<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 September 30, 1997
----------------------------------
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 0-04781
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MARKET FACTS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-2061602
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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.
8,826,908 common shares as of November 3, 1997
----------------------------------------------
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Market Facts, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
As of September 30, 1997 and December 31, 1996
Assets
------
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- -------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 112,868 $ 129,428
Certificate of deposit 50,000 50,000
Accounts receivable:
Trade, less allowance for doubtful accounts of
$1,109,273 in 1997 and $1,007,243 in 1996 13,338,742 14,630,041
Other 151,192 94,846
Notes receivable 179,618 48,037
Revenue earned on contracts in progress
in excess of billings 5,226,163 3,886,057
Deferred income taxes 979,052 979,298
Prepaid expenses and other assets 618,425 360,147
- -------------------------------------------------------------------------------
Total Current Assets $ 20,656,060 $ 20,177,854
- -------------------------------------------------------------------------------
Property, at cost 30,707,687 28,258,554
Less accumulated depreciation and amortization (13,304,057) (10,776,931)
- -------------------------------------------------------------------------------
Net Property $ 17,403,630 $ 17,481,623
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Other Assets:
Goodwill and other intangibles, net 4,653,997 515,750
Deferred income taxes 1,360,434 ---
Investment in affiliated companies 460,000 210,000
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Total Other Assets $ 6,474,431 $ 725,750
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Total Assets $ 44,534,121 $ 38,385,227
===============================================================================
</TABLE>
Page 1
<PAGE>
Market Facts, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
As of September 30, 1997 and December 31, 1996
Liabilities and Stockholders' Equity
------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Current Liabilities:
Accrued expenses $ 8,780,483 $ 6,148,582
Billings in excess of revenue earned
on contracts in progress 4,714,671 4,569,609
Short-term borrowings 3,000,000 1,750,000
Accounts payable 2,510,588 3,137,798
Income taxes 753,301 884,686
Current portion of obligations under capital leases 190,269 198,698
Current portion of long-term debt 123,972 363,971
- --------------------------------------------------------------------------------------------------
Total Current Liabilities $ 20,073,284 $ 17,053,344
- --------------------------------------------------------------------------------------------------
Long-Term Liabilities:
Long-term debt 10,203,809 10,295,656
Obligations under capital leases, noncurrent portion 361,436 447,332
Deferred income taxes 63,773 63,685
- --------------------------------------------------------------------------------------------------
Total Long-Term Liabilities $ 10,629,018 $ 10,806,673
- --------------------------------------------------------------------------------------------------
Total Liabilities $ 30,702,302 $ 27,860,017
- --------------------------------------------------------------------------------------------------
Stockholders' Equity:
Preferred stock, no par value; 500,000 shares authorized;
Series A - none issued; Series B - 100 shares issued $ --- $ ---
Common stock, $1 par value; 15,000,000 shares authorized;
8,966,258 shares issued 8,966,258 8,966,258
Capital in excess of par value 9,497,671 9,497,671
Cumulative foreign currency translation (85,774) (75,319)
Retained earnings 10,045,573 6,850,062
- --------------------------------------------------------------------------------------------------
$ 28,423,728 $ 25,238,672
Less 2,042,550 shares of treasury common stock, at cost (13,891,966) (13,891,966)
Less other transactions involving common stock (699,943) (821,496)
- --------------------------------------------------------------------------------------------------
Total Stockholders' Equity $ 13,831,819 $ 10,525,210
- --------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 44,534,121 $ 38,385,227
==================================================================================================
</TABLE>
Page 2
<PAGE>
Market Facts, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
For The Three Months Ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
Three Months Ended September 30,
---------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Revenue $24,858,871 $20,478,142
- -----------------------------------------------------------------------------------------------------
Direct Costs:
Payroll $ 4,529,289 $ 3,975,104
Other expenses 9,774,128 7,624,769
- -----------------------------------------------------------------------------------------------------
Total $14,303,417 $11,599,873
- -----------------------------------------------------------------------------------------------------
Gross Margin $10,555,454 $ 8,878,269
- -----------------------------------------------------------------------------------------------------
Operating Expenses:
Selling $ 826,026 $ 620,551
General and administrative 6,887,214 5,813,941
Contributions to profit sharing and employee stock ownership plans 400,067 272,945
- -----------------------------------------------------------------------------------------------------
Total $ 8,113,307 $ 6,707,437
- -----------------------------------------------------------------------------------------------------
Income from Operations $ 2,442,147 $ 2,170,832
- -----------------------------------------------------------------------------------------------------
Other Income (Expense):
Interest expense $ (300,077) $ (329,916)
Interest income 6,621 20,268
Other income, net 25,012 11,074
- -----------------------------------------------------------------------------------------------------
Total $ (268,444) $ (298,574)
- -----------------------------------------------------------------------------------------------------
Income Before Provision For Income Taxes $ 2,173,703 $ 1,872,258
Provision For Income Taxes 893,385 838,387
- -----------------------------------------------------------------------------------------------------
Net Income $ 1,280,318 $ 1,033,871
=====================================================================================================
Earnings Per Share $ .18 $ .15
=====================================================================================================
Common and Common Equivalent Shares 7,228,914 7,103,604
=====================================================================================================
Cash Dividends Declared $ --- $ .025
=====================================================================================================
</TABLE>
Page 3
<PAGE>
Market Facts, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
For The Nine Months Ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------------
1997 1996
----------- --------------
<S> <C> <C>
Revenue $71,693,518 $59,264,088
- -----------------------------------------------------------------------------------------------------------------
Direct Costs:
Payroll $13,149,321 $11,913,164
Other expenses 27,090,441 22,238,138
- -----------------------------------------------------------------------------------------------------------------
Total $40,239,762 $34,151,302
- -----------------------------------------------------------------------------------------------------------------
Gross Margin $31,453,756 $25,112,786
- -----------------------------------------------------------------------------------------------------------------
Operating Expenses:
Selling $ 2,410,657 $ 1,897,192
General and administrative 21,625,052 17,491,998
Contributions to profit sharing and employee stock ownership plans 1,165,536 848,880
- -----------------------------------------------------------------------------------------------------------------
Total $25,201,245 $20,238,070
- -----------------------------------------------------------------------------------------------------------------
Income from Operations $ 6,252,511 $ 4,874,716
- -----------------------------------------------------------------------------------------------------------------
Other Income (Expense):
Interest expense $ (842,938) $ (917,733)
Interest income 38,866 104,791
Other income, net 71,923 67,257
- -----------------------------------------------------------------------------------------------------------------
Total $ (732,149) $ (745,685)
- -----------------------------------------------------------------------------------------------------------------
Income Before Provision For Income Taxes $ 5,520,362 $ 4,129,031
Provision For Income Taxes 2,324,851 1,863,499
- -----------------------------------------------------------------------------------------------------------------
Net Income $ 3,195,511 $ 2,265,532
=================================================================================================================
Earnings Per Share $ .45 $ .30
=================================================================================================================
Common and Common Equivalent Shares 7,168,430 7,622,364
=================================================================================================================
Cash Dividends Declared $ --- $ .075
=================================================================================================================
</TABLE>
Page 4
<PAGE>
Market Facts, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For The Nine Months Ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1997 1996
------------- -------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 3,195,511 $ 2,265,532
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 2,309,959 1,838,623
Vesting of restricted stock and demand notes receivable 41,574 41,576
Net gain on disposal of property (17,005) (33,686)
Changes in assets and liabilities, net of effects from acquisition:
Accounts receivable 3,574,593 (1,078,585)
Prepaid expenses and other assets 76,096 32,155
Revenue earned in excess of billings on contracts in progress (1,498,707) (706,400)
Accounts payable and accrued expenses (92,509) 1,853,118
Income taxes (118,311) 69,655
- --------------------------------------------------------------------------------------------------------
Net cash provided by operating activities $ 7,471,201 $ 4,281,988
- --------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Acquisition of BAIGlobal, net of cash acquired (3,789,061) ---
Purchases of property (1,797,739) (2,555,560)
Investment in affiliated companies (250,000) ---
Investment in notes receivable (150,000) (246,200)
Proceeds from notes receivable 98,398 44,141
Proceeds from the sale of property 17,005 37,617
- --------------------------------------------------------------------------------------------------------
Net cash used in investing activities $ (5,871,397) $ (2,720,002)
- --------------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Proceeds from short-term borrowings 9,743,340 7,100,000
Repayment of short-term borrowings (8,493,340) (5,900,000)
Repayment of notes payable to BAIGlobal's selling shareholders (2,250,000) ---
Reduction in obligations under capital leases and long-term debt (423,698) (242,459)
Payment of stock issuance costs (191,799) (820,851)
Purchases of treasury stock --- (12,702,937)
Proceeds from sale of convertible note --- 8,250,000
Dividends paid --- (565,847)
Proceeds from exercise of stock options --- 386,250
Proceeds from sale of preferred stock --- 100
- --------------------------------------------------------------------------------------------------------
Net cash used in financing activities $ (1,615,497) $ (4,495,744)
- --------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash $ (867) $ (313)
- --------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents $ (16,560) $ (2,934,071)
Cash and cash equivalents at beginning of period 129,428 3,530,157
- --------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 112,868 $ 596,086
========================================================================================================
Cash Paid During The Period For:
Interest $ 851,628 $ 896,232
Income taxes $ 2,449,335 $ 1,779,112
========================================================================================================
Supplemental Schedule of Noncash Activity:
Conversion of convertible note into common stock $ --- $ 8,250,000
Capital lease obligations incurred on lease of equipment $ --- $ 109,209
========================================================================================================
</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 ("Company") have been prepared in accordance with
the 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, 1996.
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.
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.
Note 5 - Stockholders' Equity
- -----------------------------
On April 28, 1997, the Company's Board of Directors approved a 2-for-1 stock
split in the form of a common stock dividend which was paid on May 27, 1997.
All common share and per share amounts have been adjusted to give effect to the
stock split.
On April 29, 1997, the Company filed an Amendment to its Certificate of
Incorporation effecting an increase in the number of authorized shares of common
stock to 15,000,000.
Note 6 - Reclassifications
- --------------------------
Certain reclassifications have been made in the 1996 financial statements to
conform to the 1997 presentation.
Page 6
<PAGE>
Note 7 - Acquisition of BAIGlobal, Inc.
- ---------------------------------------
On July 31, 1997, the Company completed the acquisition of all the outstanding
stock of BAIGlobal, Inc., an international market research and information
company. The purchase price was an amount equal to (i) $3,590,000 in cash, to
be adjusted based upon BAIGlobal's closing net worth to be determined within 120
days of the closing date, plus (ii) the assumption of $2,250,000 in debt payable
to two of BAIGlobal's selling shareholders, and (iii) up to $5,000,000 of
possible contingent payments in the form of cash and stock based on BAIGlobal
exceeding a certain earnings target for the period July 31, 1997 through
December 31, 1999. The acquisition was accounted for under the purchase method
of accounting. The excess of the purchase price over the fair values of the
assets acquired and liabilities assumed has been recorded as goodwill and is
being amortized on a straight-line basis over 25 years. This preliminary
allocation of purchase price is subject to further adjustments; however, the
Company does not expect the estimated values to change materially upon
finalization of the allocation of the purchase price.
The operating results of BAIGlobal have been included in the consolidated
statements of earnings and cash flows since the date of acquisition. The
following pro forma financial information is provided for the nine months ended
September 30, 1997 and 1996 as though the Company had acquired BAIGlobal at the
beginning of the periods being reported on:
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1997 1996
--------------- --------------
<S> <C> <C>
Revenue $78,160,880 $66,572,605
Net Income $ 3,361,809 $ 2,259,335
Earnings Per Share $ .47 $ .30
</TABLE>
The pro forma financial results do not necessarily reflect actual results which
may have occurred if the acquisition had taken place at the beginning of the
periods being reported on, nor are they necessarily indicative of the results of
future combined operations.
Note 8 - Subsequent Event
- -------------------------
On October 27, 1997, the Company completed a public offering of its common stock
in which 1,900,000 shares were sold by the Company resulting in net proceeds of
approximately $36,811,000, after deducting estimated stock issuance costs. As of
September 30, 1997, the Company paid $191,799 in stock issuance costs relating
to the public offering. These costs have been capitalized and temporarily
classified as a current asset and will be reclassified to stockholders' equity
upon issuance of the common stock.
Page 7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources
- -------------------------------
The Company's liquidity depends primarily upon its net income, accounts
receivable, accounts payable and accrued expenses. Historically, the Company
has financed its operations through cash generated from operating activities and
bank lines of credit.
On July 31, 1997, the Company completed the acquisition of all the outstanding
stock of BAIGlobal. The acquisition was accounted for under the purchase method
of accounting. The excess of the purchase price over the fair values of the
assets acquired and liabilities assumed has been recorded as goodwill.
During the first nine months of 1997, cash and cash equivalents decreased by
$16,560. Net cash flow provided by operating activities was $7,471,201 due
primarily to net income, depreciation and amortization and collection of
accounts receivable, partially offset by an increase in net revenue earned in
excess of billings on contracts in progress. Cash used in investing activities
was $5,871,397 due primarily to the acquisition of BAIGlobal, net of cash
acquired and purchases of property. Cash used in financing activities was
$1,615,497 due primarily to the repayment of notes payable to BAIGlobal's
selling shareholders, partially offset by net proceeds from short-term
borrowings.
The Company has available borrowings under established bank credit facilities
totaling $13,650,000. Borrowings outstanding under these arrangements were
$3,000,000 and $1,750,000 at September 30, 1997 and December 31, 1996,
respectively.
At its October 1996 meeting, the Board of Directors established a policy to omit
future cash dividends in order to fund the continued development and growth of
the Company's business.
On October 27, 1997, the Company completed a public offering of its common stock
in which 1,900,000 shares were sold by the Company resulting in net proceeds of
approximately $36,811,000, after deducting estimated stock issuance costs. A
portion of the proceeds from the offering will be used to repay short-term
borrowings.
The Company believes that the net proceeds from the public offering of its
common stock, together with cash flow from operations and its credit facilities,
will be sufficient to meet its working capital expenditure requirements for the
foreseeable future. It is the Company's intention to pursue additional
acquisition opportunities as a means to grow, and these acquisitions may require
an amount of capital that exceeds that available from proceeds from the public
offering, cash from operations and existing bank arrangements.
Results of Operations
- ---------------------
Comparison of Third Quarter 1997 to Third Quarter 1996
- ------------------------------------------------------
The Company had third quarter revenue of $24,858,871 in 1997, an increase of
21.4% over the same period in 1996. The increase in revenue was due primarily
to the impact of acquiring BAIGlobal, the addition of clients for whom the
Company did not perform any research services during the previous fiscal year
and newly initiated major research programs.
Gross margin for the third quarter of 1997 was $10,555,454, an increase of 18.9%
over the same period in 1996. The increase in gross margin was primarily due to
the growth in revenue. Gross margin as a percentage of revenue was 42.5% in 1997
compared to 43.4% in 1996.
Operating expenses for the third quarter of 1997 rose by $1,405,870, an increase
of 21.0% compared to the same period in 1996. The increase in operating expenses
was due primarily to the impact of acquiring BAIGlobal and higher marketing
staff expenses to support the growth in business. Operating expenses as a
percentage of revenue were 32.6% in 1997 compared to 32.8% in 1996.
Page 8
<PAGE>
The 1997 third quarter provision for income taxes reflected an effective tax
rate of 41.1% versus 44.8% in 1996. The decrease in the effective tax rate was
primarily due to a reduction in state and local income taxes.
Net income rose 23.8% to $1,280,318 or 5.2% of revenue compared to $1,033,871
and 5.0% of revenue during the same period in 1996. Earnings per share increased
20.0% to $.18 for the third quarter of 1997 compared to $.15 for the same period
in 1996.
Comparison of First Nine Months of 1997 to First Nine Months of 1996
- --------------------------------------------------------------------
During the first nine months of 1997, the Company had revenue of $71,693,518, an
increase of 21.0% over the same period in 1996. The increase in revenue was due
primarily to the addition of clients for whom the Company did not perform any
research services during the previous fiscal year, newly initiated major
research programs and the impact of acquiring BAIGlobal.
Gross margin for the first nine months of 1997 was $31,453,756, an increase of
25.2% over the same period in 1996. The increase in gross margin was primarily
due to the growth in revenue. Gross margin as a percentage of revenue was 43.9%
in 1997 compared to 42.4% in 1996.
Operating expenses for the first nine months of 1997 rose by $4,963,175, an
increase of 24.5% compared to the same period in 1996. The increase was
primarily due to higher marketing staff expenses to support the growth in
business, the impact of acquiring BAIGlobal and continued investments in new
products and technologies. Operating expenses as a percentage of revenue were
35.2% in 1997 compared to 34.1% in 1996.
The 1997 provision for income taxes reflected an effective tax rate of 42.1%
versus 45.1% in 1996. The decrease in the effective tax rate was primarily due
to a reduction in state and local income taxes.
Net income for the first nine months of 1997 rose 41.0% to $3,195,511 or 4.5% of
revenue compared to $2,265,532 and 3.8% of revenue during the same period in
1996. Earnings per share increased 50.0% to $.45 for the first nine months of
1997 compared to $.30 for the same period in 1996.
Forward-Looking Statements
- --------------------------
Certain statements included in this Management's Discussion and Analysis section
constitute "forward-looking statements" made in reliance upon the safe harbor
contained in Section 21E of the Securities Exchange Act of 1934, as amended.
Such forward-looking statements include those relating to acquisition
opportunities. The Company's ability to grow through acquisition will be
dependent upon, among other things, the availability of suitable acquisition
candidates and related financing on terms deemed reasonable by the Company and
the Company's ability to successfully integrate future acquisitions into its
existing business. The Company's actual results, performance or achievements
could differ materially from the results, performance or achievements expressed
in, or implied by, these forward-looking statements.
Page 9
<PAGE>
Recently Issued Financial Accounting Standards
- ----------------------------------------------
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" ("Statement 128").
Implementation of Statement 128 is required for periods ending after December
15, 1997. Statement 128 establishes new methods for computing and presenting
earnings per share ("EPS") and replaces the presentation of primary and fully
diluted EPS with basic and diluted EPS.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
("Statement 130"). Implementation of Statement 130 is required for periods
beginning after December 15, 1997. Statement 130 establishes standards to
report and display comprehensive income and its components in a full set of
general purpose financial statements. The standard requires all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed in
equal prominence with the other financial statements. The Company is currently
evaluating its options for disclosure under Statement 130 and will adopt the
Statement during the year ending December 31, 1998.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("Statement 131"). Implementation of
Statement 131 is required for periods beginning after December 15, 1997.
Statement 131 establishes standards for the way companies are to report
information about operating segments in annual financial statements and requires
those companies to report selected information about operating segments in
interim financial reports issued to shareholders. It also establishes standards
for related disclosures about products and services, geographic areas and major
customers. The Company is currently evaluating its options for disclosure under
Statement 131 and will adopt the Statement during the year ending December 31,
1998.
PART II - OTHER INFORMATION
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 July 31, 1997 was filed on August 15, 1997, reporting
under Item 2 thereof the acquisition of BAIGlobal, Inc.
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: November 3, 1997 Timothy J. Sullivan
---------------- -------------------
Timothy J. Sullivan
Chief Financial Officer, Senior Vice President,
Treasurer, Assistant Secretary and Director
(Principal Financial Officer)
Date: November 3, 1997 Anthony J. Solarz
---------------- -----------------
Anthony J. Solarz
Controller
(Principal Accounting Officer)
Page 11
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description
- -------------- -----------
(3)(a) Restated Certificate of Incorporation (5), as amended. (14)
(3)(b) By-laws as Amended and Currently in Effect. (11)
(4)(a) Article Fourth of the Company's Restated Certificate of
Incorporation (5), as amended. (14)
(4)(b) Rights Agreement as Amended and Currently in Effect. (3)
(4)(c) Certificate of Designation, Preferences and Rights of Series B
Preferred Stock. (10)
(10.1) Term Note dated February 23, 1995 between Market Facts, Inc.
and Verne Churchill. (4)
(10.2) Term Note dated February 23, 1995 between Market Facts, Inc.
and Lawrence Labash. (4)
(10.3) Term Note dated February 23, 1995 between Market Facts, Inc.
and Thomas Payne. (4)
(10.4) Term Note dated February 23, 1995 between Market Facts, Inc.
and Glenn Schmidt. (4)
(10.5) Term Note dated February 23, 1995 between Market Facts, Inc.
and Timothy Sullivan.
(10.6) Demand Note and London Interbank Offered Rate Borrowing
Agreement dated April 30, 1997, between the Company and
American National Bank and Trust Company of Chicago.
(10.7) 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. (2)
(10.8) Credit Agreement dated June 7, 1996, between the Company and
Harris Trust and Savings Bank. (6), as amended, and Revolving
Credit Note dated September 4, 1997 relating thereto.
(10.9) Employment Agreement with Verne Churchill. (1)
(10.10) Employment Agreement with Glenn Schmidt. (1)
(10.11) Employment Agreement with Sanford Schwartz. (1)
(10.12) Employment Agreement with Thomas Payne. (13)
(10.13) Employment Agreement with Michael Freehill. (13)
(10.14) Employment Agreement with Lawrence Labash. (13)
(10.15) Employment Agreement with Lawrence Levin. (13)
(10.16) Employment Agreement with Donald Morrison. (13)
(10.17) Employment Agreement with Timothy Rounds. (13)
(10.18) Employment Agreement with Timothy Sullivan. (13)
(10.19) Employment Agreement with Steven Weber. (13)
(10.20) Indemnity Agreement with Jack Wentworth dated July 15,
1994. (1)
Substantially identical agreements were also entered into with
the following individuals:
William Boyd Karen Predow
Verne Churchill Sanford Schwartz
Lawrence Labash Thomas Payne
(10.21) Term Note dated March 29, 1996 between Market Facts, Inc. and
Verne Churchill. (5)
(10.22) Term Note dated March 29, 1996 between Market Facts, Inc. and
Thomas Payne. (5)
(10.23) Term Note dated March 29, 1996 between Market Facts, Inc. and
Glenn Schmidt. (5)
Page 12
<PAGE>
Exhibit Number Description
- -------------- -----------
(10.24) Term Note dated March 29, 1996 between Market Facts, Inc. and
Lawrence Labash. (5)
(10.25) Term Note dated March 29, 1996 between Market Facts, Inc. and
Timothy Sullivan.
(10.26) Indemnity Agreement with Timothy Sullivan dated September 3,
1997. Substantially identical agreements were also entered
into with Ned Sherwood and Jeffery Oyster.
(10.27) Investment Agreement dated June 6, 1996 among the Company, MFI
Investors L.P. and MFI Associates, Inc. (7)
(10.28) Financial Advisory Agreement dated June 6, 1996 between the
Company and MFI Investors L.P. (8)
(10.29) Convertible Note dated June 6, 1996 in the principal amount of
$8,250,000 issued by the Company to MFI Investors L.P. (9)
(10.30) Market Facts, Inc. 1996 Stock Plan. (12)
(10.31) Stock Purchase Agreement by and among Market Facts, Inc.,
Kathleen Knight, Robert Skolnick, Gunilla Broadbent and
BAIGlobal, Inc. dated as of July 31 1997. (15)
(10.32) Employment Agreement with Kathleen Knight. (15)
(10.33) Employment Agreement with Robert Skolnick. (15)
(10.34) Employment Agreement with Gunilla Broadbent. (15)
(10.35) Underwriting Agreement dated October 21, 1997 by and among
Market Facts, Inc., MFI Investors L.P. and the several
underwriters named therein.
(10.36) Promissory Note dated April 1, 1994 between Market Facts, Inc.
and Timothy Sullivan.
(27) Financial Data Schedule.
__________________
(1) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1994.
(2) Incorporated by reference to Registrant's Annual Report on Form 10-K for
its fiscal year ended December 31, 1992.
(3) Incorporated by reference to Registrant's Form 8-A dated July 3, 1996.
(4) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1995.
(5) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1996.
(6) Incorporated by reference to Exhibit No. (b) of Registrant's Schedule
13E-4 dated June 11, 1996, commission file number 5-20859.
(7) Incorporated by reference to Exhibit No. (c)(1) of Registrant's Schedule
13E-4 dated June 11, 1996, commission file number 5-20859.
(8) Incorporated by reference to Exhibit No. (c)(2) of Registrant's Schedule
13E-4 dated June 11, 1996, commission file number 5-20859.
(9) Incorporated by reference to Exhibit No. (c)(3) of Registrant's Schedule
13E-4 dated June 11, 1996, commission file number 5-20859.
(10) Incorporated by reference to Exhibit No. 99(c)(4) of Registrant's
Schedule 13E-4 dated June 11, 1996, commission file number 5-20859.
(11) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1996.
(12) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1996.
(13) Incorporated by reference to Registrant's Annual Report on Form 10-K for
its fiscal year ended December 31, 1996.
(14) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1997.
(15) Incorporated by reference to Registrant's Form 8-K dated July 31, 1997.
Page 13
<PAGE>
Exhibit 10.5
TERM NOTE
February 23, 1995
For value received, TIMOTHY SULLIVAN promises to pay on April 1, 1999 to the
order of Market Facts, Inc., 3040 Salt Creek Lane, Arlington Heights, Illinois,
60005, or at any such other place as the payee or legal holder hereof may in
writing appoint, the sum of THIRTY NINE THOUSAND SIXTY TWO DOLLARS AND FIFTY
CENTS ($39,062.50) together with interest.
Interest will be billed to the undersigned annually for the period of March 1
through February 28 ("Interest Rate Year") and will be calculated based upon the
balance of the Note outstanding on the first day of the Interest Rate Year. The
rate of interest will be 7.75%.
The undersigned agrees to surrender to Market Facts, Inc. 7,500 shares of Market
Facts common stock to be held as collateral for this Note until such time as the
unpaid balance of principal and interest are paid in full.
The undersigned hereby authorizes, irrevocably, any attorney of any Court of
Record to appear for TIMOTHY SULLIVAN in such Court if this Note is note paid
when due, and at any time thereafter to confess judgment, without due process,
in favor of the holder of this Note, for such amount as may appear to be due and
unpaid thereon, together with reasonable costs of collection, including
reasonable attorney fees, and to waive and release all errors which may
intervene in any such proceedings, and to consent to immediate execution upon
judgment, hereby ratifying and confirming all that said attorney may do by
virtue hereof.
TIMOTHY SULLIVAN GLENN W. SCHMIDT
---------------- ------------------------
Timothy Sullivan Glenn W. Schmidt
Executive Vice President
MARKET FACTS, INC.
<PAGE>
Exhibit 10.6
American National Bank
and Trust Company of Chicago
================================================================================
DEMAND NOTE UNSECURED
================================================================================
$3,000,000.00 Chicago, Illinois April 30, 1997
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 NO/100 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.
This Note restates and replaces a Demand Note (Unsecured) in the principal
amount of $3,000,000.00, dated April 24, 1996 executed by Borrower in favor of
Bank (the "Prior Note") and is not a repayment or novation of the Prior Note.
The unpaid principal balance of Borrower's Liabilities due hereunder shall
bear interest from the date of disbursement until paid, computed as follows: at
LIBOR plus 168 basis points, as set forth in the attached London Interbank
Offered Rate Borrowing Agreement, as amended from time to time, by and between
Borrower and Bank; 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%.
The rate of interest to be charged by Bank to Borrower 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
month and at maturity, commencing with the last day of May, 1997 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
Page 1 of 3
<PAGE>
Exhibit 10.6
Note shall not waive, affect or diminish any right of Bank thereafter to demand
strict compliance and performance therewith. Borrower and every endorser waive
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 extend permitted by law).
Borrower agrees to pay, immediately upon demand by Bank, any and all costs,
fees and expenses (including reasonable attorney's 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 by 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 does hereby irrevocably confirm, ratify and approve all such advance by
Bank and agrees to indemnify Bank against any and all losses and expenses
(including reasonable attorney's fees) and shall hold Bank harmless with respect
thereto.
TO INDUCE BANK TO ACCEPT THIS NOTE, BORROWER IRREVOCABLY AGREES THAT,
SUBJECT TO BANK'S SOLVE 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
Page 2 of 3
<PAGE>
Exhibit 10.6
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.
"BORROWER"
3040 West Salt Creek Lane Market Facts, Inc.
- ------------------------- a Delaware corporation
Arlington Heights, Illinois 60005
- ---------------------------------
Address
BY: /signed/ Timothy J. Sullivan
-----------------------------------
Timothy J. Sullivan, Senior Vice
President/Treasurer
Page 3 of 3
<PAGE>
Exhibit 10.6
LONDON INTERBANK OFFERED RATE BORROWING AGREEMENT
-------------------------------------------------
THIS LONDON INTERBANK OFFERED RATE ("LIBOR") BORROWING AGREEMENT (this
"Agreement"), dated as of the 30th date of April, 1997 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 Heights, Illinois 60005, has reference to the following facts and
circumstances:
A. Borrower has requested and Bank has agreed to extend an interest rate
option of 1.68% per annum in excess of the LIBOR; and
B. Borrower has executed a Demand Note (Unsecured) dated April 30, 1997,
in the amount of $3,000,000.00 in favor of Bank, including amendments,
modifications, extensions, renewals or replacements thereof (the
"Note") which reflects the LIBOR option.
NOW 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 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.
(f) "LIBOR Loans": any principal portion of Borrower's liabilities
bearing interest at LIBOR.
(g) "LIBOR Margin": 1.68%
(h) "Maturity Date": the date specified in the Note upon which
Borrower's liabilities are due and payable in full.
<PAGE>
Exhibit 10.6
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 1.68% 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 telephone 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) 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 Maturing Date of the Note;
and
(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 having Maturing Dates
after such Amortization Date does not exceed the aggregate principal
amount of the Note scheduled to be outstanding after such Amortization
Date.
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
<PAGE>
Exhibit 10.6
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 of 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.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year specified at the beginning hereof.
Market Facts, Inc.
a Delaware corporation
BY: /signed/ Timothy J. Sullivan
-----------------------------------
Timothy J. Sullivan, Senior Vice
President/Treasurer
Accepted this 30th day of April, 1997 at Bank's principal place of business
in the City of Chicago, State of Illinois.
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO
BY: /signed/ Peter M. LeSuer
-----------------------------------
ITS: Vice President
-----------------------------------
<PAGE>
Exhibit 10.8
Market Facts, Inc.
First Amendment and Waiver To Credit Agreement
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of
June 7, 1996 (the "Credit Agreement") by and among, Market Facts, Inc., a
Delaware corporation (the "Company"), and you (the "Bank"). All capitalized
terms used herein without definition shall have the same meanings herein as such
terms have in the Credit Agreement.
The Company hereby applies to the Bank to increase the amount of the
Revolving Credit Commitment, to increase the amount of the Revolving Loans
permitted for conversion into the Term Loan and to make certain other
corresponding amendments to the Credit Agreement, and the Bank is willing to do
so under the terms and conditions set forth in this Amendment.
1. WAIVER.
The Company has informed the Bank that the Company acquired all the capital
stock of BAIGlobal, Inc. on July 31, 1997 for an initial purchase price of
$6,000,000 and contingent future payments of an additional $5,000,000 (the
"BAIGlobal Acquisition"). By virtue of the BAIGlobal Acquisition, the Company
was not in compliance with Section 8.13 of the Credit Agreement. The Bank hereby
waives compliance with Section 8.13 of the Credit Agreement, to the extent, and
only to the extent, such Section would otherwise disallow the BAIGlobal
Acquisition, provided that this waiver shall not become effective unless and
until the conditions precedent set forth in Section 4 have been satisfied.
2. AMENDMENTS.
2.01. Section 1.1 of the Credit Agreement shall be amended by deleting the
amount "$7,000,000" appearing therein and by substituting the amount
"$10,000,000" in lieu thereof.
2.02. Section 1.2 of the Credit Agreement shall be amended by deleting the
amount "$7,000,000" appearing therein and by substituting the amount
"$10,000,000" in lieu thereof.
2.03. Section 1.3 of the Credit Agreement shall be amended by deleting the
amount "$4,800,000" appearing therein and by substituting the amount
"$7,000,000" in lieu thereof.
<PAGE>
3. REPLACEMENT OF NOTE.
In replacement for the outstanding Revolving Credit Note dated June 14,
1996 payable to the order of the Bank in the aggregate face principal amount of
$7,000,000 (the "Existing Revolving Credit Note") pursuant to the Credit
Agreement and the other changes made hereby, the Company shall execute and
deliver to the Bank a new revolving credit note in the amount of $10,000,000 and
otherwise in the form (with appropriate insertions) annexed hereto as Exhibit A
(the "New Revolving Credit Note") which shall substitute for the Existing
Revolving Credit Note issued to the Bank and shall evidence all Revolving Loans
now or hereafter outstanding from the Bank under the Revolving Credit. All
references in the Credit Agreement or in any other instrument or document
referring to the Existing Revolving Credit Note shall be deemed references to
the New Revolving Credit Note.
4. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of all
of the following conditions precedent:
4.01. The Company and the Bank shall have executed and delivered this
Amendment.
4.02. The Company shall have executed the New Revolving Credit Note in
favor of the Bank in the form attached hereto as Exhibit A, to be dated as of
the date of its issuance and in a face amount equal to $10,000,000.
4.03. No Default or Event of Default shall have occurred and be continuing
as of the date this Amendment would otherwise take effect.
4.04. Legal matters incident to the execution and delivery of this
Amendment shall be satisfactory to the Bank and its counsel.
Upon the effectiveness of this Amendment, the Bank shall promptly return to
the Company the Existing Revolving Credit Note which is being replaced by the
New Revolving Credit Note contemplated by this Amendment.
5. REPRESENTATIONS.
In order to induce the Bank to execute and deliver this Amendment, the
Company hereby represents to the Bank that as of the date hereof, the
representations and warranties set forth in Section 6 of the Credit Agreement
are and shall be and remain true and correct (except that for purposes of this
paragraph, (i) the representations contained in Section 6.3 shall be deemed to
include this Amendment as and when it refers to Loan Documents and (ii) the
representations contained in Section 6.5 shall be deemed to refer to the most
recent financial statements of the Company delivered to the Bank) and (except as
specifically waived herein) the Company is in full compliance with all of the
terms and conditions of the Credit Agreement and no Default or Event of Default
has occurred and is continuing under the Credit Agreement or shall result after
giving effect to this Amendment.
-2-
<PAGE>
6. MISCELLANEOUS.
6.01. Except as specifically amended herein, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection therewith,
or in any certificate, letter or communication issued or made pursuant to or
with respect to the Credit Agreement, any reference in any of such items to the
Credit Agreement being sufficient to refer to the Credit Agreement as amended
hereby.
6.02. This Amendment may be executed in any number of counterparts, and by
the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.
6.03. The Company agrees to pay all reasonable out-of-pocket costs and
expenses incurred by the Bank in connection with the preparation, execution and
delivery of this Amendment and the documents and transactions contemplated
hereby, including the reasonable fees and expenses of counsel for the Bank with
respect to the foregoing.
Dated as of September 4, 1997.
MARKET FACTS, INC.
By /s/ Timothy Sullivan
---------------------------------
Its Senior Vice President
-----------------------------
Accepted and agreed to in Chicago, Illinois as of the date and year last
above written.
HARRIS TRUST AND SAVINGS BANK
By /s/ Dan Sabol
---------------------------------
Its Vice President
-----------------------------
-3-
<PAGE>
Market Facts, Inc.
Revolving Credit Note
Chicago, Illinois
$10,000,000 September 4, 1997
On the Revolving Credit Termination Date, for value received, the
undersigned, MARKET FACTS, INC., a Delaware corporation (the "Company"), hereby
promises to pay to the order of HARRIS TRUST AND SAVINGS BANK (the "Bank") at
its office at 111 West Monroe Street, Chicago, Illinois, the principal sum of
(i) Ten Million and no/100 Dollars ($10,000,000), or (ii) such lesser amount as
may at the time of the maturity hereof, whether by acceleration or otherwise, be
the aggregate unpaid principal amount of all Revolving Loans owing from the
Company to the Bank under the Revolving Credit provided for in the Credit
Agreement hereinafter mentioned.
This Note evidences Revolving Loans made and to be made to the Company by
the Bank under the Revolving Credit provided for under that certain Credit
Agreement dated as of June 7, 1996, between the Company and the Bank (said
Credit Agreement, as the same may be amended, modified or restated from time to
time, being referred to herein as the "Credit Agreement"), and the Company
hereby promises to pay interest at the office described above on such Revolving
Loans evidenced hereby at the rates and at the times and in the manner specified
therefor in the Credit Agreement.
Each Revolving Loan made under the Revolving Credit against this Note, any
repayment of principal hereon, the status of each such Revolving Loan from time
to time as part of the Domestic Rate Portion or a LIBOR Portion and, in the case
of any LIBOR Portion, the interest rate and Interest Period applicable thereto
shall be endorsed by the holder hereof on a schedule to this Note or recorded on
the books and records of the holder hereof (provided that such entries shall be
endorsed on a schedule to this Note prior to any negotiation hereof). The
Company agrees that in any action or proceeding instituted to collect or enforce
collection of this Note, the entries endorsed on a schedule to this Note or
recorded on the books and records of the holder hereof shall be prima facie
evidence of the unpaid principal balance of this Note, the status of each
Revolving Loan from time to time as part of the Domestic Rate Portion or a LIBOR
Portion and, in the case of any LIBOR Portion, the interest rate and Interest
Period applicable thereto absent manifest error.
This Note is issued by the Company under the terms and provisions of the
Credit Agreement, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity and voluntary
prepayments may be made hereon, all in the events, on the terms and with the
effects provided in the Credit Agreement. All capitalized terms used
<PAGE>
herein without definition shall have the same meanings herein as such terms are
defined in the Credit Agreement.
This Note is issued in substitution for and in replacement of that certain
Revolving Credit Note of the Company dated June 14, 1996 payable to the order of
the Bank in the face principal amount of $7,000,000.
The Company hereby promises to pay all reasonable out-of-pocket costs and
expenses (including attorneys' fees) suffered or incurred by the holder hereof
in collecting this Note or enforcing any rights in any collateral therefor. The
Company hereby waives presentment for payment and demand. This Note shall be
construed in accordance with, and governed by, the internal laws of the State of
Illinois without regard to principles of conflicts of laws.
MARKET FACTS, INC.
By: /s/ Timothy J. Sullivan
--------------------------
Name: Timothy J. Sullivan
------------------------
Title: Senior Vice President
-----------------------
-2-
<PAGE>
Exhibit 10.25
TERM NOTE
March 29, 1996
For value received, TIMOTHY J. SULLIVAN promises to pay on April 1, 2000 to the
order of Market Facts, Inc., 3040 Salt Creek Lane, Arlington Heights, Illinois,
60005, or at any such other place as the payee or legal holder hereof may in
writing appoint, the sum of SIXTY THOUSAND DOLLARS ($60,000.00) together with
interest.
Interest will be billed to the undersigned annually for the period of March 1
through February 28 ("Interest Rate Year") and will be calculated based upon the
balance of the Note outstanding on the first day of the Interest Rate Year. The
rate of interest will be 8.25%.
The undersigned agrees to surrender to Market Facts, Inc. 12,000 shares of
Market Facts common stock to be held as collateral for this Note until such time
as the unpaid balance of principal and interest are paid in full.
The undersigned hereby authorizes, irrevocably, any attorney of any Court of
Record to appear for TIMOTHY J. SULLIVAN in such Court if this Note is not paid
when due, and at any time thereafter to confess judgment, without due process,
in favor of the holder of this Note, for such amount as may appear to be due and
unpaid thereon, together with reasonable costs of collection, including
reasonable attorney fees, and to waive and release all errors which may
intervene in any such proceedings, and to consent to immediate execution upon
judgment, hereby ratifying and confirming all that said attorney may do by
virtue hereof.
TIMOTHY J. SULLIVAN GLENN W. SCHMIDT
------------------- ----------------
Timothy J. Sullivan Glenn W. Schmidt
Executive Vice President
MARKET FACTS, INC.
<PAGE>
EXHIBIT 10.26
[MARKET FACTS LOGO] MARKET FACTS, INC.
3040 WEST SALT CREEK LANE
ARLINGTON HEIGHTS, ILLINOIS 60005
PHONE: 847-590-7000
FAX: 847-590-7010
CHICAGO TORONTO
NEW YORK MONTREAL
WASHINGTON, D.C. CINCINNATI
LOS ANGELES NEW JERSEY
BOSTON
September 3, 1997
Mr. Timothy J. Sullivan
Chief Financial Officer
Market Facts, Inc.
3040 West Salt Creek Lane
Arlington Heights, IL 60005
Dear Tim:
This letter will confirm the agreement between you and Market Facts, Inc.
(the "Company") regarding your continued service as a director of the Company.
In consideration of your continuing as a director of the Company, the
Company will indemnify you against any and all expenses (including attorneys'
fees and disbursements) ("Expenses"), judgments, fines, amounts paid in
settlement and any other liabilities incurred by reason of the fact that you
were or are a director, officer, employee or agent of the Company to the fullest
extent permitted by the Delaware General Corporation Law, as it exists now or
hereafter may be amended. In addition, the Company will advance to you any and
all Expenses incurred by you in (i) defending any suit or other proceeding to
which you are, or are threatened to be made, a party by reason of your being (or
having been) a director, officer, employee or agent of the Company, and (ii)
prosecuting any suit or other proceeding to enforce your rights under this
agreement. Such advancement of Expenses shall be made to you in immediately
available funds within twenty (20) days of the Company's receipt from you of (i)
a statement reasonably detailing the Expenses for which advancement is
requested, and (ii) an undertaking by you or on your behalf to repay such
advancement of Expenses if it is ultimately determined by a final judicial
decision from which there is no further right to appear that you are not
entitled to be indemnified for such Expenses under this agreement or otherwise.
The indemnification and advancement of Expenses provided by this agreement
shall inure to the benefit of your heirs and legal representatives.
Notwithstanding anything to the contrary in this agreement, the rights
granted to you by the Company herein shall continue to be valid, binding and
enforceable both before and after you have ceased to be a director, officer,
employee or agent of the Company.
The rights granted to you by the Company in this agreement shall not be
deemed exclusive of, or in limitation of, any rights to which you may be
entitled under Delaware law, the Company's certificate of limitation or bylaws,
or otherwise.
<PAGE>
EXHIBIT 10.26
[MARKET FACTS LOGO] Mr. Timothy J. Sullivan
September 3, 1997
Page 2
You shall be presumed to be entitled to indemnification for any act or
omission covered in this agreement. The burden of proof of establishing that
you are not entitled to indemnification because of the failure to fulfill any
legal requirement shall be on the Company.
If this letter confirms your understanding of our agreement, please execute
the enclosed counterpart of this letter.
Very truly yours,
MARKET FACTS, INC.
By: /s/ Thomas H. Payne
--------------------------------
Thomas H. Payne
Chief Executive Officer
Accepted and agreed to this 3rd day of September, 1997:
/s/ Timothy J. Sullivan
- ----------------------------------
Timothy J. Sullivan
<PAGE>
EXHIBIT 10.35
-------------
2,400,000 Shares
MARKET FACTS, INC.
COMMON STOCK, $1.00 PAR VALUE
UNDERWRITING AGREEMENT
October 21, 1997
<PAGE>
October 21, 1997
EVEREN Securities, Inc.
The Robinson-Humphrey Company, LLC
As Representatives of the
several Underwriters named in
Schedule I hereto,
c/o EVEREN Securities, Inc.
77 West Wacker Drive
Chicago, Illinois 60601-1694
Dear Sirs:
Market Facts, Inc., a Delaware corporation ("the Company"), and MFI
Investors L.P. (the "Selling Stockholder"), severally propose to sell an
aggregate of 2,400,000 shares of Common Stock, par value $1.00 per share, of the
Company (the "Firm Shares"), to the several underwriters named in SCHEDULE I
hereto (the "Underwriters"). The Firm Shares consist of 1,900,000 shares to be
issued and sold by the Company and 500,000 outstanding shares to be sold by the
Selling Stockholder. The Company also proposes to issue and sell, and the
Selling Stockholder also proposes to sell, to the several Underwriters not more
than 210,000 and 150,000 additional shares of Common Stock, par value $1.00 per
share, of the Company (the "Additional Shares"), respectively, if requested by
the Underwriters as provided in Section 3 hereof. The Firm Shares and the
Additional Shares are herein collectively called the "Shares". The shares of
common stock of the Company to be outstanding after giving effect to the sales
contemplated hereby are hereinafter referred to as the Common Stock. The Company
and the Selling Stockholder are hereinafter collectively called the "Sellers".
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement on Form S-3 under the Securities Act (the "registration statement"),
including a prospectus subject to completion relating to the Shares. The term
"Registration Statement" as used in this Agreement means the registration
statement (including all financial schedules and exhibits), as amended at the
time it becomes effective, or, if the registration statement became effective
prior to the execution of this Agreement, as supplemented or amended prior to
the execution of this Agreement. If it is contemplated, at the time this
Agreement is executed, that a post-effective amendment to the registration
statement will be filed and must be declared effective before the offering of
the Shares may commence, the term "Registration Statement" as used in this
Agreement means the registration statement as amended by said post-effective
amendment. The term "Prospectus" as used in this Agreement means the prospectus
in the form included in the Registration Statement, or, if the prospectus
included in the Registration Statement omits information in reliance on Rule
430A under the Securities Act and
<PAGE>
such information is included in a prospectus filed with the Commission pursuant
to Rule 424(b) under the Securities Act, the term "Prospectus" as used in this
Agreement means the prospectus in the form included in the Registration
Statement as supplemented by the addition of the Rule 430A information contained
in the prospectus, if any, filed with the Commission pursuant to Rule 424(b). If
the Company has filed an abbreviated registration statement to register
additional shares of Common Stock pursuant to Rule 462(b) under the Securities
Act (the "Rule 462 Registration Statement"), then any reference herein to the
term "Registration Statement" shall be deemed to include such Rule 462
Registration Statement. Any reference in this Agreement to the registration
statement, the Registration Statement, or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act, as of the date of the registration
statement, the Registration Statement, or the Prospectus, as the case may be,
and any reference to any amendment or supplement to the registration statement,
the Registration Statement or the Prospectus shall be deemed to refer to and
include any documents filed after such date under the Securities Exchange Act of
1934, as amended (the "Exchange Act") which, upon filing, are incorporated by
reference therein, as required by paragraph (b) of Item 12 of Form S-3.
1. Representations and Warranties of the Company. The Company represents
and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect and
no proceedings for such purpose are pending before or threatened by the
Commission.
(b) (i) Each part of the Registration Statement, when such part
became effective, did not contain and each such part, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii)
the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder and (iii) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set
forth in this Section 1(b) do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information relating to
any Underwriter furnished to the Company in writing by you or by any
Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
2
<PAGE>
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(d) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(e) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(f) The shares of Common Stock (including the Shares to be sold by
the Selling Stockholder) outstanding prior to the issuance of the Shares to
be sold by the Company have been duly authorized and are validly issued,
fully paid and non-assessable.
(g) The Shares to be sold by the Company have been duly authorized
and, when issued and delivered in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable, and the
issuance of such Shares will not be subject to any preemptive or similar
rights.
(h) This Agreement has been duly authorized, executed and delivered
by the Company.
(i) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not contravene
any provision of applicable law or the certificate of incorporation or by-
laws of the Company or any of its subsidiaries or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Company or any subsidiary, and no consent, approval,
authorization or order of or qualification with any governmental body or
agency is required for the performance by the Company of its obligations
under this Agreement, except such as may be required by the securities or
Blue Sky laws of the various states in connection with the offer and sale
of the Shares.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise,
3
<PAGE>
or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement).
(k) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(l) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in
all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein in the light
of the circumstances under which they were made, not misleading.
(m) The Company is not, and after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described
in the Prospectus, will not be an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
(n) The Company and its subsidiaries are (i) in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(o) The Company has complied with all provisions of Section 517.075
Florida Statutes relating to doing business with the Government of Cuba or
with any person or affiliate located in Cuba.
(p) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration
4
<PAGE>
statement under the Securities Act with respect to any securities of the
Company or to require the Company to include such securities with the
Shares registered pursuant to the Registration Statement, except in each
case as described in the Prospectus.
(q) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) the Company and
its subsidiaries have not incurred any material liability or obligation,
direct or contingent, nor entered into any material transaction not in the
ordinary course of business; (ii) the Company has not purchased any of its
outstanding capital stock, nor declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock other than
ordinary and customary dividends; and (iii) there has not been any material
change in the capital stock, short-term debt or long-term debt of the
Company and its subsidiaries, except in each case as described in the
Prospectus.
(r) The Company and its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the
Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; and any real property and facilities held
under lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries, in each
case except as described in or contemplated by the Prospectus.
(s) The Company and its subsidiaries own or possess, or can acquire
on reasonable terms, all material patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names currently
employed by them in connection with the business now operated by them, and
neither the Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to
any of the foregoing which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in any material
adverse change in the condition, financial or otherwise, or in the
earnings, business or operations of the Company and its subsidiaries, taken
as a whole.
(t) No material labor dispute with the employees of the Company or
any of its subsidiaries exists, except as described in or contemplated by
the Prospectus, or, to the knowledge of the Company, is imminent; and the
Company is not aware of any existing, threatened or imminent labor
disturbance by the employees of any of its principal service providers or
suppliers that could result in any material adverse change in the
condition,
5
<PAGE>
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole.
(u) The Company and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its subsidiaries are
engaged; neither the Company nor any such subsidiary has been refused any
insurance coverage sought or applied for; and neither the Company nor any
such subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not materially and adversely
affect the condition, financial or otherwise, or the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, except as
described in or contemplated by the Prospectus.
(v) The Company and each of its subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits of
and from (collectively, "permits"), and has made all declarations and
filings with, all federal, state, local, foreign and other governmental and
regulatory authorities, all self-regulatory organizations and all courts
and other tribunals, to own, lease, license and use its properties and
assets and to conduct its business in the manner described in the
Prospectus, except to the extent that the failure to obtain any such permit
or to make any such declaration or filing would not have a material adverse
effect on the Company and its subsidiaries taken as a whole. Neither the
Company nor any such subsidiary has received any notice of proceedings
relating to the revocation or modification of any such permits which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a material adverse change in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, except as
described in or contemplated by the Prospectus; and, except as described in
the Prospectus, such permits contain no restrictions that are materially
burdensome to the Company or any subsidiary.
(w) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
6
<PAGE>
(x) All of the outstanding shares of capital stock of, or other
ownership interests in, each of the Company's subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable, and
are owned by the Company, free and clear of any security interest, claim,
lien, encumbrance or adverse interest of any nature.
(y) Neither the Company nor any of its subsidiaries is (i) in
violation of its respective charter or by-laws or (ii) in default in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any other
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
or their respective property is bound, other than defaults that would not,
individually or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(z) Neither the Company nor any of its subsidiaries has violated any
federal or state law relating to discrimination in the hiring, promotion or
pay of employees nor any applicable federal or state wages and hours laws,
nor any provisions of the Employee Retirement Income Security Act or the
rules and regulation promulgated thereunder, which in each case are
reasonably likely to result in any material adverse change in the
condition, financial or otherwise, or in the earnings or business
operations of the Company and its subsidiaries, taken as a whole.
(aa) The Company has filed an application to list the Shares on the
Nasdaq National Market and has received notification that the listing has
been approved, subject to notice of issuance of the Shares.
(ab) There are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or liens
related to or entitling any person to purchase or otherwise to acquire any
shares of the capital stock of, or other ownership interest in, the Company
or any subsidiary thereof, except as otherwise disclosed in the
Registration Statement.
(ac) All material tax returns required to be filed by the Company and
each of its subsidiaries in any jurisdiction have been filed, other than
those filings being contested in good faith, and all material taxes,
including withholding taxes, penalties and interest, assessments, fees and
other charges due pursuant to such returns or pursuant to any assessment
received by the Company or any of its subsidiaries have been paid, other
than those being contested in good faith and for which adequate reserves
have been provided.
(ad) KPMG Peat Marwick LLP is the independent public accountant with
respect to the Company as required by the Securities Act.
7
<PAGE>
(ae) The financial statements, together with related schedules and
notes forming part of the Registration Statement and the Prospectus (and
any amendment or supplement thereto), present fairly the consolidated
financial position, results of operations and changes in financial position
of the Company and its subsidiaries on the basis stated in the Registration
Statement at the respective dates or for the respective periods to which
they apply; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data set
forth in the Registration Statement and the Prospectus (and any amendment
or supplement thereto) is, in all material respects, accurately presented
and prepared on a basis consistent with such financial statements and the
books and records of the Company.
2. Representations and Warranties of the Selling Stockholder. The
Selling Stockholder represents and warrants to and agrees with each of the
Underwriters that:
(a) This Agreement has been duly authorized, executed and delivered
by or on behalf of the Selling Stockholder.
(b) The execution and delivery by the Selling Stockholder of, and the
performance of the Selling Stockholder of its obligations under, this
Agreement, the Custody Agreement signed by the Selling Stockholder and
First Chicago Trust Company of New York, as Custodian, relating to the
deposit of the Shares to be sold by the Selling Stockholder (the "Custody
Agreement") and the Power of Attorney appointing certain individuals as the
Selling Stockholder's attorneys-in-fact to the extent set forth therein,
relating to the transactions contemplated hereby and by the Registration
Statement (the "Power of Attorney") will not contravene any provision of
applicable law, or the partnership agreement of the Selling Stockholder, or
any agreement or other instrument binding upon the Selling Stockholder or
any judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Selling Stockholder, and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by the Selling Stockholder of its
obligations under this Agreement or the Custody Agreement or Power of
Attorney of the Selling Stockholder, except such as may be required by the
securities or Blue Sky laws of the various states in connection with the
offer and sale of the Shares.
(c) The Selling Stockholder has, and on the Closing Date and any
later date on which the Additional Shares are to be purchased will have,
good and marketable title to the Shares to be sold by the Selling
Stockholder and the legal right and power, and all authorization and
approval required by law, to enter into this Agreement, the Custody
Agreement and the Power of Attorney and to sell, transfer and deliver the
Shares to be sold by the Selling Stockholder.
8
<PAGE>
(d) The Custody Agreement and the Power of Attorney have been duly
authorized, executed and delivered by the Selling Stockholder and are valid
and binding agreements of the Selling Stockholder.
(e) Certificates in negotiable form for Shares to be sold by such
Selling Stockholder have been placed in custody under the Custody Agreement
for delivery under this Agreement with the Custodian; the Selling
Stockholder agrees that the shares of Common Stock represented by the
certificates so held in custody for the Selling Stockholder are subject to
the interests of the several Underwriters and the Company, that the
arrangements made by such Selling Stockholder for such custody, including
the Power of Attorney, are to that extent irrevocable, and that the
obligations of the Selling Stockholder shall not be terminated by any act
of the Selling Stockholder or by operation of law, whether by the
termination, dissolution or liquidation of the Selling Stockholder or the
occurrence of any other event; if any such termination, dissolution,
liquidation or other such event should occur before the delivery of the
Shares to be sold by the Selling Stockholder hereunder, certificates for
such shares of the Common Stock shall be delivered by the Custodian in
accordance with the terms and conditions of this Agreement as if such
termination, dissolution, liquidation or other event had not occurred,
regardless of whether the Custodian shall have received notice of such
termination, dissolution, liquidation or other event.
(f) Delivery of the Shares to be sold by the Selling Stockholder
pursuant to this Agreement will pass title to the Shares free and clear of
any security interests, claims, liens, equities and other encumbrances.
(g) (i) To the knowledge of the Selling Stockholder, the
Registration Statement, when it became effective, did not contain and, as
amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, (ii) the Registration Statement and the Prospectus comply and,
as amended or supplemented, if applicable, will comply in all material
respects with the Securities Act and the applicable rules and regulations
of the commission thereunder and (iii) the Prospectus does not contain and,
as amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and
warranties set forth in this Section 2(g) do not apply to statements or
omissions in the Registration Statement or the Prospectus based upon
information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein.
(h) The Selling Stockholder has not taken and will not take, directly
or indirectly, any action which has constituted, or which is designed to or
might reasonably
9
<PAGE>
be expected to cause or result in, stabilization or manipulation of the
price of sale or resale of the Common Stock.
3. AGREEMENTS TO SELL AND PURCHASE. Each Seller, severally and not
jointly, hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from such Seller at U.S. $21.00 a share (the
"Purchase Price") the number of Firm Shares (subject to such adjustments to
eliminate fractional shares as you may determine) that bears the same proportion
to the total number of Firm Shares to be sold by such Seller as the number of
Firm Shares set forth in SCHEDULE I hereto opposite the name of such Underwriter
bears to the total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, each Seller, severally and
not jointly, agrees to sell to the Underwriters the Additional Shares, and the
Underwriters shall have a one-time right to purchase, severally and not jointly,
up to 360,000 Additional Shares, 210,000 Additional Shares from the Company and
150,000 Additional Shares from the Selling Stockholder, at the Purchase Price.
Such date may be the same as the Closing Date (as defined below) but not earlier
than the Closing Date nor later than ten business days after the date written
notice of an election to purchase Additional Shares is given. If the
Representatives, on behalf of the Underwriters, elect to exercise such option,
the Representatives shall so notify the Company in writing not later than 45
days after the date of the Prospectus which notice shall specify the number of
Additional Shares to be purchased by the Underwriters and the date on which such
Additional Shares are to be purchased. Additional Shares may be purchased as
provided in Section 5 hereof solely for the purpose of covering over allotments
made in connection with the offering of the Firm Shares. If any Additional
Shares are to be purchased, each Underwriter agrees, severally and not jointly,
to purchase the number of Additional Shares that bears the same proportion to
the total number of Additional Shares to be purchased as the number of Firm
Shares set forth in SCHEDULE I hereto opposite the name of such Underwriter
bears to the total number of Firm Shares. If the Representatives, on behalf of
the Underwriters, elect to purchase less than all of the Additional Shares, then
the Underwriters shall purchase and the Company and the Selling Stockholder, as
the case may be, shall sell the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as the Representatives may determine)
equal to (A) in the case of the Company, the product of (i) the number of
Additional Shares the Underwriters have elected to purchase multiplied by (ii)
the quotient of 210,000 divided by 360,000 and (B) in the case of the Selling
Stockholder, the product of (i) the number of Additional Shares the Underwriters
have elected to purchase multiplied by (ii) the quotient of 150,000 divided by
360,000. The Additional Shares to be purchased by the Underwriters hereunder
and the Firm Shares are hereinafter collectively referred to as the "Shares."
Each Seller hereby agrees that, without the prior written consent of EVEREN
Securities, Inc., it will not, directly or indirectly, during the period ending
120 days after the date of the Prospectus, (i) offer, sell (including, without
limitation, any short sale), pledge, contract to sell,
10
<PAGE>
grant any option to purchase or otherwise dispose of any Common Stock
(including, without limitation, shares of Common Stock which may be deemed to be
beneficially owned by the Seller in accordance with the rules and regulations of
the Commission and shares of Common Stock which may be issued upon exercise of a
stock option or warrant) or any options, warrants, or other securities
convertible into or exercisable or exchangeable for such Common Stock, in any
case whether now owned or hereafter acquired, or in any manner to transfer all
or a portion of the economic consequences associated with ownership of the
Common Stock. The foregoing sentence shall not apply to (A) the Shares to be
sold hereunder, (B) the issuance by the Company of shares of Common Stock upon
the exercise of an option or warrant or the conversion of a security outstanding
on the date hereof which is disclosed or reflected in the Prospectus, (C) the
grant by the Company of options or other awards or the issuance by the Company
of Common Stock pursuant to the Market Facts, Inc. 1996 Stock Plan and the
employee stock purchase plans, (D) the transfer of the Common Stock by the
Selling Stockholder by one or more bona fide gifts or pledges, provided that the
donee(s) or pledgee(s) thereof agree in writing to be bound by this paragraph,
(E) the transfer of Common Stock by the Selling Stockholder to its affiliates,
which affiliates agree in writing to be bound by this paragraph, or (F) the
transfer of limited partnership interests in the Selling Stockholder. In
addition, the Selling Stockholder, agrees that, without the prior written
consent of the Representatives, it will not, during the period ending 120 days
after the date of the Prospectus, make any demand for, or exercise any right
with respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock.
4. TERMS OF PUBLIC OFFERING. The Sellers are advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at U.S.
$21.00 a share (the "Public Offering Price") and to certain dealers selected by
you at a price that represents a concession not in excess of U.S. $1.31 a share
under the Public Offering Price, and that any Underwriter may allow, and such
dealers may reallow, a concession, not in excess of U.S. $0.10 a share, to any
Underwriter or to certain other dealers.
5. PAYMENT AND DELIVERY. Payment for the Firm Shares to be sold by each
Seller shall be made to such Seller in Federal or other funds immediately
available in Chicago against delivery of such Firm Shares for the respective
accounts of the several Underwriters at 9:00 A.M., Chicago time, on October 27,
1997, or at such other time on the same or such other date, not later than
October 31, 1997, as shall be designated in writing by you. The time and date
of such payment are hereinafter referred to as the "Closing Date."
Payment for any Additional Shares to be sold by each Seller shall be made
to such Seller in Federal or other funds immediately available in Chicago
against delivery of such Additional Shares for the respective accounts of the
several Underwriters at 9:00 A.M., Chicago time, on the date specified in the
notice described in Section 3 or on such other date, in any event not later
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than, December 16, 1997, as shall be designated in writing by the
Representatives. The time and date of such payment are hereinafter referred to
as the "Option Closing Date."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than two full business days prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
6. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Sellers to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay for the Shares on the Closing Date
hereunder are subject to the condition that the Registration Statement shall
have become effective not later than 3:00 P.M. (Chicago time) on the date
hereof.
The several obligations of the Underwriters hereunder are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations, of the Company and
its subsidiaries, taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement), that, in your judgment, is material and adverse and
that makes it, in your judgment, impracticable to market the Shares on the
terms and in the manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a (x)
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in clause Section 6(a) above and to
the effect that the representations and warranties of the Company contained
in this Agreement are true and correct as of the Closing Date and that the
Company has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or before
the Closing Date, and (y) a certificate of the Selling Stockholder to the
effect that the representations and warranties of the Selling Stockholder
contained in this Agreement are true and correct as of the Closing Date and
that such Selling Stockholder has complied with all the agreements and
satisfied all of the conditions on its part to be performed or satisfied
hereunder on or before the Closing Date.
(c) The Underwriters shall have received on the Closing Date an
opinion of Lord Bissell & Brook, counsel for the Company, dated the Closing
Date, to the effect that:
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(i) the Company is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
the corporate power and authority to own its property and to conduct
its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries taken as a
whole;
(ii) Market Facts of Canada, Ltd. has been duly incorporated;
each subsidiary of the Company is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries
taken as a whole;
(iii) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus;
(iv) the shares of Common Stock (including the Shares to be sold
by the Selling Stockholder) outstanding prior to the issuance of the
Shares to be sold by the Company have been duly authorized and are
validly issued, fully paid and non-assessable;
(v) the Shares to be sold by the Company have been duly
authorized and, when issued and delivered in accordance with the terms
of this Agreement, will be validly issued, fully paid and non-
assessable, and the issuance of such Shares will not be subject to any
preemptive or similar rights;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) the Registration Statement has become effective under the
Securities Act, no stop order suspending its effectiveness has been
issued and no proceedings for that purpose are, to the knowledge of
such counsel, pending or threatened by the Commission; and to the best
of our knowledge, after due inquiry, at the time the Registration
Statement became effective the Company met the conditions for use of
Form S-3 under the Securities Act;
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(viii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene (A) any provision of applicable law or the
certificate of incorporation or by-laws of the Company or any of its
subsidiaries, (B) any agreement or other instrument binding upon the
Company or any of its Subsidiaries that is material to the Company and
its subsidiaries, taken as a whole, and that is known to such counsel
after due inquiry or (C) to the best of such counsel's knowledge after
due inquiry, any judgment or decree of any governmental body, agency
or court having jurisdiction over the Company or any subsidiary; and
no consent, approval, authorization or order of or qualification with
any governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, except such as may be
required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares by the Underwriters;
(ix) to the best of such counsel's knowledge after due inquiry,
no holder of any security of the Company has any right to require
registration of shares of Common Stock or any other security of the
Company, except as described in the Prospectus;
(x) all of the outstanding shares of capital stock of, or other
ownership interests in, each of the Company's subsidiaries have been
duly and validly authorized and issued, and are owned by the Company,
free and clear of any security interest, claim, lien, encumbrance or
adverse interest of any nature and all of the outstanding shares of
capital stock of, or other ownership interests in, Market Facts of
Canada, Ltd. are fully paid and non-assessable;
(xi) to the best of such counsel's knowledge after due inquiry,
the Company and each of its subsidiaries has all necessary consents,
authorizations, approvals, orders, certificates and permits of and
from (collectively, "permits"), and has made all declarations and
filings with, all federal, state, local, foreign and other
governmental and regulatory authorities, all self-regulatory
organizations and all courts and other tribunals, to own, lease,
license and use its properties and assets and to conduct its business
in the manner described in the Prospectus, except to the extent that
the failure to obtain any such permit or to make any such declaration
or filing would not have a material adverse effect on the Company and
its subsidiaries taken as a whole; and to the knowledge of such
counsel after due inquiry, neither the Company nor any such subsidiary
has received any notice of proceedings relating to the revocation or
modification of any such permits which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would
result in a material adverse change in the condition, financial or
otherwise, or in the earnings, business or operations of the Company
and its subsidiaries, taken as a whole, except as described in or
contemplated by the Prospectus;
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(xii) the statements (A) in the Prospectus under the captions
"Description of Capital Stock," "Shares Eligible for Future Sale" and
"Underwriting" and (B) in the Registration Statement in Item 15, in
each case insofar as such statements constitute summaries of the legal
matters, documents or proceedings referred to therein and in the case
of the statements under the caption "Underwriting" only insofar as
such statements relate to this Agreement, fairly present the
information called for with respect to such legal matters, documents
and proceedings and fairly summarize the matters referred to therein;
(xiii) after due inquiry, such counsel does not know of any
legal or governmental proceeding pending or threatened to which the
Company or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject that
are required to be described in the Registration Statement or the
Prospectus and are not so described or of any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described or filed as
required;
(xiv) the Company is not, and after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" or an entity "controlled" by an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended;
(xv) to the knowledge of such counsel after due inquiry, the
Company and its Subsidiaries (A) are in compliance with any and all
applicable Environmental Laws, (B) have received all permits, licenses
or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (C) are in compliance
with all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
approvals would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole;
and
(xvi) (A) the Registration Statement and Prospectus (except for
financial statements and schedules and other financial and statistical
data included therein as to which such counsel need not express any
opinion) comply as to form in all material respects with the
Securities Act and the rules and regulations of the Commission
thereunder, (B) the documents incorporated by reference in the
Registration Statement and the Prospectus, as such incorporated
documents may have been amended, (except for financial statements and
schedules and other financial and statistical data included in such
incorporated documents as to which
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counsel need not express any opinion) comply as to form in all
material respects with the Exchange Act and the rules and regulations
of the Commission thereunder, (C) such counsel has no reason to
believe that (except for financial statements and schedules and other
financial and statistical data as to which such counsel need not
express any belief) the Registration Statement and the Prospectus
included therein at the time the Registration Statement became
effective contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (D) such counsel has no
reason to believe that (except for financial statements and schedules
and other financial and statistical data as to which such counsel need
not express any belief) the Prospectus contains any untrue statement
of a material fact or omits to state a material fact necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(d) The Underwriters shall have received on the Closing Date an
opinion of Kirkland & Ellis, counsel for the Selling Stockholder, dated the
Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Stockholder;
(ii) the execution and delivery by the Selling Stockholder of,
and the performance by the Selling Stockholder of its obligations
under, this Agreement and the Custody Agreement and Power of Attorney
of the Selling Stockholder will not contravene any provision of
applicable law known to such counsel, or the certificate of
partnership or the partnership agreement of the Selling Stockholder,
or, to the best of such counsel's knowledge, any agreement or other
instrument binding upon the Selling Stockholder or, to the best of
such counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the
Selling Stockholder, and no consent, approval, authorization or order
of, or qualification with, any governmental body or agency is required
for the performance by the Selling Stockholder of its obligations
under this Agreement or the Custody Agreement or Power of Attorney of
the Selling Stockholder, except such as may be required by the
securities or Blue Sky laws of the various states in connection with
the offer and sale of the Shares;
(iii) the Selling Stockholder has the legal right and power to
enter into this Agreement and the Custody Agreement and Power of
Attorney of the Selling Stockholder and to sell, transfer and deliver
the Shares to be sold by the Selling Stockholder;
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(iv) the Custody Agreement and the Power of Attorney of the
Selling Stockholder have been duly authorized, executed and delivered
by the Selling Stockholder and are valid and binding agreements of the
Selling Stockholder; and
(v) delivery of the Shares to be sold by the Selling Stockholder
pursuant to this Agreement will pass title to such Shares free and
clear of any security interests, claims, liens, equities and other
encumbrances.
(e) The Underwriters shall have received on the Closing Date an
opinion of Katten Muchin & Zavis, special counsel for the Underwriters,
dated the Closing Date, covering the matters referred to in clauses (v),
(vi) (with regards to authorization, execution and delivery by the
Company), (xii) (but only as to the statements in the Prospectus under
"Underwriting") and (xvi)(A), (C) and (D) of Section 6(c) above.
With respect to clause (xvi) of Section 6(c) above, Lord Bissell &
Brook and Katten Muchin & Zavis may state that their opinion and belief are
based upon their participation in the preparation of the Registration
Statement and Prospectus and any amendments or supplements thereto and
review and discussion of the contents thereof, but are without independent
check or verification except as specified. With respect to Section 6(c)
above, Lord Bissell & Brook may rely, with respect to matters including the
application of laws of any jurisdictions other than the laws of the State
of Illinois or the United States or the Delaware General Corporation Law
and to the extent such counsel deems appropriate, upon an opinion or
opinions of local counsel, provided that (a) each such local counsel is
satisfactory to your counsel, (b) a copy of each opinion so relied upon is
delivered to you and is in form and substance satisfactory to your counsel,
and (c) Lord Bissell & Brook shall state in their opinion that they believe
they are justified in relying on each others opinion.
The opinion of Lord Bissell & Brook described in Section 6(c) above and
the opinion of Kirkland & Ellis described in Section 6(d) above shall be
rendered to the Underwriters at the request of the Company or of the
Selling Stockholder, as the case may be, and shall so state therein.
(f) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to you, from KPMG
Peat Marwick LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and
the Prospectus; provided that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof. The letters
shall not disclose any change, or any development involving a prospective
change, in or affecting the business or properties of the Company or any of
its subsidiaries which, in your sole judgment, makes it impractical
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or inadvisable to proceed with the public offering of the Shares as
contemplated by the Prospectus.
(g) The "lock-up" agreements, between you and certain stockholders,
officers and directors of the Company relating to sales and certain other
dispositions of shares of Common Stock or certain other securities,
delivered to you on or before the date hereof, shall be in full force and
effect on the Closing Date.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the delivery to the Representatives on the Option
Closing Date of such documents as they may reasonably request with respect to
the good standing of the Company, the due authorization and issuance of the
Additional Shares and other matters related to the issuance of the Additional
Shares.
7. Covenants of the Company. In further consideration of the agreements
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, seven signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York, without
charge, prior to 10:00 a.m. local time on the business day next succeeding
the date of this Agreement and during the period mentioned in paragraph (c)
below, as many copies of the Prospectus and any supplements and amendments
thereto or to the Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of your counsel, it is necessary to amend or supplement the
Prospectus to comply with law, forthwith to prepare, file with the
Commission and furnish, at its own expense, to the Underwriters and to the
dealers (whose names and addresses you will furnish to the Company) to
which Shares may have been sold by you on behalf of the Underwriters and to
any other dealers upon request, either amendments or supplements to the
Prospectus so that the statements in the Prospectus as so amended or
supplemented will not, in the light
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of the circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will
comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request; provided, however, that the Company shall not be obligated to file
any general consent to service of process or to qualify as a foreign
corporation in any jurisdiction in which it is not currently so qualified.
(e) To make generally available to the Company's security holders and
to you as soon as practicable an earnings statement covering the twelve-
month period ending December 31, 1998 that satisfies the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) During the period referred to in paragraph (e), the Company will
furnish to you as soon as available a copy of each report or other publicly
available information of the Company mailed to the holders of Common Stock
or filed with the Commission and such other publicly available information
concerning the Company and its subsidiaries as you may reasonably request.
8. Expenses of the Company. Whether or not the transactions contemplated
in this Agreement are consummated or this Agreement is terminated, the Company
agrees to pay or cause to be paid all expenses incident to the performance of
its obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel and the Company's accountant in connection
with the registration and delivery of the Shares under the Securities Act and
all other fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof to the
Underwriters and dealers, in the quantities hereinabove specified, (ii) all
costs and expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (iii) the
cost of printing or producing any Blue Sky or Legal Investment memorandum in
connection with the offer and sale of the Shares under state securities laws and
all expenses in connection with the qualification of the Shares for offer and
sale under state securities laws as provided in Section 7(d) hereof, including
filing fees and the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky or Legal Investment memorandum, (iv) all filing fees and disbursements
of counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the Shares by the National Association of
Securities Dealers, Inc., (v) all costs and expenses incident to listing the
Shares on the Nasdaq National Market and other national securities exchanges and
foreign stock exchanges, (vi) the cost of printing certificates representing the
Shares, (vii) the costs and charges of any transfer agent, registrar or
depositary, (viii) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the marketing of
the offering of the Shares, including, without
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limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the
road show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered in connection with the road
show, and (ix) all other costs and expenses incident to the performance of the
obligations of the Company and the Selling Stockholder hereunder for which
provision is not otherwise made in this Section. It is understood, however,
that except as provided in this Section 8, Section 9 entitled "Indemnity and
Contribution", and the last paragraph of Section 11 below, the Underwriters will
pay all of their costs and expenses, including fees and disbursements of their
counsel, stock transfer taxes payable on resale of any of the Shares by them and
any advertising expenses connected with any offers they may make.
9. INDEMNITY AND CONTRIBUTION.
--------------------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter, the directors, officers, partners, employees and agents of,
and each person, if any, who controls any Underwriter within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably
incurred in connection with defending or investigating any such action or
claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein; provided, however, that,
with respect to any untrue statement or alleged untrue statement or
omission or alleged omission made in any preliminary prospectus, the
foregoing indemnity agreement shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claim, damages
or liabilities purchased the Shares concerned, or any person controlling
such Underwriter, to the extent that any such loss, claim, damage or
liability of such Underwriter results from the fact that a copy of the
Prospectus (or Prospectus as amended or supplemented) was not sent or given
to such person, if required by the Securities Act so to have been
delivered, at or prior to the written confirmation of the sale of such
Shares to such person and the untrue statement or alleged untrue statement
or omission or alleged omission was corrected in such Prospectus (or
Prospectus as amended or supplemented), if the Company had previously
furnished copies of such Prospectus (or Prospectus as amended or
supplemented) to such Underwriter.
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(b) The Selling Stockholder agrees to indemnify and hold harmless
each Underwriter, the directors, officers, partners, employees and agents
of, and each person, if any, who controls any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that the Selling
Stockholder's indemnification obligation shall arise only if and to the
extent that (i) the Underwriters shall have established (by way of a final,
nonappealable judgment of a court of proper jurisdiction) that the Selling
Stockholder has breached any of the representations and warranties set
forth in Section 2(g) and (ii) the losses, claims, damages or liabilities
as to which indemnification is sought arise out of or are based upon such
breach.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement, each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act, and the Selling Stockholder and each person, if any,
who controls the Selling Stockholder within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act from and against
any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection
with defending or investigating any such action or claim) caused by any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto), or caused by
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through
you expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to Section 9(a), (b) or (c), such person (the
"Indemnified Party") shall promptly notify the person against whom such
indemnity may be sought (the "Indemnifying Party") in writing and the
Indemnifying Party, upon request of the Indemnified Party, shall retain
counsel reasonably satisfactory to the Indemnified Party to represent the
Indemnified Party and any others the Indemnifying Party may designate in
such proceeding and shall pay the fees and
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disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the Indemnifying Party and the Indemnified
Party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them.
It is understood that the Indemnifying Party shall not, in respect of the
legal expenses of any Indemnified Party in connection with any proceeding
or related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel)
for (i) all Underwriters and all persons, if any, who control any
Underwriter within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act, (ii) the Company, its directors, its
officers who sign the Registration Statement and each person, if any, who
controls the Company within the meaning of either such Section and (iii)
the Selling Stockholder and all persons, if any, who control the Selling
Stockholder within the meaning of either such Section of the Securities Act
or the Exchange Act, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for
the Underwriters and such control persons of Underwriters, such firm shall
be designated in writing by EVEREN Securities, Inc. In the case of any
such separate firm for the Company, and such directors, officers and
control persons of the Company, such firm shall be designated in writing by
the Company. In the case of any such separate firm for the Selling
Stockholder and such controlling persons of the Selling Stockholder, such
firm shall be designated in writing by the persons named as attorneys-in-
fact for the Selling Stockholder under the Powers of Attorney. The
Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or
if there be a final judgment for the plaintiff, the Indemnifying Party
agrees to indemnify the Indemnified Party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Party shall have
requested an Indemnifying Party to reimburse the Indemnified Party for fees
and expenses of counsel as contemplated by the second and third sentences
of this paragraph, the Indemnifying Party agrees that it shall be liable
for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 60 days after receipt by
such Indemnifying Party of the aforesaid request and (ii) such Indemnifying
Party shall not have reimbursed the Indemnified Party in accordance with
such request prior to the date of such settlement or, if such Indemnifying
Party in good faith disputes all or a portion of such fees and expenses,
such Indemnifying Party shall have failed to provide the Indemnified Party
with reasonable security for payment of the disputed amounts. No
Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Party is or could have been
a party and indemnity could have been sought hereunder by such Indemnified
22
<PAGE>
Party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter
of such proceeding.
(e) If the indemnification provided for in Section 9(a), (b) or (c)
is unavailable to an Indemnified Party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Party under such paragraph, in lieu of indemnifying such
Indemnified Party thereunder, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect
the relative benefits received by the Indemnifying Party or Parties on the
one hand and the Indemnified Party or Parties on the other hand from the
offering of the Shares or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Indemnifying Party or Parties
on the one hand and of the Indemnified Party or Parties on the other hand
in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Sellers on
the one hand and the Underwriters on the other hand in connection with the
offering of the Shares shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Shares (before
deducting expenses) received by each Seller and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate
Public Offering Price of the Shares. The relative fault of the Sellers on
the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Sellers or by the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Underwriters' respective obligations to contribute pursuant
to this Section 9 are several in proportion to the respective number of
Shares they have purchased hereunder, and not joint.
(f) The Sellers and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 9(e). The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the amount by which
the total price at which the Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages
that such Underwriter has
23
<PAGE>
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The remedies provided for in this
Section 9 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any Indemnified Party at law or in
equity.
(g) The indemnity and contribution provisions contained in this
Section 9 and the representations and warranties of the Company and the
Selling Stockholder contained in this Agreement shall remain operative and
in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of any Underwriter
or any person controlling the Underwriter, the Selling Stockholder or any
person controlling the Selling Stockholder, or the Company, its officers or
directors or any person controlling the Company and (iii) acceptance of and
payment for any of the Shares.
(h) Notwithstanding anything to the contrary contained herein, the
aggregate liability of the Selling Stockholder pursuant to the provisions
of this Section 9 and with respect to breaches of the representations,
warranties and agreements contained in Section 2, except for liability
resulting from the willful misconduct or intentional action of the Selling
Stockholder, shall not exceed an amount equal to the total price at which
the Shares of which the Selling Stockholder is a beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) were sold to the public
hereunder.
10. TERMINATION. This Agreement shall be subject to termination by notice
given by you to the Company, if (a) after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the Nasdaq National Market,
the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) trading of any securities of the Company shall have
been suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York shall have been
declared by either Federal or New York State authorities or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that, in your judgment, is material
and adverse and (b) in the case of any of the events specified in clauses (a)(i)
through (iv) of this Section 10, such event singly or together with any other
such event makes it, in your judgment, impracticable to market the Shares on the
terms and in the manner contemplated in the Prospectus.
11. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
or they have agreed to purchase hereunder on such date, and the aggregate number
of Shares which such defaulting Underwriter
24
<PAGE>
or Underwriters agreed but failed or refused to purchase is not more than one-
tenth of the aggregate number of the Shares to be purchased on such date, the
other Underwriters shall be obligated severally in the proportions that the
number of Firm Shares set forth opposite their respective names in Schedule I
bears to the aggregate number of Firm Shares set forth opposite the names of all
such nondefaulting Underwriters, or in such other proportions as you may
specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to this Section 11 by
an amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If, on the Closing Date or the Option Closing
Date, as the case may be, any Underwriter or Underwriters shall fail or refuse
to purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased on such date, and arrangements satisfactory to you, the
Company and the Selling Stockholder for the purchase of such Firm Shares are not
made within 36 hours after such default, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter, the Company or the
Selling Stockholder. In any such case either you or the relevant Sellers shall
have the right to postpone the Closing Date or the Option Closing Date, as the
case may be, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and in the Prospectus or
in any other documents or arrangements may be effected. If, on the Option
Closing Date, any Underwriter shall fail or refuse to purchase Additional Shares
and the aggregate number of Additional Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Additional Shares to be
purchased, the non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase Additional Shares or (ii)
purchase not less than the number of Additional Shares that such non-defaulting
Underwriters would have been obligated to purchase in the absence of such
default. Any action taken under this Section 11 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of any Seller to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Seller shall be unable to perform its obligations under this
Agreement, the Sellers will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
12. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
13. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Illinois.
25
<PAGE>
14. Headings. The Headings of the Sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours,
MARKET FACTS, INC.
By: /s/ Anthony J. Solarz
-------------------------------
Name: Anthony J. Solarz
Title: Controller
MFI INVESTORS L.P.,
a Delaware limited partnership
By: MFI ASSOCIATES, INC.,
its sole general partner
By: /s/ Jeffery A. Oyster
-------------------------------
Name: Jeffery A. Oyster
Title: V.P.
Accepted, as of the date hereof
EVEREN SECURITIES, INC.
THE ROBINSON-HUMPHREY COMPANY, LLC
Acting severally on behalf of themselves and the
several Underwriters named in SCHEDULE I hereto.
By: EVEREN SECURITIES, INC.
By: /s/ Basil E. Horner
-------------------
Name: Basil E. Horner
Title: Managing Director
26
<PAGE>
SCHEDULE I
Underwriters
------------
<TABLE>
<CAPTION>
Number of
Firm Shares
Underwriter To Be Purchased
----------- ---------------
<S> <C>
EVEREN Securities, Inc................................... 798,000
The Robinson-Humphrey Company, LLC....................... 798,000
ABN AMRO Chicago Corporation............................. 96,000
BancAmerica Robertson Stephens........................... 96,000
William Blair & Company, L.L.C........................... 96,000
Hambrecht & Quist LLC.................................... 96,000
Robert W. Baird & Co. Incorporated....................... 60,000
Furman Selz LLC.......................................... 60,000
Ladenburg Thalmann & Co. Inc............................. 60,000
Mesirow Financial, Inc................................... 60,000
Needham & Company, Inc................................... 60,000
Nesbitt Burns Securities Inc............................. 60,000
Stephens Inc............................................. 60,000
---------
Total Firm Shares................................... 2,400,000
=========
</TABLE>
<PAGE>
Exhibit 10.36
PROMISSORY NOTE
$ 40,500.00 Arlington Heights, Illinois
-----------
April 1, 1994
---------------------------
FOR VALUE RECEIVED, Timothy J. Sullivan ("Borrower"), hereby promises to
pay to Market Facts, Inc. ("Market Facts") at Market Facts' address at 3040 West
Salt Creek Lane, Arlington Heights, Illinois 60005 or at such other place as
Market Facts may designate from time to time in writing the principal sum of
Forty Thousand, Five Hundred and No One-hundredths Dollars ($40,500.00), in
lawful currency of the United States of America.
1. Payment of Principal. If not otherwise paid or forgiven pursuant to
Paragraph 5 of this Note, the principal sum shall be repaid in ten (10) annual
installments of Four Thousand and Fifty Dollars ($4,050.00) each, on the dates
specified below and, if not sooner paid in full, on February 1, 2004. Annual
payments hereunder shall be made on the following dates: February 1, 1995;
February 1, 1996; February 1, 1997; February 1, 1998; February 1, 1999; February
1, 2000; February 1, 2001; February 1, 2002; February 1, 2003 and February 1,
2004.
2. Interest. This Note shall bear interest at a rate of nine percent (9%)
upon the occurrence of an Event of Default (as defined herein).
3. Costs of Collection. Should the indebtedness represented by this Note
or any part hereof be placed in the hands of attorneys for collection after an
Event of Default, the Borrower agrees to pay, in addition to the principal and
any interest due and payable thereon, all costs of collecting this Note,
including reasonable attorney's fees and expenses.
4. Prepayment. The Borrower may from time to time prepay this Note in
whole or in part, without premium or penalty.
5. Note Issued in Connection with Employment. Borrower acknowledges that
Market Facts offers loans to its employees from time to time. Borrower further
acknowledges that this Note is issued by Borrower as an employee of Market
Facts. Accordingly, this Note shall accelerate and all amounts of principal and
any interest due and owing hereunder shall become immediately due and payable
upon termination of Borrower's employment with Market Facts for any reason.
During the term of this Note, Market Facts shall forgive the principal payments
due hereunder on each of the following dates: February 1, 1996; February 1,
1998; February 1, 2000; February 1, 2002; February 1, 2004; provided that
Borrower is employed by Market Facts on the date such payment is due. Such
forgiveness to be effective on the date each such payment is due.
This Note does not confer upon Borrower any right with respect to
continuation of employment by Market Facts or any affiliate of Market Facts, nor
interfere with the right of Market Facts or any such affiliate to terminate his
or her employment at any time.
<PAGE>
Exhibit 10.36
6. Non-Negotiability. This Note is non-negotiable and non-assignable;
provided, however, that the interest of Market Facts may be transferred to the
transferees or assigns of Market Facts; provided, further, that the payments to
be made hereunder (exclusive of any enforcement rights with respect hereto) may
be pledged or assigned by Market Facts as collateral.
7. Events of Default. The occurrence of any one or more of the following
shall constitute an Event of Default hereunder:
(a) The Borrower shall fail to pay any installment of principal within
twenty (20) days after the same becomes due.
(b) The Borrower shall make an assignment for the benefit of creditors,
or shall admit in writingits inability to pay its debts as they
become due, or shall file a voluntary petition in bankruptcy, or
shall be adjudicated a bankrupt or insolvent.
(c) An involuntary petition in bankruptcy shall have been filed against
the Borrower, and the same shall not have been dismissed within 60
days.
(d) Termination of Borrower's employment with Market Facts.
8. Remedies in the Event of Default. If an Event of Default occurs and is
continuing:
(a) This Note, together with all principal and any interest due and
owing hereunder shall become immediately due and payable
(including, without limitation, that amount that would have been
forgiven pursuant to Paragraph 5 had Borrower remained in Market
Facts' employ) without demand, or legal process of any kind.
(b) Market Facts may proceed to protect and enforce Market Facts'
rights by suit in equity or by action at law, whether for the
specific performance of any covenant, agreement or provision of
this Note, or in aid of the exercise of any power granted herein,
and may proceed to enforce the paymentof this Note or to enforce
any other legal or equitable rights with respect thereto.
No delay or failure in declaring any such default or in enforcing any such
right, power or remedy, and no course of dealing between Market Facts and the
Borrower, or in any other person, firm, corporation or entity, and no failure by
Market Facts or the Borrower, or any other person, firm, corporation or entity
to act in good faith, shall constitute a waiver of any right, power or remedy
available to Market Facts, or in any way or manner prejudice, impair, diminish
or restrict any right, power or remedy available to Market Facts.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by Borrower.
<PAGE>
Exhibit 10.36
9. Waivers of Default. Market Facts may waive any past default under this
Note and its consequences; provided, however, that no waiver of a default shall
be effective unless and until set forth in a writing signed by Market Facts.
Upon the giving of a waiver as provided in this Paragraph 9, such default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been remedied and cured for every purpose of this Note. No such waiver
shall extend to any subsequent or other default or impair any right, power or
remedy with respect to any subsequent or other default.
10. General. This Note shall be construed in accordance with the laws of
the State of Illinois. Any notice or other communication required, permitted or
desirable hereunder shall be sufficiently given if sent by United States mail,
postage prepaid, certified or registered mail, return receipt requested, to the
party's last known address.
11. Investment Representation. Borrower is aware of Market Facts' business
affairs and financial condition, and has acquired sufficient information about
Market Facts to reach an informed and knowledgeable decision to acquire shares
of Market Facts, Inc. common stock. Borrower is purchasing these shares for
investment purposes only and not with a view to, or for the resale in connection
with, any "distribution" thereof for purposes of the Securities Act of 1933.
IN WITNESS WHEREOF, the Borrower has executed this Note on the date first
written above.
BORROWER:
TIMOTHY J. SULLIVAN
-------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 112,868
<SECURITIES> 50,000
<RECEIVABLES> 14,599,207
<ALLOWANCES> 1,109,273
<INVENTORY> 0
<CURRENT-ASSETS> 20,656,060
<PP&E> 30,707,687
<DEPRECIATION> 13,304,057
<TOTAL-ASSETS> 44,534,121
<CURRENT-LIABILITIES> 20,073,284
<BONDS> 0
0
0
<COMMON> 8,966,258
<OTHER-SE> 4,865,561
<TOTAL-LIABILITY-AND-EQUITY> 44,534,121
<SALES> 71,693,518
<TOTAL-REVENUES> 71,693,518
<CGS> 40,239,762
<TOTAL-COSTS> 40,239,762
<OTHER-EXPENSES> 25,201,245
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 842,938
<INCOME-PRETAX> 5,520,362
<INCOME-TAX> 2,324,851
<INCOME-CONTINUING> 3,195,511
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,195,511
<EPS-PRIMARY> .45
<EPS-DILUTED> .45
</TABLE>
