO, upon such time as the common stock of idealab! trades at
an average closing bid price of $60.00 (as adjusted to give effect to
stock splits, stock dividends and stock reclassifications) or more per
share measured over 20 consecutive trading days.
During the term of this License Agreement, Find.com shall retain
books and records sufficient to evidence its compliance with this Section 4.2.
Find/SVP shall, on dates to be mutually agreed upon by Find/SVP and Find.com,
have the right to inspect such books and records during normal business hours,
but no more frequently than once each year.
5. OTHER AGREEMENTS
Find.com will include a link (the "Link") to the Find/SVP website located
at www.findsvp.com from the front page of the Find.com website located at
www.find.com for three years following the Effective Date. The Link shall have
dimensions of not less than 1.5 inches across and .75 inches in height. The Link
may include Find/SVP's name, logo, trademark and any business description which
distinguishes Find/SVP's business from Find.com's business; PROVIDED, HOWEVER,
that the content, look and feel of the Link must be approved by Find.com, which
consent may not be unreasonably withheld. Notwithstanding the foregoing, the
Link (including any images or text associated with the Link) may not (i) include
advertising for third parties, (ii) exceed a file size of 3KB or (iii) suggest
any affiliation between Find/SVP and Find.com. In the event that the find.com
website provides web content directed primarily at business customers, Find.com
will consider extending the Link for an appropriate period. Find/SVP hereby
grants Find.com a non-exclusive license to use, reproduce and display Find/SVP's
name, logo, trademark and any content contained in the Link solely in connection
with its obligations under this Section 5.
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6. REPRESENTATIONS AND WARRANTIES
Find/SVP hereby represents and warrants that
(i) Find/SVP has full power and authority to enter into this License
Agreement, to grant the rights granted herein, and to perform its obligations
hereunder, and to do so will not violate or conflict with any term or provision
of any agreement, instrument, statute, rule, regulation, order or decree to
which Find/SVP is a party or by which it is bound;
(ii) Find/SVP is the sole owner of the Licensed Mark and the find.com
Domain Name, free and clear of any liens or other encumbrances;
(iii) Find/SVP has no knowledge of any third party who has registered,
has applied to register, is using, is authorized to use or asserts a right to
use the Licensed Mark;
(iv) the find.com Domain Name is registered with InterNIC;
(v) there have been no challenges or disputes regarding Find/SVP's
ownership or use of the Licensed Mark or the find.com Domain Name, and, to
Find/SVP's knowledge, no such challenge or dispute is threatened;
(vi) Find/SVP is not aware of any facts or circumstances that, as of
the date hereof, could reasonably form the basis of a successful challenge to
its ownership or use of the Licensed Mark or Find.com Domain Name;
(vii) no consent or other authorization is required to be obtained in
order to validly license and transfer the rights licensed and transferred
hereunder;
(viii) Find/SVP has neither Transferred nor caused to be Transferred any
right, title or interest in either the Licensed Mark or the find.com Domain Name
to any person or entity;
(ix) to Find/SVP's knowledge, the content on the Find/SVP website does
not and will not infringe any copyright, trademarks, trade secrets or other
intellectual property rights of any third party and does not and will not
constitute a defamation or invasion of the rights of privacy or publicity of any
kind of any third party;
(x) to Find/SVP's knowledge, the Find/SVP website does not and will
not violate the laws, statutes or regulations of any jurisdiction; and
(xi) to Find/SVP's knowledge, Find.com's use of the Find/SVP trademark,
name and logo pursuant to Section 5 does not and will not violate the rights of
any third party, including without limitation, copyright, trademark, trade
secret, privacy, publicity or other right.
Find/SVP acknowledges and understands that Find.com is entering into this
License Agreement in reliance upon the representations and warranties of
Find/SVP herein.
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7. PROMOTION OF GOODWILL; STANDARDS OF CONDUCT; QUALITY CONTROL
7.1. COMPLIANCE WITH LAW. The parties shall comply with all applicable
laws, regulations, standards and decrees of any governmental authorities in the
Territory in connection with their respective uses of FIND as provided herein.
7.2. AVOIDANCE OF ADVERSE ACTIONS. Neither party shall take any action
that would jeopardize or impair (i) Find/SVP's ownership of the Licensed Mark,
(ii) Find.com's ownership of the find.com Domain Name subject to the terms of
this Agreement and the Collaboration Agreement or (iii) the legality or
enforceability of the Licensed Mark or the find.com Domain Name.
7.3. QUALITY CONTROL STANDARDS. Neither party shall take any action
and/or shall cease taking any action that may: (i) impair the quality of
products and services with which the Licensed Mark is used, or (ii) in any way
disparage the Licensed Mark, the "FIND," "Find/SVP or "FINDOUT" trademarks or
the other party's goods and services. Find.com shall use the Licensed Mark only
in connection with goods and services that are of a nature and quality
equivalent or better than the nature and quality of the current goods and
services offered by other companies currently majority owned by idealab!.
Find/SVP shall use its "FIND", "FIND/SVP" and "FINDOUT" marks in connection with
goods and services that are of a nature and quality equivalent or better than
the nature and quality of its current goods and services. In the event that
Find/SVP determines that Find.com's goods and services offered in connection
with the Licensed Mark are below these quality standards, then Find/SVP shall so
notify Find.com in writing. Find.com will then have 30 days after the date of
Find/SVP's notice to correct any such deficiency. In the event that the
deficiency is not corrected within said time frame, then the parties will have
60 days to mediate the dispute before an impartial mediator in such a manner
that the mediation is concluded within said 60 day period. If the matter is not
resolved through mediation and the deficiency continues, then this will
constitute a breach of the Agreement and Find/SVP shall have the right to bring
action seeking specific performance directing compliance with this provision
and/or injunctive relief preventing the actions in question and recovery of
damages in accordance with the terms of this agreement.
8. INTELLECTUAL PROPERTY PROTECTION OF THE LICENSED MARK
8.1. MAINTENANCE OF THE REGISTRATION OF THE LICENSED MARK. Find/SVP
shall diligently prosecute, maintain and timely renew all applications for
trademark registration, declarations of use, applications for renewal with
respect to the Licensed Mark at Find/SVP's sole cost and expense. Find/SVP shall
provide to Find.com copies of any documents filed or received in connection with
any registration owned by Find/SVP for the Licensed Mark. In the event that
Find.com wishes Find/SVP to apply for additional registration coverage for the
Licensed Mark in any countries, then Find.com shall so request in writing that
Find/SVP do so and shall bear all fees and costs associated with said filings.
Any such filings shall be in Find/SVP's name.
8.2. In the event that Find/SVP determines to abandon the use of the
"FIND" mark as provided for in Section 2.2 herein, then Find.com or its designee
shall have an irrevocable,
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exclusive option, but not the obligation, to purchase all or any portion of the
rights to the "Find" mark at a price to be negotiated in good faith by the
parties. If the parties are unable to agree upon the terms of any such
acquisition of rights within 90 days following the date that Find/SVP makes the
determination to abandon the "Find" mark (the "ABANDONMENT DATE"), then Find/SVP
shall have the right to sell or otherwise transfer any and all rights to the
"Find" mark to any other party; provided, however, that if Find/SVP proposes to
sell or otherwise transfer any rights to the "Find" mark to any party, then
Find/SVP shall, no later than 45 calendar days prior to the consummation of such
sale or transfer, give written notice to Find.com of such proposed sale or
transfer (the "NOTICE OF SALE"). Such Notice of Sale shall describe the
principal terms of the proposed sale or transfer, including the rights to be
transferred, the price, the consideration and identity of the proposed purchaser
or transferee and offer to sell or transfer the identical rights to Find.com or
its designee on such identical terms. If Find.com and its designees fail to
accept such offer by written notice within 30 calendar days after its receipt of
the Notice of Sale, then Find/SVP may proceed with the proposed sale in
accordance with the terms stated in the Notice of Sale. If Find/SVP does not
consummate the proposed sale or transfer in accordance with the terms set forth
in the Notice of Sale within 60 days following the delivery of the Notice of
Sale, then Find/SVP must reoffer to transfer or sell to Find.com the subject
rights to the "Find" mark in accordance with this Section 8.2 prior to
consummating any such transfer or sale.
8.3. NOTIFICATION OF INFRINGEMENT. Each party shall notify the other
promptly after such party becomes aware of (i) any use or registration of any
word or phrase, symbol, logo or design, or any combination of any of the
foregoing, that such party believes or has reason to believe might constitute
infringement or dilution of the Licensed Mark; (ii) any claim of any rights in
the Licensed Mark, or in any confusingly similar Mark; and/or (iii) any action,
publication or statement that such party believes to be adverse or detrimental
to either party's rights in the Licensed Mark or which such party believes will
dilute or impair the value of the Licensed Mark.
8.4. LEGAL ACTION. Find.com shall have the right, but not the
obligation, to cause any infringement or dilution of the Licensed Mark to cease,
including, without limitation, filing a suit with respect to such infringement
or dilution. If Find.com elects to commence litigation with respect to such
infringing or diluting activity, then Find.com shall promptly provide Find/SVP
with written notice thereof. Find/SVP shall (i) cooperate at its own expense
with Find.com in any litigation proceedings instituted under this Section 8.4
against a third party (including, without limitation, making available at
reasonable times and under appropriate conditions all relevant personnel,
records, specimens and other similar materials in its possession or control) and
(ii) consent to being named as a party to any such litigation proceedings.
Find.com shall have exclusive control over any litigation instituted under this
Section 8.4, except that Find/SVP may thereafter join such suit with counsel of
its own choosing. If Find.com names Find/SVP as a co-plaintiff with Find.com,
then Find.com shall pay Find/SVP's expenses. If Find/SVP joins suit at its own
option or opts to use its own counsel after being named as a party by Find.com,
then Find/SVP does so at its own expense. All legal actions undertaken pursuant
to this Section 8.4 shall be at the expense of Find.com. All recoveries in any
legal actions undertaken pursuant to this Section 8.4 shall belong to Find.com.
Notwithstanding the foregoing, if the defendant in any such litigation
proceeding alleges any counterclaims against Find.com or any of the Find.com
Indemnitees (as defined below) which are Find/SVP Indemnified Claims (as
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defined below), the defense of such counterclaims shall be the responsibility of
Find/SVP pursuant to Section 9.2 and 9.3 hereof.
9. DEFENSE AND INDEMNIFICATION
9.1. Find.com shall defend, indemnify, and hold harmless Find/SVP and
its subsidiaries, affiliates, directors, officers, employees, affiliates, agents
and contractors from and against any and all claims, judgments, lawsuits,
liabilities, damages, penalties, losses, costs and expenses (including, but not
limited to, court costs, reasonable attorneys' fees, and expert witness fees)
(collectively, "DAMAGES") arising out of, or in connection with, any third party
claim which results, in whole or in part, or is claimed to result, in whole or
in part, from Find.com's use of the Licensed Mark by Find.com or any breach by
Find.com of any of its obligations under this License Agreement (collectively,
the "FIND.COM INDEMNIFIED CLAIMS").
9.2. Find/SVP shall defend, indemnify, and hold harmless Find.com and
its subsidiaries, affiliates (including idealab!), directors, officers,
employees, affiliates, agents and contractors (collectively, the "FIND.COM
INDEMNITEES") from and against any and all Damages arising out of, or in
connection with, any third party claim which results, in whole or in part, or is
claimed to result, in whole or in part, from (a) Find/SVP's use of the "Find"
mark, (b) any actual or alleged infringement or misappropriation by the Licensed
Mark of any trademark or other rights of any third party and (c) any breach by
Find/SVP of any of its representations, warranties or obligations under this
License Agreement (collectively, the "FIND/SVP INDEMNIFIED CLAIMS").
9.3. In the event that either Find/SVP or Find.com asserts the
existence of any right to indemnity under Sections 9.1 or 9.2, such party
("INDEMNITEE") shall give written notice thereof to the other ("INDEMNITOR") of
the nature and amount of the Damages asserted promptly, and, in the case of any
claim relating to a third party action, within ten (10) days prior to the date a
response or answer thereto is due, in writing, thereof. The failure, refusal or
neglect of the Indemnitee to notify the Indemnitor within the time period
specified above of any such claim or action shall not relieve the Indemnitor
from any liability which it may have to the Indemnitee in connection therewith,
unless the Indemnitor was prejudiced by such delay, and then only to the extent
of the harm suffered by such delay. After such notice, if the Indemnitor shall
acknowledge in writing to the Indemnitee that the Indemnitor shall be obligated
under the terms of its indemnity hereunder in connection with such Damages
claim, then the Indemnitor shall be entitled, if it so elects at its own cost,
risk and expense to: (i) take control of the defense and investigation of such
lawsuit or action; (ii) employ and engage attorneys of its own choice reasonably
acceptable to the Indemnitee, to handle and defend the same, unless the named
parties to such action or proceeding include both the Indemnitor and the
Indemnitee and the Indemnitee believes in good faith that (a) there may be one
or more legal defenses available to such Indemnitee that are different from or
additional to those available to the Indemnitor or (b) there is a potential
conflict of interests; and (iii) compromise or settle such claim, PROVIDED,
HOWEVER, without the prior written consent of the Indemnitee, the Indemnitor
shall not have the right to compromise or settle any claim which (a) requires as
a condition to such compromise or settlement an admission of liability or
wrongdoing by the Indemnitee or (b) requires any other compensation, remedy or
relief other than the payment of money damages by Indemnitor.
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Notwithstanding the foregoing, if the compromise, settlement or resolution of
any such claim is reasonably expected to have, individually or in the aggregate,
a direct and significant adverse effect on the Indemnitee's business operations
or, in the case where Find/SVP is the Indemnitee, a direct and significant
adverse effect on any rights in the Licensed Mark, then, notwithstanding the
foregoing, the Indemnitee shall be entitled to control such compromise,
settlement or resolution, including without limitation to take control of the
defense and investigation of such lawsuit or action, to employ and engage
attorneys of its own choice to handle and defend the same, at the Indemnitor's
sole cost, risk and expense, and to compromise or settle such claim. In the
event that the Indemnitor does not so assume the defense, conduct or settlement
of any claim, demand or assessment within thirty (30) days after receiving
notice of any claim relating to a third party action as set forth above, the
Indemnitee shall be entitled to defend, conduct or settle such claim, demand or
assessment without the written consent of the Indemnitor and without relieving
the Indemnitor from any of the obligations to indemnify the Indemnitee under
this Section 9.
9.4. Find.com shall maintain such insurance as will adequately protect
Find/SVP against such damage, liability, claims, losses, and expenses (including
attorneys fees) resulting from Find.com's use of the Licensed Mark. Any
insurance obtained pursuant to this paragraph shall be with an insurance carrier
acceptable to Find/SVP, have a minimum coverage of at least $1 million combined
single limit, and name Find/SVP as additional insured; provided, however, on the
date that is nine months following the date of this Agreement, such insurance
coverage shall be increased to at least $5 million combined single limit.
9.5. Find/SVP shall maintain such insurance as will adequately protect
Find.com against such damage, liability, claims, losses, and expenses (including
attorneys fees) resulting from Find/SVP's use of the "Find" trademark. Any
insurance obtained pursuant to this paragraph shall be with an insurance carrier
acceptable to Find.com, have a minimum coverage of at least $1 million combined
single limit, and name Find.com and idealab! as additional insureds; provided,
however, on the date that is nine months following the date of this Agreement,
such insurance coverage shall be increased to at least $5 million combined
single limit.
10. TERM AND TERMINATION OF AGREEMENT
10.1. TERM OF LICENSE. This License Agreement shall commence on the
Effective Date and remain in full force and effect perpetually; provided,
however that Find/SVP shall have the right to terminate this License Agreement
pursuant to Section 4 of the Collaboration Agreement or in the event that
Find.com has availed itself of, or been subjected to by any third party, a
proceeding in bankruptcy in which Find.com is the named debtor; an assignment by
Find.com for the benefit of its creditors; the appointment of a receiver for
Find.com; or any other proceeding involving insolvency or the protection of, or
from, creditors, and the same has not been discharged or terminated within
thirty (30) days. In the event of any such termination, Find.com shall cease its
use of the Licensed Mark, including as any part of Find.com's corporate name,
within 90 days after the effective date of such termination; provided that
Find.com shall be permitted a reasonable period of time within which to deplete
any existing stocks and fulfill all outstanding marketing commitments involving
Find.com's name and the Licensed Mark.
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10.2. NO FIND/SVP RIGHT TO TERMINATE AGREEMENT. Except as set forth in
Section 10.1, Find/SVP may not terminate this License Agreement or the rights or
licenses granted hereunder to Find.com for any reason. Find/SVP's exclusive
remedy upon any breach by Find.com of its obligations hereunder shall be to seek
recovery of monetary damages, as limited by Section 11 hereof, and to seek
injunctive relief or specific performance hereunder.
10.3. RIGHT TO TERMINATE. Find.com shall have the right to terminate
this License Agreement at any time for any reason.
10.4. SECTION 365(N) LICENSE RIGHTS. The parties agree and acknowledge
that all rights and licenses granted under this License Agreement are, and shall
otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy
Code, licenses of rights to "intellectual property" as defined under Section 101
of the U.S. Bankruptcy Code. The parties agree that both parties, as a holders
of such rights hereunder, shall retain and may exercise all rights and elections
under the U.S. Bankruptcy Code.
10.5. SURVIVAL OF CERTAIN PROVISIONS. The provisions of Sections 9,
10.4, 11 and 12 shall survive the termination of this License Agreement for any
reason.
11. LIMITATION OF LIABILITY
11.1. LIMITATION OF LIABILITY. EXCEPT FOR OBLIGATIONS ARISING OUT OF
SECTION 9 THAT ARE BASED ON Find.com INDEMNIFIED CLAIMS OR FIND/SVP INDEMNIFIED
CLAIMS, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY OR THEIR AFFILIATES,
SUCCESSORS OR SUBLICENSEES FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL, EXEMPLARY
OR INCIDENTAL DAMAGES (INCLUDING WITHOUT LIMITATION, LOST OR ANTICIPATED
REVENUES OR PROFITS RELATING TO THE SAME) ARISING FROM ANY CLAIM RELATING
DIRECTLY OR INDIRECTLY TO THIS LICENSE AGREEMENT, WHETHER A CLAIM FOR SUCH
DAMAGES IS BASED ON WARRANTY, CONTRACT, OR TORT (INCLUDING, WITHOUT LIMITATION,
NEGLIGENCE OR STRICT LIABILITY). EXCEPT FOR OBLIGATIONS ARISING OUT OF SECTION 9
THAT ARE BASED ON Find.com INDEMNIFIED CLAIMS OR FIND/SVP INDEMNIFIED CLAIMS,
BOTH PARTIES ACKNOWLEDGE AND AGREE THAT PAYMENT BY THE DEFAULTING PARTY OR
RETENTION BY THE NON-DEFAULTING PARTY OF DIRECT DAMAGES, AS LIMITED BY THE
FOREGOING SENTENCE, INJUNCTIVE RELIEF and specific performance SHALL BE THE
NON-DEFAULTING PARTY'S SOLE AND EXCLUSIVE REMEDY IN EXHAUSTION OF ALL OTHER
REMEDIES UNDER THIS LICENSE AGREEMENT, AT LAW OR IN EQUITY. EACH PARTY HEREBY
WAIVES ANY CLAIM IT MAY HAVE THAT ANY REMEDY HEREUNDER FAILS OF ITS ESSENTIAL
PURPOSE.
12. GENERAL PROVISIONS
12.1. CHOICE OF LAW. This License Agreement shall be governed by and
construed in accordance with the internal laws of the State of California
without regard to the conflict of law
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principles thereof, except with respect to matters of law concerning the
internal corporate affairs of any corporate entity which is a party to or the
subject of this License Agreement, and as to those matters the law of the
jurisdiction under which the respective entity derives its powers shall govern.
12.2. RIGHTS TO ASSIGN LICENSE. Find.com shall be permitted to assign
any and all rights granted herein to idealab! or any subsidiary of Find.com.
12.3. JURISDICTION AND VENUE. Any dispute regarding this License
Agreement and Find/SVP's and/or Find.com's performance hereunder, shall be
subject to the exclusive jurisdiction of the United States District Court for
the Central District of California. Each party hereby irrevocably and
unconditionally (i) consents to the jurisdiction of that court for any such
dispute; and (ii) waives any objection which such party may have to the laying
of venue of any such dispute in that court. In the event the United States
District Court for the Central District of California declines jurisdiction over
any dispute relating to the enforcement and/or interpretation of this Agreement,
any such litigation shall be brought in state court in California, in the County
of Los Angeles, and the parties hereto expressly consent to the jurisdiction of
that court and waive any objection thereto.
12.4. RELATIONSHIP OF THE PARTIES. This License Agreement does not
create a partnership or joint venture between the parties hereto, and does not
make either party the employee, agent or legal representative of the other for
any purpose whatsoever. Neither party is granted any right or authority to
assume or create any obligation or responsibility, express or implied, on behalf
of or in the name of the other party.
12.5. COSTS AND EXPENSES. Except as otherwise expressly stated herein,
each party will bear its own costs and expenses in connection with this License
Agreement.
12.6. ENTIRE AGREEMENT. This License Agreement and the Collaboration
Agreement are intended as the complete, final and exclusive statement of the
terms of the agreement between the parties with regard to the subject matter
hereof and thereof, and supersedes all prior oral and written agreements,
understandings, commitments, negotiations and practices between the parties
relating to such subject matter.
12.7. MODIFICATIONS AND AMENDMENTS. None of the terms of this License
Agreement shall be deemed to be modified, and/or amended by either party unless
such a modification, and/or amendment specifically references this License
Agreement and is in writing signed by the party to be bound.
12.8. NON-WAIVERS. Any waiver of either party's rights or remedies under
this License Agreement shall be effective only if made in writing signed by an
authorized officer of such party, and no failure or delay by either party in
exercising any right or remedy hereunder nor any custom or course of performance
shall operate as a waiver of any such right or remedy, nor shall any single or
partial exercise or waiver of any right preclude any other or further exercise
thereof or the exercise of any other right or remedy.
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12.9. SEVERABILITY. If any clause or provision of this License Agreement
is declared illegal, invalid or unenforceable under present or future laws
effective during the term hereof, it is the intention of the parties hereto to
reach agreement to terms that will lawfully carry out the intended purpose of
any such clause or provision, and to take such action as may be necessary to do
so. The parties further intend that the remainder of this License Agreement
shall not be affected thereby, and shall remain in full force and effect.
12.10. NOTICES. All notices required or permitted to be given hereunder
shall be given in writing and shall be sent by prepaid first class registered
air mail, express courier, personal delivery, or facsimile to the following
addresses:
Find/SVP: Andrew P. Garvin
President
Find/SVP
625 Avenue of the Americas, New York, NY
10011-2002
Fax: (212) 691-0704
With a copy to: Howard S. Breslow, Esq.
Breslow & Walker, LLP
100 Jericho Quadrangle
Jericho, NY 11753
Siegrun Kane, Esq.
Katherine McCarthy, Esq.
Morgan & Finnegan, L.L.P.
345 Park Avenue
New York, NY 10154
Find.com : Bill Gross
Douglas McPherson, Esq.
130 West Union Street,
Pasadena, CA 91103
Fax: (626) 535-2701
With a copy to: David M. Hernand, Esq.
Latham & Watkins
633 West Fifth St., Suite 4000
Los Angeles, California 90071
Fax: (213) 891-8763
In the case of notice by facsimile transmission, notice shall be
confirmed immediately by prepaid courier service (e.g. Federal Express) or U.S.
mail. All notices shall be effective upon receipt when delivered at the address
so specified; provided, however, that any notice sent by mail shall be deemed to
have been received ten (10) business days after dispatch;
12
<PAGE>
any notice sent by courier shall be deemed to have been received one (1)
business day after dispatch; and any notice sent by facsimile transmission shall
be deemed to have been received when such facsimile is confirmed electronically.
Any party may change the address to which notices are to be sent by so notifying
the other party in writing in the manner provided herein.
12.11. SUCCESSORS AND ASSIGNS. This License Agreement shall be binding
upon and inure to the benefit of the parties, their successors and assigns
(including, without limitation, any successor or assign of Find.com).
12.12. FURTHER ASSURANCES AND COOPERATION. Each of the parties agrees to
execute and deliver such other documents and to take all such other actions as
any of the other parties, its successors, assigns or other legal representatives
may reasonably request to effect the terms of this License Agreement, to
consummate the transactions contemplated hereunder, including, without
limitation, the execution and delivery of any and all agreements, affidavits,
testimonies, declarations, oaths, samples, exhibits, specimens and other
documentation as may be reasonably required.
12.13. CONFIDENTIALITY. Find/SVP will not release any public announcement
relating to this License Agreement, or any of the other agreements, documents
and instruments to be entered into in connection herewith, without Find.com's
approval, which shall not be unreasonably withheld. In any event, Find/SVP may
make such public announcement as its counsel or accountants reasonably believe
is the minimum disclosure necessary to satisfy Find/SVP's obligations under
applicable securities law.
12.14. CONSTRUCTION. The language used in this License Agreement was
jointly drafted and negotiated by both parties and shall be deemed to be the
language chosen by both parties hereto to express their mutual intent and no
rule of strict construction against either party shall apply to any term or
condition of this License Agreement. The headings contained in this License
Agreement are for convenience of reference only and shall not limit or otherwise
affect the meaning or interpretation hereof.
12.15. COUNTERPARTS. This License Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Each party shall become
bound by this License Agreement immediately upon affixing its signature hereto.
IN WITNESS WHEREOF, the parties hereto have caused this License
Agreement to be signed by duly authorized officers or representatives as of the
date first above written.
13
<PAGE>
Find/SVP Find.com, Inc.
By: By:
------------------------------------ ------------------------------------
Print Name: Print Name:
---------------------------- ----------------------------
Title: Title:
--------------------------------- ---------------------------------
Date: Date:
---------------------------------- ----------------------------------
14
<PAGE>
SCHEDULE A
----------
Common law rights to the mark FIND based on usage in commerce by
Find/SVP dating back to at least as early as June 15, 1971.
Federally registered trademarks/service marks as reflected in the
following registrations:
1. FIND
U.S. Registration No. 1,776,731, issued 6/15/93
covering "business research, business consulting and business
information services"
International Class 35
2. FIND
U.S. Registration No. 1,204,459, issued 8/10/82
covering "Publications, namely, Directories, Studies, Reference
Books, Special Research Reports, Catalogs and Newsletters"
International Class 16
3. FIND
U.S. Registration No. 982,082, issued 4/09/74
covering "providing computerized information retrieval services
on a subscription basis"
International Class 35
4. find.com
domain name registered through Network Solutions, Inc.
record created on 2/10/94
15
<PAGE>
SCHEDULE B
----------
Samples of use of FIND as part of FIND/SVP, e.g. 1-800-FIND-SVP,
findsvp.com, etc. attached.
16
<PAGE>
SCHEDULE C
----------
NSI transfer agreement
17
EXHIBIT AA
----------
Part I
SENIOR GRID PROMISSORY NOTE
New York, New York
$1,000,000 December 30, 1999
For value received, the undersigned unconditionally (and if more than
one, jointly and severally) promises to pay to the order of THE CHASE MANHATTAN
BANK ("Chase"), at its office located at 270 Park Avenue, New York, New York
10017, or to such other address as Chase may notify the undersigned, the sum of
One Million and no/100 Dollars ($1,000,000) or such unpaid principal amount of
each loan made to the undersigned by Chase and outstanding under this Note, on
the earlier of (i) demand, (ii) the maturity date(s) as shown on the attached
schedule or any continuation of the schedule, or (iii) June 30, 2000 (the
"Maturity Date").
This Note includes any Schedule or Rider attached hereto.
1. DEFINITIONS. As used in this Note:
------------
"BANKING DAY" means any day on which commercial banks are not
authorized or required to close in New York and whenever such day relates to an
Euro Rate loan or notice with respect to any Euro Rate loan, a day on which
dealings in U.S. dollar deposits are also carried out in the London interbank
market.
"CONSOLIDATED CURRENT ASSETS" means, in respect of the undersigned, all
of its current assets and the current assets of its Subsidiaries (if any) on a
consolidated basis which should, in accordance with GAAP, be classified as
current assets.
"CONSOLIDATED CURRENT LIABILITIES" means, in respect of the
undersigned, all of its current liabilities and the current liabilities of its
Subsidiaries (if any) on a consolidated basis which should, in accordance with
GAAP, be classified as current liabilities.
"CONSOLIDATED TANGIBLE NET WORTH" means, in respect of a Person, the
consolidated stockholders' equity in such Person and its Subsidiaries determined
in accordance with GAAP, except that there shall be deducted therefrom all
intangible assets (other than leasehold improvements) of such Person and its
Subsidiaries, such as organization costs, unamortized debt discount and expense,
goodwill, patents, trademarks, copyrights, contractual franchises, and research
and development expenses.
"DEBT" of any Person means (i) all obligations of such Person for
borrowed money (including in the case of the undersigned) the aggregate
outstanding amount of loans hereunder) or the deferred purchase price of
property or services, (ii) all obligations of such Person evidenced by bonds,
notes, debentures, drafts or similar instruments or securities, (iii)
indebtedness for borrowed money or the deferred purchase price of property or
services secured by any lien existing on property owned or acquired by such
Person, whether or not the liability secured thereby shall have been incurred or
assumed by such Person, (iv) all capitalized lease obligations of such Person,
<PAGE>
2
(v) the undrawn amount of all letters of credit issued for the account of such
Person, and (vi) all guaranties and other contingent obligations of such Person
in respect of obligations and liabilities of others referred to in clauses
(i)-(v) above.
"EURO RATE" means, for any Fixed Rate loan based upon the LIBOR Rate
for any Interest Period therefor, a rate per annum (rounded upwards, if
necessary, to the nearest 1/16 of 1%) to be equal to the quotient of (i) the
LIBOR Rate for such loan for such Interest Period, divided by (ii) one minus the
Reserve Requirement for such loan for such Interest Period plus two and one-half
percent (2.5%).
"FISCAL YEAR" means the undersigned's fiscal year consisting of a
twelve month period ending on each December 31.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect on the date hereof and from time to time
hereafter consistently applied.
"INTEREST PERIOD" means with respect to Euro Rate loans, the period as
Chase may offer and as the Borrower may select, commencing on the Loan Date and
ending on the numerically corresponding day in the first, second, third, or
sixth calendar month thereafter, provided that each such Interest Period which
commences on the last Banking Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Banking Day of the appropriate calendar month. In
no event shall an Interest Period have a duration of less than one month or
exceed the Maturity Date. "INTEREST PERIOD" means with respect to Money Market
Rate loans, for any single borrowing, the period for which such borrowing is
offered.
"LIBOR RATE" means the rate per annum (rounded upwards, if necessary,
to the nearest 1/16 of 1%) quoted by the London office of Chase at approximately
11:00 a.m. London time (or as soon thereafter as practicable) on the Second
Business Day prior to the commencement of an Interest Period for the offering by
Chase to leading banks in the London interbank market of United States dollar
deposits having a term comparable to such Interest Period and in an amount
comparable to the principal amount of the loan under the Note.
"LOAN DATE" means the date on which a loan under this Note is made.
"MONEY MARKET RATE" means if offered, a rate of interest per year as
offered by Chase from time to time on any single commercial borrowing for a
period of up to ninety (90) days. The Money Market Rate of interest available
for any subsequent borrowings may differ since Money Market Rates may fluctuate
on a daily basis.
"PERSON" means an individual, a corporation, a company, a voluntary
association, a partnership, a trust, an unincorporated organization or a
government or any agency, instrumentality or political subdivision thereof.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
<PAGE>
3
"REGULATORY CHANGE" means any change after the date hereof in United
States federal, state or foreign laws or regulations (including Regulation D) or
the adoption or making after such date of any interpretations, directives or
requests applying to a class of banks including the Bank of or under any United
States federal or state, or any foreign, laws or regulations (whether or not
having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"RESERVE REQUIREMENT" means, for any Euro Rate loan for any Interest
Period therefor, the average maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding $5,000,000,000 against
"Eurocurrency liabilities" (as such term is used in Regulation D).
"SUBORDINATED DEBT" means all indebtedness not to exceed the aggregate
amount of $2,975,000 owing under the subordinated notes issued by the
undersigned to Furman Selz SBIC, L.P. pursuant to a Note and Warrant Purchase
Agreement, dated as of October 31, 1996, among FIND/SVP, Inc., FIND/SVP
Published Products, Inc., FIND/SVP Internet Services, Inc. and Furman Selz FBIC,
L.P. and the subordinated notes issued by the undersigned to SVP, S.A. pursuant
to Note and Warrant Purchase Agreements, each dated as of November 26, 1996 and
as of August 25, 1997, respectively, among FIND/SVP, Inc., FIND/SVP Published
Products, Inc., FIND/SVP Internet Services, Inc. and SVP, S.A., which
indebtedness shall be subject to intercreditor agreements in form and substance
satisfactory to Chase.
"SUBSIDIARY" means any corporation or other entity of which at least a
majority of the securities or other ownership interests having ordinary voting
power (absolutely or contingently) for the election of directors or other
persons performing similar functions are at the time owned directly or
indirectly by the undersigned.
2. MATURITY DATE(S). Each loan shall mature on the earlier of demand,
the last day of the Interest Period therefor as noted on the Interest Period
column on the attached schedule or the Maturity Date. As to a Variable Rate
loan, if no Interest Period is noted, then such loan is payable on the earlier
of demand or the Maturity Date.
3. INTEREST. The undersigned promises to pay interest on the unpaid
balance of the principal amount of each such loan from and including the date of
each such loan to but excluding the date such loan shall be paid in full at the
following applicable rates, as may be offered by Chase and selected by the
undersigned:
Variable Rate: A rate of interest per year which shall automatically
increase or decrease from time to time so that at all
times such rate shall remain equal to that rate of
interest from time to time announced by Chase at its
head office as its prime commercial lending rate (the
"Prime Rate") plus one-half percent (.50%). Changes
in the rate of interest hereunder shall be effective
as of and for the entire day on which such change in
the Prime Rate becomes effective;
<PAGE>
4
and
Fixed Rate: A rate per year for each Interest Period for each
loan under this Note equal to either the Euro Rate or
the Money Market Rate.
Unless three Business Days prior to the expiration of an Interest
Period, the undersigned requests and Chase quotes a new Fixed Rate for a
subsequent Interest Period on an existing Fixed Rate loan, such Fixed Rate loan
shall automatically convert to a Variable Rate loan on the day immediately
following the last day of the current Interest Period. The minimum principal
amount of a Fixed Rate loan shall be $250,000.
Interest shall be payable in arrears (a) as to a Variable Rate loan, on
the first day of each month and (b) as to a Fixed Rate loan, on the last day of
each Interest Period, or if such Interest Period is more than 90 days, then on
the 90th day after the date of such loan and on the last day of such Interest
Period, unless otherwise specified on a Rider attached hereto, in respect of the
corresponding principal and (c) on the maturity date of any loan. Interest shall
be calculated on each loan on the basis of a year of 360 days and payable for
the actual number of days elapsed.
After the occurrence of an Event of Default set forth below, Chase, at
its option, by written notice to the undersigned, may increase the interest rate
on this Note by an additional two percent (2%) per year, effective on the date
of such notice.
4. PAYMENTS. All payments under this Note shall be made in lawful money
of the United States of America and in immediately available funds at Chase's
office specified above. Chase may (but shall not be obligated to) debit the
amount of any payment (principal or interest) under this Note when due to the
deposit accounts of the undersigned with Chase listed below. This Note may be
prepaid without penalty or premium unless otherwise specified herein. Chase may
apply any money received or collected for payment of this Note to the principal
of, interest on or any other amount payable under, this Note in any order that
Chase may elect.
All amounts payable hereunder shall be made without set-off or
counterclaim and clear of and without deduction for any and all taxes,
registration fees, duties, levies or any other deductions or withholdings
whatsoever imposed, collected or made with repeat to this Note. In the event the
undersigned or Chase is compelled by applicable law to pay or deduct any such
amounts, the undersigned shall pay to Chase such additional amounts to insure
that Chase receives an amount equal to the full amount it otherwise would have
received had such deduction not been made.
Whenever any payment to be made hereunder (including principal and
interest) shall be stated to be due on a day on which Chase's head office is not
open for business, that payment will be due on the next following Banking Day,
and any extension of time shall in each case be included in the computation of
interest payable on this Note.
If any payment (principal or interest) shall not be paid when due other
than a payment of the entire principal balance of the Note due upon acceleration
after default, to the extent permitted by applicable law, the undersigned shall
pay a late payment charge equal to five percent (5%) of the
<PAGE>
5
amount of such delinquent payment, provided that the amount of such late payment
charge shall be not less than $25 nor more than $500.
5. ADDITIONAL COSTS. If as a result of any Regulatory Change, Chase
determines (which determination shall be conclusive) that the cost to Chase of
making or maintaining the loan is increased, or any amount received or
receivable by Chase hereunder is reduced, or Chase is required to make any
payment (including without limitation in connection with any reserves or capital
adequacy requirements or assessments) in connection with any transaction
contemplated hereby, then the undersigned shall pay to Chase on demand such
additional amount or amounts as Chase determines will compensate Chase for such
increased cost, reduction or payment. Chase will, within 90 days of such demand,
provide the undersigned with a statement setting forth the calculation of such
additional amount or amounts; provided, however, the failure of Chase to provide
such statement shall not relieve the undersigned of its payment obligation.
6. ILLEGALITY. If it becomes unlawful for Chase or its lending office
to make, convert or maintain any loan, Chase shall promptly notify the
undersigned, and Chase shall not make, convert or maintain any loan and any loan
outstanding shall be prepaid on demand, together with interest and any amounts
due under the CERTAIN COMPENSATION section below.
7. CERTAIN COMPENSATION (FIXED RATE LOAN ONLY). If for any reason there
is a principal payment of a loan on a date other than the last day of the
Interest Period thereof (whether by demand, prepayment, or otherwise) or a
failure to borrow on the date specified for borrowing, the undersigned will pay
to Chase on demand such amount or amounts as shall be sufficient (in the
reasonable opinion of Chase) to compensate Chase for any loss, cost or expense
which Chase determines is attributable to such payment or such failure to
borrow; provided that Chase shall have delivered to the undersigned a
certificate as to the amount of such loss, cost or expense setting forth in
reasonable detail the calculation thereof, which shall be presumptively correct
if made in good faith on a reasonable basis.
8. AUTHORIZATIONS. The undersigned hereby authorizes Chase to make
loans and disburse the proceeds thereof to the account listed below and to make
repayments of such loans by debiting such account upon oral, telephonic or
telecopied instructions made by any person purporting to be an officer or agent
of the undersigned who is empowered to make such requests and give such
instructions. The undersigned may amend these instructions, from time to time,
effective upon actual receipt of the amendment by Chase. Chase shall not be
responsible for the authority, or lack of authority, of any person giving such
telephonic instructions to Chase pursuant to these provisions. By executing this
Note, the undersigned agrees to be bound to repay any loan obtained hereunder as
reflected on Chase's books and records and made in accordance with these
authorizations, regardless of the actual receipt of the proceeds thereof.
9. RECORDS. The date, principal amount, interest rate and maturity date
of each loan under this Note and each payment of principal, loan(s) to which
such principal is applied (which shall be at the discretion of Chase) and the
outstanding principal balance of loans, shall be recorded by Chase on its books
and prior to any transfer of this Note (or, at the discretion of Chase at any
<PAGE>
6
other time) endorsed by Chase on the schedule attached or any continuation of
the schedule. Any such endorsement shall be conclusive absent manifest error.
10. REPRESENTATIONS AND WARRANTIES. The undersigned represents and
warrants upon the execution and delivery of this Note and upon each loan request
hereunder, that: (a) it is duly organized and validly existing under the laws of
the jurisdiction of its organization or incorporation and, if relevant under
such laws, in good standing; (b) it has the power to execute and deliver this
Note and to perform its obligations hereunder and has taken all necessary action
to authorize such execution, delivery and performance; (c) such execution,
delivery and performance do not violate or conflict with any law applicable to
it, any provision of its organizational documents, any order or judgment of any
court or other agency of government applicable to it or any of its assets or any
material contractual restriction binding on or materially affecting it or any of
its assets; (d) to the best of undersigned's knowledge, all governmental and
other consents that are required to have been obtained by it with respect to
this Note have been obtained and are in full force and effect and all conditions
of any such consents have been complied with; (e) its obligations under this
Note constitute its legal, valid and binding obligations, enforceable in
accordance with its terms except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency or other similar laws affecting
creditors' rights generally; (f) all financial statements and related
information furnished and to be furnished to Chase from time to time by the
undersigned are true and complete and fairly present the financial or other
information stated therein as at such dates or for the periods covered thereby;
(g) there are no actions, suits, proceedings or investigations pending or, to
the knowledge of the undersigned, threatened against or affecting the
undersigned before any court, governmental agency or arbitrator, which involve
forfeiture of any assets of the undersigned or which may materially adversely
affect the financial condition, operations, properties or business of the
undersigned or the ability of the undersigned to perform its obligation under
this Note; and (h) there has been no material adverse change in the financial
condition of the undersigned since the last such financial statements or
information.
11. AFFIRMATIVE COVENANTS. The undersigned agrees that it shall:
---------------------
(a) Furnish to Chase, within 120 days after and as at the
close of each Fiscal Year, a consolidated (and consolidating) balance sheet(s)
of undersigned and its consolidated Subsidiaries, and consolidated (and
consolidating) statements of income, cash flows and changes in shareholders'
equity of undersigned and its consolidated Subsidiaries prepared in accordance
with GAAP consistently applied, on an audit basis, prepared by Deloitte & Touche
LLP, or other independent public accounting firm satisfactory to Chase, and
accompanied by a satisfactory report of such accountants which shall not contain
any qualification of opinion or disclaimer;
(b) Furnish to Chase, within 45 days after the end of each
Fiscal Quarter, a consolidated (and consolidating) balance sheet(s) of
undersigned and its consolidated Subsidiaries as at the end of each such quarter
and related consolidated (and consolidating) statements of income, cash flow and
changes in shareholders' equity of the undersigned and its consolidated
Subsidiaries for the Fiscal Quarter and from the beginning of such Fiscal Year
to the end of such Fiscal Quarter, together with comparisons to the previous
year, if appropriate, and to budget
<PAGE>
7
projections, prepared in conformity with GAAP consistently applied, and
certified by an appropriate financial officer of undersigned;
(c) Furnish to Chase when loans are outstanding, within 20
days after the end of each month, a statement of accounts receivable, to be in
form and substance satisfactory to Chase;
(d) Furnish to Chase such other books, records and reports
as Chase may from time to time reasonably request; and
(e) Permit representatives of Chase to visit and inspect any
of the properties of undersigned and its Subsidiaries, examine its corporate
books and records, and to make extracts or copies of such books and records, and
discuss its affairs, finances and accounts with its officers, accountants and
agents, provided that the foregoing shall only be done at reasonable times and
with not more than reasonable frequency, and provided further that the
reasonable cost of such inspections and examinations shall be paid by
undersigned.
12. NEGATIVE COVENANTS. The undersigned agrees that it shall not,
and shall not permit any Subsidiary to:
(a) Incur, create, permit to exist or assume, directly or
indirectly, any Debt other than (i) Debt to Chase, (ii) Subordinated Debt, (iii)
trade indebtedness (which shall not include any borrowing, trade acceptances or
notes given in settlement of trade indebtedness) incurred in the ordinary course
of business and not more than 30 days overdue, and (iv) indebtedness related to
liens permitted by clause (b)(ii) below;
(b) Pledge or encumber any of its assets, except (i)
mortgages, liens, security interests or encumbrances granted to Chase and (ii)
liens on personal property incurred in connection with a capital lease entered
into by the undersigned as lessee in the ordinary course of business, provided
that any such liens are created contemporaneously with the leasing of such
personal property and attach only to the property so leased; and
(c) Loan or make advances to, or guarantee, indorse or
otherwise be or become liable or contingently liable in connection with the
obligations or indebtedness of any other Person, directly or indirectly;
13. FINANCIAL COVENANTS. The undersigned shall maintain at all
times the following financial covenants and ratios:
(a) Debt to Consolidated Tangible Net Worth plus Subordinated
Debt of not more than 2 to 1; and
(b) Consolidated Current Assets to Consolidated Current
Liabilities of not less than 1.25 to 1.
<PAGE>
8
14. NO COMMITMENT. This Note does not create and shall not be deemed or
construed to create any contractual commitment to lend by Chase. Any such
commitment in respect of this Note can only be made by and shall only be
effective to the extent set forth in a separate writing expressly designated for
that purpose and subscribed by a duly authorized officer of Chase.
15. SECURITY. As collateral security for the payment of this Note and
of any and all other obligations and liabilities of the undersigned to Chase,
now existing or hereafter arising, the undersigned grants to Chase a security
interest in and a lien upon and right of offset against all moneys, deposit
balances, securities or other property or interest therein of the undersigned
now or at any time hereafter held or received by or for or left in the
possession or control of Chase or any of its affiliates, including subsidiaries,
whether for safekeeping, custody, transmission, collection, pledge or for any
other or different purpose.
16. DEFAULT. If any of the following events of default shall occur
with respect to any of the undersigned (each an "Event of Default"):
(a) the undersigned shall fail to pay the principal of, or
interest on, this Note, or any other amount payable under this Note, as and when
due and payable;
(b) any representation or warranty made or deemed made by the
undersigned in this Note or in any document granting security or support for (or
otherwise executed in connection with) this Note or by any third party
supporting or liable with respect to this Note (whether by guaranty,
subordination, grant of security or any other credit support, a "Third Party")
in any document evidencing the obligations of a Third Party (this Note and all
of the foregoing documents and all agreements, instruments or other documents
executed by the undersigned or a Third Party being the "Facility Documents") or
which is contained in any certificate, document, opinion, financial or other
statement furnished at any time under or in connection with any Facility
Document, shall prove to have been incorrect in any material respect on or as of
the date made or deemed made;
(c) the undersigned or any Third Party shall fail to perform
or observe any term, covenant or agreement contained in any Facility Document on
its part to be performed or observed (not constituting an Event of Default under
any other clause of this section), and such failure shall continue for 30
consecutive days;
(d) the undersigned or any Third Party shall fail to pay when
due any indebtedness (including but not limited to indebtedness for borrowed
money) or if any such indebtedness shall become due and payable, or shall be
capable of becoming due and payable at the option of any holder thereof, by
acceleration of its maturity, or if there shall be any default by the
undersigned or any Third Party under any agreement relating to such
indebtedness;
(e) the undersigned or any Third Party: (i) shall generally
not, or be unable to, or shall admit in writing its inability to, pay its debts
as such debts become due; (ii) shall make an assignment for the benefit of
creditors; (iii) shall file a petition in bankruptcy or for any relief under any
law of any jurisdiction relating to reorganization, arrangement, readjustment of
debt,
<PAGE>
9
dissolution or liquidation; (iv) shall have any such petition filed against it
and the same shall remain undismissed for a period of 30 days or shall consent
or acquiesce thereto; or (v) shall have had a receiver, custodian or trustee
appointed for all or a substantial part of its property;
(f) if the undersigned or any Third Party is an individual,
such individual shall die or be declared incompetent;
(g) any Third Party Facility Document shall at any time and
for any reason cease to be in full force and effect or shall be declared null
and void, or its validity or enforceability shall be contested by the relevant
Third Party or such Third Party shall deny it has any further liability or
obligation under any Facility Document or shall fail to perform its obligations
under any Facility Document;
(h) any security agreement or other agreement (whether by the
undersigned or any Third Party) granting a security interest, lien, mortgage or
other encumbrance securing obligations under any Facility Document shall at any
time and for any reason cease to create a valid and perfected first priority
security interest, lien, mortgage or other encumbrance in or on the property
purported to be subject to such agreement or shall cease to be in full force and
effect or shall be declared null and void, or the validity or enforceability of
any such agreement shall be contested by any party to such agreement, or such
party shall deny it has any further liability or obligation under such agreement
or any such party shall fail to perform any of its obligations under such
agreement;
(i) the undersigned shall make or permit to be made any
material change in the character, management or direction of the undersigned's
business or operations (including, but not limited to, a change in its executive
management or in the ownership of its capital stock which effects a change in
the control of any such business or operations), which is not satisfactory to
Chase;
(j) the undersigned or any Third Party shall suffer a material
adverse change in its business, financial condition, properties or prospects;
(k) any action, suit, proceeding or investigation against or
affecting the undersigned or a Third Party before any court or governmental
agency which involves forfeiture of any assets of the undersigned or a Third
Party shall have been commenced; or
(l) one or more judgments, decrees or orders for the payment
of money in excess of $50,000 in the aggregate shall be rendered against the
undersigned and shall continue unsatisfied and in effect for a period of 30
consecutive days without being vacated, discharged, satisfied or stayed or
bonded pending appeal.
THEN, in any such case, if Chase shall elect by notice to the
undersigned, the unpaid principal amount of this Note, together with accrued
interest and any other amounts due hereunder shall become forthwith due and
payable; provided that in the case of an event of default under (e) above, the
unpaid principal amount of this Note, together with accrued interest and any
other
<PAGE>
10
amounts due hereunder shall immediately become due and payable without any
notice or other action by Chase.
17. CERTAIN WAIVERS. The undersigned waive(s) presentment, notice of
dishonor, protest and any other notice or formality with respect to this Note.
18. COSTS. The undersigned agree(s) to reimburse Chase on demand for
all reasonable costs, expenses and charges (including, without limitation, any
taxes, fees and charges of external legal counsel for Chase and costs allocated
by its internal legal department) in connection with the preparation,
interpretation, administration, performance or enforcement of this Note and the
Facility Documents.
19. NOTICES. All notices, requests, demands or other communications to
or upon the undersigned or Chase shall be in writing and shall be deemed to be
delivered upon receipt if delivered by hand or overnight courier or five days
after mailing to the address (a) of the undersigned as set forth next to the
undersigned's execution of this Note, (b) of Chase as first set forth above, or
(c) of the undersigned or Chase at such other address as the undersigned or
Chase shall specify to the other in writing.
20. ASSIGNMENT. This Note shall be binding upon the undersigned and its
or their successors and shall inure to the benefit of Chase and its successors
and assigns.
21. AMENDMENT AND WAIVER. This Note may be amended only by a writing
signed on behalf of each party and shall be effective only to the extent set
forth in that writing. No delay by Chase in exercising any power or right
hereunder shall operate as a waiver thereof or of any other power or right; nor
shall any single or partial exercise of any power or right preclude other or
future exercise thereof, or the exercise of any other power or right hereunder.
22. GOVERNING LAW; JURISDICTION. This Note shall be governed by and
construed in accordance with the laws of the State of New York. The undersigned
consent(s) to the nonexclusive jurisdiction and venue of the state or federal
courts located in such state. The undersigned hereby waives any objection which
it or they may now or hereafter have to the laying of venue of any suit or
action arising out of this Note in such courts and further waives any claim that
any such suit or action brought in any such court has been brought in an
inconvenient forum. In the event of a dispute hereunder, suit may be brought
against the undersigned is such courts or in any jurisdiction where the
undersigned or any of its assets may be located. Service of process by Chase in
connection with any dispute shall be binding on the undersigned if sent to the
undersigned by registered mail at the address(es) specified below or to such
further address(es) as the undersigned may specify to Chase in writing.
23. MAXIMUM INTEREST. Notwithstanding any other provision of this Note,
the undersigned shall not be required to pay any amount pursuant to this Note
which is in excess of the maximum amount permitted to be charged under
applicable law and any such excess interest paid shall be refunded to the
undersigned or applied to principal owing hereunder.
<PAGE>
11
24. SENIOR GRID PROMISSORY NOTE. This Note and the indebtedness
evidenced hereby are senior in all respect to the Subordinated Debt, including
without limitation, payment of all amounts due hereunder to the holder hereof.
25. JURY, CERTAIN DEFENSES AND SET-OFF WAIVERS. THE UNDERSIGNED HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE(S) (TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW) ANY RIGHT TO A TRIAL BY JURY OF ANY DISPUTE ARISING
UNDER OR RELATING TO THIS NOTE OR ANY FACILITY DOCUMENT, AND AGREES THAT ANY
SUCH DISPUTE SHALL, AT CHASE'S OPTION, BE TRIED BEFORE A JUDGE SITTING WITHOUT A
JURY.
IN ADDITION, THE UNDERSIGNED WAIVES THE RIGHT TO INTERPOSE ANY DEFENSE
BASED UPON ANY STATUTE OF LIMITATIONS OR ANY CLAIM OF DELAY BY CHASE AND ANY
SET-OFF OR COUNTERCLAIM OF ANY NATURE OR DESCRIPTION.
CHASE ACCOUNT NO. TO BE CHARGED FOR
DISBURSEMENTS AND PAYMENTS:
------------------------------------
FIND/SVP, INC.
BY: _______________________________
PRINT NAME: ________________________
TITLE: ____________________________
ADDRESS FOR NOTICES:
625 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10011
TELECOPIER NO. (212)255-7632
<PAGE>
SCHEDULE TO SENIOR GRID PROMISSORY NOTE
OF FIND/SVP, INC.
DATED DECEMBER 30, 1999
<TABLE>
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AGGREGATE
PRINCIPAL
DATE OF INTEREST AMOUNT OF INTEREST AMOUNT OF BALANCE REMAINING NOTATION
LOAN PERIOD LOAN RATE PAYMENT UNPAID MADE BY
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<S> <C> <C> <C> <C> <C> <C>
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</TABLE>
<PAGE>
Exhibit AA
----------
Part II
SECURITY AGREEMENT dated December 30, 1999 made by FIND/SVP,
INC. (the "Pledgor") in favor of THE CHASE MANHATTAN BANK (the "Secured Party").
W I T N E S S E T H:
WHEREAS the Pledgor is the maker of a Senior Grid Promissory
Note of even date herewith (as it may be amended, restated, supplemented or
otherwise modified from time to time, the "Note"), payable to the order of the
Secured Party; and
WHEREAS in order to secure the obligations of the Pledgor,
including its obligations under the Note and this Security Agreement, the
Secured Party has requested and the Pledgor has agreed to execute and deliver
this Security Agreement.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Pledgor hereby agrees with the Secured Party as follows:
1. SECURITY INTEREST. As security for the Obligations (as
hereinafter defined), the Pledgor pledges and assigns to the Secured Party, and
grants to the Secured Party a continuing security interest in, all of the
Pledgor's right, title and interest (whether now existing or hereafter created
or acquired by the Pledgor) in: (a) its accounts receivable and other personal
property that constitutes accounts as such term is defined in the Uniform
Commercial Code of the State of New York (the "Uniform Commercial Code")
(collectively, "Accounts"); (b) its inventory, including goods, merchandise, raw
materials, goods in process, finished goods and other tangible personal property
that constitutes inventory as such term is defined in the Uniform Commercial
Code (collectively, "Inventory"); (c) its equipment, including all substitutes,
replacements, accessions and additions thereto, all tools, parts, accessories
and attachments used in connection therewith and all other tangible personal
property that constitutes equipment as such term is defined in the Uniform
Commercial Code) (collectively, "Equipment"); (d) its other tangible personal
property that constitutes goods as such term is defined in the Uniform
Commercial Code; (e) its intellectual property, goodwill, trademarks, trade
names, servicemarks, copyrights, permits and licenses; (f) all contracts,
contract rights, bills, notes, drafts, acceptances, instruments, documents,
chattel paper, choses in action and all other intangible personal property that
constitutes general intangibles as such term is defined in the Uniform
Commercial Code; (g) all securities, securities entitlements and investment
property; (h) all books and records (including but not limited to computer
programs and tapes and related software) relating to any of the foregoing; and
(h) all cash and noncash proceeds and products of any of the foregoing (all of
the foregoing is collectively called the "Collateral").
2. OBLIGATIONS SECURED. The security interest granted by this
Agreement is to secure the payment and performance of any and all of the
Pledgor's obligations to the Secured Party of every kind, nature and
description, whether for principal, interest, fees or other amounts, whether
direct or indirect, secured or unsecured, joint and several absolute or
contingent, due or
<PAGE>
2
to become due, now existing or hereafter arising, regardless of how they arise
or by what agreement or instrument and whether or not evidenced by any agreement
or instrument, and all obligations to perform acts or refrain from taking any
action (all of the foregoing collectively, the "Obligations").
3. UNCONDITIONAL GRANT OF SECURITY INTEREST. (a) The Pledgor
agrees that this Agreement shall be binding upon the Pledgor and that the grant
of the security interest in the Collateral shall be irrevocable and
unconditional, irrespective of the validity, legality or enforceability of the
Obligations, the absence of any action to enforce the same, any waiver or
consent by the Secured Party with respect to any provisions thereof, or any
action to enforce the same or any other similar circumstances. The Pledgor's
obligations and liabilities hereunder shall not be conditioned or contingent
upon the Secured Party's pursuit at any time of any right or remedy against any
other person or entity that may be or become liable in respect of all or any
part of the Obligations or against any collateral security or guaranty therefor
or right of offset with respect thereto. The Pledgor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
the Pledgor's merger or bankruptcy, protest or notice with respect to any notes
evidencing the Obligations and all demands whatsoever. This Agreement shall
remain in full force and effect and be binding in accordance with and to the
extent of its terms upon the Pledgor until the Obligations have been
indefeasible paid in full, notwithstanding that from time to time there may be
no Obligations outstanding.
(b) The Pledgor agrees that without notice to or
further assent by the Pledgor, its liability or the liability of any other party
for or upon any of the Obligations may, from time to time, in whole or in part,
be renewed, extended, modified, accelerated, compromised or released by the
Secured Party as the Secured Party may deem advisable, and that any other
collateral or liens for any of the Obligations may, from time to time, in whole
or in part, be exchanged, sold or surrendered by the Secured Party, as the
Secured Party may deem advisable, all without impairing, abridging, affecting or
diminishing this Agreement or the Secured Party's rights hereunder or with
respect to the Collateral.
4. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Pledgor
hereby makes the following representations, covenants and warranties, which
shall be deemed to be repeated and confirmed upon the creation or acquisition by
the Pledgor of each item of Collateral and upon the creation of any Obligation:
(a) The Pledgor is a corporation, duly organized,
validly existing and in good standing under the laws of the jurisdiction
indicated beneath the Pledgor's signature line of this Agreement, has the
requisite corporate power to own its properties and to carry on its business as
now being conducted, is qualified to engage in business and is in good standing
in each other jurisdiction in which the character of its properties or the
transaction of its business make such qualification necessary, and has the
requisite corporate power to execute, deliver and perform this Agreement.
<PAGE>
3
(b) The execution, delivery and performance of this
Agreement and the granting of the security interest in the Collateral (i) has
been duly authorized by all requisite corporate action of the Pledgor; (ii) will
not: (A) violate any provision of law, any order of any court, tribunal or
agency of government or its certificate of incorporation, bylaws or other
charter documents; (B) violate, be in conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
indenture, license, sublicense, agreement or other instrument to which the
Pledgor is a party or by which it or any of its properties are bound; (C)
violate any governmental or agency rule or regulation (including, but not
limited to, Regulations U and X of the Board of Governors of the Federal Reserve
System); or (D) result in the creation or imposition of any lien, charge or
encumbrance whatsoever upon any of the Collateral, except for the security
interest created by this Agreement; and (iii) do not require any filing or
registration with, any permit, license, consent or approval of, or any exemption
by, any governmental or regulatory authority, except filings of Uniform
Commercial Code financing statements in the public offices listed on Exhibit A
hereto.
(c) This Agreement has been duly executed and
delivered by the Pledgor and is its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject only to bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to or affecting the enforceability of rights of creditors
generally and to general equitable principles that may limit the right to obtain
equitable remedies. This Agreement creates in the Secured Party's favor a valid
and, upon the filing of the appropriate Uniform Commercial Code financing
statements in the public offices listed on Exhibit A hereto, perfected lien on
and security interest in the Collateral, enforceable against the Pledgor and all
third parties and superior in right to all other security interests, liens,
encumbrances or charges, existing or future. Upon such filings or recordings, no
filing or recording of any other financing statements or other instruments and
no recording, filing or indexing of this Agreement is necessary in order to
preserve and protect the Secured Party's security interest in the Collateral as
a legal, valid and enforceable perfected security interest in the Collateral,
except filing of appropriate continuation statements with respect to Uniform
Commercial Code financing statements.
(d) On the date hereof and at any time during the
term of this Agreement during which a security interest in the Secured Party's
favor in the Collateral exists, no financing statement (or similar statement or
instrument of registration under the laws of any jurisdiction) is or will be on
file or registered in any public office covering any interest of any kind with
respect to the Collateral, or intended so to be, other than those relating to
the security interest created by this Agreement and those permitted under the
Note, and the Pledgor will be the lawful owner of the Collateral and will have
good right to grant the Secured Party a security interest therein. The Pledgor
will perform all acts and deeds possible to assure that all documents and
agreements held by the Pledgor with respect to the Collateral will be true and
correct and in all respects what they purport to be; all signatures and
endorsements that appear thereon will be genuine and such signatories and
endorsers will have the full capacity to contract; none of the transactions
underlying or giving rise to the Collateral nor any operation or use of any of
the Collateral will violate any applicable state or federal law or regulation;
and all
<PAGE>
4
documents relating to the Collateral will be legally sufficient under such laws
and regulations and will be legally enforceable in accordance with their terms.
None of the Collateral is or will be affixed to real estate unless the Pledgor
has furnished to the Secured Party such consents, waivers or disclaimers as are
necessary to make the Secured Party's security interest in such of the
Collateral valid against persons or entities holding an interest in such real
estate. The Pledgor will defend the Collateral against all claims and demands of
all other parties claiming the same or an interest therein, and none of the
Collateral will be: (i) sold, assigned or transferred to any person or entity
other than the Secured Party except, with respect to Inventory, in the ordinary
course of the Pledgor's business or (ii) in any way pledged, mortgaged or
otherwise encumbered except to the Secured Party.
(e)(i) The Pledgor will perform all acts and deeds
possible to assure that each of its Accounts: (A) is on the date hereof and will
be at all times during the term of this Agreement a good and valid Account
representing an undisputed bona fide indebtedness incurred by the account debtor
named therein for goods theretofore sold by the Pledgor to, or services
theretofore performed by the Pledgor for, such account debtor; (B) will not be
subject to any defense, offset, counterclaim, holdback, discount or allowance;
(C) will not have been made with an account debtor under an agreement pursuant
to which any reduction or discount may be claimed; and (D) will be an Account of
which the Pledgor is the lawful owner and have the right to subject the same to
the Secured Party's security interest and (ii) no action has been or will be
taken by the Pledgor which has or will have the effect of giving to an account
debtor any defense, setoff, claim or counterclaim against the Pledgor that may
be asserted against the Secured Party, whether in any proceeding to enforce the
Collateral or otherwise. No Account will have been or hereafter will be sold,
assigned or transferred to any person or entity other than the Secured Party or
in any way encumbered except to the Secured Party.
(f) To the best of the Pledgor's knowledge, each
account debtor or guarantor or endorser of an Account or other party obligated
under an Account that at any time is or becomes subject to a security interest
in favor of the Secured Party is and will continue to be solvent and fully able
to pay and perform in full when due all Accounts under which such person or
entity is obligated, and the Pledgor will take all steps necessary to preserve
the liability of each account debtor, guarantor, endorser, obligor or secondary
party whose obligations are part of the Collateral.
(g) The Pledgor will perform all of the terms,
covenants and conditions on its part to be observed or performed under the
contracts giving rise to its Accounts and take all steps necessary to keep such
contracts in full force and effect. Without the Secured Party's prior consent,
the Pledgor will not compromise, adjust, amend, modify or alter any of the
terms, covenants or conditions of any of its Accounts (or extend the time for
payment thereof) or grant any additional discounts, allowances or credits
thereon.
(h) The Pledgor will promptly notify the Secured
Party if any Account becomes evidenced by an instrument, and, upon the Secured
Party's request, promptly deliver
<PAGE>
5
said instrument to the Secured Party, appropriately endorsed in the Secured
Party's favor to be held as Collateral hereunder.
(i) The Pledgor will furnish to the Secured Party at
such times as the Secured Party may request statements, in form and substance
satisfactory to the Secured Party, of all of its Accounts, itemized by account
debtor, and of the location and aggregate value at each such location of all the
Pledgor's Inventory and a statement showing opening Inventory, Inventory
acquired, Inventory sold and held for future delivery, Inventory returned or
repossessed, Inventory used or consumed in the Pledgor's business and closing
Inventory, each such statement to be certified by the Pledgor's chief financial
officer, and, promptly from time to time, such other information as the Secured
Party may reasonably request regarding the Collateral and the Pledgor's
operations, business, affairs and financial condition.
(j) There is no litigation pending or threatened in
any court or jurisdiction, the outcome of which would affect the Pledgor's
interest in the Collateral in a materially adverse manner.
(k) There are no setoffs, counterclaims or defenses
with respect to the Collateral and no agreement has been made with any other
person or party under which any deduction or discount may be claimed with
respect to the Collateral.
(l) The information, exhibits, reports and financial
statements furnished by the Pledgor in connection with the Note or this
Agreement are true and correct in all respects and do not contain any omission
or misstatement of fact which would make the statements contained therein false,
misleading or incomplete in any respect.
(m) The Pledgor will, promptly upon learning
thereof, report to the Secured Party: (i) any material, adverse change in the
information contained herein relating to the Pledgor, its business or the
Collateral; (ii) the details of any material, adverse claim or litigation
affecting the Pledgor or the Collateral; (iii) any material loss of or damage to
the Collateral or any other matters affecting the value, enforceability or
collectibility of any of the Collateral; and (iv) any reclamation, return or
repossession of any material portion of the Collateral, all material delays in
performance, notices of default, claims made or disputes asserted by any account
debtor or other obligor and any other matters materially, adversely affecting
the value, enforceability or collectibility of any of the Collateral.
(n) The Pledgor will conduct and carry on its
business in a manner consistent with the manner in which it is conducted on the
date hereof so as to protect and preserve the Collateral and maintain, in
accordance with generally accepted accounting principles, consistently applied,
accurate books and records pertaining to the Collateral and, if so requested by
the Secured Party, the Pledgor will mark each of its ledger cards, books of
account and other records relating to the Collateral with appropriate notations,
satisfactory to the Secured Party, disclosing that such Collateral has been
assigned and/or transferred to the Secured Party and that the Pledgor has
granted to the Secured Party a security interest therein.
<PAGE>
6
(o) All Inventory or Equipment now owned by the
Pledgor is kept at the locations indicated on Exhibit B hereto. The location of
its principal office and chief executive office and the location where the
originals of its records pertaining to its Accounts are kept are at the
addresses indicated on Exhibit B hereto. The Pledgor will not change the
location of any of its Inventory or Equipment or of its principal office or
chief executive office or the location of the office where the records of its
Accounts are kept unless 20 days' prior written notice of such change is given
to the Secured Party. The Pledgor's name set forth above its signature hereto is
its correct legal name, and the Pledgor has not within the past five years had
any other legal name, nor has the Pledgor done within such five years nor is the
Pledgor now doing business under any other name, except as set forth on Exhibit
B to this Agreement. The Pledgor will not change its legal name, use any other
name nor change the form of its organization without giving the Secured Party 20
days' prior written notice thereof. The Pledgor's correct United States tax
identification number is set forth below its signature hereto.
(p) The Pledgor will do or cause to be done all
recordings, filings and giving of public notice under any applicable law or
ordinance necessary to comply fully with such law or ordinance, including any
notices to the United States government under the Federal Assignment of Claims
Act, and the Pledgor will from time to time do whatever the Secured Party may
request by way of obtaining, executing, delivering and/or filing financing
statements, landlord's or mortgagee's lien waivers and other notices of any
kind, and amendments and renewals thereto, and will take any and all steps and
will observe such formalities as the Secured Party may request, all in order to
create and maintain the Secured Party's valid security interest in any and all
of the Collateral. The Pledgor will pay all costs for searches and filings in
connection therewith. The Pledgor agrees to execute such financing statements,
security agreements or other instruments with respect to any of the Collateral
as the Secured Party may request and authorizes the Secured Party to execute and
file at any time such financing statements without the Pledgor's signature and,
if upon request the Pledgor fails to do so, to execute such security agreements
or other instruments on its behalf. The Secured Party may file a photocopy or
other reproduction of this Agreement as a financing statement.
(q) The Pledgor will deliver, or cause to be
delivered, to the Secured Party from time to time promptly upon the Secured
Party's request: (i) any documents of title, instruments and chattel paper (and
the Secured Party has been granted a direct security interest in all of the
Pledgor's chattel paper) constituting, representing or relating to the
Collateral; (ii) all books of account, records, ledgers, reports,
correspondence, schedules, documents, statements, lists and the writings
relating to the Collateral for the purpose of inspecting, auditing or copying
the same; PROVIDED that the Pledgor shall be permitted to make copies thereof
before delivering such items to the Secured Party; (iii) all financial
statements prepared by or for the Pledgor regarding its business; (iv) copies of
all policies and certificates of insurance relating to the Collateral; and (v)
such information concerning the Collateral or the Pledgor or any affiliate of
the Pledgor as the Secured Party may reasonably request.
(r) The Pledgor will at its own expense maintain
insurance with insurance companies reasonably satisfactory to the Secured Party
on such of its assets, in such
<PAGE>
7
amounts and against such risks as is customarily maintained by similar
businesses, provided that, with respect to insurance regarding the Collateral,
all such insurance policies shall contain loss payable clauses satisfactory to
the Secured Party, naming the Secured Party as a loss payee.
(s) The Pledgor will take adequate care of the
Collateral and pay all costs necessary to preserve the Collateral, including
(but not limited to) all taxes, rates, levies, assessments and other charges of
every nature that may be lawfully levied, assessed or imposed against or in
respect of the Pledgor or the Collateral as and when they become due and
payable.
(t) The Pledgor will give the Secured Party
immediate notice of (i) any default under this Agreement or (ii) any action or
proceeding to which the Pledgor is a party, or affecting the Pledgor an adverse
determination of which would affect the Pledgor or the Collateral in a
materially adverse manner.
5. CUSTODY, INSPECTION, COLLATERAL AND HANDLING OF COLLATERAL
AND RECORDS. (a) Subject to compliance with the covenants contained herein, the
Pledgor may, until the occurrence of a default by the Pledgor hereunder,
possess, operate, collect, use and enjoy and deal with the Collateral in the
ordinary course of its business in any manner not inconsistent with the
provisions hereof; provided always that the Secured Party shall have the right
at any time and from time to time to verify the existence and state of the
Collateral in any manner the Secured Party may consider appropriate and the
Pledgor agrees to furnish all assistance and information and to perform all such
acts as the Secured Party may reasonably request in connection therewith and for
such purpose to grant to the Secured Party or its agents access to all places
where the Collateral may be located and to all premises occupied by the
Pledgor's business. The Secured Party shall be privileged at any time and from
time to time after the occurrence of a default hereunder to hire and maintain on
any of the Pledgor's premises a custodian or independent contractor selected by
the Secured Party who shall have full authority to do all acts necessary to
protect the Secured Party's interests and to report to the Secured Party
thereon. The Pledgor agrees to cooperate with any such person and to do whatever
the Secured Party may reasonably request by way of leasing warehouses or
otherwise preserving the Collateral. All expenses incurred by the Secured Party
by reason of the employment of any such person shall be charged to the Pledgor's
account, shall be part of the Obligations and shall be secured by the
Collateral.
(b) If the Collateral at any time includes
securities, the Pledgor authorizes the Secured Party to transfer the same or any
part thereof into the Secured Party's own name or that of its nominee(s) so that
it or its nominee(s) may appear of record as the sole owner thereof; provided
that, until the occurrence of a default by the Pledgor hereunder, the Secured
Party shall deliver promptly to the Pledgor all notices or other communications
received by the Secured Party or its nominee(s) as such registered owner and,
upon demand and receipt of payment of any necessary expenses thereof, shall
issue to the Pledgor or its order a proxy vote and take all action with respect
to such securities. After a default by the Pledgor hereunder, the Pledgor waives
all rights to receive any notices or communications received by the Secured
Party or its nominee(s) as such registered owner and agrees that no proxy issued
by the Secured Party to the Pledgor or its order as aforesaid shall thereafter
be effective.
<PAGE>
8
(c) Until the occurrence of a default by the Pledgor
under this Agreement, the Pledgor reserves the right to receive any moneys
constituting income from or interest on the Collateral, and if the Secured Party
receives any such moneys before a default by the Pledgor under this Agreement
and until the Obligations have been satisfied in full, the Secured Party shall
either credit such moneys to the Pledgor's account or promptly pay them to the
Pledgor. After a default by the Pledgor under this Agreement, the Pledgor will
not request or receive any moneys constituting income from or interest on the
Collateral, and if the Pledgor receives any such moneys without any request by
the Secured Party, the Pledgor will pay them promptly to the Secured Party.
(d) Whether or not a default under this Agreement
has occurred, the Pledgor authorizes the Secured Party: (i) to receive any
increase in or profits on the Collateral (other than money) and to hold them as
part of the Collateral (money so received shall be treated as income for the
purposes of paragraph (c) of this Section 5 and dealt with accordingly); and
(ii) to receive any payment or distribution upon redemption or retirement or
upon dissolution and liquidation of the account debtor of any of the Collateral,
to surrender such Collateral in exchange for such payment or distribution and to
hold any such payment or distribution as part of the Collateral. If the Pledgor
receives any such increase or profits (other than money) or payments or
distributions, the Pledgor will deliver them promptly to the Secured Party to be
held by the Secured Party as provided in this Agreement.
(e) The Pledgor will, promptly upon the Secured
Party's request, at any time or from time to time, and the Secured Party may in
its sole discretion upon a default by the Pledgor under this Agreement, notify
the Pledgor's account debtors that payment of all Accounts shall be made to the
Pledgor at such address or addresses as the Secured Party may from time to time
specify. Upon such notification, the Secured Party shall have the right to
receive, or its agents or independent contractors shall have the right to
receive on its behalf, the proceeds of, and all documents, instruments or papers
in connection with, the Pledgor's Accounts at such address or addresses and to
receive, endorse, assign or deliver in the Secured Party's name or the Pledgor's
name any and all checks, drafts and other instruments for the payment of money
relating to the Pledgor's Accounts, and the Pledgor waives notice of
presentment, protest and nonpayment of any instrument so endorsed. The Pledgor
acknowledges that any payments on, or other proceeds of, the Collateral received
by the Pledgor from account debtors, whether before or after notification to
account debtors of the security interest granted by this Agreement and whether
before or after the occurrence of a default under this Agreement, shall be
received and held by the Pledgor in trust for the Secured Party and shall be
turned over to the Secured Party upon its request to be subject to the
provisions of this Agreement. Proceeds of Accounts so received by the Secured
Party or on its behalf shall be credited, subject to collection, to the
Pledgor's account with the Secured Party or as otherwise determined by the
Secured Party, subject to the Secured Party's right to withhold credit pending
the final collection and settlement of any item and its further right to apply
all or part of such proceeds to the then outstanding Obligations. The Pledgor
constitutes the Secured Party or its designee as the Pledgor's attorney-in-fact
with power: to endorse the Pledgor's name upon any notes, acceptances, checks,
drafts, money orders or other evidences of payment or Collateral that may come
into the Secured
<PAGE>
9
Party's possession; to sign the Pledgor's name on any invoice or bill of lading
relating to the Pledgor's Accounts, drafts against account debtors, assignments
and verifications of the Pledgor's Accounts and notices to account debtors; to
send verifications of Accounts to any of the Pledgor's account debtors; to
notify the postal authorities to change the address for delivery of mail
addressed to the Pledgor to such address as the Secured Party may designate; and
to do all other acts and things necessary to carry out this Agreement. All acts
of said attorney or designee are hereby ratified and approved, and said attorney
or designee shall not be liable for any acts of omission or commission nor for
any error of judgment or mistake of fact or law. This power being coupled with
an interest is irrevocable as long as any Obligation remains unpaid or
unperformed.
(f) After the occurrence of a default hereunder, the
Secured Party may, without notice to or consent from the Pledgor, sue upon or
otherwise collect, extend the time of payment of or compromise or settle for
cash, credit or otherwise upon any terms any of the Pledgor's Accounts or any
securities, instruments or insurance applicable thereto and/or release the
obligor thereon. The Secured Party is authorized and empowered in its sole
discretion to accept the return of the goods represented by any of the Pledgor's
Accounts without notice to or consent by the Pledgor, all without discharging or
in any way affecting the Pledgor's liability under this Agreement.
6. DEFAULT. If any default in the payment or performance of
any of the Obligations occurs and is continuing, if any representation,
warranty, report or certificate made in this Agreement, the Note or otherwise
furnished in writing by the Pledgor to the Secured Party in connection with this
Agreement or the Note proves to have been false or misleading in any material
respect when made or deemed made, if the Pledgor defaults in the due observance
or performance of any other covenant, condition or agreement to be observed or
performed pursuant to the terms of this Agreement or the Note or if the Pledgor
becomes involved as the debtor in any bankruptcy or insolvency proceedings, then
the Pledgor will be in default under this Agreement.
7. RIGHTS AND REMEDIES UPON DEFAULT. (a) Upon the Pledgor's
default under this Agreement, and at any time thereafter, the Secured Party may,
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived, declare any or all of the Obligations to be immediately
due and payable.
(b) Upon the Pledgor's default, the Secured Party
shall also have the right, without notice to or assent by the Pledgor, and
without affecting the Obligations, in the Pledgor's name or in the Secured
Party's name or otherwise, to: (i) ask for, demand, collect, receive, compound
and give acquittance for the Accounts or any part thereof; (ii) extend the time
of payment of, compromise or settle for cash, credit or otherwise, and upon any
terms and conditions, any of the Accounts; (iii) endorse the Pledgor's name on
any checks, drafts or other orders or instruments for the payment of moneys
payable to the Pledgor issued in respect of any Accounts or other Collateral;
(iv) file any claims and commence, maintain or discontinue any actions, suits,
or other proceedings deemed by the Secured Party to be necessary or advisable
for
<PAGE>
10
the purpose of collecting or enforcing payment of any Accounts; (v) execute any
instrument and do any and all other things necessary and proper to protect and
preserve and realize upon the Accounts or other Collateral and the other rights
contemplated by this Agreement; (vi) notify any or all account debtors under any
or all of the Accounts to make payment thereof directly to the Secured Party for
the Pledgor's account and to require the Pledgor promptly to give similar notice
to the account debtors; and/or (vii) require the Pledgor promptly to account for
and transmit to the Secured Party in the same form as received all proceeds
(other than physical property) of collection of Accounts received by the Pledgor
and, until so transmitted to the Secured Party, to hold such proceeds in trust
for the Secured Party and not commingle them with any other of the Pledgor's
funds.
(c) Upon the Pledgor's default, the Secured Party
shall also have the right, without notice to or assent by the Secured Party
(except as provided in clause (i) of this paragraph (c)), and without affecting
the Obligations, in the Pledgor's name or in the Secured Party's name or
otherwise, to: (i) upon notice to such effect, require the Pledgor to deliver,
at its expense, any or all of the Collateral and all books of account, records,
ledgers, reports, correspondence, schedules, documents, statements, lists and
other writings relating to the Collateral to the Secured Party at a place
designated by the Secured Party (and after delivery thereof the Pledgor will
have no further claim to or interest in such Collateral); (ii) take possession
of any or all of the Collateral and all books of account, records, ledgers,
reports, correspondence, schedules, documents, statements, lists and other
writings relating to the Collateral and, for that purpose, to enter, with the
aid and assistance of any person or entity, any premises where the Collateral or
any part thereof is or may be placed or assembled, and to remove any of such
Collateral and documents; (iii) execute any instrument and do all other things
necessary and proper to protect and preserve and realize upon the Collateral and
the other rights contemplated by this Agreement; and/or (iv) without obligation
to resort to other security, at any time and from time to time, sell, re-sell,
assign and deliver all or any of the Collateral, in one or more parcels at the
same or different times, and all right, title and interest, claim and demand
therein and right of redemption thereof, at public or private sale, for cash,
upon credit or for future delivery, and at such price or prices and on such
terms as the Secured Party may determine, with the amounts realized from any
such sale to be applied in the manner provided in Section 9.
(d) In addition to any rights and remedies contained
in this Agreement or now or hereafter granted under applicable law and not by
way of limitation of any such rights and remedies, the Secured Party shall have
all the rights and remedies of a secured party under the Uniform Commercial Code
as enacted in any applicable jurisdiction. The Secured Party may take legal
proceedings for the appointment of a receiver or receivers (to which the Secured
Party shall be entitled as a matter of right) to take possession of the
Collateral pending the sale thereof pursuant either to the power of sale granted
by this Agreement or to a judgment, order or decree made in any judicial
proceeding for the foreclosure or involving the enforcement of this Agreement.
<PAGE>
11
(e) The Pledgor agrees that all of the foregoing
rights and actions specified in paragraphs (a), (b), (c) and (d) of this Section
7 may be executed or effected without demand, advertisement or notice (except as
required by law or by clause (i) of paragraph (c) of this Section 7), all of
which (to the extent permitted by law) are hereby expressly waived. The Secured
Party shall not be obligated to do any of the acts authorized in this Agreement,
but if the Secured Party elects to do any such act, the Secured Party will not
be responsible to the Pledgor except for the Secured Party's own gross
negligence or willful misconduct.
(f) The Secured Party shall have the right in its
sole discretion to determine which rights, security, liens, guarantees, security
interests or remedies the Secured Party will retain, pursue, release,
subordinate, modify or take any other action with respect to, without in any way
modifying or affecting any other of them or any of its rights under this
Agreement. Any of the Pledgor's moneys, deposits, balances or other property
that may come into the Secured Party's possession at any time or in any manner
may in its sole discretion be retained by the Secured Party and applied to any
of the Obligations. Notwithstanding any other rights the Secured Party may have
under applicable law and under this Agreement, the Pledgor agrees that, should
it at any time be in default under this Agreement, the Secured Party shall have
the right to apply (including, but not limited to, by way of setoff) any of the
Pledgor's property held by the Secured Party or any of its affiliates
(including, but not limited to, deposit account balances) to a reduction of the
Obligations. The Secured Party shall be deemed to have exercised such right of
setoff immediately at the time of making its decision to do so even though any
charge for such setoff is made or entered on the Secured Party's records
subsequent to such time.
8. SALE OF COLLATERAL. Upon any sale of any of the Collateral,
whether made under the power of sale given by this Agreement or under judgment,
order or decree in any judicial proceeding for foreclosure or involving the
enforcement of this Agreement: (a) the Secured Party may bid for the property
being sold and, upon compliance with the terms of sale, may hold, retain and
possess and dispose of such property in its own absolute right without further
accountability and may, in paying the purchase price for such property, deliver
any notes evidencing the Obligations or claims for interest thereon in lieu of
cash in payment of the amount equal to the unpaid amount of such notes or
claims; (b) the Secured Party may make and deliver to the purchaser or
purchasers a good and sufficient deed, bill of sale and instrument of assignment
and transfer of the property sold; (c) the Secured Party is irrevocably
appointed the Pledgor's true and lawful attorney-in-fact in the Pledgor's name
and stead to make all necessary deeds, bills of sale and instruments of
assignment and transfer of the property thus sold and for such other purposes as
are necessary or desirable to effectuate the provisions of this Agreement, and
for that purpose the Secured Party may execute and deliver all necessary deeds,
bills of sale and instruments of assignment and transfer, and may substitute one
or more persons or entities with like power, and the Pledgor ratifies and
confirms all that the Pledgor's said attorney, or such substitute or
substitutes, shall lawfully do by virtue of this appointment, but if so
requested by the Secured Party or by any purchaser the Pledgor will ratify and
confirm any such sale or transfer by executing and delivering to the Secured
Party or to such purchaser all such deeds, bills of sale, instruments of
assignment and transfer and releases as may be designated in any such request;
(d) all of the Pledgor's right, title, interest, claim and demand whatsoever,
either at
<PAGE>
12
law or in equity or otherwise, in and to the property so sold shall be divested,
such sale shall be a perpetual bar both at law and in equity against the
Pledgor, its successors and assigns and against any and all persons or entities
claiming or who may claim the property sold or any part thereof from, through or
under the Pledgor or its successors or assigns; (e) the Pledgor will terminate
and cease forthwith all use of the property so sold; (f) the Secured Party's
receipt or a receipt of the officer making such sale shall be a sufficient
discharge to the purchaser or purchasers at such sale for the purchase money,
and such purchaser or purchasers, and such purchaser's or purchasers' assigns or
personal representatives, shall not, after paying such purchase money and
receiving such receipt, be obligated to see to the application of such purchase
money or be in any way answerable for any loss, misapplication or
non-application thereof; and (g) to the extent that the Pledgor may lawfully do
so, the Pledgor agrees that it will not at any time insist upon or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any
appraisement, valuation, stay, extension or redemption law or any law permitting
it to direct the order in which the Collateral or any part thereof shall be
sold, now or at any time hereafter in force, that may delay, prevent or
otherwise affect the performance or enforcement of this Agreement or the
Obligations, and the Pledgor expressly waives all benefit or advantage of any
such law and agrees that the Pledgor will not hinder, delay or impede the
execution of any power granted or delegated to the Secured Party in this
Agreement, but will suffer and permit the execution of every such power as
though no such law were in force. In the event of any sale of Collateral, the
Secured Party shall, at least ten days before such sale, give the Pledgor
written notice of the Secured Party's intention to sell.
9. APPLICATION OF MONEYS. Except as otherwise provided in this
Agreement, all moneys the Secured Party receives in accordance with the
provisions of this Agreement shall be applied in the following manner: FIRST, to
the payment of all costs and expenses incurred in connection with the
administration and enforcement of, or the preservation of any rights under, this
Agreement or the Note and the realization on the Collateral (including, but not
limited to, the reasonable fees and disbursements of the Secured Party's counsel
and agents); and SECOND, to the payment of all other Obligations in such order
as the Secured Party may choose. Any surplus shall be accounted for as required
by law.
10. WAIVERS, AMENDMENTS, REQUIRED NOTICES. The Pledgor waives
notice of acceptance of this Agreement, notice of nonpayment, demand,
presentment, protest and notice thereof with respect to any and all instruments,
notice of Collateral received or delivered or any other action taken in reliance
on this Agreement and all other demands and notices of any description, except
such as are expressly provided for in this Agreement or which by applicable law
may not be waived on the date of this Agreement. No failure on the Secured
Party's part to exercise, and no delay in exercising, any right, power or remedy
under this Agreement shall operate as a waiver thereof or of any default by the
Pledgor under this Agreement, nor shall any single or partial exercise by the
Secured Party of any right, power or remedy under this Agreement preclude any
other or future exercise thereof or the exercise of any other right, power or
remedy. No amendment or modification of this Agreement nor any waiver of any
provision of this Agreement or consent to any departure by the Pledgor therefrom
shall be effective unless it is in writing and signed by the Secured Party and
then any such waiver or consent shall be
<PAGE>
13
effective only in the specific instance and for the purpose for which given. No
notice to or demand on the Pledgor shall, of itself, entitle the Pledgor to any
other or further notice or demand in similar or other circumstances. Except as
otherwise provided in this Agreement, if notice, whether before or after any
default by the Pledgor under this Agreement has occurred, is required by law to
be given by the Secured Party to the Pledgor, the Pledgor agrees that five days'
notice given in the manner provided in Section 12 will be reasonable notice.
11. CUMULATIVE RIGHTS AND REMEDIES. This Agreement and the
security interest granted by this Agreement are in addition to and not in
substitution for any other security interest now or hereafter held by the
Secured Party, and this Agreement is, and is intended to be, a continuing
agreement and shall not operate as a merger of any contract debt or suspend the
fulfillment of or affect the Secured Party's rights, remedies or powers in
respect of any obligation or other security held by the Secured Party for the
fulfillment thereof. The remedies provided in this Agreement are cumulative and
are not exclusive of any remedy provided by law.
12. NOTICES. Any notice given under this Agreement shall be
given in writing (including teletransmissions) and mailed, teletransmitted or
delivered by the party giving such notice to the other party at the address or
telefax number, if to the Secured Party, indicated beneath its signature line of
this Agreement or, if to the Pledgor, indicated beneath its signature line of
this Agreement or, as to each such party, at such other address or telefax
number as may be designated by such party by notice complying with the terms of
this Section 12. All notices under this Agreement shall be deemed given when
deposited in the mails or delivered or teletransmitted, addressed as provided in
this Section 12.
13. COSTS AND EXPENSES. The Pledgor agrees to pay, promptly
after demand, whether or not any default by the Pledgor under this Agreement has
occurred and whether or not any proceeding to enforce this Agreement or the
Obligations has been commenced, all of the Secured Party's reasonable costs and
expenses, including (but not limited to) all reasonable fees and disbursements
of the Secured Party's legal counsel, incurred in connection with the
enforcement of this Agreement, the security interest granted by this Agreement,
the receipt of proceeds of Collateral under this Agreement, the care and
preservation of the Collateral or the preparation of any requested amendments to
this Agreement, modifications of this Agreement or waivers or consents in
connection with this Agreement. Any such expenses so incurred by the Secured
Party shall be specified to the Pledgor, shall be part of the Obligations and
shall be secured by the Collateral.
If any tax, assessment, charge or claim is claimed or made
with respect to the Collateral that in the Secured Party's opinion may possibly
create a valid obligation having priority over the security interest granted to
the Secured Party by this Agreement, the Secured Party may, in its sole
discretion and without notice, pay such taxes, assessments, charges or claims,
and the amount thereof shall be specified to the Pledgor, shall be part of the
Obligations and shall be secured by the Collateral.
<PAGE>
14
Upon the Pledgor's failure to perform any of its duties under
this Agreement, the Secured Party may, but shall not be obligated to, perform
any or all of such duties, and the Pledgor will pay to the Secured Party on
written demand an amount equal to the cash or out-of-pocket expense incurred by
the Secured Party in so doing plus interest thereon from the date such expense
is incurred until it is paid at a rate per annum equal to the highest rate of
interest payable by the Pledgor from time to time on the Obligations.
14. SUCCESSORS AND ASSIGNS, GOVERNING LAW, SURVIVAL AND
SEVERABILITY. This Agreement, shall inure to the benefit of and shall be binding
upon each of the parties and respective successors and assigns; PROVIDED,
HOWEVER, the Pledgor shall not assign its rights or obligations hereunder or any
interest herein and any assignment in violation hereof shall be void. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York. All covenants, agreements, representations and warranties
made by the Pledgor in this Agreement shall survive the execution and delivery
of this Agreement and shall continue in full force and effect so long as any
Obligation remains unpaid or unperformed. If any part of this Agreement is
contrary to, prohibited by or deemed invalid under applicable law or
regulations, such provision shall be inapplicable and deemed omitted to the
extent so contrary, prohibited or invalid, but the remainder of this Agreement
shall not be invalidated and shall be given full force and effect so far as
possible, and any such prohibition or invalidity in any jurisdiction shall not
invalidate such provision or render it unenforceable in any other jurisdiction.
15. NO ASSUMPTIONS OF DUTIES; LIMITATION ON LIABILITIES. (a)
Nothing in this Agreement shall be construed to constitute the Secured Party as
the Pledgor's agent for any purpose whatsoever. The Secured Party does not, by
this Agreement or any assignment or otherwise, assume any of the Pledgor's
obligations under any Collateral, or any contract or agreement relating to any
Collateral, and the Secured Party shall not be responsible in any way for
performance of any of the terms and conditions thereof.
(b) Neither the Secured Party nor any of its
directors, officers, agents or employees shall be liable to any person or entity
for any action taken or omitted by it or any of its directors, officers, agents
or employees under this Agreement or with respect to any transaction
contemplated by this Agreement, except for the Secured Party's or such
director's, officer's, agent's or employee's own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, the Secured Party
shall not be responsible or liable for any damage, loss or destruction of any
part of the Collateral, wherever it may be located and regardless of the cause
thereof, unless due to its own gross negligence or willful misconduct. The
Secured Party shall not, under any circumstances or in any event whatsoever,
have any liability for any error or omission or delay of any kind occurring in
the settlement, collection or payment of any Collateral or any instrument
received in payment thereof or for any damage resulting therefrom. The Pledgor
assumes all responsibility and liability arising from the use of the Collateral
and will pay, and indemnify and holds the Secured Party harmless from and
against, any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to its right, title and interest in, to and under
the Collateral.
<PAGE>
15
16. AMENDMENTS, MODIFICATIONS AND WAIVERS WITH RESPECT TO
OBLIGATIONS. The Pledgor hereby consents that, without the necessity of any
reservation of rights against it and without notice to or further assent by it,
the liability of any other person or entity on or for any part of the
Obligations, or any collateral security or guaranty therefor or right of offset
with respect thereto, may from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released and any other collateral security document or guaranty or document
delivered in connection therewith to which the Pledgor is not a party may be
amended, modified, supplemented, restated or terminated, in whole or in part, as
the Secured Party may deem advisable from time to time, and any collateral
security or guaranty or right of offset at any time held for payment of the
Obligations may be sold, waived, surrendered or released, all without the
necessity of any reservation of rights against the Pledgor and without notice to
or further assent by the Pledgor, and the Pledgor will remain bound hereunder
notwithstanding any such renewal, extension, modification, acceleration,
compromise, amendment, supplement, restatement, termination, sale, exchange,
waiver, surrender or release. The Pledgor waives any and all notice of or proof
of reliance by the Secured Party on this Agreement, and the Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred in reliance upon this Agreement, and all dealings between the parties
shall likewise be conclusively presumed to have been had or consummated in
reliance on this Agreement. The Pledgor waives (to the fullest extent permitted
by applicable law) diligence, presentment, protest, demand for payment and
notice of default or nonpayment to with respect to the Obligations.
17. NO SUBROGATION. Notwithstanding any payment or payments
made by the Pledgor hereunder, the receipt of any amounts by the Secured Party
with respect to the Collateral or any setoff or application of the Pledgor's
funds by the Secured Party, the Pledgor shall not be entitled to be subrogated
to any of the Secured Party's rights against any collateral security or guaranty
or right of offset held by the Secured Party for the payment of the Obligations,
until this Agreement has terminated in accordance with Section 20 hereof.
18. HEADINGS; CONSTRUCTION. The headings used in this
Agreement are for convenience only and are not to be considered a part of this
Agreement and do not in any way limit or amplify the terms and provisions of
this Agreement. When the context so requires, the singular number shall be read
as if the plural were expressed and the provisions of this Agreement shall be
read with all grammatical changes necessary dependent upon the person or entity
referred to being a male, female, firm or corporation.
19. SUBMISSION TO JURISDICTION. The Pledgor expressly submits
to the jurisdiction of all federal and state courts located in the County of New
York, State of New York, and consents that any order, process or other paper may
be served upon it within or without such court's jurisdiction by registered mail
or by personal service at the address specified pursuant to Section 12 hereof,
PROVIDED a reasonable time for appearance is allowed. The Pledgor irrevocably
waives any objection it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement brought
in any such court and further irrevocably waives any claim that any such suit,
action or proceeding brought in any such
<PAGE>
16
court has been brought in an inconvenient forum. Nothing contained in this
Agreement shall affect the Secured Party's right to serve legal process in any
other manner permitted by law or to bring any action or proceeding against the
Pledgor or its property in the courts of other jurisdictions.
20. DEFEASANCE. Upon the indefeasible satisfaction in
full of the Obligations, this Agreement shall terminate and be of no further
force and effect. Notwithstanding the preceding sentence, the indemnity
agreement contained in Section 15(b) hereof shall survive the termination of
this Agreement.
21. PRIOR UNDERSTANDINGS. This Agreement supersedes all
prior understandings and agreements, whether written or oral, between the
parties relating to the transactions provided for herein.
22. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the parties hereto on separate counterparts, each
of which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one and the same instrument. Counterparts
of this Agreement may be executed by facsimile transmission.
23. WAIVER OF JURY TRIAL. THE PLEDGOR AND, BY ITS ACCEPTANCE
OF THIS AGREEMENT, THE SECURED PARTY EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT THE PLEDGOR OR THE SECURED PARTY MAY HAVE TO A
TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT AND
AGREE THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A
JURY.
FIND/SVP, INC.
By
----------------------------------------
Name:
Title:
U.S. Tax ID No.:
---------------------
Jurisdiction of incorporation:
--------
Address for notices:
625 Avenue of the Americas
New York, New York 10011
Attention:
Telephone No.:
Telefax No.: (212) 255-7632
ACCEPTED:
<PAGE>
17
THE CHASE MANHATTAN BANK
By
--------------------------------
Name:
Title:
Address for notices:
1411 Broadway
New York, New York 10018
Attention: Stephen Szanto
Telephone No.: (212) 391-7691
Telefax No.: (212) 391-7117
<PAGE>
EXHIBIT A
---------
V3
UCC FILING OFFICES
------------------
1. Secretary of State of New York
2. Clerk of the County of New York
<PAGE>
EXHIBIT B
ADDRESS OF CHIEF EXECUTIVE OFFICE
AND PRINCIPAL OFFICE (INCLUDE COUNTY, IF APPLICABLE)
- ----------------------------------------------------
LOCATION OF RECORDS PERTAINING
TO ACCOUNTS (INCLUDE COUNTY, IF APPLICABLE)
- -------------------------------------------
LOCATION(S) OF COLLATERAL (INCLUDE COUNTY, IF APPLICABLE)
- ---------------------------------------------------------
OTHER LEGAL NAME AND/OR TRADE NAMES
- -----------------------------------
<PAGE>
EXHIBIT B
---------
SCHEDULE A TO UCC FINANCING STATEMENT
-------------------------------------
DEBTOR: FIND/SVP, INC.
625 Avenue of the Americas
New York, New York 10011
SECURED PARTY: THE CHASE MANHATTAN BANK
4 MetroTech Center
Brooklyn, New York 11245
This FINANCING STATEMENT covers the following types of items
of property:
All of Debtor's right, title and interest (whether now existing or hereafter
created or acquired) in:
(a) its accounts receivable and other personal property that
constitutes accounts as such term is defined in the Uniform Commercial Code of
the State of New York (the "UCC" );
(b) its inventory, including goods, merchandise, raw
materials, goods in process, finished goods and other tangible personal property
that constitutes inventory as such term is defined in the UCC;
(c) its equipment, including all substitutes, replacements,
accessions and additions thereto, all tools, parts, accessories and attachments
used in connection therewith and all other tangible personal property that
constitutes equipment as such term is defined in the UCC;
(d) its other tangible personal property that constitutes goods
as such term is defined in the UCC;
(e) its intellectual property, goodwill, trademarks, trade
names, service marks, copyrights, permits and licenses;
(f) all contracts, contract rights, bills, notes, drafts,
acceptances, instruments, documents, chattel paper, chooses in action and all
other intangible personal property that constitutes general intangibles as such
term is defined in the UCC;
(g) all securities, securities entitlements and investment
property;
(h) all books and records (including but not limited to
computer programs and tapes and related software) relating to any of the
foregoing; and
(i) all cash and noncash proceeds and products of any of the
foregoing.
<PAGE>
EXHIBIT AA
----------
Part III
SUBORDINATION AGREEMENT
AGREEMENT dated December 30, 1999 among FIND/SVP, Inc., a New York
corporation with an office located at 625 Avenue of the Americas, New York, New
York 10011-2002 (the "Borrower"), SVP, S.A., a societe anonyme with an office
located at 70 rue des Rosiers Saint-Ouen, Cedex, France, F-93585 (the
"Subordinated Creditor") and THE CHASE MANHATTAN BANK, with an office located at
270 Park Avenue, New York, New York 10017 (the "Lender").
RECITALS
A. The Borrower, together with FIND/SVP Published Products, Inc., a
Delaware corporation, and FIND/SVP Internet Services, Inc., a Delaware
corporation (collectively, the "Subsidiaries"), is indebted to the Subordinated
Creditor (i) in the original principal amount of up to $475,000 as evidenced by
the Series A Senior Subordinated Note dated November 26, 1996 (the "Subordinated
A Note") made by the Borrower and the Subsidiaries to the Subordinated Creditor;
(ii) the Stock Subscription Warrant dated November 26, 1996 (the "Subordinated A
Warrant") from the Borrower to the Subordinated Creditor; (iii) in the original
principal amount of $475,000 as evidenced by the Series B Senior Subordinated
Note dated August 25, 1997 made by the Borrower and the Subsidiaries (the
"Subordinated B Note"); and (iv) the Stock Subscription Warrant dated August 25,
1997 from the Borrower to the Subordinated Creditor (the "Subordinated B
Warrant") (collectively, the "Subordinated Creditor's Debt") (the Subordinated A
Note, the Subordinated B Note, the Subordinated A Warrant, the Subordinated B
Warrant and all other documents executed in connection therewith are
collectively referred to as the "Subordinated Creditor's Loan Documents").
B. The Borrower is indebted to the Lender in the original principal
amount of up to $1,000,000 (the "Lender Debt") as evidenced by the $1,000,000
Senior Grid Promissory Note dated December 30, 1999 from the Borrower to the
Lender (the "Lender Note").
C. As security for the payment of the Borrower's obligations to the
Lender, pursuant to a Security Agreement dated December 30, 1999 (the "Security
Agreement"), the Borrower granted a security interest in the Collateral (as
therein defined) (the Security Agreement, the Lender Note and all other
documents executed in connection therewith are collectively referred to as the
"Lender's Loan Documents").
D. In consideration of and as an inducement for the Lender to consent to
the continued extension of the Subordinated Creditor's Debt, the Subordinated
Creditor and the Borrower agree to the terms and conditions contained in this
Agreement.
AGREEMENT
In consideration of the Recitals, which are incorporated by reference, the
terms and conditions contained in this Agreement and other good and valuable
consideration, the receipt
<PAGE>
2
and sufficiency of which is acknowledged, the parties, intending to be bound
legally, agree as follows:
1. DEFINITIONS.
(a) "Junior Debt" means all indebtedness, liabilities and obligations
whatsoever, of every kind and description, whenever and however arising,
absolute or contingent, due or to become due, from the Borrower to the
Subordinated Creditor pursuant to the Subordinated Creditor's Debt.
(b) "Senior Debt" means all indebtedness, liabilities and obligations
whatsoever, of every kind and description, whenever and however arising,
absolute or contingent, due or to become due, now existing or hereafter arising
from, or in any way connected with, any direct or indirect indebtedness of the
Borrower to the Lender, including, but not limited to, the Lender Debt, together
with all costs, expenses and attorneys' fees incurred in any action to collect
any indebtedness to the Lender including the Lender Debt or to enforce or
foreclose any mortgage, security agreement or other agreement securing any
indebtedness to the Lender including the Lender Debt.
2. SUBORDINATION. The Subordinated Creditor and the Borrower agree that
the Junior Debt is in all respects fully subordinated to the full and complete
payment and satisfaction in full of the Senior Debt in the manner and to the
extent set forth in Section 4 below and that, except as expressly permitted in
Section 4 below, no payments shall be made on the Junior Debt.
3. WARRANTIES AND REPRESENTATION. The Borrower and the Subordinated
Creditor each represent and warrant that:
(a) The total aggregate principal amount of the Junior Debt as of the
date hereof is $950,000;
(b) The Junior Debt is evidenced by the Subordinated Loan Documents;
(c) The Subordinated Creditor has not assigned the Junior Debt or any
interest therein; and
(d) The Borrower and the Subsidiaries have not and will not grant,
directly or indirectly, to the Subordinated Creditor any security for the
repayment of the Junior Debt.
4. COVENANTS.
(a) Except as restricted below, the Borrower may pay and the
Subordinated Creditor may collect: (i) all regularly scheduled payments of
interest under the Subordinated Creditor's Loan Documents; and (ii) (A) any
non-accelerated prepayment or regularly scheduled payment of principal of the
Junior Debt (a "Principal Payment") or (B) any payment under the Subordinated A
Warrant or the Subordinated B Warrant (a "Warrant Payment"), provided such
Principal Payment or Warrant Payment does not cause or is not a contributing
factor in causing a
<PAGE>
3
default under any covenant contained in the Lender's Loan Documents or any other
documents evidencing the Senior Debt (a "Covenant Default"). In the event that a
Principal Payment or Warrant Payment causes or is a contributing factor in
causing a Covenant Default, upon the receipt of a Notice of Non-Payment Default
by the Lender to the Subordinated Creditor, such Principal Payment or Warrant
Payment shall be held in trust for the benefit of the Lender and be immediately
delivered to the Lender for application to the Senior Debt in accordance with
Section 5 below.
(b) (i) In the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings, or any receivership proceedings in
connection therewith relative to any of the Borrower, the Subsidiaries or their
respective creditors or property and in the event of any proceedings for
voluntary or involuntary liquidation, dissolution or other winding up of any of
the Borrower or the Subsidiaries, whether or not involving insolvency or
bankruptcy proceedings, then all Senior Debt shall first be paid in full, before
the payment on account of principal or interest is made upon any Junior Debt.
(ii) In any of the proceedings referred to in paragraph (b)(i)
above, any payment or distribution of any kind or character, whether in cash,
property, stock or obligations which may be payable or deliverable in respect of
the Junior Debt shall be paid or delivered directly to the holders of the Senior
Debt for application in payment thereof, unless and until all Senior Debt shall
have been paid in full.
(c) In the event (i) the Borrower shall fail to make when due any
payment of principal, interest or any other sums on the Senior Debt, or (ii) the
Lender shall have accelerated the Senior Debt (the events set forth in clauses
(i) and (ii) hereafter referred to as a "Payment Default"), then upon the
occurrence of the sending of a written notice from the Lender to the
Subordinated Creditor of such Payment Default (with no obligation to send
written notice to any successor, assignee, transferee, investor or participant
of the Junior Debt) (the "Notice of Payment Default"): (i) effective on the date
of the Notice of Payment Default, no payment shall be made by the Borrower or
any other co-maker or obligor of the Junior Debt to the Subordinated Creditor
and the Subordinated Creditor shall not receive any payments until the Lender
shall have been paid in full or until the Lender shall have sent written notice
to the Subordinated Creditor indicating that the Lender and the Borrower have
settled or resolved any outstanding disputes and/or defaults under the Lender's
Loan Documents or any other documents evidencing the Senior Debt; and (ii) while
such Payment Default is in effect, any payment received by the Subordinated
Creditor shall be held in trust for the benefit of the Lender and be immediately
delivered to the Lender for application to the Senior Debt in accordance with
Section 5 below.
(d) In the event of any default (other than a Payment Default) by the
Borrower of the Lender's Loan Documents or any other documents evidencing the
Senior Debt giving the Lender the right to accelerate the Senior Debt (a
"Non-Payment Default") and the Lender has not accelerated the Senior Debt, then
upon the occurrence of the sending of a notice specifying the list of known
Non-Payment Default(s) by the Lender to the Subordinated Creditor of such
Non-Payment Default(s) (a "Notice of Non-Payment Default") (with no obligation
to send written notice to any successor, assignee, transferee, investor or
participant of the Junior Debt): (i) effective on the date of the Notice of
Non-Payment Default, no payment shall be made by the Borrower or any other
co-maker or obligor of the Junior Debt to the Subordinated Creditor and the
Subordinated Creditor shall not receive any payments until the earlier of: (A)
the date that the Lender shall have sent written
<PAGE>
4
notice to the Subordinated Creditor indicating that the Lender and the Borrower
have settled or resolved any outstanding disputes and/or defaults under the
Lender's Loan Documents or any other documents evidencing the Senior Debt; or
(B) the date one hundred eighty (180) days after the Notice of Non-Payment
Default was sent by the Lender to the Subordinated Creditor (the "Payment Block
Period"). Any payment received by the Subordinated Creditor during the Payment
Block Period shall be held in trust for the benefit of the Lender and be
immediately delivered to the Lender for application to the Senior Debt in
accordance with Section 5 below. The Lender and the Subordinated Creditor agree
that the Lender shall have the right to impose any number of Payment Block
Periods pursuant to this Subsection (d) provided that: (i) the Subordinated
Creditor shall not be blocked from receiving any payments under the Junior Debt
in excess of one hundred eighty (180) days in any three hundred sixty-five (365)
day period; and (ii) in the event any Payment Block Period was terminated
pursuant to Clause (A) of the preceding sentence, then (x) any notice of default
for the same covenant violation in a three hundred sixty-five (365) day period
shall be given in good faith and not solely for the purpose of instituting a
payment block against the Subordinated Creditor; and/or (y) the Lender will not
institute a Payment Block Period for any Non-Payment Default which was known to
the Lender prior to instituting any previous Payment Block Period during the
preceding three hundred sixty-five (365) day period and not listed in a Notice
of Non-Payment Default during such three hundred sixty-five (365) day period.
The foregoing shall not prevent the Lender from accelerating any default by the
Borrower or declaring a Payment Default pursuant to Subsection (c) above.
(e) The Lender agrees that after it sends a Notice of Payment Default
pursuant to Subsection (c) above the Lender shall diligently pursue collection
of the Senior Debt. Nothing set forth herein shall prohibit or prevent the
Lender from negotiating or settling any defaults or disputes with the Borrower
under the Lender's Loan Documents or any other documents evidencing the Senior
Debt.
(f) After a period of one hundred eighty (180) days from the date of
the Notice of Payment Default pursuant to Subsection (c) above, the Subordinated
Creditor may commence any action or proceeding against the Borrower or any other
co-maker or obligor under the Subordinated Creditor Loan Documents to demand or
collect the Junior Debt. Notwithstanding the foregoing, any receipt of funds or
any payment collected, garnished or otherwise received by the Subordinated
Creditor shall be held in trust for the benefit of the Lender and be immediately
delivered to the Lender for application to the Senior Debt in accordance with
Section 5 below.
(g) The Subordinated Creditor agrees to send to the Lender a notice
indicating its intention to declare a default and accelerate its rights under
the Subordinated Creditor's Loan Documents prior to any acceleration of the
Junior Debt.
<PAGE>
5
(h) Neither the Borrower nor the Subordinated Creditor shall take or
permit any action prejudicial to or inconsistent with the Lender's priority
position over the Subordinated Creditor that is created by this Agreement.
5. TURNOVER OF PROHIBITED TRANSFER. If any payment on account of the
Junior Debt is received by the Subordinated Creditor, such payment shall be
delivered immediately by the Subordinated Creditor to the Lender for application
to the Senior Debt, in the form received except for the addition of any
endorsement or assignment necessary to effect a transfer of all rights therein
to the Lender. The Lender is irrevocably authorized to supply any required
endorsement or assignment which may have been omitted. Until so delivered, any
such payment shall be held by the Subordinated Creditor in trust for the Lender
and shall not be commingled with other funds or property of the Subordinated
Creditor.
6. WAIVERS. The Borrower and the Subordinated Creditor each waive any
defense based on the adequacy of a remedy at law which might be asserted as a
bar to the remedy of specific performance of this Agreement in any action
brought therefor by the Lender. To the fullest extent permitted by law, the
Borrower and the Subordinated Creditor each further waive the following: (i)
presentment, demand, protest, notice of protest, notice of default, notice of
dishonor, notice of payment or nonpayment and any and all other notices and
demands of any kind by the Lender in connection with all instruments evidencing
all or any portion of the Senior Debt or the Junior Debt to which the Lender or
Subordinated Creditor may be a party; (ii) notice of the acceptance of this
Agreement by the Lender; (iii) notice of any loans made, extensions granted or
other action taken in reliance hereon by the Lender; and (iv) all other demands
and notices in every kind by the Lender in connection with this Agreement, the
Senior Debt or the Junior Debt. The Subordinated Creditor consents to, from time
to time, in whole or in part, any release, renewal, modification, amendment,
settlement, extension, compromise or postponement of the time of payment of the
Senior Debt, to any substitution, exchange or release of collateral therefor and
to the addition or release of any person primarily or secondarily liable
thereon.
7. LEGEND. The Subordinated Creditor and the Borrower agree on the date
hereof to have stamped or endorsed on each of the Subordinated Creditor Loan
Documents and any other documents evidencing the Junior Debt a legend or
statement in form satisfactory to the Lender indicating that each of such
documents are expressly subject to the terms and conditions of this Agreement.
8. NOTICES. All notices, requests, consents, demands and other
communications hereunder shall be in writing and shall be mailed by registered
or certified first class mail or delivered by an overnight courier to the
respective parties to this Agreement as follows:
If to the Borrower: FIND/SVP, INC.
625 Avenue of the Americas
New York, New York 10011-2002
Attention:
<PAGE>
6
with a copy to: Breslow & Walker
767 Third Avenue
New York, New York 10011
Attn: Howard S. Breslow, Esq.
If to the Lender: The Chase Manhattan Bank
1411 Broadway
New York, New York 10018
Attention: Stephen Szanto
with a copy to: Hughes Hubbard & Reed LLP
One Battery Park Plaza, 12th Floor
New York, New York 10004
Attention: Beverly G. Miller, Esq.
If to the Subordinated
Creditor: SVP, S.A.
70 rue des Rosiers
Saint-Ouen, Cedex
France, F93585
with a copy to: Jean Louis Bodmer
70 rue des Rosiers
Saint-Ouen, Cedex
France, F93585
9. INDULGENCES NOT WAIVERS. Neither the failure nor any delay on the part
of the Lender to exercise any right, remedy, power or privilege hereunder shall
operate as a waiver thereof or give rise to an estoppel, nor be construed as an
agreement to modify the terms of this Agreement, nor shall any single or partial
exercise of any right, remedy, power or privilege with respect to any occurrence
be construed as a waiver of such right, remedy, power or privilege with respect
to any other occurrence. No waiver by a party hereunder shall be effective
unless it is in writing and signed by the party making such waiver, and then
only to the extent specifically stated in such writing.
10. DURATION AND TERMINATION. This Agreement shall constitute a continuing
agreement of subordination and shall remain in effect so long as the Borrower is
in any way indebted, liable or obligated to the Lender.
11. ENTIRE AGREEMENT. This Agreement constitutes and expresses the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, whether express or implied, oral or
written including, but not limited to, anything contained in the Subordinated
Creditor's Loan Documents to the contrary. Neither this Agreement nor any
portion or provision hereof may be changed, waived or amended orally or in
<PAGE>
7
any manner other than by an agreement in writing signed by the Lender, the
Borrower and the Subordinated Creditor.
12. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
the Lender, its successors and assigns, and shall be binding upon the Borrower,
its successors and assigns, and the Subordinated Creditor, its successors and
assignees.
13. GOVERNING LAW. The validity, construction and enforcement of this
Agreement shall be governed by the laws of the State of New York and the parties
consent irrevocably to the jurisdiction and venue of the federal and state
courts located in New York City, New York in resolving any dispute arising from
this Agreement. The Borrower and the Subordinated Creditor hereby waive any
objection which it or they have or may have to the laying of venue of any such
action or suit arising out of this Agreement in such courts and further waives
any claim that any such suit or action has been brought in an inconvenient
forum.
14. JURY TRIAL WAIVER. Each of the parties hereto waives (to the fullest
extent permitted by applicable law) any right to a trial by jury of any dispute
arising from this Agreement.
15. SEVERABILITY. The provisions of this Agreement are independent of and
separable from each other. If any provision hereof shall for any reason be held
invalid or unenforceable, it is the intent of the parties that such invalidity
or unenforceability shall not effect the validity or enforceability of any other
provision hereof, and that this Agreement shall be construed as if such invalid
or unenforceable provision had never been contained herein.
IN WITNESS WHEREOF, the parties have executed this Agreement on December
30, 1999.
FIND/SVP, Inc.
By
---------------------------------------
Name:
Title:
SVP, S.A.
By
---------------------------------------
Name:
Title:
<PAGE>
8
THE CHASE MANHATTAN BANK
By
---------------------------------------
Name:
Title:
<PAGE>
STATE OF NEW YORK )
) ss.: New York
COUNTY OF NEW YORK )
On this the ____ day of _______________, 1999, before me, the
undersigned officer, personally appeared _________________, who acknowledged
himself/herself to be the ____________ of FIND/SVP, Inc., a corporation, and
that he/she, as such officer, being authorized so to do, executed the foregoing
instrument for the purposes therein contained and acknowledged the same to be
his/her free act and deed individually and as such officer, and the free act and
deed of the corporation.
IN WITNESS WHEREOF, I hereunto set my hand.
----------------------------------
Notary Public
My Commission Expires:
<PAGE>
STATE OF ___________ )
) ss.: _____________
COUNTY OF _________ )
On this the ____ day of ___________, 1999, before me, the undersigned
officer, personally appeared ________________, who acknowledged himself/herself
to be a ____________ of SVP, S.A. a societe anonyme, and that he/she, as such
___________ , being authorized so to do, executed the foregoing instrument for
the purposes therein contained and acknowledged the same to be his/her free act
and deed individually, as such __________ and the free act and deed of the
___________________.
IN WITNESS WHEREOF, I hereunto set my hand.
----------------------------------
Notary Public
My Commission Expires:
<PAGE>
Exhibit AA
----------
Part IV
SUBORDINATION AGREEMENT
AGREEMENT dated December 30, 1999 among FIND/SVP, Inc., a New York
corporation with an office located at 625 Avenue of the Americas, New York, New
York 10011-2002 (the "Borrower"), FURMAN SELZ, L.P., a Delaware limited
partnership with an office located at 55 East 52nd Street, New York, New York
10055 (the "Subordinated Creditor") and THE CHASE MANHATTAN BANK, with an office
located at 270 Park Avenue, New York, New York 10017 (the "Lender").
RECITALS
A. The Borrower, together with FIND/SVP Published Products, Inc., a
Delaware corporation, (the "Subsidiary"), is indebted to the Subordinated
Creditor (i) in the original aggregate principal amount of up to $2,025,000 as
evidenced by the Series A Senior Subordinated Notes dated October 31, 1996
(collectively, the "Subordinated A Note") made by the Borrower and the
Subsidiary to the Subordinated Creditor; and (ii) the Stock Subscription Warrant
dated October 31, 1996 (the "Subordinated A Warrant") from the Borrower to the
Subordinated Creditor (collectively, the "Subordinated Creditor's Debt") (the
Subordinated A Note, the Subordinated A Warrant and all other documents executed
in connection therewith are collectively referred to as the "Subordinated
Creditor's Loan Documents").
B. The Borrower is indebted to the Lender in the original principal
amount of up to $1,000,000 (the "Lender Debt") as evidenced by the $1,000,000
Senior Grid Promissory Note dated December 30, 1999 from the Borrower to the
Lender (the "Lender Note").
C. As security for the payment of the Borrower's obligations to the
Lender, pursuant to a Security Agreement dated December 30, 1999 (the "Security
Agreement"), the Borrower granted a security interest in the Collateral (as
therein defined) (the Security Agreement, the Lender Note and all other
documents executed in connection therewith are collectively referred to as the
"Lender's Loan Documents").
D. In consideration of and as an inducement for the Lender to consent to
the continued extension of the Subordinated Creditor's Debt, the Subordinated
Creditor and the Borrower agree to the terms and conditions contained in this
Agreement.
AGREEMENT
In consideration of the Recitals, which are incorporated by reference, the
terms and conditions contained in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which is acknowledged, the
parties, intending to be bound legally, agree as follows:
1. Definitions.
(a) "Junior Debt" means all indebtedness, liabilities and obligations
whatsoever, of every kind and description, whenever and however arising,
absolute or
<PAGE>
2
contingent, due or to become due, from the Borrower to the Subordinated Creditor
pursuant to the Subordinated Creditor's Debt.
(b) "Senior Debt" means all indebtedness, liabilities and obligations
whatsoever, of every kind and description, whenever and however arising,
absolute or contingent, due or to become due, now existing or hereafter arising
from, or in any way connected with, any direct or indirect indebtedness of the
Borrower to the Lender, including, but not limited to, the Lender Debt, together
with all costs, expenses and attorneys' fees incurred in any action to collect
any indebtedness to the Lender including the Lender Debt or to enforce or
foreclose any mortgage, security agreement or other agreement securing any
indebtedness to the Lender including the Lender Debt.
2. Subordination. The Subordinated Creditor and the Borrower agree that
the Junior Debt is in all respects fully subordinated to the full and complete
payment and satisfaction in full of the Senior Debt in the manner and to the
extent set forth in Section 4 below and that, except as expressly permitted in
Section 4 below, no payments shall be made on the Junior Debt.
3. Warranties and Representation. The Borrower and the Subordinated
Creditor each represent and warrant that:
(a) The total aggregate principal amount of the Junior Debt as of the
date hereof is $2,025,000;
(b) The Junior Debt is evidenced by the Subordinated Loan Documents;
(c) The Subordinated Creditor has not assigned the Junior Debt or any
interest therein; and
(d) The Borrower and the Subsidiaries have not and will not grant,
directly or indirectly, to the Subordinated Creditor any security for the
repayment of the Junior Debt.
4. Covenants.
(a) Except as restricted below, the Borrower may pay and the
Subordinated Creditor may collect: (i) all regularly scheduled payments of
interest under the Subordinated Creditor's Loan Documents; and (ii) (A) any
non-accelerated prepayment or regularly scheduled payment of principal of the
Junior Debt (a "Principal Payment") or (B) any payment under the Subordinated A
Warrant (a "Warrant Payment"), provided such Principal Payment or Warrant
Payment does not cause or is not a contributing factor in causing a default
under any covenant contained in the Lender's Loan Documents or any other
documents evidencing the Senior Debt (a "Covenant Default"). In the event that a
Principal Payment or Warrant Payment causes or is a contributing factor in
causing a Covenant Default, upon the receipt of a Notice of Non-Payment Default
by the Lender to the Subordinated Creditor, such Principal Payment or Warrant
Payment shall be held in trust for the benefit of the Lender and be immediately
delivered to the Lender for application to the Senior Debt in accordance with
Section 5 below.
(b) (i) In the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings, or any receivership proceedings in
connection
<PAGE>
3
therewith relative to any of the Borrower, the Subsidiary or their respective
creditors or property and in the event of any proceedings for voluntary or
involuntary liquidation, dissolution or other winding up of any of the Borrower
or the Subsidiary, whether or not involving insolvency or bankruptcy
proceedings, then all Senior Debt shall first be paid in full, before the
payment on account of principal or interest is made upon any Junior Debt.
(ii) In any of the proceedings referred to in paragraph (b)(i)
above, any payment or distribution of any kind or character, whether in cash,
property, stock or obligations which may be payable or deliverable in respect of
the Junior Debt shall be paid or delivered directly to the holders of the Senior
Debt for application in payment thereof, unless and until all Senior Debt shall
have been paid in full.
(c) In the event (i) the Borrower shall fail to make when due any
payment of principal, interest or any other sums on the Senior Debt, or (ii) the
Lender shall have accelerated the Senior Debt (the events set forth in clauses
(i) and (ii) hereafter referred to as a "Payment Default"), then upon the
occurrence of the sending of a written notice from the Lender to the
Subordinated Creditor of such Payment Default (with no obligation to send
written notice to any successor, assignee, transferee, investor or participant
of the Junior Debt) (the "Notice of Payment Default"): (i) effective on the date
of the Notice of Payment Default, no payment shall be made by the Borrower or
any other co-maker or obligor of the Junior Debt to the Subordinated Creditor
and the Subordinated Creditor shall not receive any payments until the Lender
shall have been paid in full or until the Lender shall have sent written notice
to the Subordinated Creditor indicating that the Lender and the Borrower have
settled or resolved any outstanding disputes and/or defaults under the Lender's
Loan Documents or any other documents evidencing the Senior Debt; and (ii) while
such Payment Default is in effect, any payment received by the Subordinated
Creditor shall be held in trust for the benefit of the Lender and be immediately
delivered to the Lender for application to the Senior Debt in accordance with
Section 5 below.
(d) In the event of any default (other than a Payment Default) by the
Borrower of the Lender's Loan Documents or any other documents evidencing the
Senior Debt giving the Lender the right to accelerate the Senior Debt (a
"Non-Payment Default") and the Lender has not accelerated the Senior Debt, then
upon the occurrence of the sending of a notice specifying the list of known
Non-Payment Default(s) by the Lender to the Subordinated Creditor of such
Non-Payment Default(s) (a "Notice of Non-Payment Default") (with no obligation
to send written notice to any successor, assignee, transferee, investor or
participant of the Junior Debt): (i) effective on the date of the Notice of
Non-Payment Default, no payment shall be made by the Borrower or any other
co-maker or obligor of the Junior Debt to the Subordinated Creditor and the
Subordinated Creditor shall not receive any payments until the earlier of: (A)
the date that the Lender shall have sent written notice to the Subordinated
Creditor indicating that the Lender and the Borrower have settled or resolved
any outstanding disputes and/or defaults under the Lender's Loan Documents or
any other documents evidencing the Senior Debt; or (B) the date one hundred
eighty (180) days after the Notice of Non-Payment Default was sent by the Lender
to the Subordinated Creditor (the "Payment Block Period"). Any payment received
by the Subordinated Creditor during the Payment Block Period shall be held in
trust for the benefit of the Lender and be immediately delivered to the Lender
for application to the Senior Debt in accordance with Section 5 below. The
Lender and the Subordinated Creditor agree that the
<PAGE>
4
Lender shall have the right to impose any number of Payment Block Periods
pursuant to this Subsection (d) provided that: (i) the Subordinated Creditor
shall not be blocked from receiving any payments under the Junior Debt in excess
of one hundred eighty (180) days in any three hundred sixty-five (365) day
period; and (ii) in the event any Payment Block Period was terminated pursuant
to Clause (A) of the preceding sentence, then (x) any notice of default for the
same covenant violation in a three hundred sixty-five (365) day period shall be
given in good faith and not solely for the purpose of instituting a payment
block against the Subordinated Creditor; and/or (y) the Lender will not
institute a Payment Block Period for any Non-Payment Default which was known to
the Lender prior to instituting any previous Payment Block Period during the
preceding three hundred sixty-five (365) day period and not listed in a Notice
of Non-Payment Default during such three hundred sixty-five (365) day period.
The foregoing shall not prevent the Lender from accelerating any default by the
Borrower or declaring a Payment Default pursuant to Subsection (c) above.
(e) The Lender agrees that after it sends a Notice of Payment Default
pursuant to Subsection (c) above the Lender shall diligently pursue collection
of the Senior Debt. Nothing set forth herein shall prohibit or prevent the
Lender from negotiating or settling any defaults or disputes with the Borrower
under the Lender's Loan Documents or any other documents evidencing the Senior
Debt.
(f) After a period of one hundred eighty (180) days from the date of
the Notice of Payment Default pursuant to Subsection (c) above, the Subordinated
Creditor may commence any action or proceeding against the Borrower or any other
co-maker or obligor under the Subordinated Creditor Loan Documents to demand or
collect the Junior Debt. Notwithstanding the foregoing, any receipt of funds or
any payment collected, garnished or otherwise received by the Subordinated
Creditor shall be held in trust for the benefit of the Lender and be immediately
delivered to the Lender for application to the Senior Debt in accordance with
Section 5 below.
(g) The Subordinated Creditor agrees to send to the Lender a notice
indicating its intention to declare a default and accelerate its rights under
the Subordinated Creditor's Loan Documents prior to any acceleration of the
Junior Debt.
(h) Neither the Borrower nor the Subordinated Creditor shall take or
permit any action prejudicial to or inconsistent with the Lender's priority
position over the Subordinated Creditor that is created by this Agreement.
5. Turnover of Prohibited Transfer. If any payment on account of the
Junior Debt is received by the Subordinated Creditor, such payment shall be
delivered immediately by the Subordinated Creditor to the Lender for application
to the Senior Debt, in the form received except for the addition of any
endorsement or assignment necessary to effect a transfer of all rights therein
to the Lender. The Lender is irrevocably authorized to supply any required
endorsement or assignment which may have been omitted. Until so delivered, any
such payment shall be held by the Subordinated Creditor in trust for the Lender
and shall not be commingled with other funds or property of the Subordinated
Creditor.
6. Waivers. The Borrower and the Subordinated Creditor each waive any
defense based on the adequacy of a remedy at law which might be asserted as a
bar to the remedy of
<PAGE>
5
specific performance of this Agreement in any action brought therefor by the
Lender. To the fullest extent permitted by law, the Borrower and the
Subordinated Creditor each further waive the following: (i) presentment, demand,
protest, notice of protest, notice of default, notice of dishonor, notice of
payment or nonpayment and any and all other notices and demands of any kind by
the Lender in connection with all instruments evidencing all or any portion of
the Senior Debt or the Junior Debt to which the Lender or Subordinated Creditor
may be a party; (ii) notice of the acceptance of this Agreement by the Lender;
(iii) notice of any loans made, extensions granted or other action taken in
reliance hereon by the Lender; and (iv) all other demands and notices in every
kind by the Lender in connection with this Agreement, the Senior Debt or the
Junior Debt. The Subordinated Creditor consents to, from time to time, in whole
or in part, any release, renewal, modification, amendment, settlement,
extension, compromise or postponement of the time of payment of the Senior Debt,
to any substitution, exchange or release of collateral therefor and to the
addition or release of any person primarily or secondarily liable thereon.
7. Legend. The Subordinated Creditor and the Borrower agree on the date
hereof to have stamped or endorsed on each of the Subordinated Creditor Loan
Documents and any other documents evidencing the Junior Debt a legend or
statement in form satisfactory to the Lender indicating that each of such
documents are expressly subject to the terms and conditions of this Agreement.
8. Notices. All notices, requests, consents, demands and other
communications hereunder shall be in writing and shall be mailed by registered
or certified first class mail or delivered by an overnight courier to the
respective parties to this Agreement as follows:
If to the Borrower: FIND/SVP, INC.
625 Avenue of the Americas
New York, New York 10011-2002
Attention: ___________________
with a copy to: Breslow & Walker
767 Third Avenue
New York, New York 10011
Attn: Howard S. Breslow, Esq.
If to the Lender: The Chase Manhattan Bank
1411 Broadway
New York, New York 10018
Attention: Stephen Szanto
with a copy to: Hughes Hubbard & Reed LLP
One Battery Park Plaza, 12th Floor
New York, New York 10004
Attention: Beverly G. Miller, Esq.
<PAGE>
6
If to the Subordinated
Creditor: Furman Selz SBIC, L.P.
55 East 52nd Street
New York, New York 10055
Attention: Nicholas Daraviras
with a copy to: Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103
Attention: Carmen J. Romano, Esq.
9. Indulgences Not Waivers. Neither the failure nor any delay on the part
of the Lender to exercise any right, remedy, power or privilege hereunder shall
operate as a waiver thereof or give rise to an estoppel, nor be construed as an
agreement to modify the terms of this Agreement, nor shall any single or partial
exercise of any right, remedy, power or privilege with respect to any occurrence
be construed as a waiver of such right, remedy, power or privilege with respect
to any other occurrence. No waiver by a party hereunder shall be effective
unless it is in writing and signed by the party making such waiver, and then
only to the extent specifically stated in such writing.
10. Duration and Termination. This Agreement shall constitute a continuing
agreement of subordination and shall remain in effect so long as the Borrower is
in any way indebted, liable or obligated to the Lender.
11. Entire Agreement. This Agreement constitutes and expresses the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, whether express or implied, oral or
written including, but not limited to, anything contained in the Subordinated
Creditor's Loan Documents to the contrary. Neither this Agreement nor any
portion or provision hereof may be changed, waived or amended orally or in any
manner other than by an agreement in writing signed by the Lender, the Borrower
and the Subordinated Creditor.
12. Successors and Assigns. This Agreement shall inure to the benefit of
the Lender, its successors and assigns, and shall be binding upon the Borrower,
its successors and assigns, and the Subordinated Creditor, its successors and
assignees.
13. Governing Law. The validity, construction and enforcement of this
Agreement shall be governed by the laws of the State of New York and the parties
consent irrevocably to the jurisdiction and venue of the federal and state
courts located in New York City, New York in resolving any dispute arising from
this Agreement. The Borrower and the Subordinated Creditor hereby waive any
objection which it or they have or may have to the laying of venue of any such
action or suit arising out of this Agreement in such courts and further waives
any claim that any such suit or action has been brought in an inconvenient
forum.
14. Jury Trial Waiver. Each of the parties hereto waives (to the fullest
extent permitted by applicable law) any right to a trial by jury of any dispute
arising from this Agreement.
<PAGE>
7
15. Severability. The provisions of this Agreement are independent of and
separable from each other. If any provision hereof shall for any reason be held
invalid or unenforceable, it is the intent of the parties that such invalidity
or unenforceability shall not effect the validity or enforceability of any other
provision hereof, and that this Agreement shall be construed as if such invalid
or unenforceable provision had never been contained herein.
IN WITNESS WHEREOF, the parties have executed this Agreement on December
30, 1999.
FIND/SVP, Inc.
By
-----------------------------------------
Name:
Title:
FURMAN SELZ SBIC, L.P.
By: Furman Selz SBIC Investments LLC,
General Partner
By
-----------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
By
-----------------------------------------
Name:
Title:
<PAGE>
STATE OF NEW YORK )
) ss.: New York
COUNTY OF NEW YORK )
On this the ____ day of _______________, 1999, before me, the undersigned
officer, personally appeared _________________, who acknowledged himself/herself
to be the ____________ of FIND/SVP, Inc., a corporation, and that he/she, as
such officer, being authorized so to do, executed the foregoing instrument for
the purposes therein contained and acknowledged the same to be his/her free act
and deed individually and as such officer, and the free act and deed of the
corporation.
IN WITNESS WHEREOF, I hereunto set my hand.
---------------------------------
Notary Public
My Commission Expires:
<PAGE>
STATE OF NEW YORK )
) ss.: New York
COUNTY OF NEW YORK )
On this the ____ day of _______________, 1999, before me, the undersigned
officer, personally appeared _________________, who acknowledged himself/herself
to be the ____________ of FURMAN SELZ SBIC INVESTMENTS LLC, general partner of
FURMAN SELZ SBIC, L.P., a limited partnership, and that he/she, as such
_________________ of the general partner of the limited partnership, being
authorized so to do, executed the foregoing instrument for the purposes therein
contained and acknowledged the same to be his/her free act and deed individually
and as such ____________________, and the free act and deed of the general
partner and the limited partnership.
IN WITNESS WHEREOF, I hereunto set my hand.
---------------------------------
Notary Public
My Commission Expires:
Exhibit 23
Part I
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference of our reports dated March 24,
2000, appearing in this Annual Report on Form 10-K of Find/SVP, Inc. for the
year ended December 31, 1999, in the following registration statements of
Find/SVP, Inc.; Registration Statement No. 33-42746 on Form S-8 (pertaining to
the Find/SVP, Inc. 1986 Stock Option Plan); Registration Statement No. 333-22439
on Form S-8 (pertaining to the Find/SVP, Inc. 1986 Stock Option Plan);
Registration Statement No. 333-22445 on Form S-8 (pertaining to the Find/SVP
Inc. 1996 Stock Option Plan); and Post-Effective Amendment No. 1 to the
Registration Statement on Form S-8 No. 333-68315 (pertaining to the Find/SVP,
Inc. 1996 Stock Option Plan).
Deloitte & Touche
Stamford, Connecticut
March 24, 2000
Exhibit 23
Part II
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
FIND/SVP, Inc.
We consent to incorporation by reference in the registration statements (No.
33-42746, 33-75828, 333-030376, 333-22439, 333-22445 and 333-68315) on Form S-8
of FIND/SVP, Inc. and subsidiaries of our report dated February 22, 1999,
relating to the consolidated balance sheets of FIND/SVP, Inc. and subsidiaries
as of December 31, 1998, and 1997, and the related consolidated statements of
operations, shareholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1998, and the related schedule, which
report appears in the December 31, 1998 annual report on Form 10-K of FIND/SVP,
Inc.
/s/ KPMG LLP
------------------
KPMG LLP
New York, New York
March 29, 1999
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