<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
---------------------------------------------
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 number 0-4781
-----------------------------------------------------
MARKET FACTS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-2061602
- ----------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3040 West Salt Creek Lane, Arlington Heights, Illinois 60005
- -------------------------------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 590-7000
------------------------------
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES [X] NO [_]
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
1,730,927 common shares as of July 18, 1996
- --------------------------------------------------------------------------------
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Market Facts, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
As of June 30, 1996 and December 31, 1995
Assets
------
<TABLE>
<CAPTION> June 30, December 31,
1996 1995
------------- -------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 8,591,951 $ 3,530,157
Certificate of deposit 50,000 50,000
Accounts receivable:
Trade, less allowance for doubtful accounts of
$927,844 in 1996 and $838,203 in 1995 13,422,502 9,547,035
Other 68,509 6,200
Notes receivable 60,017 79,214
Revenue earned on contracts in progress
in excess of billings 3,462,159 2,889,027
Current portion of deferred income taxes 747,331 747,314
Prepaid expenses and other assets 325,681 309,954
- -----------------------------------------------------------------------------------------------------
Total Current Assets $ 26,728,150 $ 17,158,901
- -----------------------------------------------------------------------------------------------------
Other Assets:
Deferred transaction costs 1,108,337 ---
Goodwill, net of accumulated amortization 536,659 557,568
Mail panel acquired, net of accumulated amortization 60,953 101,587
- -----------------------------------------------------------------------------------------------------
Total Other Assets $ 1,705,949 $ 659,155
- -----------------------------------------------------------------------------------------------------
Property, at cost 27,639,211 26,083,047
Less accumulated depreciation and amortization (10,591,724) (9,524,466)
- -----------------------------------------------------------------------------------------------------
Net Property $ 17,047,487 $ 16,558,581
- -----------------------------------------------------------------------------------------------------
Total Assets $ 45,481,586 $ 34,376,637
=====================================================================================================
</TABLE>
Page 1
<PAGE>
Market Facts, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
As of June 30, 1996 and December 31, 1995
Liabilities and Stockholders' Equity
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------- -------------
<S> <C> <C>
Current Liabilities:
Accrued expenses $ 6,275,326 $ 5,517,230
Billings in excess of revenues earned on contracts in progress 4,394,346 3,328,937
Accounts payable 1,735,105 1,253,922
Income taxes 266,416 387,742
Note payable for acquisition of MFCL 339,126 339,126
Current portion of obligations under capital leases 222,768 225,903
Current portion of long-term debt 112,555 112,555
- -----------------------------------------------------------------------------------------------------
Total Current Liabilities $ 13,345,642 $ 11,165,415
- -----------------------------------------------------------------------------------------------------
Long-Term Liabilities:
Long-term debt 10,364,709 10,419,628
Convertible note 8,250,000 ---
Obligations under capital leases, noncurrent portion 428,669 536,242
Deferred income taxes 205,550 205,545
- -----------------------------------------------------------------------------------------------------
Total Long-Term Liabilities $ 19,248,928 $ 11,161,415
- -----------------------------------------------------------------------------------------------------
Total Liabilities $ 32,594,570 $ 22,326,830
- -----------------------------------------------------------------------------------------------------
Stockholders' Equity:
Preferred stock, series A, no par value;
500,000 shares authorized; none issued $ --- $ ---
Preferred stock, series B, no par value;
100 shares authorized and issued in 1996 --- ---
Common stock, $1 par value; 5,000,000 shares authorized;
2,183,237 and 2,106,237 shares issued in 1996 and 1995, respectively 2,183,237 2,106,237
Capital in excess of par value 2,637,487 2,328,137
Cumulative foreign currency translation (68,296) (69,144)
Retained earnings 10,364,308 9,525,401
- -----------------------------------------------------------------------------------------------------
$ 15,116,736 $ 13,890,631
- -----------------------------------------------------------------------------------------------------
Less 182,468 and 167,468 shares of treasury stock,
at cost, in 1996 and 1995, respectively (1,374,654) (1,189,029)
Less other transactions involving common stock (855,066) (651,795)
- -----------------------------------------------------------------------------------------------------
Total Stockholders' Equity $ 12,887,016 $ 12,049,807
- -----------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 45,481,586 $ 34,376,637
=====================================================================================================
</TABLE>
Page 2
<PAGE>
<TABLE>
Market Facts, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
For The Three Months Ended June 30, 1996 and 1995
<CAPTION>
Three Months Ended June 30,
------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Revenue $ 20,127,203 $ 16,331,604
- --------------------------------------------------------------------------------
Direct Costs:
Payroll $ 4,053,477 $ 3,453,430
Other expenses 7,795,418 5,546,116
- --------------------------------------------------------------------------------
Total $ 11,848,895 $ 8,999,546
- --------------------------------------------------------------------------------
Gross Margin $ 8,278,308 $ 7,332,058
- --------------------------------------------------------------------------------
Operating Expenses:
Selling $ 652,504 $ 494,359
General and administrative 5,714,793 5,330,388
Contributions to profit sharing and
employee stock ownership plans 362,182 312,350
- --------------------------------------------------------------------------------
Total $ 6,729,479 $ 6,137,097
- --------------------------------------------------------------------------------
Income from operations $ 1,548,829 $ 1,194,961
- --------------------------------------------------------------------------------
Other Income (Expense):
Interest expense $ (314,449) $ (287,286)
Interest income 50,016 11,047
Other income, net 8,364 30,060
- --------------------------------------------------------------------------------
Total $ (256,069) $ (246,179)
- --------------------------------------------------------------------------------
Income Before Provision For Income Taxes $ 1,292,760 $ 948,782
Provision For Income Taxes 589,046 434,436
- --------------------------------------------------------------------------------
Net Income $ 703,714 $ 514,346
================================================================================
Earnings Per Share $ .35 $ .26
================================================================================
Common and Common Equivalent Shares 2,000,769 1,953,130
================================================================================
Cash Dividends Declared $ .10 $ .10
================================================================================
</TABLE>
Page 3
<PAGE>
Market Facts, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
For The Six Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
Six Months Ended June 30,
----------------------------
1996 1995
----------- -----------
<S> <C> <C>
Revenue $38,785,946 $31,665,004
- ---------------------------------------------------------------------------------------------------
Direct Costs:
Payroll $ 7,938,060 $ 6,856,189
Other expenses 14,613,369 10,893,982
- ---------------------------------------------------------------------------------------------------
Total $22,551,429 $17,750,171
- ---------------------------------------------------------------------------------------------------
Gross Margin $16,234,517 $13,914,833
- ---------------------------------------------------------------------------------------------------
Operating Expenses:
Selling $ 1,276,641 $ 1,083,108
General and administrative 11,678,057 10,151,838
Contributions to profit sharing and employee stock ownership plans 575,935 426,388
- ---------------------------------------------------------------------------------------------------
Total $13,530,633 $11,661,334
- ---------------------------------------------------------------------------------------------------
Income from operations $ 2,703,884 $ 2,253,499
- ---------------------------------------------------------------------------------------------------
Other Income (Expense):
Interest expense $ (587,817) $ (573,043)
Interest income 84,523 23,489
Other income, net 56,183 52,971
- ---------------------------------------------------------------------------------------------------
Total $ (447,111) $ (496,583)
- ---------------------------------------------------------------------------------------------------
Income Before Provision For Income Taxes $ 2,256,773 $ 1,756,916
Provision For Income Taxes 1,025,112 825,256
- ---------------------------------------------------------------------------------------------------
Net Income $ 1,231,661 $ 931,660
===================================================================================================
Earnings Per Share $ .63 $ .49
===================================================================================================
Common and Common Equivalent Shares 1,970,436 1,902,720
===================================================================================================
Cash Dividends Declared $ .20 $ .18
===================================================================================================
</TABLE>
Page 4
<PAGE>
Market Facts, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For The Six Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
Six Months Ended June 30,
----------------------------
1996 1995
----------- -------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 1,231,661 $ 931,660
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 1,223,979 1,154,502
Vesting of restricted stock and demand notes receivable 27,716 27,716
Net gain on disposal of property (32,986) (28,650)
Change in assets and liabilities:
Accounts receivable (3,937,230) (367,177)
Prepaid expenses and other assets (15,618) 171,029
Billings in excess of revenues earned on contracts in progress 492,787 (1,396,419)
Accounts payable and accrued expenses 606,937 47,206
Income taxes (121,355) (448,391)
- ---------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities $ (524,109) $ 91,476
- ---------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Purchases of property (1,669,947) (634,717)
Investment in notes receivable (246,200) (219,444)
Proceeds from the sale of property 36,917 45,157
Proceeds from notes receivable 34,410 71,355
- ---------------------------------------------------------------------------------------------------
Net cash used in investing activities $(1,844,820) $ (737,649)
- ---------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Proceeds from sale of convertible note $ 8,250,000 $ ---
Proceeds from short-term borrowings 1,100,000 1,500,000
Repayment of short-term borrowings (1,100,000) (1,500,000)
Payment of deferred transaction costs (461,015) ---
Dividends paid (392,754) (335,031)
Proceeds from exercise of stock options 386,250 605,355
Purchases of treasury stock (185,625) ---
Reduction in obligations under capital leases and long-term debt (165,739) (160,996)
Proceeds from issuance of preferred stock 100 ---
Proceeds from sale of treasury stock --- 124,080
- ---------------------------------------------------------------------------------------------------
Net cash provided by financing activities $ 7,431,217 $ 233,408
- ---------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash $ (494) $ 10,139
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents $ 5,061,794 $ (402,626)
Cash and cash equivalents at beginning of period 3,530,157 911,209
- ---------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 8,591,951 $ 508,583
===================================================================================================
Cash Paid During The Period For:
Interest $ 537,808 $ 561,704
Income taxes $ 1,146,467 $ 1,273,648
===================================================================================================
Supplemental Schedule of Noncash Activity:
Capital lease obligations incurred on lease of equipment $ --- $ 107,249
===================================================================================================
</TABLE>
Page 5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
- ------------------------------
The accompanying unaudited condensed consolidated financial statements of Market
Facts, Inc. and Subsidiaries (the Company) have been prepared in accordance with
instructions to Form 10-Q. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the entire year. For
further information regarding the Company's most recent completed fiscal years,
refer to the consolidated financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995.
Note 2 - Adjustments and Reclassifications
- ------------------------------------------
The information furnished herein includes all adjustments, consisting of normal
recurring adjustments, which are, in the opinion of management, necessary for a
fair presentation of the interim financial statements. Certain reclassifications
have been made to the 1995 financial statements to conform to the 1996
presentation.
Note 3 - Foreign Currency Translation
- -------------------------------------
Assets and liabilities of Market Facts of Canada, Ltd. (MFCL), the Company's
only foreign subsidiary, have been translated using the exchange rate in effect
at the balance sheet date. MFCL's results of operations are translated using the
average exchange rate prevailing throughout the period. Resulting translation
gains and losses are reported as a component of stockholders' equity.
Note 4 - Revenue Recognition
- ----------------------------
The Company recognizes revenue under the percentage of completion method of
accounting. Revenue on client projects is recognized as services are performed.
Losses expected to be incurred on jobs in progress are charged to income as soon
as such losses are known. Revenue earned on contracts in progress in excess of
billings is classified as a current asset. Amounts billed in excess of revenue
earned are classified as a current liability. Client projects are expected to be
completed within a twelve month period.
Page 6
<PAGE>
Note 5 - Tender Offer and Convertible Note
- ------------------------------------------
On June 11, 1996, the Company commenced its offering ("tender offer") to
purchase up to 900,000 shares of its common stock from its stockholders at a
cash price of $14.50 per share. The tender offer period expired on July 10,
1996.
The tender offer was made pursuant to an Investment Agreement ("Investment
Agreement") dated June 6, 1996 among MFI Investors L.P., MFI Associates, Inc.
and the Company, whereby MFI Investors L.P. purchased from the Company a 10-
year, 7% convertible subordinated note ("Convertible Note") in the principal
amount of $8,250,000. Immediately prior to the purchase of the shares in the
tender offer, the Convertible Note automatically converts at a rate of $14.50
per share into a number of shares equal to the number of shares (up to 568,965)
purchased in the tender offer. A new class of Series B preferred shares was also
issued to MFI Investors, L.P., granting it the right to elect 3 of the 11
Company directors, subject to decrease as its ownership interest decreases.
As of June 30, 1996, the Company had incurred $1,108,337 in transaction costs
relating to the tender offer and Investment Agreement. These costs have been
capitalized and temporarily classified as a long-term asset. They will be
reclassified to stockholders' equity upon the expected conversion of the
Convertible Note and purchase of the tendered shares.
As of July 18, 1996, the Company purchased 838,807 shares pursuant to the tender
offer at a cost of $12,162,701. The purchase was funded by the proceeds from the
Convertible Note and bank financing. Immediately prior to the purchase of these
shares, the Convertible Note converted into 568,965 shares of the Company's
common stock.
The following is certain pro forma summary consolidated financial information of
the Company based upon historical information as of June 30, 1996 and for the
six month period then ended and for the year ended December 31, 1995, which has
been adjusted to reflect: (i) the conversion of the Convertible Note into
568,965 shares at $14.50 per share; (ii) the purchase by the Company of 838,807
shares at $14.50 per share; (iii) the incurrence of indebtedness in the amount
of $3,912,701 at an interest rate of 8.25% per annum for the purchase of shares
in excess of 568,965; (iv) the reclassification of deferred transaction costs;
and (v) the recognition of an annual management fee payable to MFI Associates,
Inc. for financial advisory services. The balance sheet and income statement
data give effect to these events as if they had occurred as of the date of the
balance sheet and the beginning of the periods presented, respectively.
<TABLE>
<CAPTION>
Pro Forma Balance Sheet Information
-----------------------------------
June 30, 1996
-------------
<S> <C>
Total Assets $36,123,249
Total Indebtedness $15,380,528
Stockholders' Equity $ 7,865,978
</TABLE>
<TABLE>
<CAPTION>
Pro Forma Statement of Earnings Information
-------------------------------------------
Six Months Ended Twelve Months Ended
June 30, 1996 December 31, 1995
---------------- -------------------
<S> <C> <C>
Revenue $38,785,946 $64,608,724
Net Income $ 1,115,542 $ 1,988,338
Earnings Per Share $ .66 $ 1.19
Common and Common Equivalent Shares 1,770,594 1,672,364
</TABLE>
Page 7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Liquidity and Capital Resources
- -------------------------------
The ratio of current assets to current liabilities was 2.0 to 1 as of June 30,
1996 versus 1.5 to 1 as of December 31, 1995. The improvement in the ratio is
primarily attributable to the proceeds from the sale of the Convertible Note and
an increase in accounts receivable due to growth in business. As of July 18,
1996, the Company repurchased 838,807 shares in the tender offer, and pursuant
to its terms, the Convertible Note automatically converted into 568,965 shares.
See Note 5 to the Financial Statements.
Cash and cash equivalents increased by $5,061,794 from December 31, 1995 to June
30, 1996. This is primarily the result of the proceeds from the sale of the
Convertible Note, partially offset by purchases of property and cash used in
operating activities.
In June 1996, the Company signed a revolving and term credit facility ("Credit
Facility") with a bank in the amount of $7,000,000. The Credit Facility bears
interest at either the prime lending rate or a reserve adjusted LIBOR rate, plus
between .75% and 1.5% per annum, and expires on June 30, 1998. The Credit
Facility replaces a $4,000,000 existing line of credit. The Company maintains
other established bank lines of credit totaling $3,650,000 which are renewed
annually.
The Company believes that cash flow from the sale of the Convertible Note,
future operations, its ability to secure additional leases and borrowings
available from its Credit Facility and lines of credit will be adequate to fund
both short-term and long-term investing and financing activities, including the
tender offer, and growth for the foreseeable future.
Results of Operations
- ---------------------
Comparison of Second Quarter 1996 to Second Quarter 1995
- --------------------------------------------------------
During the second quarter of 1996, the Company had revenue of $20,127,203, an
increase of 23.2% over the same period in 1995. The increase in revenue is
attributable to significant expansion of major program services for existing as
well as new clients.
Gross margin for the second quarter of 1996 was $8,278,308, an increase of 12.9%
over the same period in 1995. The increase in gross margin is due to the growth
in revenue. Gross margin as a percentage of revenue was 41.1% during the second
quarter of 1996 compared to 44.9% for the same period in 1995. The decline in
the gross margin percentage is primarily attributable to the fact that the
Company has experienced growth in certain types of business which yield lower
gross margin percentages but which require only a minimal increase in operating
expenses.
Operating expenses for the second quarter of 1996 increased by $592,382, an
increase of 9.7% compared to the same period in 1995. The increase is primarily
attributable to growth in business and higher overhead payroll expense.
Operating expenses as a percentage of revenue decreased from 37.6% in 1995 to
33.4% in 1996, primarily attributable to the fact that the Company has
experienced growth in certain types of business which require only a minimal
increase in operating expenses.
Provision for income taxes for the second quarter of 1996 reflects an effective
income tax rate of 45.6% versus 45.8% in 1995.
Net income for the second quarter of 1996 was $703,714 or 3.5% of revenue
compared with $514,346 and 3.1% of revenue during the same period in 1995.
Page 8
<PAGE>
Comparison of First Six Months of 1996 to First Six Months of 1995
- ------------------------------------------------------------------
During the first six months of 1996, the Company had revenue of $38,785,946, an
increase of 22.5% over the same period in 1995. The increase in revenue is
attributable to significant expansion of major program services for existing as
well as new clients.
Gross margin for the first six months of 1996 was $16,234,517, an increase of
16.7% over the same period in 1995. The increase in gross margin was due to the
growth in revenue. Gross margin as a percentage of revenue was 41.9% during the
first half of 1996 compared to 43.9% for the same period in 1995. The decline in
the gross margin percentage is primarily attributable to the fact that the
Company has experienced growth in certain types of business which yield lower
gross margin percentages but which require only a minimal increase in operating
expenses.
Operating expenses for the first six months of 1996 rose by $1,869,299, an
increase of 16.0% compared to the same period in 1995. This increase is due
primarily to growth in business and higher overhead payroll expense. Operating
expenses as a percentage of revenue decreased from 36.8% in 1995 to 34.9% in
1996, primarily attributable to the fact that the Company has experienced growth
in certain types of business which require only a minimal increase in operating
expenses.
Provision for income taxes for the first half of 1996 reflects an effective
income tax rate of 45.4% versus 47.0% in 1995.
Net income for the first six months of 1996 was $1,231,661 or 3.2% of revenue
compared with $931,660 and 2.9% of revenue during the same period in 1995.
Page 9
<PAGE>
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
(b) Pursuant to the terms of the Investment Agreement among the Company, MFI
Investors L.P. and MFI Associates, Inc., MFI Investors L.P. was issued 100
shares of a new class of Series B preferred stock, no par value, granting
it the right to elect 3 of the 11 Company directors, subject to decrease as
its ownership interest decreases.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) The Annual Stockholders' Meeting of the Company was held on April 24, 1996.
(c) At the Annual Stockholders' Meeting, the Stockholders voted to elect four
directors of the Company in an uncontested election. Each nominee for
director was elected by a vote of the Stockholders as follows:
<TABLE>
<CAPTION>
Votes Against
Votes For Or Withheld
----------- ------------
<S> <C> <C>
Lawrence W. Labash 1,673,853 10,946
Thomas H. Payne 1,673,853 10,946
Sanford M. Schwartz 1,671,803 12,996
Wesley S. Walton 1,672,928 11,871
</TABLE>
No other items were voted on at the Annual Stockholders' Meeting or otherwise
during the quarter.
ITEM 5. OTHER INFORMATION.
Wesley S. Walton resigned as a director of the Company effective May 28, 1996.
On June 5 1996, John C. Robertson and Timothy Q. Rounds resigned as directors
and two new members, Ned L. Sherwood and Henrik Falktoft, were elected by MFI
Investors L.P. to the Company's board.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
See Index to Exhibits immediately following the signature page.
(b) Reports on Form 8-K.
A report on Form 8-K dated June 5, 1996, commission file number 000-04781,
was filed on July 12, 1996.
Page 10
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
Market Facts, Inc.
------------------------------------
(Registrant)
Date: July 18, 1996 /s/ Timothy J. Sullivan
------------- ------------------------------------
Timothy J. Sullivan
Senior Vice President, Treasurer and
Assistant Secretary
(Principal Accounting Officer)
Date: July 18, 1996 /s/ Glenn W. Schmidt
------------- ------------------------------------
Glenn W. Schmidt
Executive Vice President, Assistant
Secretary and Assistant Treasurer
(Principal Financial Officer)
Page 11
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description
- -------------- -----------
(3)(a)(7) Restated Certificate of Incorporation.
(3)(b) By-laws as Amended and Currently in Effect.
(4)(a)(7) Article Fourth of Restated Certificate of Incorporation is
included in Exhibit (3)(a) above.
(4)(b)(4) Rights Agreement as Amended and Currently in Effect.
(4)(c)(12) Certificate of Designation, Preferences and Rights of Series B
Preferred Stock.
(10.1)(6) Term Note dated February 23, 1995 between Market Facts, Inc. and
Verne Churchill.
(10.2)(6) Term Note dated February 23, 1995 between Market Facts, Inc. and
Lawrence Labash.
(10.3)(6) Term Note dated February 23, 1995 between Market Facts, Inc. and
Thomas Payne.
(10.4)(6) Term Note dated February 23, 1995 between Market Facts, Inc. and
Glenn Schmidt.
(10.5)(6) Term Note dated March 1, 1995 between Market Facts, Inc. and
Stephen J. Weber.
(10.6)(5) Promissory Note dated April 1, 1994 between Market Facts, Inc.
and Stephen J. Weber.
(10.7)(1) Employment Agreement by and among Market Facts of Canada, Ltd.,
Market Facts, Inc. and John C. Robertson dated as of April 14,
1994.
(10.8) Demand Note and London Interbank Offered Rate Borrowing
Agreement dated April 24, 1996, between the Company and American
National Bank and Trust Company of Chicago.
(10.9)(3) Mortgage and Security Agreement dated April 11, 1990 between
American National Bank and Trust Company as Trustee under Trust
No. 110201-04 and The Manufacturers Life Insurance Company
together with Mortgage Note.
(10.10)(8) Credit Agreement dated June 7, 1996, between the Company and
Harris Trust and Savings Bank.
(10.11)(2) Employment Agreement with Verne B. Churchill.
(10.12)(2) Employment Agreement with Lawrence W. Labash.
(10.13)(2) Employment Agreement with Timothy Q. Rounds.
(10.14)(2) Employment Agreement with Glenn W. Schmidt.
(10.15)(2) Employment Agreement with Sanford M. Schwartz.
Page 12
<PAGE>
Exhibit Number Description
-------------- -----------
(10.16)(2) Indemnity Agreement with Jack R. Wentworth.
Substantially identical agreements were also entered
into with the following individuals:
William W. Boyd John C. Robertson
Verne B. Churchill Timothy Q. Rounds
Lawrence W. Labash Glenn W. Schmidt
Thomas H. Payne Sanford M. Schwartz
Karen E. Predow-James Wesley S. Walton
(10.17)(7) Term Note dated March 29, 1996 between Market Facts,
Inc. and Verne Churchill.
(10.18)(7) Term Note dated March 29, 1996 between Market Facts,
Inc. and Thomas Payne.
(10.19)(7) Term Note dated March 29, 1996 between Market Facts,
Inc. and Glenn Schmidt.
(10.20)(7) Term Note dated March 29, 1996 between Market Facts,
Inc. and Lawrence Labash.
(10.21)(9) Investment Agreement dated June 6, 1996 among the
Company, MFI Investors, L.P. and MFI Associates, Inc.
(10.22)(10) Financial Advisory Agreement dated June 6, 1996 between
the Company and MFI Investors, L.P.
(10.23)(11) Convertible Note dated June 6, 1996 in the principal
amount of $8,250,000 issued by the Company to MFI
Investors L.P.
(27) Financial Data Schedule.
- -----------------------
(1) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 1994.
(2) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 1994.
(3) Incorporated by reference to Registrant's Annual Report on Form 10-K for
its fiscal year ended December 31, 1992.
(4) Incorporated by reference to Registrant's Form 8-A dated July 3, 1996,
commission file number 000-04781.
(5) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q/A-1
for the quarterly period ended June 30, 1994.
(6) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 1995.
(7) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 1996.
Page 13
<PAGE>
(8) Incorporated by reference to Exhibit No. (b) of Registrant's Schedule 13E-4
dated June 11, 1996, commission file number 005-20859.
(9) Incorporated by reference to Exhibit No. (c)(1) of Registrant's Schedule
13E-4 dated June 11, 1996, commission file number 005-20859.
(10) Incorporated by reference to Exhibit No. (c)(2) of Registrant's Schedule
13E-4 dated June 11, 1996, commission file number 005-20859.
(11) Incorporated by reference to Exhibit No. (c)(3) of Registrant's Schedule
13E-4 dated June 11, 1996, commission file number 005-20859.
(12) Incorporated by reference to Exhibit No. 99(c)(4) of Registrant's Schedule
13E-4 dated June 11, 1996, commission file number 005-20859.
Page 14
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Exhibit 3(b)
As Amended through 6/5/96
BY-LAWS
OF MARKET FACTS, INC.
ARTICLE I
OFFICES
Section 1. Delaware Office. The registered office of the corporation in
the State of Delaware shall be in the City of Wilmington and County of New
Castle.
Section 2. Other Offices. The corporation may also have offices at such
other places both within and without the State of Delaware as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Location. All meetings of the stockholders for the election of
directors shall be held in the City of Chicago, State of Illinois, at such place
as may be fixed from time to time by the board of directors, or at such other
place either within or without the State of Delaware as shall be designated from
time to time by the board of directors and stated in the notice of the meeting.
Meetings of stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meeting. Annual meetings of stockholders shall be held
on the third Wednesday in April in each year, if not a legal holiday, and if a
legal holiday, then on the next business day following, or on such other date
and time as shall be designated from time to time by the board of directors and
stated in the notice of the meeting, at which they shall elect by a simple
majority vote a board of directors, and transact such other business as may
properly be brought before the meeting.
In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a stockholder, the stockholder must
have given timely notice thereof in writing to the secretary of the corporation.
To be timely, a stockholder's notice must be delivered to or mailed and received
at the principal executive offices of the corporation, not less than 50 days nor
more than 75 days prior to the meeting; provided, however, that in the event
that less than 65 days' notice or prior
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public disclosure of the date of the meeting is given or made to the
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 15th day following the day on which such
notice of the date of the annual meeting was mailed or such public disclosure
was made whichever first occurs. A stockholder's notice to the secretary shall
set forth as to each matter the stockholder proposes to bring before the annual
meeting (i) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and record address of the stockholder proposing such
business, (iii) the class and number of shares of the corporation which are
beneficially owned by the stockholder, and (iv) any material interest of the
stockholder in such business.
Notwithstanding anything in these by-laws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Article II, Section 2, provided, however, that
nothing in this Article II, Section 2 shall be deemed to preclude discussion by
any stockholder of any business properly brought before the annual meeting.
The chairman of an annual meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Article II, Section 2, and if
he should so determine, he shall so declare to the meeting any such business not
properly brought before the meeting shall not be transacted. (Amended 2/3/93)
Section 3. Notice. Written notice of the annual meeting stating the
place, date and hour of the meeting shall be given to each stockholder entitled
to vote at such meeting not less than ten nor more than sixty days before the
date of the meeting.
Section 4. Voting Lists. The officer who has charge of the stock ledger of
the corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
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Section 5. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the chairman of the board of
directors or the president and shall be called by the president or secretary at
the request in writing of a majority of the board of directors, or at the
request in writing of stockholders owning a majority in amount of the entire
capital stock of the corporation issued and outstanding and entitled to vote.
Such request shall state the purpose or purposes of the proposed meeting.
Section 6. Notice. Written notice of a special meeting stating the place,
date and hour of the meeting and the purpose or purposes for which the meeting
is called, shall be given not less than ten nor more than sixty days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Purpose. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 8. Quorum. The holders of a majority of each class of stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
statute or by the certificate of incorporation. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 9. Vote Required For Action. When a quorum is present at any
meeting, the vote of the holders of a majority of the stock having voting power
present in person or represented by proxy shall decide any question brought
before such meeting, unless the question is one upon which by express provision
of the statutes or of the certificate of incorporation, a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
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Section 10. Proxies. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on or
after three years from its date, unless the proxy provides for a longer period.
Section 11. Informal Action. Unless otherwise provided in the certificate
of incorporation, any action required to be taken at any annual or special
meeting of stockholders of the corporation, or any action which may be taken at
any annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
Section 12. Nomination of Directors. Except with respect to directors
elected by holders of any class or series of preferred stock, only persons who
are nominated in accordance with the following procedure shall be eligible for
election as directors. (Amended 6/5/96) Nominations of persons for election to
the board of the corporation at the annual meeting may be made at a meeting of
stockholders or by or at the direction of the board of directors, by any
nominating committee or person appointed by the board, or by any stockholder of
the corporation entitled to vote for the election of directors at the meeting
who complies with the notice procedures set forth in this Article II, Section
12. Such nominations, other than those made by or at the direction of the board,
shall be made pursuant to timely notice in writing to the secretary of the
corporation. To be timely, a stockholder's notice shall be delivered to, or
mailed and received at the principal executive offices of the corporation, not
later than (1) with respect to an election to be held at an annual meeting of
stockholders, 90 days in advance of the meeting or no later than 270 days after
the date of the last annual meeting, and (2) with respect to an election to be
held at a special meeting of stockholders for the election of directors, the
close of business on the 7th day following the earlier of (x) the date on which
notice of such meeting is first given to stockholders and (y) the date on which
a public announcement of such meeting is first made. Such stockholder's notice
to the secretary shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or re-election as a director, (i) the name,
age, business address and residence address of the person, (ii) the principal
occupation
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or employment of the person, (iii) the class and number of shares of capital
stock of the corporation which are beneficially owned by the person, (iv) the
consent of each nominee to serve as a director of the corporation if so elected
and (v) any other information relating to the person that is required to be
disclosed in solicitations for proxies for election of directors pursuant to
Rule 14a under the Securities Exchange Act of 1934, as amended; and (b) as to
the stockholder giving the notice (i) the name and record address of the
stockholder and (ii) the class and number of shares of capital stock of the
corporation which are beneficially owned by the stockholder. The corporation may
require any proposed nominee to furnish such other information as may reasonably
be required by the corporation to determine the eligibility of the proposed
nominee to serve as director of the corporation. No person shall be eligible for
election as director of the corporation unless nominated in accordance with the
procedures set forth herein.
The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedures, and if he should so determine, he shall so declare to the
meeting and defective nomination shall be disregarded. (Adopted 2/3/93)
ARTICLE III
DIRECTORS
Section 1. Number. The number of directors which shall constitute the
whole board shall not be less than six (6) nor more than twelve (12) as
determined from time to time by resolution adopted by the board of directors.
The directors shall be elected at the annual meeting of the stockholders, except
as provided in Section 2 of this Article, and each director elected shall hold
office until his successor is elected and qualified. Directors need not be
stockholders.
Section 2. Vacancies. Except with respect to directors elected by holders
of any class or series of preferred stock, vacancies and newly created
directorships resulting from any increase in the authorized number of directors
may be filled by a majority of the remaining directors elected by the holders of
the Common Stock, although less than a quorum, or by a sole remaining director
elected by the holders of the Common Stock. Any vacancies with respect to
directors elected by holders of any class or series of preferred stock, may be
filled by a majority of the remaining directors elected by the holders of such
class or series of preferred stock, or by a sole remaining director elected by
the holders of such class or series of preferred stock. Any director
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so appointed shall hold office for a term expiring at the next election of the
class for which such director was appointed and until his or her successor is
elected and qualified. (Amended 6/5/96)
Section 3. Powers. The business of the corporation shall be managed by
its board of directors which may exercise all such powers of the corporation and
do all such lawful acts and things as are not by statute or by the certificate
of incorporation or by these by-laws directed or required to be exercised or
done by the stockholders.
Section 4. Location. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 5. Meeting. The first meeting of each newly elected board of
directors shall be held without notice immediately after the annual meeting of
stockholders in each year.
Section 6. Notice Regular Meetings. Regular meetings of the board of
directors may be held without notice at such time and at such place as shall
from time to time be determined by the board.
Section 7. Notice Special Meetings. Special meetings of the board may be
called by the chairman of the board or the president on five days' notice to
each director, either personally or by mail or by telegram; special meetings
shall be called by the president or secretary in like manner and on like notice
on the written request of two directors.
Section 8. Quorum. At all meetings of the board, a majority of the
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Informal Action. Unless otherwise restricted by the
certificate of incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the board of directors or of any committee thereof
may be taken without a meeting, if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the board.
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Section 10. Telephonic Meetings. Unless otherwise restricted by the
certificate of incorporation or these by-laws, members of the board of
directors, or any committee designated by the board of directors, may
participate in a meeting of the board of directors, or any committee, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
Section 11. Powers of Committees. The board of directors may, by
resolution passed by unanimous vote, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board may designate one or more directors as alternate numbers of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in the place of
any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the board of directors, shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to amending the
certificate of incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommending to the
stockholders a dissolution of the corporation or a revocation of a dissolution,
or amending the by-laws of the corporation; and, unless the resolution or the
certificate of incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the board of directors.
Section 12. Minutes. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.
Section 13. Voting Shares of Other Corporations. Unless otherwise ordered
by the board of directors the chairman of the board and the president or such
other persons as the board of directors may appoint shall have full power and
authority on behalf of the corporation to attend any meeting of stockholders of
any corporation in which this corporation may hold stock, and to vote
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the shares held by this corporation at such meeting and to possess and exercise
any and all the rights and powers incident to the ownership of such shares which
this corporation as the owner thereof might have, possess and exercise.
Section 14. Compensation. Unless otherwise restricted by the certificate
of incorporation or these by-laws, the board of directors shall have the
authority to fix the compensation of directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the board of directors and
may be paid a fixed sum for attendance at each meeting of the board of directors
or a stated salary as director. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
ARTICLE IV
NOTICES
Section 1. Notice. Whenever, under the provisions of the statutes or of
the certificate of incorporation or of these by-laws, notice is required to be
given to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Section 2. Notice by Telegraph, Cable or Radio. Whenever, under the
provisions of these by-laws, notice is required to be given to any director or
officer, such notice may be given by prepaid telegram, cablegram or radiogram
addressed to such director or officer at such address as appears on the books of
the corporation, or in default of other address, at his place of residence or
usual place of business last known to the corporation, and such notice shall be
deemed to be given at the time such telegram, cablegram or radiogram shall be
delivered to the telegraph, cable or radio company for transmittal.
Section 3. Notice by Telephone, Wireless or Other Means of Voice
Communication. Whenever, under the provisions of these by-laws, notice is
required to be given to any director or officer, such notice shall be deemed to
have been given when such notice has been transmitted by telephone, wireless or
other means of voice communication to such number or call designation as may
appear on
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the records of the corporation for such person, or in default of other address,
at his place of residence or usual place of business known to the corporation.
Section 4. Waiver of Notice. Whenever any notice is required to be given
under the provisions of the statutes or of the certificate of incorporation or
of these by-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. Number. The officers of the corporation shall be chosen by the
board of directors and shall be a chairman of the board of directors, a
president, a secretary and a treasurer. The board of directors may also choose
one or more vice-presidents, assistant secretaries and assistant treasurers. Any
number of offices may be held by the same person, unless the certificate of
incorporation or these by-laws otherwise provide.
Section 2. Election. The board of directors at its first meeting after
each annual meeting of stockholders shall choose a chairman of the board of
directors, a president, one or more vice-presidents, a secretary and a
treasurer.
Section 3. Other Officers. The board of directors may appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
Section 4. Salaries. The board of directors shall fix and determine the
salaries of the officers of the corporation: Provided, however, that the board
of directors by resolution duly adopted may delegate to the chief executive
officer the power to fix and determine the salaries of all officers and to
increase and decrease such salaries from time to time in his sole discretion,
subject, however, to the power of the board of directors to review and increase
or decrease the salary of any officer at any time. No officer whose salary is
fixed and determined in an annual amount or at an annual rate shall have any
contractual right to receive the salary so fixed and determined for any period
of time beyond the period of time that such officer shall hold the office to
which he is elected and perform the duties thereof; and the fixing and
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determining of any salary in an annual amount shall constitute the rate at which
such officer is to be compensated during the period he is performing the duties
of his office. (Amended 7/26/89)
Section 5. Term of Office. The officers of the corporation shall hold
office until their successors are chosen and qualify. Any officer elected or
appointed by the board of directors may be removed at any time by vote of the
board of directors. Any vacancy occurring in any office of the corporation may
be filled by the board of directors.
Section 6. The Chief Executive Officer. The chief executive officer of
the corporation shall have general direction over the general policies and
affairs of the corporation and of compliance with the by-laws and resolutions
and directions of the board of directors, subject only to the control and
direction of the board of directors. He may sign with the secretary or other
proper officer of the corporation thereunto authorized by the board of
directors, certificates for shares of the corporation, any deeds, mortgages,
contracts, bonds and all other corporate obligations or instruments for and in
the name of the corporation except where the signing and execution thereof is
expressly delegated by the board of directors or by these by-laws to some other
officer or agent, or shall be required by law to be otherwise signed or
executed. As to all employees, except those selected by the board of directors,
he shall employ such employees, prescribe their duties, fix their salaries and
he may discharge any such employee.
Section 7. The Chief Operating Officer. The chief operating officer shall
have general direction over the day to day management of the affairs of the
corporation and perform such other duties as from time to time may be assigned
by the chief executive officer. In the absence of the chief executive officer or
in the event of his inability or refusal to act, the chief operating officer
shall perform the duties of the chief executive officer and when so acting shall
have all the powers of and be subject to all the restrictions upon the chief
executive officer.
Section 8. Chairman of the Board. The chairman of the board shall, when
present, preside as chairman at all meetings of the shareholders and the board
of directors. He may call meetings of the board of directors and of any standing
committee of the board of directors when he deems it necessary. He may appoint
special committees and prescribe the scope of their duties and authority. He
shall, in the absence or incapacity of the president, perform all duties and
functions and exercise all of the powers of the president. The chairman shall
have such other powers and perform such other duties as from time to time may be
prescribed by the board of directors.
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Section 9. The Vice Chairman of the Board. The vice chairman shall assist
the chairman and the president in the discharge of their duties as the board of
directors may direct from time to time and will perform such other duties as
from time to time may be assigned by the chairman of the board or the board of
directors.
Section 10. The President. The president shall report to the chairman and
keep the chairman informed concerning the affairs and condition of the business
of the corporation. He shall, in the absence or incapacity of the chairman,
perform all duties and functions and exercise all of the powers and perform such
other duties as are incident to the office of the chairman, and as from time to
time may be prescribed by the board of directors or the chairman thereof. In
the absence of the chairman, he shall preside as chairman of all meetings of the
shareholders and the board of directors.
Section 11. The Vice Presidents. There shall be one or more executive vice
presidents and one or more vice presidents who shall assist the chairman and the
president in the discharge of their duties as the president and/or the chairman
may direct and shall perform such other duties as from time to time may be
assigned by the president or by the board of directors. In the absence of the
chairman and of the president, or in the event of their inability or refusal to
act, the executive vice president shall perform the duties of the chairman
and/or the president, and when so acting shall have all the powers of and be
subject to all the restrictions upon the chairman and the president. In the
absence of the chairman, vice chairman, the president and the executive vice
president, the vice presidents in the order designated by the board of
directors, or in the absence of any designation, then in the order of seniority
of tenure as vice president, shall perform the duties of the president and/or
the chairman, and when so acting shall have all the powers of and be subject to
all the restrictions upon the chairman and the president.
Section 12. The Secretary and Assistant Secretary. The secretary shall
attend all meetings of the board of directors and all meetings of the
stockholders and record all the proceedings of the meetings of the corporation
and of the board of directors in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. He shall give, or
cause to be given, notice of all meetings of the stockholders and special
meetings of the board of directors, and shall perform such other duties as may
be prescribed by the board of directors or president, under whose supervision he
shall be. He shall have custody of the corporate seal of the corporation and he,
or an assistant secretary, shall have authority to affix the same to any
instrument
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requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his signature.
The assistant secretary, if any, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
Section 13. The Treasurer and Assistant Treasurers. The treasurer shall
have the custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by the board of directors.
He shall disburse the funds of the corporation as may be ordered by the
board of directors, taking proper vouchers for such disbursements, and shall
render to the president and the board of directors, at its regular meetings, or
when the board of directors so requires, an account of all his transactions as
treasurer and of the financial condition of the corporation.
If required by the board of directors, he shall give the corporation a bond
(which shall be renewed every six years) in such sum with such surety or
sureties as shall be satisfactory to the board of directors for the faithful
performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control, belonging to the corporation.
The assistant treasurer, if any, or if there shall be more than one, the
assistant treasurers in the order determined by the board of directors (or if
there be no such determination, then in the order of their election), shall, in
the absence of the treasurer or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the treasurer and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
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ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Signatures. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the chairman of the board of directors or the president or a vice-president and
the treasurer or an assistant treasurer, or the secretary or an assistant
secretary of the corporation, certifying the number of shares owned by him in
the corporation.
Section 2. Facsimile Signatures. Any of or all the signatures on the
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 3. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
Section 4. Transfer of Stock. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 5. Fixing Record Date. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a
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meeting, or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix, in advance, a record date, which shall
not be more than sixty nor less than ten days before the date of such meeting,
nor more than sixty days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the board of directors may fix a new record date for the adjourned meeting.
Section 6. Registered Stockholders. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise required by
the laws of Delaware.
Section 7. Inspection of Records. The directors shall determine from time
to time whether and if allowed, when and under what conditions and regulations
the accounts and books of the corporation (except such as may by statute be
specifically open to inspection) or any of them shall be open to the inspection
of the stockholders, and the stockholders' rights in this respect are and shall
be restricted and limited accordingly.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall indemnify all directors of the corporation acting in
such capacity and may indemnify any and all persons whom it has the power to
indemnify under the General Corporation Law of Delaware against any and all
expenses, judgments, fines, amounts paid in settlement, and any other
liabilities to the fullest extent permitted by such Law and may, at the
discretion of the board of directors, purchase and maintain insurance, at its
expense, to protect itself and such persons against any such expense, judgment,
fine, amount paid in settlement or other liability, whether or not the
corporation would have the power to so indemnify such person under the General
Corporation Law of Delaware.
-14-
<PAGE>
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation.
Before payment of any dividend, there may be set aside out of any funds of
the corporation available for dividends such sums or sums as the directors from
time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing
or maintaining any property of the corporation, or for such other purpose as
the directors shall think conducive to the interest of the corporation, and the
directors may modify or abolish any such reserve in the manner in which it was
created.
Section 2. Contracts. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances.
Section 3. Loans. No loans shall be contracted on behalf of the
corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a resolution of the board of directors. Such authority may be
general or confined to specific instances.
Section 4. Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the board of directors may
select.
Section 5. Checks. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
Section 6. Fiscal Year. The fiscal year of the corporation shall be the
calendar year.
-15-
<PAGE>
Section 7. Seal. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the words "Corporate
Seal, Delaware." The seal may be used by causing it or a facsimile thereof to
be impressed or affixed or reproduced or otherwise.
ARTICLE IX
AMENDMENTS
These by-laws may be altered, amended or repealed or new by-laws may
be adopted by the stockholders entitled to vote or by the board of directors,
when such power is conferred upon the board of directors by the certificate of
incorporation, at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new by-
laws be contained in the notice of such special meeting.
-16-
<PAGE>
Exhibit 10.8
DEMAND NOTE (UNSECURED)
$3,000,000.00 Chicago, Illinois April 24, 1996
DUE ON DEMAND
FOR VALUE RECEIVED, the undersigned (jointly and severally if more than
one) ("Borrower"), promises to pay to the order of AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO ("Bank"), at its principal place of business in
Chicago, Illinois or such other place as Bank may designate from time to time
hereafter, the principal sum of Three Million and 00/100ths Dollars, or such
lesser principal sum as may then be owed by Borrower to Bank hereunder.
Borrower's obligations and liabilities to Bank under this Note ("Borrower's
Liabilities") shall be payable ON DEMAND.
The unpaid principal balance of Borrower's Liabilities due hereunder shall
bear interest from the date hereof until paid, computed as follows (DELETE
INAPPLICABLE PROVISION): (ii) AT A DAILY RATE EQUAL TO THE DAILY RATE EQUIVALENT
OF _______% PER ANNUM (computed on the basis of a 360-day year and actual days
elapsed) IN EXCESS OF the rate of interest announced or published publicly from
time to time by Bank as its prime or base rate of interest (THE "BASE RATE");
provided, however, that in the event that any of Borrower's Liabilities are not
paid on demand, the unpaid amount of Borrower's Liabilities shall bear interest
after the demand date until paid at a rate equal to the sum of the rate that
would otherwise be in effect plus 3%.*
If the rate of interest to be charged by Bank to Borrower hereunder is that
specified in clause (ii) above, such rate shall fluctuate hereafter from time to
time concurrently with, and in an amount equal to, each increase or decrease in
the Base Rate, whichever is applicable.
Accrued interest shall be payable by Borrower to Bank on the same day of
each (DELETE INAPPLICABLE PROVISION): (i) month, or and at maturity, commencing
with the 31 day of May, 1996, or as billed by Bank to Borrower, at Bank's
principal place of business, or at such other place as Bank may designate from
time to time hereafter.
Borrower warrants and represents to Bank that Borrower shall use the
proceeds represented by this Note solely for proper business purposes and
consistently with all applicable laws and statutes.
Any deposits or other sums at any time credited by or payable or due from
Bank to Borrower, or any monies, cash, cash equivalents, securities,
instruments, documents or other assets of Borrower in the possession or control
of Bank or its bailee for any purpose, may be reduced to cash and applied by
Bank to or setoff by Bank against Borrower's Liabilities.
Upon demand, all of Borrower's Liabilities shall be immediately due and
payable. All of Bank's rights and remedies under this Note are cumulative and
non-exclusive. The acceptance by Bank of any partial payment made hereunder
after the time when any of Borrower's Liabilities become due and payable will
not establish a custom or waive any rights of Bank to enforce prompt payment
hereof. Bank's failure to require strict performance by Borrower of any
provision of this Note shall not waive, affect or diminish any right of Bank
thereafter to demand strict compliance and performance therewith. Borrower and
every endorser waiver presentment, demand and protest and notice of presentment,
protest, default, non-payment, maturity, release, compromise, settlement,
extension or renewal of this Note, and hereby ratify and confirm whatever Bank
may do in this regard. Borrower further waives any and all notice or demand to
which Borrower might be entitled with respect to this Note by virtue of any
applicable statute or law (to the extent permitted by law).
Borrower agrees to pay, immediately upon demand by Bank, any and all costs,
fees and expenses (including reasonable attorneys' fees, costs and expenses)
incurred by Bank (i) in enforcing any of Bank's rights hereunder, and (ii) in
representing Bank in any litigation, contest, suit or dispute, or to commence,
defend or intervene or to take any action with respect to any litigation,
contest, suit or dispute (whether instituted by Bank, Borrower or any other
person) in any way relating to this Note or Borrower's Liabilities, and to the
extent not paid the same shall become part of Borrower's Liabilities.
This Note shall be deemed to have been submitted by Borrower to Bank and to
have been made at Bank's principal place of business. This Note shall be
governed and controlled by the internal laws of the State of Illinois and not
the law of conflicts.
Advances under this Note may be made by Bank upon oral or written request
of any person authorized to make such requests on behalf of Borrower
("Authorized Person"). Borrower agrees that Bank may act on requests which Bank
in good faith believes to be made by an Authorized Person, regardless of whether
such requests are in fact made by an Authorized Person. Any such advance shall
be conclusively presumed to have been made by Bank to or for the benefit of
Borrower. Borrower does hereby irrevocably confirm, ratify and approve all such
advances by Bank and agrees to indemnify Bank against any and all losses and
expenses (including reasonable attorneys' fees) and shall hold Bank harmless
with respect thereto.
TO INDUCE BANK TO ACCEPT THIS NOTE, BORROWER IRREVOCABLY AGREES THAT,
SUBJECT TO BANK'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY
WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS NOTE SHALL BE
LITIGATED IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS.
BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR
FEDERAL COURT LOCATED WITHIN SAID CITY AND STATE. BORROWER HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT
AGAINST BORROWER BY BANK IN ACCORDANCE WITH THIS PARAGRAPH.
BORROWER IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT,
COUNTERCLAIM OR PROCEEDING (I) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN
CONNECTION WITH THIS NOTE OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR
(II) ARISING FROM ANY DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO
THIS NOTE OR ANY SUCH AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT, AND AGREES
THAT ANY SUCH ACTION, SUIT, COUNTERCLAIM OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
3040 West Salt Creek Lane Market Facts, Inc.
- ------------------------------------ ---------------------------------------
Print or Type Name of Borrower
Arlington Heights, IL 60005 /s/ T. J. Sullivan
- ------------------------------------ ---------------------------------------
Address Signature
362061602 V.P. and Treasurer
- ------------------------------------ ---------------------------------------
FEIN or SSN Title
* Pursuant to LIBOR Agreement dated April 24, 1996.
<PAGE>
LONDON INTERBANK OFFERED RATE BORROWING AGREEMENT
THIS LONDON INTERBANK OFFERED RATE ("LIBOR") BORROWING AGREEMENT (this
"Agreement"), dated as of the 24 day of April, 1996 by and between AMERICAN
NATIONAL BANK AND TRUST COMPANY OF CHICAGO ("Bank"), a national banking
association with its principal place of business at 33 North LaSalle Street,
Chicago, Illinois 60690, and Market Facts, Inc. ("Borrower"), a Delaware
corporation with its principal place of business at 3040 West Salt Creek Lane
Arlington Hts, IL has reference to the following facts and circumstances:
A. Borrower has requested and Bank has agreed to extend an interest rate
option of 2.0% per annum in excess of the London Interbank Offered Rate
("LIBOR"); and
B. Borrower has executed a Demand Note dated April 24, 1996, in the amount
of $3,000,000.00 in favor of Bank (the "Note") which reflects the LIBOR
option.
NOTE, THEREFORE, in consideration of any loan, advance, extension of credit
and/or other financial accommodation at any time made by Bank to or for the
benefit of Borrower, and of the promises set forth herein, the parties hereto
agree as follows:
1. DEFINITIONS AND TERMS
1.1 The following words, terms and/or phrases shall have the meanings set
forth thereafter and such meanings shall be applicable to the singular and
plural form thereof; whenever the context so requires, the use of "it" in
reference to Borrower shall mean Borrower as identified at the beginning of this
Agreement:
(a) "Amortization Date": the dates specified in the Note when
principal payments are due.
(b) "Borrowing": any portion of Borrower's liabilities bearing
interest at LIBOR.
(c) "Business Day": any day on which Bank is open for regular
business.
(d) "Event of Default": the definition ascribed to this term in each
of the Note.
(e) "Interest Period": the period commencing on the date a LIBOR Loan
is made and ending, as the Borrower may select, up to 90 days
thereafter.
<PAGE>
(f) "LIBOR Loans": any principle portion of Borrower's liabilities
bearing interest at LIBOR.
(g) "LIBOR Margin": 2.0%
(h) "Maturity Date": the date specified in the Note upon which the
Borrower's liabilities are due and payable in full.
1.2 Any terms or phrases not specifically defined in this Agreement shall
have the meanings ascribed to them in the Note.
2. MANNER OF LIBOR ELECTION
2.1 Borrower may elect to cause all or a portion of the principal
outstanding on the Notes to bear interest at a daily rate equal to the daily
rate equivalent of 2.0% in excess of LIBOR, subject to the following
conditions:
(a) Not more than five (5) nor less than two (2) Business Days prior to
the requested date of any LIBOR Borrowing, Borrower shall deliver to
Bank an irrevocable written or telephonic notice setting forth the
requested date and amount of such Borrowing (which amount shall not be
less than $500,000.00 and, if in excess of $500,000.00, shall be in
integral multiples of $50,000.00 in excess of $500,000.00) and the
requested Interest Period of such Borrowing;
(b) The LIBOR used in computing the interest rate applicable to such
Borrowing shall be the LIBOR as quoted by Bank to Borrower as being in
effect for the date of such Borrowing plus the LIBOR Margin, computed
on the basis of a 360-day year and actual days elapsed, and shall be
fixed for the requested period of such Borrowing;
(c) Such Borrowing may not be prepaid prior to the expiration of the
requested Interest Period of such Borrowing and shall be repaid in
full on the last day of the requested Interest Period of such
Borrowing;
(d) With respect to any Borrowing of LIBOR Loans, Borrower may not select
an Interest Period that extends beyond the Maturity Date of the Note.
(e) With respect to any Borrowing of LIBOR Loans under the Note, Borrower
may not select an Interest Period that extends beyond any Amortization
Date unless, after giving effect to such requested Borrowing, the
aggregate unpaid principal amount of such Loans have Maturity Dates
after such Amortization Date shall not exceed the aggregate principal
amount of the Note scheduled to be outstanding after such Amortization
Date.
2
<PAGE>
2.2 In the event Borrower fails to give notice pursuant to Section 2.1(a)
above of the reborrowing of the principal amount of any maturing LIBOR Borrowing
and has not notified the Bank by 10:00 a.m. (Chicago time) on the day such
Borrowing matures that it intends to renew such Borrowing, then Borrower shall
be deemed to have requested a Borrowing of Base or Prime Rate Loans (as defined
in the Note) on such day in the amount of the maturing Borrowing.
3. GENERAL PROVISIONS
3.1 FUNDING INDEMNITY. In the event Bank shall incur any loss, cost or
expense (including, without limitation, any loss of profit, and any loss, cost
or expense incurred by reason of the liquidation or re-employment of deposits or
other funds acquired by such Bank to fund or maintain any LIBOR Loan or the
relending or reinvesting of such deposits or amounts paid or prepaid to such
Bank) as a result of:
(a) any payment or prepayment of a LIBOR Loan on a date other than the
last day of its Interest Period,
(b) any failure by Borrower to borrow a LIBOR Loan on the date specified
in a notice given pursuant to Section 2.1 hereof,
(c) any failure by Borrower to make any payment of principal on any LIBOR
Loan when due (whether by acceleration or otherwise), or
(d) any acceleration of the maturity of a LIBOR Loan as a result of the
occurrence of any Event of Default,
then, upon the demand of Bank, Borrower shall pay to Bank such amount as will
reimburse Bank for such loss, cost or expense. If Bank makes such a claim for
compensation, it shall provide to Borrower a certificate executed by an officer
of Bank setting forth the amount of such loss, cost or expense in reasonable
detail (including an explanation of the basis for the computation of such loss,
cost or expense) and the amounts shown on such certificate if reasonably
calculated shall be conclusive.
3.2 AVAILABILITY OF LIBOR LOANS. If Bank determines that maintenance of
its Loans would violate any applicable law, rule, regulation, or directive,
whether or not having the force of law, or if Bank determines that deposits of a
type and maturity appropriate to match fund LIBOR Loans are not available to it
then Bank shall forthwith give notice thereof to Borrower, whereupon, until Bank
notifies Borrower that the circumstances giving rise to such suspension no
longer exist, the obligations of the Bank to make LIBOR Loans shall be
suspended.
3
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year specified at the beginning hereof.
(BORROWER)
Market Facts, Inc.
--------------------------------
By: /s/ T.J. Sullivan
--------------------------
Its: V P and Treasurer
--------------------------
ATTEST:
By: /s/ Glenn W. Schmidt
--------------------------
Its: Assistant Secretary
--------------------------
By: /s/ Thomas H. Payne
--------------------------
Its: President
--------------------------
Accepted this 24th day of April, 1996, at Bank's principal place of
business in the City of Chicago, State of Illinois.
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO
By: /s/ Linda J. Schiff
---------------------------
Its: Second Vice President
---------------------------
4
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<PAGE>
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 8,591,951
<SECURITIES> 50,000
<RECEIVABLES> 14,478,872
<ALLOWANCES> 927,844
<INVENTORY> 0
<CURRENT-ASSETS> 26,728,150
<PP&E> 27,639,211
<DEPRECIATION> 10,591,724
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0
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<OTHER-SE> 10,703,779
<TOTAL-LIABILITY-AND-EQUITY> 45,481,586
<SALES> 38,785,946
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