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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF
THE SECURITIES EXCHANGE ACT OF 1934
MARKET FACTS, INC.
(NAME OF SUBJECT COMPANY)
MARKET FACTS, INC.
(NAME OF PERSON FILING STATEMENT)
Common Stock, par value $1.00 per share
(Title of Class of Securities)
570559 10 4
(CUSIP Number of Class of Securities)
THOMAS H. PAYNE
Chief Executive Officer
MARKET FACTS, INC.
3040 West Salt Creek Lane
Arlington Heights, Illinois 60005
(847) 590-7000
(Name, address and telephone number of person
authorized to receive notices and communications
on behalf of the person filing statement)
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COPY TO:
JANET O. LOVE, Esq.
Lord, Bissell & Brook
115 S. LaSalle Street
Chicago, Illinois 60603
(312) 443-0700
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Market Facts, Inc., a Delaware
corporation (the "Company"). The address of the principal executive offices of
the Company is 3040 West Salt Creek Lane, Arlington Heights, Illinois 60005. The
title of the class of equity securities to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (this "Statement" or
"Schedule 14D-9") relates is the common stock, par value $1.00 per share, of the
Company.
ITEM 2. TENDER OFFER OF THE BIDDER
This Statement relates to the offer by Aegis Acquisition Corp., a Delaware
corporation ("Purchaser") and an indirect wholly owned subsidiary of Aegis Group
plc, a corporation incorporated under the laws of England and Wales ("Parent"),
to purchase all of the outstanding shares of common stock, par value $1.00 per
share (the "Shares" or "Common Stock"), of the Company at a price of $31.00 per
Share, net to the seller in cash (the "Offer Price"), on the terms and subject
to the conditions set forth in the Offer to Purchase dated May 4, 1999 (the
"Offer to Purchase") and in the related Letter of Transmittal (which, as amended
or supplemented from time to time, together constitute the "Offer"). Unless the
context requires otherwise, all references to Shares in this Schedule 14D-9
shall be deemed to refer also to the associated preferred stock purchase rights
(the "Rights") issued pursuant to the Rights Agreement dated as of July 26, 1989
(the "Rights Agreement") between the Company and First Chicago Trust Company of
New York, as amended by a First Amendment to the Rights Agreement dated as of
June 5, 1996 and by a Second Amendment to the Rights Agreement dated as of April
29, 1999, and all references to rights shall be deemed to include all benefits
that may inure to the stockholders of the Company or to holders of the Rights
pursuant to the Rights Agreement.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of April 29, 1999 (the "Merger Agreement") by and among the Company, Parent
and Purchaser. The Merger Agreement provides, among other things, for the
commencement of the Offer by Purchaser and further provides that, as promptly as
practicable following the purchase of Shares pursuant to the Offer (the
"consummation" of the Offer) and the approval and adoption of the Merger
Agreement by the stockholders of the Company, if required by applicable law, and
the satisfaction or waiver of certain other conditions set forth therein,
Purchaser will be merged with and into the Company (the "Merger"), with the
Company continuing as the surviving corporation (the "Surviving Corporation")
and becoming an indirect wholly owned subsidiary of Parent. Pursuant to the
Merger, each issued and outstanding Share (other than (i) Shares held by
Purchaser, Parent or the Company or any direct or indirect subsidiary of
Purchaser, Parent or the Company and (ii) dissenting Shares) will be converted
into the right to receive $31.00 in cash or any higher price that may be paid
per Share in the Offer, without interest thereon, less any required withholding
of taxes (the "Merger Consideration"). The Merger Agreement is more fully
described in Item 3 hereof.
Simultaneously with entering into the Merger Agreement, MFI Investors, L.P.,
and its affiliates and certain senior executives of the Company (the "Selling
Stockholders"), entered into an Option and Voting Agreement, dated as of April
29, 1999 with Parent (the "Option Agreement"). Pursuant to the Option Agreement,
the Selling Stockholders have agreed, among other things, (i) to sell to Parent
or its permitted assign 2,760,484 Shares (30.07% of the Shares, on a fully
diluted basis, after giving effect to the exercise of vested employee stock
options) at a price of $31.00 per Share, (ii) not to tender such Shares into the
Offer without Parent's consent, and (iii) to vote such Shares and all shares of
Series B Preferred Stock, no par value (the "Series B Shares"), held by the
Selling Stockholders in favor of the Merger, in each case, upon the terms and
subject to the conditions and limitations set forth in the Option Agreement. The
Option Agreement is more fully described in Section 3 hereof.
As set forth in Parent and Purchaser's Tender Offer Statement on Schedule
14D-1 (the "Schedule 14D-1" or "14D-1"), the address of the principal executive
offices of Purchaser and Parent is 11A West Halkin Street, London, England, SW1X
8JL.
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ITEM 3. IDENTITY AND BACKGROUND
(a) The name and business address of the Company, which is the person filing
this statement, are set forth in Item 1 above. All information contained in this
Schedule 14D-9 or incorporated herein by reference concerning Parent, Purchaser
or their affiliates, or actions or events with respect to any of them, was
provided by Parent, and the Company takes no responsibility for such
information.
(b) Except as described herein, in the Information Statement of the Company
attached to this Schedule 14D-9 as Annex A (which is hereby incorporated by
reference), and in the exhibits hereto, to the knowledge of the Company, as of
the date hereof, there are no material contracts, agreements, arrangements or
understandings or any actual or potential conflicts of interest between the
Company or its affiliates and (1) the Company's executive officers, directors or
affiliates or (2) Parent, Purchaser or their respective executive officers,
directors or affiliates.
INDEMNIFICATION AGREEMENTS
The Company has entered into Indemnification Agreements with each of its
current and certain of its former directors (collectively, the "Indemnification
Agreements"). Pursuant to the Indemnification Agreements, the Company agreed to
indemnify each director against any and all expenses (including attorneys' fees
and disbursements), judgments, fines, amounts paid in settlement and any other
liabilities incurred by reason of the fact that such person was or is a
director, officer, employee or agent of the Company, to the fullest extent
permitted by Delaware General Corporation Law (the "DGCL"). In addition, the
Company agreed to advance to each director any and all expenses incurred by such
director (i) in defending any suit or other proceeding to which the director is,
or is threatened to be made a party due to the fact that he or she is or was a
director, officer, employee or agent of the Company or (ii) in prosecuting any
suit or other proceeding to enforce his or her rights under the Indemnification
Agreement. The advancement of expenses will be made within twenty (20) days
after the Company receives a statement reasonably detailing all expenses and an
undertaking by the director or on the director's 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 appeal that the director is not
entitled to be indemnified for the expenses under the Indemnification Agreement
or otherwise.
According to the Indemnification Agreements, this indemnification and
advancement of expenses inures to the benefit of each director's heirs and legal
representatives. In addition, the rights granted pursuant to the Indemnification
Agreements will continue to be valid, binding and enforceable after the
individual has ceased to be a director, officer, employee or agent of the
Company. The Indemnification Agreements do not limit any rights to which the
directors are entitled under DGCL, the Company's Certificate of Incorporation,
Bylaws, or otherwise. The burden of proof of establishing that any director is
not entitled to indemnification because of a failure to fulfill any legal
requirement shall be on the Company.
RESTRICTED STOCK AWARD
In consideration for Sanford Schwartz's agreement to become an employee of
the Company and to encourage his contribution to the successful performance of
the Company, on July 6, 1992 the Company awarded to Dr. Schwartz 400,000 shares
of the Company's Common Stock subject to certain restrictions (the "Restricted
Stock"). The Restricted Stock vests at 10% per year commencing on January 5,
1993 and ending on January 5, 2002, provided that Dr. Schwartz continues to be
employed by the Company. To date, 280,000 shares of the Restricted Stock have
vested. In the event of a change in control or merger of the Company, all shares
of the Restricted Stock which have not yet vested will become fully vested on
the effective date of such change in control or merger.
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THE MERGER AGREEMENT
The following summary of certain provisions of the Merger Agreement is
presented only as a summary and is qualified in its entirety by reference to the
Merger Agreement, a copy of which has been filed as an exhibit to the Schedule
14D-1.
THE OFFER. The Merger Agreement provides that as soon as practicable after
the date of execution of the Merger Agreement, but in no event later than five
business days after the day on which Purchaser's intention to make the Offer is
announced, Purchaser will commence the Offer for all of the outstanding Shares
at a price of not less than $31.00 per Share in cash, net to the seller, subject
to the satisfaction of the conditions set forth below and, subject only to the
terms and conditions of the Offer, will consummate the Offer as soon as legally
permissible. Purchaser may waive any condition to the Offer, increase the price
per Share payable in the Offer and make any other changes in the terms and
conditions of the Offer. However, no change may be made which decreases the
price per Share or changes the form of consideration payable in the Offer, or
which amends any of the conditions described below or which imposes conditions
to the Offer other than those described below or which extends the Offer (except
as set forth in the following sentence), without the consent of the Company.
Purchaser may, without the consent of the Company, (i) extend the Offer beyond
the scheduled expiration date (the initial scheduled expiration date being 20
business days following the commencement of the Offer) in its sole discretion
from time to time, if on the initial scheduled or any extended expiration date
of the Offer, any of the conditions to Purchaser's obligation to accept for
payment, and to pay for, the Shares, shall not be satisfied or waived, or (ii)
extend the Offer for a period not to exceed 10 business days, notwithstanding
that all conditions to the Offer are satisfied as of such expiration date of the
Offer, if, immediately prior to the expiration date of the Offer (as it may be
extended), the Shares tendered and not withdrawn pursuant to the Offer, together
with the Shares subject to the Option Agreement, without duplication, equal less
than 90% of the outstanding Shares and Purchaser expressly irrevocably waives
any condition (other than the Minimum Condition) that subsequently may not be
satisfied during such extension of the Offer, or (iii) extend the Offer for any
period required by any rule, regulation or interpretation of the Securities and
Exchange Commission (the "Commission") or the staff thereof applicable to the
Offer; provided that, unless agreed to by the Company, any extended expiration
date pursuant to the immediately preceding clause (i) may not be later than 90
days from the date of commencement of the Offer, or 120 days from such date if
within such 90 day period a tender offer for at least 20% of the outstanding
Shares is commenced by any person who is not an affiliate (as defined under the
rules promulgated pursuant to the Securities Act of 1933, as amended) of Parent
or Purchaser (an "Intervening Tender Offer").
In the event that (i) the Minimum Condition shall not have been satisfied or
(ii) the other conditions described below shall not have been satisfied or
waived at the scheduled or any extended expiration date of the Offer, at the
request of the Company, Purchaser has agreed to extend the expiration date of
the Offer in increments of five (5) business days each until the earliest to
occur of (x) the satisfaction or waiver of the Minimum Condition or such other
condition, (y) the termination of the Merger Agreement in accordance with its
terms, and (z) 90 days from commencement of the Offer or 120 days from such date
in the event of an Intervening Tender Offer (unless extended by agreement of
Parent, Purchasr and the Company).
THE MERGER. The Merger Agreement provides that, subject to the terms and
conditions thereof, at the effective time of the Merger (the "Effective Time"),
Purchaser will be merged with and into the Company and the separate corporate
existence of Purchaser will cease. At the election of Parent exercised prior to
the filing of any proxy statement pursuant to the Merger Agreement, the Company
will be merged with and into Purchaser and the separate corporate existence of
the Company will cease. At the Effective Time, by virtue of the Merger and
without any action on the part of Purchaser, the Company, the surviving
corporation or any holder of Shares, (i) each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Purchaser,
Parent or any direct or indirect subsidiary of Parent or owned by the Company or
any direct or indirect subsidiary of the Company and Shares that are outstanding
immediately prior to the Effective Time and which are held by stockholders who
shall have not
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voted in favor of the Merger or consented thereto in writing and who shall have
demanded properly in writing appraisal for such Shares in accordance with
Section 262 of the DGCL) will be converted into the right to receive $31.00 per
Share, or such higher amount as may be paid if the Offer is amended, without
interest (the "Merger Consideration"), and (ii) each Series B Share which is
issued and outstanding immediately prior to the Effective Time shall be canceled
and retired, and no payment shall be made with respect thereto. Pursuant to the
Merger Agreement, all shares of common stock of Purchaser issued and outstanding
immediately prior to the Effective Time will be converted into and exchanged for
a sole validly issued, fully paid and nonassessable share of common stock of the
surviving corporation (the "Surviving Corporation").
STOCKHOLDERS MEETING. The Merger Agreement provides that the Company will
take all action necessary, in accordance with the DGCL and its Certificate of
Incorporation and By-Laws to convene a meeting of its stockholders to consider
and vote upon the approval of the Merger Agreement and the Merger, if necessary
to comply with applicable law, as promptly as practicable after the consummation
of the Offer. The Merger Agreement provides that, if Company stockholder
approval is required by law in order to consummate the Merger, the Company and
Parent shall prepare and file with the Commission as soon as is reasonably
practicable a preliminary proxy or information statement relating to the Merger
and the Merger Agreement and, as promptly as practicable thereafter, subject to
compliance with the rules and regulations of the Commission, shall mail a
definitive proxy statement or information statement to stockholders of the
Company. The Board of Directors of the Company (the "Board") will recommend such
approval and the Company will use its best efforts to solicit such approval;
provided, however, that the Board at any time prior to the Effective Time, may
withdraw, modify or change any such recommendation or refrain from soliciting
proxies in favor of the Merger to the extent that the Board determines in good
faith after consultation with and based upon the advice of outside legal counsel
that the failure to so withdraw, modify or change its recommendation or refrain
from soliciting proxies would cause the Board to breach its fiduciary duties to
the Company's stockholders under applicable law. In any event, the Board is
obligated under the Merger Agreement to submit the Merger Agreement to the
stockholders of the Company.
Parent and its affiliates will vote all Shares over which they exercise
voting control in favor of the Merger Agreement and the Merger. Under the DGCL,
if Purchaser acquires at least 90% of the outstanding Shares, Purchaser will be
able to approve the Merger without a vote of the Company's stockholders. See
Section 12 of the Schedule 14D-1 for a further discussion of certain provisions
of the DGCL applicable to the Merger.
CONDUCT OF BUSINESS. Pursuant to the Merger Agreement, prior to the
Effective Time, except to the extent that Purchaser shall otherwise consent, the
Company and its subsidiaries shall conduct their businesses in the ordinary
course of business and will not take any material action except in the ordinary
course of business and consistent with past practice. The Company and its
subsidiaries will use their respective best efforts to maintain and preserve
their respective business organizations, assets and advantageous business
relationships.
Without Parent's prior written consent, neither the Company nor any of its
subsidiaries will directly or indirectly do any of the following:
(a) amend its charter or by-laws (or comparable charter documents);
(b) except for Shares the Company may be obligated to issue in
connection with a prior acquisition, authorize for issuance, issue, sell,
deliver or agree or commit to issue, sell or deliver (whether through the
issuance or granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise) any stock of any class or any other
securities, except in the case of Shares of the Company, as required by
employee stock options outstanding on the date of the execution of the
Merger Agreement or Company employee benefit plans as in effect on the date
of the execution of
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the Merger Agreement, or amend any of the terms of any such securities or
agreements outstanding on the date of the execution of the Merger Agreement;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, or redeem or otherwise acquire any securities of the Company
or any of the subsidiaries;
(d) (i) incur or assume any long-term debt, except in the ordinary
course of business under existing facilities or required refinancings or
replacements thereof, or incur or assume any short-term debt, except in the
ordinary course of business, or issue or sell any debt securities or rights
to acquire any debt securities of the Company or any subsidiary; (ii)
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other person except wholly owned subsidiaries of the Company in the ordinary
course of business and consistent with past practice; or (iii) make any
loans, advances or capital contributions to, or investments in, any person
other than a wholly owned subsidiary of the Company in the ordinary course
of business (except for customary loans or advances to directors, officers
or employees in accordance with past practice or as required by existing
contractual arrangements or agreements);
(e) other than as required by ERISA enter into, adopt or amend any
bonus, profit sharing, compensation, severance, termination, stock option,
stock appreciation right, restricted stock, performance unit, pension,
retirement, deferred compensation, employment, severance or other employee
benefit agreements, trusts, plans, funds or other arrangements for the
benefit or welfare of any director, officer or employee, or (except (i) in
the case of persons whose compensation has been established by the
Compensation Committee of the Board of Directors, for increases in amounts
previously approved by such Committee, and (ii) in the case of all other
directors, officers or employees, for normal increases in the ordinary
course of business that are consistent with past practices and that, in the
aggregate, do not result in a material increase in benefits or compensation
expense to the Company), increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit or make any
distribution or award not required by any existing plan or arrangement
(including, without limitation, the granting of stock options, stock
appreciation rights, shares of restricted stock or performance units) or
enter into any contract, agreement, commitment or arrangement to do any of
the foregoing;
(f) except pursuant to existing contractual arrangements or agreements
disclosed pursuant to the Merger Agreement, acquire, sell, lease, license,
dispose of, mortgage or otherwise encumber any assets outside the ordinary
course of business or any assets which are material, in the aggregate, to
the Company and its subsidiaries, taken as a whole, or enter into any
material commitment or transaction outside the ordinary course of business;
(g) except as may be required by law, take any action to terminate or
amend or accelerate the vesting of any benefits under any of its employee
benefit plans;
(h) waive or release any rights material to the Company and its
subsidiaries, taken as a whole, or make any payment, direct or indirect, of
any material liability of the Company or any of its subsidiaries before the
same comes due in accordance with its terms;
(i) acquire or agree to acquire, including, without limitation, by
merging or consolidating with, or by purchasing a substantial equity
interest in or substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof without Parent's prior written consent;
(j) except as set forth on a schedule to the Merger Agreement, make any
capital expenditure or expenditures which exceed $250,000 in the aggregate;
and
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(k) take, or agree in writing or otherwise to take, any of the foregoing
actions or any action which would make any representation or warranty of the
Company contained in the Merger Agreement untrue or incorrect as of the date
when made or as of a future date.
NO SOLICITATION. Pursuant to the Merger Agreement, the Company agreed to
immediately cease and cause to be terminated all existing discussions or
negotiations relating to a Competing Transaction (as defined below) with any
parties conducted prior thereto. The Company has agreed not to, directly or
indirectly, and to instruct its representatives not to, directly or indirectly,
(i) initiate, solicit or encourage (including by way of furnishing information
or assistance), or take any other action to facilitate, any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Competing Transaction (as defined below) or (ii) enter into or maintain
discussions or negotiate with any person in furtherance of or relating to such
inquiries or to obtain a Competing Transaction or (iii) agree to or endorse any
Competing Transaction or (iv) authorize or permit any representative of the
Company or any of its subsidiaries to take any such action. The Company also
agreed to promptly notify Parent if any such inquiries or proposals are made
regarding a Competing Transaction and inform Purchaser in reasonable detail of
any such inquiry or proposal. The Company also agreed to keep Parent informed,
on a current basis, of the significant developments and changes in status of any
such proposals; provided, however, that prior to consummation of the Offer, the
Merger Agreement will not prohibit the Board from (i) furnishing information to,
or entering into discussions or negotiations with, any person that after the
date of the Merger Agreement makes an unsolicited proposal regarding a Competing
Transaction or agreeing to or endorsing any Competing Transaction, if, and only
to the extent that, (A) the Board, after consultation with and based upon the
advice of independent legal counsel, determines in good faith that such action
is required for the Board to comply with its fiduciary duties to the Company's
stockholders imposed by Delaware law, (B) prior to furnishing such information
to, or entering into discussions or negotiations with such person or agreeing to
or endorsing any Competing Transaction, the Board determines in good faith,
after consultation with and based upon the advice of a financial advisor of
nationally recognized reputation, that such Competing Transaction is a Superior
Proposal (as defined below), (C) prior to furnishing such information to, or
entering into discussions or negotiations with, such person, the Company
provides written notice to Purchaser to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person,
and (D) such information to be so furnished has been previously delivered to
Purchaser; or (ii) complying with Rule 14e-2 promulgated under the Securities
Exchange Act of 1934, as amended, with regard to a Competing Transaction. The
Company further agreed that if it determines that a Competing Transaction is a
Superior Proposal, it will immediately notify Purchaser of such determination,
and will not take any action with respect to such Competing Transaction or the
Merger Agreement for at least 48 hours after such notification.
For purposes of the Merger Agreement, "Competing Transaction" means any of
the following involving the Company or any of its subsidiaries: (a) any merger,
consolidation, share exchange, business combination, or other similar
transaction; (b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 20% or more of the assets of the Company and its subsidiaries,
taken as a whole, in a single transaction or series of transactions; (c) any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 20% or more of the outstanding shares of capital stock of
the Company or the filing of a registration statement under the Securities Act,
in connection therewith; (d) any solicitation of proxies in opposition to
approval by the Company's stockholders of the Merger; (e) the adoption by the
Company of a plan of liquidation, the declaration or payment by the Company of
an extraordinary dividend on any of its shares of capital stock or the
effectuation by the Company of a recapitalization or other type of transaction
that would involve either a change in the Company's outstanding capital stock or
a distribution of assets of any kind to the holders of such capital stock; (f)
the repurchase by the Company or any subsidiary of the Company of 20% or more of
the outstanding shares of Common Stock; or (g) any agreement to, or public
announcement by the Company or any other person, entity or group of a proposal,
plan or intention to do any of the foregoing.
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For purposes of the Merger Agreement, a "Superior Proposal" means any
proposal relating to a Competing Transaction made by a third party on terms
which if consummated the Board determines in its good faith judgment (based upon
the advice of a financial advisor of nationally recognized reputation) to be
more financially favorable to the Company's stockholders than the Offer and the
Merger and for which financing, to the extent required, is then committed or
which, in the good faith judgment (based upon the advice of a financial advisor
of nationally recognized reputation) of the Board, is reasonably capable of
being financed by such third party.
THE COMPANY'S BOARD OF DIRECTORS. The Merger Agreement provides that
promptly upon the acceptance for payment and purchase by Purchaser pursuant to
the Offer and the Option Agreement of such number of Shares which represents a
majority of the outstanding Shares (on a fully diluted basis), and from time to
time thereafter, Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Board of Directors as will give
Purchaser, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Board of Directors equal to at least that number of
directors which equals the product of the total number of directors on the Board
of Directors (giving effect to the directors designated by Parent) multiplied by
the percentage that such number of Shares so accepted for payment and paid for
by Purchaser bears to the number of Shares outstanding. The Company shall, at
such time, cause Purchaser's designees to be so elected, provided that (i) until
the Effective Time the Board of Directors will have at least two directors who
are directors as of the date of execution of the Merger Agreement who are not
employees of the Company and who have not been designated as directors of the
Company by Parent and its affiliates (the "Independent Directors") and (ii) if
the number of Independent Directors is reduced below two because of disability
or resignation, the remaining Independent Director will be entitled to designate
one person to fill such vacancy who will be deemed to be an Independent Director
for purposes of the Merger Agreement.
Subject to applicable law, the Company agreed to take all action necessary
to effect any such election, including mailing to its stockholders the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, and the Company agreed to include in the Schedule 14D-9
mailed to stockholders such information. The Merger Agreement also provides that
prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors shall be required to (i) amend or terminate the Merger
Agreement on behalf of the Company, (ii) exercise or waive any of the Company's
rights or remedies under the Merger Agreement, (iii) extend the time for
performance of the Purchaser's obligations under the Merger Agreement, or (iv)
take any other action by the Company in connection with the Merger Agreement
required to be taken by the Board of Directors.
DIRECTORS' AND OFFICERS' INDEMNIFICATION. The Merger Agreement requires
that for a period of six years after the Effective Time, the corporation
surviving the Merger (the "Surviving Corporation") will maintain, without
modification or amendment that would adversely affect the rights thereunder of
any current or former director or officer of the Company or any of its
subsidiaries (an "Indemnified Party"), the provisions of the Company's
certificate of incorporation and bylaws with respect to indemnification and
liability of officers, directors and employees. In addition, the Merger
Agreement provides that the Surviving Corporation will honor the Company's
existing indemnification agreements that have been executed by certain of the
Company's present and former directors.
The Merger Agreement further provides that from and after the Effective
Time, the Surviving Corporation shall indemnify, defend and hold harmless the
Indemnified Parties against all losses, expenses, claims, damages, liabilities,
judgments or amounts that are paid in settlement of (with approval of Parent and
the Surviving Corporation) and in connection with, any claim, action, suit,
proceeding or investigation, based in whole or in part on the fact that such
person is or was such a director or officer and arising out of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by the Merger Agreement), in each case
to the fullest extent permitted under the DGCL (and shall pay expenses in
advance of the final disposition of any such action or proceeding to
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each Indemnified Party to the fullest extent permitted under the DGCL, upon
receipt from the Indemnified Party to whom expenses are advanced of the
undertaking to repay such advances contemplated by Section 145(e) of the DGCL).
The Surviving Corporation has agreed to maintain in effect for not less than
six years after the Effective Time officers' and directors' liability insurance
covering the Indemnified Parties who are currently covered by the Company's
officers' and directors' liability insurance policy on terms no less favorable
than those of such policy in terms of coverage and amounts; provided, however,
that the Surviving Corporation is not required to pay for such insurance in
excess of 200% of the rates paid at the date of the Merger Agreement but in such
case shall purchase as much coverage as possible for such amount.
COMPANY OPTIONS. The Merger Agreement provides that, at the Effective Time,
each holder of a stock option granted under the Company's stock option plan (an
"Employee Option"), whether or not then vested or exercisable shall, in
settlement thereof, receive for each Share subject to such Employee Option an
amount (subject to any applicable withholding tax) in cash equal to the
difference between the Offer Consideration and the per Share exercise price of
such Employee Option to the extent such difference is a positive number (such
amount being hereinafter referred to as, the "Option Consideration"). Upon
receipt of the Option Consideration, the Employee Option shall be canceled.
Prior to the Effective Time, the Company will obtain all necessary consents or
releases from holders of Employee Options under the Company's stock option plan
and will take all such other lawful action as may be necessary to effectuate the
foregoing. Except as otherwise agreed to between the Company and the Parent, (i)
all stock option plans of the Company will terminate as of the Effective Time
and the provisions in any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any subsidiary thereof, will be canceled as of the Effective Time,
and (ii) the Company shall ensure that following the Effective Time no
participant in any stock option plan or other plans, programs, arrangements or
agreements will have any right thereunder to acquire equity securities of the
Company, the Surviving Corporation or any subsidiary thereof and to terminate
all such plans. Prior to the Effective Time, the Company will not take any
action to accelerate the vesting of any unvested stock options as a result of
the Offer or the Merger.
EMPLOYEE STOCK OWNERSHIP PLAN. The Merger Agreement provides that all
accounts in the Company's Employee Stock Ownership Plan (the "ESOP") will become
100% vested as of the Effective Time. The Company will take all steps necessary
to terminate, as of or as promptly as practicable after the Effective Time, the
ESOP, and the balance of each participant's account in the ESOP will be
delivered to such participant on or as promptly as practicable after the
termination of the ESOP.
EMPLOYEES. Following the Effective Time, the Surviving Corporation has
agreed to pay all benefits due under the terms of all contracts, agreements,
arrangements, policies and commitments of the Company and its subsidiaries with
or with respect to its current or former employees, officers and directors which
benefits are vested on or prior to the Effective Time or which become vested
thereafter or as a result of the transactions contemplated hereby. Parent has
agreed to provide, for a period ending on the first anniversary of the Effective
Time, or cause the Surviving Corporation to provide, employees of the Company
and its subsidiaries with employee benefits (other than stock options and other
equity-based benefits) in the aggregate substantially no less favorable than
those benefits provided at the Effective Time.
CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The Merger Agreement provides
that the respective obligations of each party to consummate the Merger are
subject to the satisfaction of a number of conditions, including, but not
limited to, (i) the approval and adoption of the Merger Agreement by the
stockholders of the Company (if required), (ii) the expiration of any waiting
period applicable to the consummation of the Merger under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and any required
approvals in connection with any premerger notification
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filing with any relevant non-US antitrust authority shall have been obtained and
shall remain in full force and effect, (iii) no preliminary or permanent
injunction or other order, decree or official action issued by any United States
Federal or state or foreign court or regulatory or administrative agency or
commission of competent jurisdiction, nor any statute, rule, regulation or
executive order promulgated or enacted by any United States Federal or state or
foreign governmental authority of competent jurisdiction, shall be in effect,
which would (A) make the acquisition or holding by Parent or its subsidiaries or
affiliates of the shares of Common Stock of the Surviving Corporation illegal or
otherwise prevent the consummation of the Merger, or (B) impose any limitations
on the ability of Parent effectively to control, directly or indirectly through
its subsidiaries, in any material respect the business and operations of the
Company, and (iv) the Purchaser shall have accepted for payment and paid for
Shares tendered pursuant to the Offer; provided that this condition shall be
deemed waived by the Purchaser and Parent if the failure to accept for payment
and purchase Shares pursuant to the Offer is for any reason other than the
failure to satisfy the conditions to the Offer set forth in the Merger
Agreement.
CONDITIONS TO THE OBLIGATIONS OF PARENT AND PURCHASER. The Merger Agreement
provides that the obligations of Parent and Purchaser to consummate the Merger
are subject to the satisfaction of a number of further conditions, including but
not limited to, (i) the accuracy of representations and warranties of the
Company as of the times, and subject to the qualifications, specified in the
Merger Agreement, (ii) the performance by the Company of its agreements and
covenants contained in the Merger Agreement unless any failures to so perform
would not, in the aggregate, have a material adverse effect on the financial
condition, business, operations or results of operations of the Company and its
subsidiaries taken as a whole and will not prevent the consummation of the
transactions contemplated by the Merger Agreement (collectively, a "Material
Adverse Effect") and (iii) all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and other
third parties as are necessary in accordance with the transactions contemplated
by the Merger Agreement shall have been obtained and be in full force and
effect, except such licenses, permits, consents, approvals, authorizations,
qualifications and orders, the failure to deliver which would not have a
Material Adverse Effect with respect to the Company.
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The Merger Agreement provides
that the obligations of the Company to effect the Merger are subject to the
satisfaction of the following further conditions: (i) the accuracy of
representations and warranties of Parent and Purchaser as of the times, and
subject to the qualifications, specified in the Merger Agreement, and (ii) the
performance by Parent and Purchaser of their agreements and covenants contained
in the Merger Agreement.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of the parties thereto including, but
not limited to, representations by the Company as to corporate organization and
qualification, subsidiaries, capitalization, authority to enter into the Merger
Agreement, filings with the Commission and other governmental authorities, the
absence of certain changes or events, intellectual property, material contracts,
compliance with law, environmental matters, employee benefit matters, the
opinion of the Company's financial advisor, labor relations, the Company's
rights agreement, the application of Delaware law, tax returns, audits, brokers
and litigation.
EXPENSES. The Merger Agreement provides that, if (i) Purchaser terminates
the Merger Agreement because, prior to the consummation of the Offer, (A) the
Board of Directors of the Company withdraws, modifies or changes in a manner
adverse to Purchaser, its approval or recommendation of the Offer, the Merger
Agreement or Merger or presents to the stockholders of the Company a Competing
Transaction or resolves to do so or (B) the Company deliberately fails to
perform in any material respect any of its material obligations under the Merger
Agreement; (ii) the Company terminates the Merger Agreement because, prior to
the consummation of the Offer, (A) the Board of Directors of the Company
withdraws, modifies or changes in a manner adverse to Purchaser its approval or
recommendation of the Offer, the Merger Agreement or the Merger or (B) the Board
of Directors recommends a Superior Proposal or resolves to do so; (iii)
Purchaser terminates the Offer because the Minimum Condition is not satisfied
and
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at or prior to such time the Company has received one or more proposals for a
Competing Transaction which at the time of such occurrence has not been
absolutely and unconditionally withdrawn or abandoned and within six months
after the date of termination of the Merger Agreement a Competing Transaction is
entered into by the Company, and within twelve months of such termination a
Competing Transaction is consummated, then promptly after such termination (or,
with respect to item (iii), upon the consummation of such Competing Transaction)
by Parent or the Company, the Company shall pay to Purchaser or its designee an
amount equal to $9,000,000 (the "Break-up Fee") and shall reimburse Purchaser or
its designee for all of its out-of-pocket costs and expenses up to an amount
equal to $1,500,000.
The Merger Agreement further provides that if the Company terminates the
Merger Agreement because Purchaser shall have failed to commence this Offer
within five business days of the day on which Purchaser's intention to make this
Offer is announced or, prior to the purchase of any Shares pursuant to the
Offer, Purchaser deliberately fails to perform in any material respect any of
its obligations under the Merger Agreement, Purchaser shall pay to the Company
$4,500,000.
Except as set forth in the preceding two paragraphs, all expenses incurred
in connection with the Merger Agreement and the transactions contemplated by the
Merger Agreement will be paid by the party incurring such expenses, whether or
not the Offer or the Merger is consummated.
TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be terminated
at any time prior to the Effective Time, whether prior to or after approval by
the stockholders of the Company, as follows:
(i) by mutual written consent duly authorized by the Boards of Directors
of each of Parent and the Company;
(ii) by Purchaser if, due to an occurrence which would result in the
failure to satisfy the Minimum Condition or any of the other conditions set
forth below, Purchaser shall have (A) failed to commence the Offer within
five business days after the day on which Purchaser's intention to make the
Offer is announced or (B) terminated the Offer after compliance with the
terms of the Merger Agreement without any purchase of Shares thereunder;
(iii) by Purchaser, if the Effective Time shall not have occurred on or
before October 31, 1999, unless prior thereto Parent, Purchaser and their
affiliates have acquired beneficial ownership of at least a majority of the
then outstanding Shares;
(iv) by Purchaser, if prior to the consummation of the Offer, the
Company deliberately fails to perform in any material respects any of its
material obligations under the Merger Agreement;
(v) by Purchaser, if prior to the consummation of the Offer, the Board
(A) withdraws, modifies or changes, in a manner adverse to Parent or
Purchaser, its approval or recommendation of the Offer, the Merger Agreement
or the Merger, (B) presents to the stockholders of the Company any Competing
Transaction or (C) resolves to do any of the foregoing;
(vi) by the Company, if Purchaser shall have failed to commence the
Offer within five business days after the day on which Purchaser's intention
to make the Offer is announced;
(vii) by the Company, if the Offer is terminated in accordance with its
terms without the purchase of any Shares thereunder;
(viii) by the Company, if the Offer has not been consummated within the
time period set forth in the Merger Agreement;
(ix) by the Company, if prior to the purchase of any Shares by Purchaser
pursuant to the Offer, Purchaser deliberately fails to perform in any
material respect any of its obligations under the Merger Agreement; and
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(x) by the Company, if prior to the purchase of any Shares by Purchaser
pursuant to the Offer, the Board of Directors of the Company (A) withdraws,
modifies or changes in a manner adverse to Purchaser its approval or
recommendation of the Offer, the Merger Agreement or the Merger or (B)
recommends to the stockholders of the Company any Superior Proposal, which
is then pending, or resolves to do so; provided that any termination of the
Merger Agreement by the Company pursuant to this provision shall not be
effective until the close of business on the second full business day after
notice of such termination has been given to Purchaser.
CONDITIONS TO THE OFFER
The Merger Agreement provides that, notwithstanding any other provision of
the Offer, Parent or Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the Commission, including
Rule 14e-1(c) under the Exchange Act (relating to Purchaser's obligation to pay
for or return tendered Shares promptly after expiration or termination of the
Offer), to pay for any Shares tendered, and may postpone the acceptance for
payment or, subject to the restriction referred to above, payment for any Shares
tendered, and may amend or terminate the Offer (whether or not any Shares have
theretofore been purchased or paid for), if: (i) the Minimum Condition shall not
have been satisfied prior to the expiration of the Offer; (ii) all material
regulatory and related approvals have not been obtained or made on terms
reasonably satisfactory to Purchaser; (iii) any applicable waiting periods under
the HSR Act shall not have expired or been terminated prior to the expiration of
the Offer; or (iv) at any time on or after the date of the Merger Agreement and
before acceptance for payment of, or payment for, such Shares any of the
following events shall occur:
(A) any governmental entity or federal, state or foreign court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, injunction
or other order which is in effect (or pending) and which (1) restricts,
prevents or prohibits the making or consummation of the Offer, the Merger or
any transaction contemplated by the Merger Agreement, (2) prohibits or
limits materially the ownership or operation by the Company, Parent or any
of their subsidiaries of all or any material portion of the business or
assets of the Company and its subsidiaries taken as a whole, or compels the
Company, Parent, or any of their subsidiaries to dispose of or hold separate
all or any material portion of the business or assets of the Company and its
subsidiaries taken as a whole, (3) imposes limitations on the ability of
Parent, Purchaser or any other subsidiary of Parent to exercise effectively
full rights of ownership of any Shares, including, without limitation, the
right to vote any Shares acquired by Purchaser pursuant to the Offer or
otherwise on all matters properly presented to the Company's stockholders,
including, without limitation, the approval and adoption of the Merger
Agreement and the transactions contemplated thereby, or (4) requires
divestitures by Parent, Purchaser or any other affiliate of Parent of any
Shares; provided that Parent shall have used all commercially reasonable
efforts to cause any such decree, judgment, injunction or other order to be
vacated or lifted;
(B) the representations and warranties of the Company contained in the
Merger Agreement (without giving effect to any materiality or similar
qualifications contained therein) shall not be true and correct as of the
date of consummation of the Offer as though made on and as of such date
except (1) for changes specifically permitted by the Merger Agreement, (2)
that those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date, (3) in any
case where such failure to be true and correct would not, in the aggregate,
have a Material Adverse Effect, and (4) notwithstanding anything in the
Merger Agreement to the contrary, in the event that any of the
representations and warranties of the Company with respect to any of its
subsidiaries are determined to be inaccurate, and all such inaccuracies
capable of measurement in dollar amounts, in the aggregate, exceed
$3,000,000, then only the amounts in excess of $3,000,000 will be taken into
account in determining whether such inaccuracies, taken together with all
other breaches of representations and warranties generally, result in a
Material Adverse Effect;
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(C) the Company shall not have performed or complied with any of its
obligations, covenants and agreements under the Merger Agreement to be
performed or complied with by it unless all such failures together in their
entirety would not have a Material Adverse Effect;
(D) the Merger Agreement shall have been terminated in accordance with
its terms;
(E) prior to the purchase of Shares pursuant to the Offer, the Company
shall have received any other offer for the purchase of Shares, the purchase
of substantially all of the Company's assets, the merger of the Company or
any other transaction which would require the withdrawal or material
modification of the Offer, the Merger Agreement or the Merger and the Board
shall have withdrawn or materially modified or changed (including by
amendment of the Schedule 14D-9) in a manner adverse to Purchaser its
recommendation of the Offer, the Merger Agreement or the Merger;
(F) (1) any person or group shall have entered into a definitive
agreement or agreement in principle with the Company with respect to a
merger, consolidation, sale of a material portion of the assets of the
Company, or other business combination with the Company; or (2) (A) the
Board of Directors of the Company or any committee thereof shall have
withdrawn, modified or changed in a manner adverse to Parent or Purchaser
its approval or recommendation of the Offer, the Merger Agreement or Merger
or approved or recommended any Competing Transaction, or (B) the Board of
Directors of the Company or any committee thereof shall have resolved to do
any of the foregoing;
(G) there shall have occurred any change, condition event or development
that has a Material Adverse Effect (excluding any change, condition, event
or development arising out of or attributable to general economic
conditions);
(H) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock
Exchange, the NASDAQ\NMS or the London Stock Exchange for a period in excess
of 24 hours (excluding any coordinated trading halt triggered solely as a
result of a specified decrease in a market index and suspensions or
limitations resulting solely from physical damage or interference with such
exchange or association not related to market conditions), (ii) a
declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States or the United Kingdom or (iii) any material
limitation (whether or not mandatory) by any government or governmental
authority of the United States or the United Kingdom on the extension of
credit by banks or other lending institutions; or
(I) the Selling Stockholders shall have failed to comply in any material
respect with their obligations pursuant to the Option Agreement;
which, in the reasonable judgment of Purchaser in any such case, and regardless
of the circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payments.
OPTION AND VOTING AGREEMENT
Parent and Verne B. Churchill, Lawrence W. Labash, Jeffery A. Oyster, Thomas
H. Payne, Sanford M. Schwartz, Ned L. Sherwood, Timothy J. Sullivan and MFI
Investors, L.P. have entered into the Option and Voting Agreement, dated April
29, 1999, pursuant to which, among other things, each such stockholder (the
"Selling Stockholders") has agreed (i) to vote the Shares and the Series B
Shares then owned by such Selling Stockholder for the Merger and in favor of the
approval and adoption of the transactions contemplated by the Merger Agreement
and against (A) any action or agreement that could reasonably be expected to
impede, interfere with or otherwise materially adversely affect the Merger or
inhibit the timely consummation of the Merger, (B) any action or agreement that
could reasonably be expected to result in a breach of any covenant,
representation or warranty or any other obligation of the Company under the
Merger Agreement, and (C) except for the Merger, against any merger,
consolidation, business combination, reorganization, recapitalization,
liquidation or sale or transfer of any material assets of the Company
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or its subsidiaries; (ii) to grant Parent an irrevocable proxy to vote such
Shares and (iii) not to tender any Shares then owned by such Selling Stockholder
into the Offer, without the consent of Parent.
Additionally, under the Option Agreement, (i) each Selling Stockholder has
granted to Parent, or its permitted assign, an irrevocable option to purchase
all Shares then owned by such Selling Stockholder at a price of $31.00 per Share
at any time on or prior to the expiration date of the Option Agreement if after
the date of the Option Agreement a proposal or an offer for a Competing
Transaction is made (which Shares, in the aggregate, represent 30.07% of the
Shares on a fully diluted basis, after giving effect to the exercise of vested
employee stock options); and (ii) Parent has agreed to purchase at a price of
$31.00 per Share all Shares held by each Selling Stockholder by 11:59 p.m. on
the first business day immediately following the consummation of the Offer. The
Option Agreement terminates upon the earliest to occur of (i) the closing of the
Merger, (ii) 11:59 p.m. on the first business day immediately following the
expiration or consummation of the Offer, (iii) in the event that the Merger
Agreement is terminated prior to any offer or proposal for a Competing
Transaction having been made, the termination date of the Merger Agreement, (iv)
the date specified in a written agreement executed by Parent and each of the
Selling Stockholders, and (v) November 2, 1999; provided that if Parent has
exercised the option on or before the date that the Option Agreement would
otherwise have terminated, the Option Agreement will terminate on the date of
the purchase by Parent of the Shares of the Selling Stockholders.
The foregoing is a summary of certain provisions of the Option Agreement, is
presented only as a summary and is qualified in its entirety by reference to the
Option Agreement, a copy of which has been filed as an exhibit to the Schedule
14D-1.
RIGHTS AGREEMENT
In connection with the Merger Agreement the Company has amended the Rights
Agreement so that (i) the execution and delivery of the Merger Agreement and the
Option Agreement, and the consummation of the transactions contemplated thereby,
including the Offer and the purchase of Shares pursuant thereto, will not result
in Parent, Purchaser or any of their affiliates becoming an Acquiring Person (as
defined in the Rights Agreement), or (ii) the occurrence of a Distribution Date
or a Shares Acquisition Date (each as defined in the Rights Agreement). Unless
and until the Distribution Date occurs, the Rights will be transferred with and
only with the Shares and, therefore, the surrender for transfer of any of the
certificates representing Shares, including upon acceptance for payment of such
Shares pursuant to the Offer, will also constitute the surrender for transfer of
the Rights associated with the Shares represented by such Share certificates.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors has unanimously approved the Merger Agreement and the
transactions contemplated thereby, and has determined that the Offer and the
Merger are fair to, and in the best interests of, the stockholders of the
Company. The Board of Directors recommends that the stockholders of the Company
accept the Offer and tender their Shares pursuant to the Offer.
(b) BACKGROUND; REASONS FOR THE RECOMMENDATION
Over the last several years, the Company has sought to develop the
capability and resources to expand its business activities throughout the world
in order to develop and enhance its ability to serve the international research
needs of its United States based clients. Prior to December 1998, the Company
and Company A had informal discussions from time to time regarding a possible
business combination between the parties. On December 11, 1998, Sanford M.
Schwartz, an Executive Vice President of the Company, met with Company A's
Chairman in New York for preliminary discussions regarding the possible
acquisition of the Company by Company A.
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On January 8, 1999, the Company engaged Schroder & Co. Inc. ("Schroders") to
assist it in reviewing its strategic alternatives, including entering into a
possible transaction with Company A. On January 12, 1999, Schroders met with
Company management and together identified a list of six companies that they
considered possible candidates for a strategic alliance or transaction based
upon apparent business synergies or previously expressed interest in acquiring
the Company. At this meeting, it was decided that Schroders would contact Parent
and three of the other possible candidates and that the Company would contact
the other two candidates directly. As a result of these contacts, Parent,
Company A and one other company expressed an interest in entering into
negotiations with the Company.
On January 25, 1999, Company A's Chairman called Sanford Schwartz to confirm
that the Company was still interested in pursuing a possible business
combination between the parties.
On February 22, 1999, Sanford Schwartz had preliminary discussions with
representatives of Company A regarding the integration of the domestic
operations of each company in connection with a possible business combination
between the Company and Company A.
On February 26, 1999, Company A, through its financial advisors, sent a
letter to Schroders with a preliminary non-binding indication of value with
respect to a possible acquisition of all of the Company's outstanding capital
stock at a price of $28.50 per share in cash. The letter indicated that the
proposed transaction would be subject to, among other things, (i) confirmatory
due diligence, (ii) the execution of a mutually satisfactory merger agreement,
(iii) the execution by the Company's major stockholder and management of
irrevocable undertakings to accept Company A's offer, (iv) approval by Company
A's directors and shareholders, (v) Company A's obtaining financing for the
proposed transaction, and (vi) the execution of employment agreements with key
Company employees satisfactory to both parties.
On March 1, 1999, the Company held a special meeting of its Board of
Directors to review its strategic alternatives. At this meeting, Schroders
reported on its activities since its engagement and reviewed with the Board in
detail the terms of the letter received from Company A on February 26, 1999.
Schroders also reported that Parent had expressed an interest in meeting with
Company management, but would not be able to meet with Company representatives
until March 15, and that Company B had expressed an interest in a transaction at
a price range of $25.00 to $28.00 per share, payable in Company B's equity
securities. Thomas H. Payne, the Company's Chief Executive Officer, reviewed the
Company's other strategic alternatives, which included remaining independent and
continuing on its own to pursue the Company's long-term strategy of developing
its international presence and enhancing its Internet capabilities or entering
into a strategic relationship with another company that already possessed
international custom research capabilities. The Board instructed Schroders to
continue discussions with Company A and the other interested parties.
On March 11, 1999, Company A and the Company executed a
confidentiality/standstill agreement. On March 16 and 17, and again on March 22,
Company A and its financial and legal advisors conducted due diligence meetings
with Company representatives in Arlington Heights, Illinois. At the same time,
Company A's accountants began their financial due diligence investigation of the
Company. On March 17, 1999, the Company's legal advisors sent a proposed form of
merger agreement to Company A's financial advisor and legal counsel and comments
thereon were received from Company A's legal counsel on March 24, 1999.
On March 15, 1999, Crispin Davis, Parent's Chief Executive Officer, and Pat
Doble, Parent's Group Marketing Director, met with Verne Churchill, Thomas
Payne, Lawrence Labash and Timothy Sullivan of the Company in Arlington Heights,
Illinois, at which meeting each company gave a presentation to the other
regarding its business, and the parties discussed potential business
opportunities.
On March 17, 1999, a director of Company A met with Sanford Schwartz to
promote Company A. On March 18, 1999, Thomas Payne and Sanford Schwartz met with
Company A's Chairman in Arlington Heights, Illinois to discuss a possible
transaction.
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On March 23, 1999, Parent and the Company executed a
confidentiality/standstill agreement. A proposed form of merger agreement was
sent to Parent's legal counsel on March 25, 1999.
On or about March 25, 1999, Schroders orally advised Company A, Company B
and Parent that final proposals were due by April 9, 1999.
On March 26, 1999, a second meeting was held between Crispin Davis of Parent
and Thomas Payne, Sanford Schwartz, Lawrence Labash and Timothy Sullivan of the
Company in Arlington Heights, Illinois, at which meeting Parent discussed its
business and the parties further discussed potential business opportunities,
including a possible transaction.
On March 30 and 31, 1999, Pat Doble and Sunil Garga of Parent met with
Michael Freehill, Stephen Weber and Peter LaSalle of the Company primarily to
discuss the types of products and services offered by the Company. On March 30
and 31, Parent's financial staff and legal counsel also conducted due diligence
meetings with Company representatives in Arlington Heights, Illinois.
On March 30, 1999, Company B and the Company executed a
confidentiality/standstill agreement, and a proposed form of merger agreement
was sent to Company B's legal counsel on that date. From March 31 to April 2,
Company B's financial advisors conducted due diligence meetings with Company
representatives in Arlington Heights, Illinois. Meetings between Company B's
representatives and the Company's management were held on April 7 and 8 in New
York.
On April 6, 1999, Company A sent a letter to Schroders indicating that until
such time as the Company was willing to proceed on an exclusive basis with a
negotiated transaction on the terms set forth in Company A's letter dated
February 26, 1999, Company A was withdrawing its proposal and was not interested
in becoming involved in an auction process.
On April 7, 1999, at a special meeting of the Company's Board of Directors,
Thomas Payne reviewed the status of Schroders' engagement to assist the Company
in understanding its strategic alternatives. Mr. Payne stated that contacts had
been limited to six potential interested parties and that it would not serve the
best interests of the Company's stockholders to have public inquiries made to
all potential buyers because of the destabilizing effect such inquiries could
have on the Company's business which, as a service business, is dependent upon
the stability of its client base and workforce. Mr. Payne advised the Board that
Company A had informed Schroders that it was not interested in participating in
an auction process for the Company and had withdrawn its indication of interest
at $28.50 per share, but that management believed that Company A was still
interested in pursuing a possible transaction. Mr. Payne also reported that
Parent and Company B had executed confidentiality agreements and that all
parties had been asked to submit their final proposals by April 9. Mr. Payne
concluded by informing the Board that a board meeting was tentatively scheduled
for April 13 to review the final proposals received from interested bidders and
to determine whether there was sufficient interest to pursue one or more of the
proposals.
By letter dated April 8, 1999, Parent submitted a non-binding offer to
acquire 100% of the Company's capital stock for $31.00 per share in cash. The
offer was conditioned upon Parent receiving an irrevocable "lock-up" agreement
from the Company's major stockholder and the Company's five management directors
and completion of its due diligence investigation, and was not subject to
financing. The offer also sought a two-week exclusivity period to negotiate and
sign a definitive merger agreement.
On April 9, 1999, Schroders received a letter from Company B indicating that
it would be prepared to move forward with negotiations on the basis of a
valuation in the range of $28.50 to $30.50 per share through the exchange of
Company stock for equity securities of Company B.
On April 12, 1999, Schroders received a letter from Company A stating that
it had reconsidered its position with respect to a potential business
combination with the Company and gave a revised indication of value of $30.00
per share in cash, subject to the conditions set forth in its February 26, 1999
letter and an agreement that the Company enter into exclusive negotiations with
it.
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On April 12, 1999, Schroders advised Company B that its bid was not the
highest offer in terms of economic value, and asked whether it desired to amend
its proposal before the Company's board meeting on April 13, 1999. Company B
declined to raise its last offer. A similar call was made by Schroders to
Company A's financial advisors on the morning of April 13, 1999 prior to the
Board meeting. Company A's financial advisors informed Schroders that Company A
declined to raise its offer.
On April 13, 1999, a special meeting of the Board was held to discuss the
Company's strategic alternatives, and to review the final proposals from
prospective bidders for the acquisition of the Company. Schroders advised the
Board that three interested parties had submitted proposals regarding a possible
acquisition of the Company. After a brief review of the discussions with each of
the interested parties to date, Schroders reviewed the terms of each party's
proposal:
- Parent submitted a non-binding offer to acquire 100% of the Company's
capital stock (including unexercised employee stock options) for $31.00
per share in cash. The offer did not contain a financing contingency or
require approval from Parent's stockholders. The offer requested
irrevocable "lock-up" agreements from the Company's major stockholder and
five management directors. The offer also sought a two week exclusivity
period to finalize due diligence and negotiate and sign a definitive
merger agreement and a $9 million termination fee in the event of the
Company's receipt of a competing offer during the exclusivity period.
- Company A submitted a non-binding indication of interest at $28.50 per
share in cash, which was subsequently withdrawn. Company A then
resubmitted its offer at $30.00 per share in cash. Company A's offer
contained significant financing contingencies, required approval from
Company A's shareholders and directors, required irrevocable lock-up
agreements from the Company's major stockholder and management, and
contained aggregate termination fees of $11.2 million, including a $6.5
million expense reimbursement. Company A's proposal also required the
Company to issue to Company A a stock option for a number of shares equal
to 19.9% of the Company's outstanding shares.
- Company B's letter indicated interest in a transaction in the range of
$28.50 to $30.50 per share payable in Company B equity securities.
Schroders also reported that both Company A and Company B were advised prior to
the Board meeting that their offer was not the highest offer received in terms
of economic value and that each declined to increase their offer. The Company's
legal counsel reviewed the Board's fiduciary duties to its stockholders. After
discussion, the Board concluded that it was advisable to negotiate and enter
into an exclusivity agreement with Parent.
On April 14, 1999, the Company and Parent entered into an exclusivity
agreement (the "Exclusivity Letter") pursuant to which the parties agreed to
commence negotiation of a definitive merger agreement for Parent's proposed
acquisition of the Company on the terms set forth in Parent's preliminary
proposal dated April 8, 1999, and thereafter the parties and their legal counsel
negotiated the Merger Agreement and related documents. Under the terms of the
Exclusivity Letter, the Company agreed until 12:00 midnight on April 27, 1999 to
negotiate exclusively with Parent and to not solicit any offer or engage in any
negotiations other than with Parent for the merger or sale of the business or
assets of the Company or any material part thereof or for any tender or exchange
offer for the Company's capital stock. Subject to certain conditions, the
Exclusivity Letter provided that the Company had the right to terminate
negotiations with Parent in the event that the Company received an unsolicited
proposal for the acquisition of the Company from another party which in the
opinion of the Company's financial advisor was, or was reasonably likely to lead
to, a proposal that was more favorable to the Company's stockholders than
Parent's proposal (a "Superior Bid"). The Exclusivity Letter required the
Company to promptly notify Parent of its receipt of any Superior Bid, and the
terms thereof, and Parent thereafter had two business days within which to amend
its proposal to cause such third party proposal to no longer be a Superior Bid
or the exclusivity provisions of the Exclusivity Letter would cease to apply. In
the event the Company
17
<PAGE>
terminated or abandoned negotiations with Parent due to its receipt of a
Superior Bid prior to the end of the exclusivity period, the Company agreed to
reimburse Parent within five days of termination an amount up to $150,000 for
its reasonable out-of-pocket expenses and fees. In addition, if the Company
became obligated to make the $150,000 reimbursement and entered into a
definitive agreement with the party submitting such Superior Bid within six (6)
months and consummated such transaction within twelve (12) months of the
termination of the Exclusivity Letter, the Company would be required to pay
Parent a $9 million termination fee and to reimburse it for up to $750,000 of
its expenses and fees.
Commencing shortly after the Exclusivity Letter was executed and continuing
to the date of the execution of the Merger Agreement, Parent and Purchaser
conducted additional due diligence reviews of the Company, both financial and
legal.
On April 15, 1999, Parent's legal counsel submitted comments on the
Company's proposed form of merger agreement to the Company's legal counsel. On
April 16, 1999, Crispin Davis and Frank Law, the Chief Executive Officer and
Non-Executive Chairman of Parent, respectively, met with Verne Churchill, Thomas
Payne, Sanford Schwartz, Lawrence Labash and Timothy Sullivan of the Company in
Arlington Heights, Illinois to discuss the Company's business and its business
plans and strategies.
On April 16, 1999, Schroders received a letter from Company B indicating
that it was prepared to offer $32.00 per share for the Company's common stock,
payable in Company B's equity securities.
On April 19, 1999, the Board met to discuss the April 16 letter received
from Company B and the appointment of a committee to negotiate a definitive
merger agreement with Parent. Schroders reviewed the terms of the April 16
letter with the Board, noting in particular that: (i) Company B's proposal
involved the receipt of Company B equity securities by the Company's
stockholders and did not specify the method for calculating the exchange rate
for Company B's shares and the Company's stock and whether it would fluctuate
with the market price of its shares or provide protection against market risk,
(ii) it was uncertain whether Company B's offer would be discounted by the
amount of the termination fee payable to Parent, (iii) the trading market in the
United States for Company B's stock is relatively illiquid, (iv) Company B's
letter did not contain any terms other than price and Company B did not submit
comments to the Company's form of merger agreement along with its proposal which
would have provided the Company with more detail as to the terms of Company B's
proposal, and therefore it was unknown what other conditions would be attached
to Company B's offer, and (v) because Company B had not submitted comments to
the Company's form of merger agreement and had conducted only a minimal due
diligence review of the Company and would be required to file a registration
statement in the United States before it could offer its shares to the Company's
stockholders, it was not known how much time would be required to consummate a
transaction with Company B, or in fact, whether a transaction could be
consummated. Based on these factors, Schroders was unable to conclude that
Company B's offer constituted, or was reasonably likely to lead to, a more
favorable offer under the terms of the Exclusivity Letter with Parent. The Board
also noted the fact that the share price of Company B's equity securities had
significantly increased since the beginning of 1999, a factor that, along with
the relative lack of liquidity of Company B's shares in the United States,
indicated an investment risk with respect to Company B's equity securities. The
Company's legal counsel then advised the Board that it would be precluded from
negotiating with Company B under the terms of the Exclusivity Letter with Parent
if it concluded that Company B's offer was not reasonably likely to lead to a
more favorable offer. After further discussion, the Board determined that it
would not respond to Company B's offer. The Board also formed and authorized a
committee consisting of Jeffery Oyster, an outside director, and Timothy
Sullivan, the Company's Chief Financial Officer, to negotiate the terms of the
definitive merger agreement with Parent.
On April 20, 1999, Thomas Payne, Sanford Schwartz and Lawrence Labash of the
Company met with Crispin Davis at Parent's offices in London, England to discuss
Parent's business and the operation of its subsidiaries.
18
<PAGE>
On April 22, 1999, Schroders received a letter from Company B confirming
that it was prepared to amend the consideration payable in its offer of $32.00
per share for the Company's common stock to include a cash payment for
approximately 20% to 33 1/3% of the total value of the consideration to be paid,
with the balance payable in Company B's equity securities.
On April 23, 1999, the Board met to review and discuss the status of
Parent's proposed acquisition of the Company. At the meeting, Schroders advised
the Board of the April 22 letter received from Company B, which modified the
consideration payable in its April 16 letter to include a cash component.
Schroders noted that despite the inclusion of a partial cash payment, this did
not mitigate the uncertainties and issues raised at the April 19 Board meeting,
and advised the Board that it was unable to conclude that Company B's modified
proposal was reasonably likely to lead to a proposal that was more favorable to
the Company's stockholders than Parent's proposal. The Company's legal counsel
reviewed the status of the negotiations between the Company and Parent and
Parent's due diligence investigation and advised the Board of a request by
Parent to extend the exclusivity period under the Exclusivity Letter until April
30, 1999. After discussion, the Board approved the extension. On April 27, 1999,
the Company and Parent formally extended the exclusivity period under the
Exclusivity Letter until April 30, 1999.
On April 28, 1999, the Board met to review and discuss Parent's proposed
acquisition of the Company. At the meeting, Schroders delivered a presentation
to the Board and its written opinion that, as of such date and based upon and
subject to certain matters stated therein, the consideration to be received by
the holders of the Shares pursuant to the Merger Agreement with Parent was fair,
from a financial point of view, to such holders. The Company's legal counsel
gave a presentation to the Board on the terms of the Merger Agreement and
related documents, the structure of the Offer and the Merger and the Board's
fiduciary duties to its stockholders. The Board discussed the terms of the
proposed acquisition and asked questions of Schroders and the Company's legal
counsel. Following this discussion, the Board (i) determined that each of the
Merger Agreement, the Offer and the Merger are fair to and in the best interests
of the Company's stockholders, (ii) approved the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger, and (iii)
recommended acceptance of the Offer, approval and adoption of the Merger
Agreement and approval of the Merger by the Company's stockholders. The Board
also approved the Option Agreement for purposes of Section 203 of the DGCL.
On April 28, 1999, Schroders received another letter from Company B
indicating that it would use the closing share price of Company B's equity
securities on the date of its previous letter for purposes of calculating the
amount of Company B's equity securities to be received by the Company's
stockholders under its proposal, which would have the effect of raising Company
B's offer due to the increase, by approximately 5%, of the price of Company B's
equity securities since that date.
On April 29, 1999, a special meeting of the Board of Directors was held to
review the amended proposal received by Schroders from Company B the previous
day. Schroders reviewed the terms of the amended proposal with the Board and
reported that Parent had been contacted regarding the existence of the proposal
and had advised Schroders that it was not willing to raise its offer to a price
higher than $31.00 per Share or delay the execution of the Merger Agreement,
which was scheduled for later that day, and indicated that if the Merger
Agreement was not executed as scheduled that it would withdraw its offer.
Schroders again reviewed the uncertainties regarding Company B's offer which
were discussed at the Board's April 19 meeting, and the Board noted that the
April 28 letter from Company B did not include any price protections for the
Company's stockholders in the event that the price of Company B's equity
securities should decrease from the price of such securities on the date of its
previous letter. Based on these factors, Schroders advised the Board that it was
unable to conclude that Company B's amended proposal was reasonably likely to
lead to a proposal that was more favorable to the Company's stockholders than
Parent's proposal. After discussion and the receipt of advice of its financial
and legal advisors, the Board of Directors determined that Company B's amended
proposal did not constitute a Superior Proposal and reaffirmed its approval of
the Merger Agreement with Parent and Purchaser. Thereafter, Schroders delivered
a letter dated April 29, 1999 to the Company reaffirming its opinion as to the
fairness of the consideration to be received by the stockholders pursuant to the
Merger Agreement.
19
<PAGE>
On April 29, 1999, the Company, Parent and Purchaser executed the Merger
Agreement, and, simultaneously therewith, Parent and certain of the Company's
stockholders executed the Option Agreement. Following the execution of the
Merger Agreement, in accordance with the terms of the confidentiality/standstill
agreement with Company B and the terms of the Merger Agreement, the Company
advised Company B that it did not wish to proceed with a transaction with
Company B. The transaction with Parent was publicly announced prior to the
opening of the Nasdaq National Market on April 30, 1999.
On April 30, 1999, Thomas Payne and Sanford Schwartz called Company A's
Chairman to advise him that the Company had entered into a definitive merger
agreement with Parent.
OPINION OF SCHRODERS
On April 28, 1999, Schroders rendered its opinion to the Board of Directors
of the Company to the effect that, as of the date of such opinion, the $31.00
per Share cash consideration (the "Per Share Amount") to be received by the
holders of the Shares pursuant to the Merger Agreement was fair, from a
financial point of view, to such holders.
A copy of the Schroders opinion, dated April 28, 1999 and affirmed April 29,
1999, which sets forth the assumptions made, matters considered and limitations
on the scope of review undertaken by Schroders, is attached as Exhibit 99 (a)(6)
to this Schedule 14D-9. The Schroders opinion is directed only to the fairness,
from a financial point of view, of the Per Share Amount. The Schroders opinion
was provided at the request and for the information of the Board of Directors of
the Company in evaluating the Per Share Amount and does not constitute a
recommendation to any stockholder as to whether to tender such stockholder's
Shares or vote in favor of the transactions contemplated by the Merger
Agreement. The summary of the Schroders opinion set forth in this Schedule 14D-9
does not purport to be complete and is qualified in its entirety by reference to
the full text of the Schroders opinion attached as Exhibit 99 (a)(6) hereto and
incorporated herein by reference. Stockholders of the Company should read the
Schroders opinion carefully and in its entirety for information with respect to
the procedures followed, assumptions made, matters considered and limitations on
the review undertaken by Schroders in rendering the Schroders opinion. Schroders
has consented to the references to Schroders and the Schroders opinion in this
Schedule 14D-9, and to the attachment of the Schroders opinion to this Schedule
14D-9 as an exhibit hereto.
In arriving at the Schroders opinion, Schroders: (i) reviewed a draft of the
Merger Agreement dated April 25, 1999; (ii) reviewed the Company's Annual
Reports on Form 10-K filed with the Commission for the years ended December 31,
1996, 1997 and 1998; reviewed the Company's draft balance sheet as of March 31,
1999 and draft income statement for the three months ended March 31, 1999; and
reviewed the Company's Proxy Statement dated March 25, 1999; (iii) reviewed the
Company's projected financial results for the years ending December 31, 1999,
2000 and 2001 as provided by management on March 30, 1999 (projections for any
subsequent period were not made available to Schroders); (iv) visited the
principal office of the Company and conducted discussions with senior management
of the Company concerning its historical and projected financial results as
described above; (v) performed various financial analyses, as Schroders deemed
appropriate, using generally accepted analytical methodologies, including: (a)
the application to the historical and projected financial results of the Company
of the public trading multiples of companies which Schroders deemed reasonably
comparable to the Company; and (b) the application to the historical financial
results of the Company of the multiples reflected in recently reported public
mergers and acquisitions for businesses which Schroders deemed reasonably
comparable to the Company; (vi) reviewed the historical trading prices and
volumes of the Company's Shares on the Nasdaq National Market from January 1,
1994 to April 27, 1999; (vii) discussed the transaction with Parent's senior
management; (viii) reviewed Parent's Report and Accounts for the years ended
December 31, 1997 and December 31, 1998; Interim Statement for the six months
ended June 1998; and research reports on Parent by HSBC Securities, dated
January 5, 1999, by Merrill Lynch & Co., dated March 2, 1999 and April 15, 1999,
and by Credit Suisse First Boston (Europe) Limited, dated March 3, 1999; (ix)
performed such other
20
<PAGE>
analyses, studies, inquiries and investigations as Schroders deemed appropriate;
and (x) did not perform a discounted cash flow analysis because it was not
provided projections for any period subsequent to December 31, 2001.
In its review and analysis and in formulating the Schroders opinion,
Schroders: (i) assumed and relied upon the accuracy and completeness of all
information supplied or otherwise made available to it by the Company or
obtained by Schroders from other sources, and upon the assurance of the
Company's management that it was not aware of any information or facts that
would make the information provided to Schroders incomplete or misleading; (ii)
did not attempt to independently verify any of such information; (iii) did not
undertake an independent appraisal of the assets or liabilities (contingent or
otherwise) of the Company, nor was Schroders furnished with any such appraisals;
and (iv) did not review any information with respect to Parent other than that
referred to in the preceding paragraph.
The Schroders opinion was necessarily based upon financial, economic, market
and other conditions as they existed and could be evaluated by Schroders on the
date thereof. Schroders disclaimed any undertaking or obligation to advise any
person of any change in any fact or matter affecting the Schroders opinion which
may come or be brought to its attention after the date of the Schroders opinion
unless specifically requested by the Company to do so.
The Schroders opinion does not constitute a recommendation as to any action
the Board of Directors of the Company or any stockholder of the Company should
take in connection with the Merger Agreement, the Offer, the Merger or any
aspect thereof or alternatives thereto. Without limiting any of the foregoing,
the Schroders opinion does not constitute a recommendation to any stockholder
with respect to whether to tender their Shares in the Offer or to vote in favor
of the Merger, and should not be relied upon by any stockholder as such.
In rendering the Schroders opinion, Schroders was not engaged as an agent or
fiduciary of the Company's stockholders or of any other third party. The
Schroders opinion related solely to the fairness, from a financial point of
view, to the holders of the Shares of the Per Share Amount to be received by
such holders in the Offer and the Merger. Schroders expressed no opinion therein
as to the structure, terms or effects of any other aspect of the Offer, the
Merger, or the Merger Agreement.
The following is a summary of the material financial analyses performed by
Schroders in arriving at the Schroders opinion and was provided by Schroders for
inclusion herein.
SELECTED COMPARABLE PUBLIC CUSTOM AND SYNDICATED MARKET RESEARCH COMPANIES
ANALYSIS. Schroders compared selected historical and projected financial data
of the Company to the corresponding data of a group of selected publicly traded
custom and syndicated market research companies that Schroders deemed to be
reasonably comparable to the Company. In determining the appropriate comparable
companies, Schroders considered a variety of factors, including business focus,
revenues and cash flow. These companies included: ACNielsen Corporation,
Intelliquest Information Group, Inc., M/A/R/C Inc., NFO Worldwide, Inc., Opinion
Research Corporation, and Total Research Corporation (the "Comparable Market
Research Companies").
Schroders calculated multiples of enterprise value to the latest twelve
months ("LTM") revenues, earnings before interest, taxes, depreciation and
amortization ("EBITDA") and earnings before interest and taxes ("EBIT") for the
Comparable Market Research Companies. Additionally, Schroders calculated
multiples of market value of equity to LTM earnings per share ("EPS") and
projected calendar year 1999 and 2000 EPS for the Comparable Market Research
Companies. 1999 and 2000 EPS were derived from information published by Zack's
Investment Research, Inc. (an on-line data service which compiles estimates
developed by research analysts). In addition, Schroders calculated multiples of
market value of equity to latest available book value of the Comparable Market
Research Companies. It was noted that this analysis did not reflect a control
premium for these companies.
21
<PAGE>
The following table sets forth the low, high and median implied equity
values per share of the Company's Common Stock based upon the foregoing
analysis:
COMPARABLE MARKET RESEARCH COMPANIES
<TABLE>
<CAPTION>
IMPLIED EQUITY VALUE PER SHARE
ENTERPRISE VALUE -------------------------------
AS A MULTIPLE OF LOW HIGH MEDIAN
- -------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
LTM Revenue................................................... $ 8.26 $ 17.24 $ 14.25
LTM EBITDA.................................................... $ 8.57 $ 25.64 $ 18.27
LTM EBIT...................................................... $ 11.84 $ 23.72 $ 18.51
<CAPTION>
MARKET VALUE OF EQUITY
AS A MULTIPLE OF
- --------------------------------------------------------------
<S> <C> <C> <C>
LTM EPS....................................................... $ 10.14 $ 23.60 $ 20.99
1999 EPS...................................................... $ 16.47 $ 38.19 $ 29.48
2000 EPS...................................................... $ 18.32 $ 29.94 $ 28.47
Book Value.................................................... $ 6.93 $ 31.89 $ 11.78
</TABLE>
SELECTED COMPARABLE CUSTOM MARKET RESEARCH COMPANIES. Schroders compared
selected historical and projected financial data of the Company to the
corresponding data of a subset of the Comparable Market Research Companies that
operate in the custom market research segment (the "Comparable Custom Market
Research Companies"). These companies included: M/A/R/C Inc., NFO Worldwide,
Inc., Opinion Research Corporation, and Total Research Corporation.
Schroders calculated multiples of enterprise value to LTM revenues, LTM
EBITDA and LTM EBIT for the Comparable Market Research Companies. Schroders also
calculated multiples of market value of equity to LTM EPS, 1999 EPS, 2000 EPS
and latest available book value for the Comparable Custom Market Research
Companies. It was noted that this analysis did not reflect a control premium for
these companies.
The following table sets forth low, high and median implied equity values
per share of the Company's Common Stock based upon the foregoing analysis:
COMPARABLE CUSTOM MARKET RESEARCH COMPANIES
<TABLE>
<CAPTION>
IMPLIED EQUITY VALUE PER SHARE
ENTERPRISE VALUE -------------------------------
AS A MULTIPLE OF LOW HIGH MEDIAN
- -------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
LTM Revenue................................................... $ 8.26 $ 14.25 $ 14.25
LTM EBITDA.................................................... $ 8.57 $ 25.64 $ 18.90
LTM EBIT...................................................... $ 11.84 $ 18.51 $ 15.25
<CAPTION>
MARKET VALUE OF EQUITY
AS A MULTIPLE OF
- --------------------------------------------------------------
<S> <C> <C> <C>
LTM EPS....................................................... $ 10.14 $ 21.69 $ 20.39
1999 EPS...................................................... $ 16.47 $ 32.23 $ 24.35
2000 EPS...................................................... $ 18.32 $ 27.65 $ 22.90
Book Value.................................................... $ 6.93 $ 31.89 $ 11.78
</TABLE>
22
<PAGE>
COMPARABLE TRANSACTIONS ANALYSIS. Schroders considered the terms, to the
extent publicly available, of selected transactions reasonably comparable to the
transaction (the "Comparable Transactions") and sought to compare the Per Share
Amount with the consideration involved in such transactions. The Comparable
Transactions and their pertinent dates were as follows:
- United Information Group, Inc.'s acquisition of Audits & Surveys
Worldwide, Inc. (effective March 24, 1999)
- Quintiles Transnational Corporation's acquisition of Pharmaceutical
Marketing Services, Inc. (effective February 26, 1999)
- NFO Worldwide, Inc.'s acquisition of Infratest Burke Aktiengesellschaft
Holding, Inc. (effective February 20, 1998)
- Taylor Nelson AGB's acquisition of Sofres SA (effective December 12, 1997)
- NFO Worldwide, Inc.'s acquisition of MBL Group plc (effective July 11,
1997)
Schroders calculated multiples of the enterprise values of these
transactions to LTM revenue, LTM EBITDA and LTM EBIT. Schroders also calculated
multiples of the equity values of these transactions to LTM EPS and latest
available book value.
The following table sets forth the low, high and median implied equity
values per share of the Company's Common Stock upon the basis of the foregoing
analysis.
COMPARABLE TRANSACTIONS
<TABLE>
<CAPTION>
IMPLIED EQUITY VALUE PER SHARE
TRANSACTION ENTERPRISE VALUE -------------------------------
AS A MULTIPLE OF LOW HIGH MEDIAN
- -------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
LTM Revenue................................................... $ 11.25 $ 27.72 $ 14.25
LTM EBITDA.................................................... $ 22.27 $ 23.96 $ 23.11
LTM EBIT...................................................... $ 17.69 $ 27.78 $ 20.14
<CAPTION>
TRANSACTION EQUITY VALUES
AS A MULTIPLE OF
- --------------------------------------------------------------
<S> <C> <C> <C>
LTM EPS....................................................... $ 16.07 $ 35.75 $ 30.13
Book Value.................................................... $ 11.78 $ 30.50 $ 24.95
</TABLE>
PREMIUM ANALYSIS. Schroders reviewed the premia paid in all publicly
announced negotiated merger and acquisition transactions since January 1, 1998
in which all of the outstanding equity of the target company was acquired in the
transaction. Schroders also reviewed the premia paid in certain subsets of such
transactions: (i) transactions with an enterprise value between $200 million and
$400 million; (ii) transactions where the consideration paid was cash; and (iii)
transactions with an enterprise value between $200 million and $400 million
where the consideration paid was cash.
23
<PAGE>
The following tables set forth the implied price per share of the Company's
Common Stock on the basis of the foregoing analysis based on the average premium
on the day of public announcement, one week prior thereto and four weeks prior
thereto.
ALL TRANSACTIONS
<TABLE>
<CAPTION>
CLOSING PRICE IMPLIED
PREMIUM BASED ON CLOSING OF AVERAGE PRICE PER
PRICE OF COMMON STOCK ON: COMMON STOCK PREMIUM SHARE
- ------------------------------------------------------ --------------- ----------- -----------
<S> <C> <C> <C>
April 27, 1999........................................ $ 25.88 29.4% $ 33.49
1 week prior (April 20, 1999)......................... $ 19.25 35.8% $ 26.14
4 weeks prior (March 30, 1999)........................ $ 20.50 40.3% $ 28.76
</TABLE>
TRANSACTIONS WITH AN EQUITY VALUE BETWEEN
$200 MILLION AND $400 MILLION
<TABLE>
<CAPTION>
CLOSING PRICE IMPLIED
PREMIUM BASED ON CLOSING OF AVERAGE PRICE PER
PRICE OF COMMON STOCK ON: COMMON STOCK PREMIUM SHARE
- ------------------------------------------------------- --------------- ----------- -----------
<S> <C> <C> <C>
April 27, 1999......................................... $ 25.88 29.6% $ 33.54
1 week prior (April 20, 1999).......................... $ 19.25 34.5% $ 25.89
4 weeks prior (March 30, 1999)......................... $ 20.50 40.8% $ 28.86
</TABLE>
ALL CASH TRANSACTIONS
<TABLE>
<CAPTION>
CLOSING PRICE IMPLIED
PREMIUM BASED ON CLOSING OF AVERAGE PRICE PER
PRICE OF COMMON STOCK ON: COMMON STOCK PREMIUM SHARE
- ------------------------------------------------------- --------------- ----------- -----------
<S> <C> <C> <C>
April 27, 1999......................................... $ 25.88 29.2% $ 33.43
1 week prior (April 20, 1999).......................... $ 19.25 35.5% $ 26.08
4 weeks prior (March 30, 1999)......................... $ 20.50 45.4% $ 29.81
</TABLE>
CASH TRANSACTIONS WITH AN EQUITY VALUE BETWEEN
$200 MILLION AND $400 MILLION
<TABLE>
<CAPTION>
CLOSING PRICE IMPLIED
PREMIUM BASED ON CLOSING OF AVERAGE PRICE PER
PRICE OF COMMON STOCK ON: COMMON STOCK PREMIUM SHARE
- ------------------------------------------------------- --------------- ----------- -----------
<S> <C> <C> <C>
April 27, 1999......................................... $ 25.88 24.6% $ 32.25
1 week prior (April 20, 1999).......................... $ 19.25 28.5% $ 24.74
4 weeks prior (March 30, 1999)......................... $ 20.50 37.0% $ 28.09
</TABLE>
The preparation of a fairness opinion is a complex process involving various
determinations as to the most appropriate and relevant quantitative and
qualitative methods of financial analysis and the application of those methods
to the particular circumstances and, therefore, is not readily susceptible to
partial analysis or summary description. In arriving at its opinion, Schroders
considered the results of all its analyses as a whole and did not attribute any
particular weight to any analysis or factor considered by it. Subject to the
matters set forth in the Schroders opinion, the judgments made by Schroders as
to its analyses and the factors considered by it caused Schroders to be of the
opinion, as of the date of the Schroders opinion, that the Per Share Amount to
be received by the holders of the Shares pursuant to the Merger Agreement was
fair, from a financial point of view, to such holders. Schroders' analyses must
be
24
<PAGE>
considered as a whole and considering any portion of such analyses and of the
factors considered, without considering all analyses and factors, could create a
misleading or incomplete view of the process underlying the Schroders opinion.
In performing its analyses, Schroders made numerous assumptions with respect
to the industry performance, general business and economic conditions, and other
matters, many of which are beyond the control of the Company. Any estimates
contained in Schroders' analyses are not necessarily indicative of actual values
or predictive of future results or values, which may be significantly more or
less favorable than those contained in such analyses. Estimated values do not
purport to be appraisals or to reflect the prices at which businesses or
companies may be sold in the future, and such estimates are inherently subject
to uncertainty.
Schroders, as part of investment banking business, is regularly engaged in
the valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate and
other purposes.
The extensive experience of Schroders' media investment banking group in
providing corporate finance and advisory services to companies in the media
industry was a significant factor in the Company's decision to select Schroders
to be its financial advisor for the transaction.
Pursuant to a letter agreement dated January 8, 1999, the Company has agreed
to pay Schroders a fee of $200,000 (the "Fairness Opinion Fee") for the
Schroders opinion and has agreed to pay, contingent upon consummation of the
transaction, a cash transaction fee equal to $2,452,025. In addition, the
Company has agreed to indemnify Schroders against certain expenses and
liabilities in connection with its engagement. The Fairness Opinion Fee was not
conditioned upon the conclusion reached by Schroders as to the fairness of the
Per Share Amount, nor upon the ultimate consummation of the transaction.
REASONS FOR THE BOARD'S CONCLUSIONS
In approving the Merger Agreement and the transactions contemplated thereby
and recommending that all holders tender their Shares pursuant to the Offer, the
Board considered a number of factors, including the following:
(i) The Board's familiarity with, and information provided by the
Company's management as to, the Company's business, financial condition, and
results of operations, and the historical and current market prices for the
Shares.
(ii) The Company's current long-term objectives and future business
prospects, the risks involved in achieving those objectives in current
industry and market conditions, and the ongoing changes in the market
research industry, including the trend toward globalization and the
increasing use of electronic media, both of which would require significant
capital outlays by the Company in order for it to remain competitive.
(iii) The terms of the Merger Agreement, including (x) the proposed
structure of the Offer and the Merger involving an immediate cash tender
offer followed by a merger for the same consideration and (y) the fact that
financing is not a condition to the Offer and the Merger, thereby enabling
the Company's stockholders to obtain cash for their Shares quickly.
25
<PAGE>
(iv) That the per Share price contemplated by the Merger Agreement, at
$31.00, represented a significant premium over the Company's historical
trading prices.
(v) The process engaged by the Company's management and financial
advisor, which included discussions with likely potential acquirors, and the
view of the Board, based in part upon Schroders' presentation, regarding the
likelihood of a superior offer arising and being consummated.
(vi) Schroders' presentation and written opinion that, as of the date of
the opinion and based upon and subject to certain matters stated therein,
the $31.00 per Share cash consideration to be received by the holders of
Shares pursuant to the Offer and the Merger was fair to the stockholders of
the Company, from a financial point of view. THE FULL TEXT OF THE SCHRODERS
OPINION IS FILED AS EXHIBIT 99 (a)(6) TO THIS SCHEDULE 14D-9. STOCKHOLDERS
ARE URGED TO READ SUCH OPINION IN ITS ENTIRETY.
(vii) That the Merger Agreement permits the Company to furnish nonpublic
information to, and to participate in negotiations with, any third party
that has submitted a proposal that constitutes a Superior Proposal, if the
Board determines in good faith that taking such action is necessary under
applicable law, and the Merger Agreement permits the Board to change its
recommendation with respect to the Offer and to terminate the Merger
Agreement in certain circumstances in the exercise of its fiduciary duties.
(viii) The termination provisions of the Merger Agreement, which under
certain circumstances could obligate the Company to pay a termination fee of
$9 million to Parent and reimburse Parent for its actual expenses incurred
in connection with the transaction, up to $1.5 million, and the Board's
belief that such fees and expense reimbursement provisions would not deter a
higher offer.
(ix) The willingness of MFI Investors, L.P., the Company's largest
stockholder, and the management directors to enter into the Option Agreement
pursuant to which, among other things, each such party granted to Parent an
option to purchase the Shares owned by them at a price of $31.00 per Share.
(x) The likelihood that the transaction would be consummated, including
the conditions to the Offer, and Parent's financial strength, including an
undertaking to provide all necessary funds to purchase the Shares.
The foregoing addresses the material information and factors considered by
the Board in its consideration of the Offer. In view of the variety of factors
and the amount of information considered, the Board did not find it practicable
to provide specific assessments of, quantify or otherwise assign relative
weights to the specific factors considered in reaching its determination. The
determination to recommend that the Company's stockholders accept the Offer was
made after consideration of all of the factors taken as a whole. In addition,
individual members of the Board may have given different weights to different
factors.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The Company retained Schroders to act as its exclusive financial advisor in
connection with a possible transaction, which includes a sale pursuant to the
transactions contemplated by the Merger Agreement. Pursuant to a letter
agreement dated January 8, 1999, the Company is required to pay Schroders: (i) a
retainer fee of $75,000, payable in cash in three monthly installments of
$25,000, with the first month's installment payable in cash 30 days from the
execution of the letter agreement, which amount will be credited against the
transaction fee described below, (ii) a fee of $200,000 in cash upon the
issuance and delivery of the Schroders opinion, and (iii) an additional
transaction fee equal to 0.825% of the aggregate consideration involved in the
transaction, payable in cash upon the closing of the transaction. In addition,
the Company has agreed to indemnify Schroders against certain liabilities and
expenses arising out of the
26
<PAGE>
engagement and the transactions in connection therewith, including certain
liabilities under federal securities laws.
Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to stockholders of the Company on its
behalf in connection with the Offer and the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) To the best of the Company's knowledge, except as set forth herein with
respect to the Option Agreement and the Merger Agreement, no transactions in
Shares have been effected during the past 60 days by the Company or by any
executive officer, director, affiliate or subsidiary of the Company.
(b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules and regulations, all of the Company's
executive officers, directors, affiliates and subsidiaries who own Shares
presently intend to tender such shares to Purchaser pursuant to the Offer,
except as provided in the Option Agreement. See Item 3--Option and Voting
Agreement.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth herein, the Company is not engaged in any
negotiation in response to the Offer which relates to or would result in: (1) an
extraordinary transaction, such as a merger or reorganization, involving the
Company or any subsidiary of the Company; (2) a purchase, sale or transfer of a
material amount of assets by the Company or any subsidiary of the Company; (3) a
tender offer for or other acquisition of securities by or of the Company; or (4)
any material change in the present capitalization or dividend policy of the
Company.
(b) Except as set forth herein, there are no transactions, board
resolutions, agreements in principle or signed contracts in response to the
Offer, which relate to or would result in one or more of the matters referred to
in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
(a) The Information Statement attached as Annex A hereto is being furnished
in connection with the possible designation by Purchaser, pursuant to the Merger
Agreement, of certain persons to be appointed to the Company's Board of
Directors other than at a meeting of the Company's stockholders.
(b) As a Delaware corporation, the Company is subject to Section 203
("Section 203") of the DGCL. Under Section 203, certain "business combinations"
between a Delaware corporation whose stock is publicly traded or held of record
by more than 2,000 stockholders and an "interested stockholder" are prohibited
for a three-year period following the date that such stockholder became an
interested stockholder, unless, among other possible exceptions, prior to the
time such stockholder became an interested stockholder the board of directors of
the corporation approved either the business combination or the transaction
which resulted in the stockholder becoming an interested stockholder. The term
"business combination" is defined generally to include mergers or consolidations
between the corporation and an interested stockholder, transactions with an
interested stockholder involving the assets or stock of the corporation or its
majority-owned subsidiaries and transactions which increase an interested
stockholder's percentage ownership of stock. The term "interested stockholder"
is defined generally as a stockholder who, together with affiliates and
associates, owns (or within three years prior, did own) 15% or more of the
corporation's voting stock. An owner includes a person who has the right to
acquire such stock, including upon the exercise of an option.
At its meeting on April 28, 1999, the Company's Board of Directors approved
the Offer and the Merger Agreement and the transactions contemplated thereby,
including the Merger and the Option Agreement for purposes of Section 203.
27
<PAGE>
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<S> <C>
Exhibit 99 Form of Offer to Purchase, dated May 4, 1999 (incorporated by reference to
(a)(1) Exhibit (a)(1) to Parent and Purchaser's Tender Offer Statement on Schedule
14D-1 dated May 4, 1999 (the "Schedule 14D-1").
Exhibit 99 Letter of Transmittal (incorporated by reference to Exhibit (a)(2) to the
(a)(2) Schedule 14D-1).
Exhibit 99 Summary Advertisement as published on May 4, 1999 (incorporated by
(a)(3) reference to Exhibit (a)(7) to the Schedule 14D-1).
Exhibit 99 Press Release of Parent dated April 30, 1999 (incorporated by reference to
(a)(4) Exhibit (a)(8) to the Schedule 14D-1).
Exhibit 99 Press Release of the Company and Parent dated April 30, 1999 (incorporated
(a)(5) by reference to Exhibit (a)(9) to the Schedule 14D-1).
Exhibit 99 Opinion of Schroder & Co. Inc. dated April 28, 1999 and affirmed April 29,
(a)(6) 1999.*
Exhibit 99 Letter to Stockholders of the Company dated May 7, 1999 from Verne B.
(a)(7) Churchill and Thomas H. Payne.*
Exhibit 99 Agreement and Plan of Merger, dated as of April 29, 1999 by and among
(c)(1) Parent, Purchaser and the Company (incorporated by reference to Exhibit
(c)(1) to the Schedule 14D-1).
Exhibit 99 Option and Voting Agreement, dated as of April 29, 1999 between Parent and
(c)(2) Verne B. Churchill, Lawrence W. Labash, Jeffery A. Oyster, Thomas H. Payne,
Sanford M. Schwartz, Ned L. Sherwood, Timothy J. Sullivan and MFI
Investors, L.P. (incorporated by reference to Exhibit (c)(2) to the
Schedule 14D-1).
Exhibit 99 Second Amendment to Rights Agreement dated as of April 29, 1999 between the
(c)(3) Company and First Chicago Trust Company of New York.
</TABLE>
- ------------------------
*Included in copies of the Schedule 14D-9 mailed to stockholders.
28
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
<TABLE>
<S> <C> <C>
MARKET FACTS, INC.
By: /s/ THOMAS H. PAYNE
-----------------------------------------
Thomas H. Payne
Chief Executive Officer
</TABLE>
Dated: May 6, 1999
29
<PAGE>
ANNEX A
MARKET FACTS, INC.
3040 WEST SALT CREEK LANE
ARLINGTON HEIGHTS, ILLINOIS 60005
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934
AND RULE 14f-1 THEREUNDER
------------------------
This Information Statement is being mailed on or about May 7, 1999 as part
of the Solicitation/ Recommendation on Schedule 14D-9 (the "Schedule 14D-9") of
Market Facts, Inc., a Delaware corporation (the "Company"), with respect to the
offer by Aegis Acquisition Corp., a Delaware corporation ("Purchaser") and an
indirect wholly owned subsidiary of Aegis Group plc, a corporation incorporated
under the laws of England and Wales ("Parent"), to purchase all of the
outstanding shares of Common Stock, par value $1.00 per share (the "Shares") of
the Company, at a purchase price of $31.00 per Share, net to the seller in cash,
on the terms and subject to the conditions set forth in the Offer to Purchase
dated May 4, 1999 and in the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer"). You are
receiving this Information Statement in connection with the possible appointment
of persons designated by Parent to a majority of the seats on the Board of
Directors of the Company. The Agreement and Plan of Merger dated as of April 29,
1999 (the "Merger Agreement") by and among the Company, Parent and Purchaser
provides that the Company will take all action necessary to cause the Parent
Designees (as defined below) to be designated to the Company's Board of
Directors upon the conditions stated in the Merger Agreement.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and Rule 14f-1 thereunder.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action with respect to the possible election of
the Parent Designees to the Board of Directors of the Company. Capitalized terms
used herein and not otherwise defined herein shall have the meanings set forth
in the Schedule 14D-9 to which this Annex A is attached.
Pursuant to the Merger Agreement, Purchaser commenced the Offer on May 4,
1999. The Offer is scheduled to expire at 12:00 midnight, New York City time, on
Tuesday, June 1, 1999, unless the Offer is extended.
The information contained in this Information Statement concerning
Purchaser, Parent and the Parent Designees has been furnished to the Company by
Parent and Purchaser. The Company assumes no responsibility for the accuracy or
completeness of such information or for the failure by Purchaser or Parent to
disclose events which may have occurred or may affect the significance or
accuracy of any such information.
GENERAL
On April 29, 1999, the Company had outstanding voting securities consisting
of 8,944,701 shares of Common Stock and 100 shares of Series B Preferred Stock
("Series B Stock"). The Series B Stock and 22.78% of the outstanding Common
Stock are held by MFI Investors L.P., a Delaware limited partnership (the
"Partnership"). Holders of Common Stock are entitled to one vote per share. The
Partnership, as the holder of the Series B Stock, is entitled to elect three
directors, subject to decrease as its percentage ownership of Common Stock
decreases. See "Certain Transactions--Investment Agreement; Rights of Series B
Stock."
A-1
<PAGE>
The Board of Directors currently consists of ten members. The Board of
Directors is divided into three classes and each director serves a term of three
years and until his successor is duly elected and qualified or until his death,
resignation or removal.
OPTION AND VOTING AGREEMENT
Simultaneously with entering into the Merger Agreement, the Partnership and
certain of its affiliates and certain senior executives of the Company (the
"Selling Stockholders"), entered into an Option and Voting Agreement, dated as
of April 29, 1999, with Parent (the "Option Agreement"). Pursuant to the Option
Agreement, the Selling Stockholders have agreed, among other things, (i) to sell
to Parent or its permitted assign 2,760,484 Shares (30.07% of the Shares, on a
fully diluted basis, after giving effect to the exercise of vested employee
stock options) at a price of $31.00 per Share, (ii) not to tender such Shares
into the Offer without Parent's consent, and (iii) to vote such Shares and the
Series B Stock in favor of the Merger, in each case upon the terms and subject
to the conditions and limitations set forth in the Option Agreement.
RIGHT TO DESIGNATE DIRECTORS; THE PARENT DESIGNEES
Pursuant to the Merger Agreement, promptly upon the purchase by Purchaser
pursuant to the Offer and the Option Agreement of Shares which represent at
least a majority of the outstanding Shares on a fully diluted basis, and from
time to time thereafter, Parent shall be entitled to designate such number of
directors (the "Parent Designees"), rounded up to the next whole number, on the
Company's Board of Directors as will give Purchaser representation on the Board
of Directors (including any directors designated by Parent then serving on the
Board of Directors) equal to at least that number of directors which equals the
product of the total number of directors on the Board of Directors (giving
effect to the directors elected pursuant to this sentence) multiplied by the
percentage that such number of Shares so accepted for payment and paid for by
the Purchaser, bears to the number of Shares outstanding, and the Company shall,
at such time, cause the Parent Designees to be so appointed.
Notwithstanding the foregoing, until the consummation of the Merger, the
Board of Directors of the Company shall have at least two directors who were
directors on the date the Merger Agreement was executed who are not employees of
the Company and are not Parent Designees (the "Independent Directors"). The
affirmative vote of a majority of the Independent Directors shall be required to
(i) amend or terminate the Merger Agreement on behalf of the Company, (ii)
exercise or waive any of the Company's rights or remedies under the Merger
Agreement, (iii) extend the time for performance of the Purchaser's obligations
under the Merger Agreement, or (iv) take any other action by the Company in
connection with the Merger Agreement required to be taken by the Board of
Directors.
No action is required by the stockholders of the Company in connection with
the election of the Parent Designees to the Board. However, Section 14(f) of the
Exchange Act requires the mailing to the Company's stockholders of the
information set forth in this Information Statement prior to a change in a
majority of the Company's directors otherwise than at a meeting of the Company's
stockholders.
It is expected that the Parent Designees will assume office following the
purchase by the Parent of a majority of the Shares pursuant to the Offer and the
Option Agreement, which purchase cannot be earlier than June 1, 1999, and that,
upon assuming office, the Parent Designees will thereafter constitute at least a
majority of the Board of Directors.
PARENT DESIGNEES
As of the date of this Information Statement, Parent has not determined the
identity of the Parent Designees. However, the Parent Designees shall be
selected from the officers and employees of Parent and Purchaser listed below,
or from the directors and executive officers of Parent or Purchaser. Additional
A-2
<PAGE>
information regarding the directors and executive officers of Parent and
Purchaser is contained in Schedule I to the Offer to Purchaser, which is
incorporated herein by reference.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND ADDRESS AGE FOR LAST FIVE YEARS
- -------------------------------------- --- -----------------------------------------------------------------------
<S> <C> <C>
Crispin Davis ........................ 50 Director, Chief Executive Officer of Aegis Group plc since September 1,
11A West Halkin Street 1994; prior thereto, Group Managing Director of United Distillers since
London, SW1X 8JL, England 1992.
Colin Day ............................ 44 Group Finance Director of Aegis Group plc since February, 1995; Finance
11A West Halkin Street Director of ABB Instrumentation Group prior to February 1995;
London, SW1X 8JL, England Non-Executive Director of Bell Security Limited from January 1999;
Former Non-Executive Director of Vero plc.
Eleonore Sauerwein ................... 40 Group Legal Director of Aegis/Carat Group since 1993.
4, Place de Saverne Courbevoie
92971-Paris-La Defense, France
David Verklin ........................ 43 Chief Executive Officer of Carat North America since April 1998; prior
3 Park Avenue thereto, Executive Vice President and Managing Director of Hal Riney &
New York, New York 10016 Partners since 1993.
Pat Doble ............................ 55 Group Marketing Director of Aegis Group plc since 1995; prior thereto,
11A West Halkin Street Marketing Director of United Distillers.
London, SW1X 8JL, England
Stig Karlsen ......................... 52 Chief Operating Officer of MMA/Carat Inc. since April 1998; prior
15 River Road thereto, Chief Executive Officer of Carat North America since 1996; and
Wilton, Connecticut 06897 prior thereto, Managing Director of Carat Denmark since 1992.
</TABLE>
Parent has informed the Company that each of the persons from among whom the
Parent Designees will be selected has consented to act as a director of the
Company.
None of the Parent Designees or their associates (i) is currently a director
of, or holds any position with, the Company, (ii) has a familial relationship
with any of the directors or executive officers of the Company or (iii) to the
best knowledge of the Company, beneficially owns any securities (or rights to
acquire any securities) of the Company. The Company has been advised by Parent
that, to the best of Parent's knowledge, none of the Parent Designees has been
involved in any transactions with the Company or any of its directors, executive
officers or affiliates which are required to be disclosed pursuant to the rules
and regulations of the Securities and Exchange Commission (the "Commission"),
except as may be disclosed herein or in the Schedule 14D-9.
A-3
<PAGE>
SECURITY OWNERSHIP OF FIVE PERCENT BENEFICIAL OWNERS
The following table sets forth all persons known by the Company to be
beneficial owners of more than five percent of the Company's Common Stock and
Series B Stock outstanding as of April 29, 1999:
<TABLE>
<CAPTION>
NUMBER OF CLASS OF SHARES AND
NAME AND ADDRESS NATURE OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
- ---------------------------------------------------------------------- ------------------------------- ---------
<S> <C> <C>
Ned L. Sherwood ...................................................... 2,042,732(2) Common Stock 22.82%
MFI Investors L.P. 100(2) Series B Stock 100%
54 Morris Lane
Scarsdale, New York 10583
CG Trust Company(3) .................................................. 778,502 Common Stock 8.70%
525 West Monroe Street
Chicago, Illinois 60661
AMVESCAP PLC(4) ...................................................... 556,400 Common Stock 6.23%
11 Devonshire Square
London, EM2M 4YR, England
March & McLennan Companies, Inc.(5) .................................. 465,100 Common Stock 5.20%
1166 Avenue of the Americas
New York, New York 10036
</TABLE>
- ------------------------
(1) The nature of beneficial ownership of securities is direct, and arises from
sole voting and investment power, unless otherwise indicated by footnote.
(2) Shares are held of record by MFI Investors L.P., a Delaware limited
partnership (the "Partnership"), of which MFI Associates, Inc., a Delaware
corporation, is the general partner (the "General Partner"). The General
Partner has the sole voting and dispositive power over the Common Stock and
Series B Stock held by the Partnership, and Mr. Sherwood has voting control
over 52.6% of the outstanding voting securities of the General Partner. He
may therefore be deemed to beneficially own all of such shares. Pursuant to
the terms of the Series B Stock, the Partnership has the right to elect
three directors. Additional information regarding the Partnership, the
General Partner and the Series B Stock is included under "Certain
Transactions--Investment Agreement; Rights of Series B Stock." Also includes
5,400 shares subject to options exercisable by Mr. Sherwood within 60 days.
(3) CG Trust Company is a unit of Connecticut General Life Insurance Company,
Hartford, CT, and is the Trustee of the Market Facts, Inc. Profit Sharing
and Retirement Plan ("Profit Sharing Plan") and the Market Facts, Inc.
Employee Stock Ownership Plan ("ESOP"). As of April 29, 1999, the Market
Facts Stock Fund of the Profit Sharing Plan held 402,264 shares of Common
Stock for the benefit of Company employees and the ESOP held 376,238 shares.
(4) Based solely on a Schedule 13G filed with the Commission on February 11,
1999 reflecting ownership as of December 31, 1998. Represents 556,400 shares
beneficially owned by AMVESCAP PLC. AMVESCAP PLC and five of its
subsidiaries (AVZ, Inc., AIM Management Group Inc., AMVESCAP Group Services,
Inc., INVESCO, Inc. and INVESCO North American Holdings, Inc.) have shared
voting and shared dispositive power with respect to the 556,400 shares of
Common Stock. Such shares are held by the AMVESCAP PLC subsidiaries on
behalf of other persons who have the right to receive or the power to direct
the receipt of dividends from such shares or the proceeds from the sale of
such shares. The interest of any such persons does not exceed 5% of the
outstanding shares of Common Stock.
(5) Based solely on a Schedule 13G filed with the Commission on February 5, 1999
reflecting ownership as of December 31, 1998. According to the Schedule 13G,
Marsh & McLennan Companies, Inc.'s wholly owned subsidiary Putnam
Investments, Inc. wholly owns two registered investment advisers:
A-4
<PAGE>
(i) Putnam Investment Management, Inc. ("PIM"), which is the investment
adviser to the Putnam family of mutual funds; and (ii) The Putnam Advisory
Company, Inc. ("PAC"), which is the investment adviser to Putnam's
institutional clients. PIM has shared dispositive power over 149,900 shares.
Each of PIM's mutual fund client's trustees has voting power over the shares
held by each fund. PAC has shared dispositive power over 315,200 shares, and
shares voting power over 263,200 of such shares with its institutional
clients.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of April 29, 1999 by (i)
each of the Company's directors and executive officers, and (ii) all directors
and executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER AND NATURE OF
BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
- ------------------------------------------------------------------------------- ---------------------- ---------
<S> <C> <C>
William W. Boyd................................................................ 12,600(2) 0.14%
Verne B. Churchill............................................................. 64,201(3) 0.72%
Lawrence W. Labash............................................................. 118,181(4) 1.32%
Jeffery A. Oyster.............................................................. 4,800(5) 0.05%
Thomas H. Payne................................................................ 144,497(6) 1.61%
Karen E. Predow................................................................ 5,400(7) 0.06%
Sanford M. Schwartz............................................................ 251,797(8) 2.81%
Ned L. Sherwood................................................................ 2,042,732(9) 22.82%
Timothy J. Sullivan............................................................ 134,391(10) 1.50%
Jack R. Wentworth.............................................................. 6,200(11) 0.07%
All directors and executive officers as a group (10 people).................... 2,784,799(12) 30.79%
</TABLE>
- ------------------------
(1) The nature of beneficial ownership of securities is direct, and arises from
sole voting and investment power, unless otherwise indicated by footnote.
(2) Includes 5,400 shares subject to options exercisable within 60 days; the
remaining shares are held in the William W. Boyd Insurance Trust and Janet
S. Boyd Insurance Trust.
(3) Includes 262 shares allocated to Mr. Churchill under the ESOP; 627 shares
held for his benefit in the Market Facts Stock Fund of the Profit Sharing
Plan; 9,400 shares subject to options exercisable within 60 days; and 53,912
shares held in the Churchill Family Trust.
(4) Includes 11,200 shares with respect to which voting and investment powers
are shared; 5,850 shares allocated to Mr. Labash under the ESOP; 41,755
shares held for his benefit in the Market Facts Stock Fund of the Profit
Sharing Plan; and 13,000 shares subject to options exercisable within 60
days.
(5) Includes 600 shares held by Mr. Oyster's wife as to which Mr. Oyster
disclaims beneficial ownership and 4,200 shares subject to options
exercisable by Mr. Oyster within 60 days. Does not include 2,037,332 shares
of Common Stock (the "MFI Shares") held of record by MFI Investors, L.P., a
Delaware limited partnership (the "Partnership"), of which MFI Associates,
Inc., a Delaware corporation, is the general partner (the "General
Partner"). The General Partner has the sole voting and dispositive power
over the MFI Shares. Mr. Oyster holds 9.9% of the Class A Common Stock of
the General Partner; however, he has granted to Mr. Ned Sherwood an
irrevocable proxy to vote one-half of his shares, which together with
proxies delivered by the other shareholders of the General Partner,
A-5
<PAGE>
gives Mr. Sherwood voting control over 52.6% of the Class A Common Stock of
the General Partner. Therefore, Mr. Sherwood possesses voting control over
all of the MFI Shares owned by the Partnership.
(6) Includes 10,373 shares allocated to Mr. Payne under the ESOP; 24,896 shares
held for his benefit in the Market Facts Stock Fund of the Profit Sharing
Plan; and 26,000 shares subject to options exercisable within 60 days.
(7) Represents 5,400 shares subject to options exercisable within 60 days.
(8) Includes 221,400 shares which are subject to the terms of a Restricted Stock
Award. There were 400,000 shares awarded, which vest 10% each year over a
ten-year period that commenced January 5, 1993. As of April 29, 1999,
280,000 of such shares had vested. Upon the termination of Dr. Schwartz's
employment with the Company, any unvested shares will be forfeited and
returned to the Company. In the event of a change in control or merger of
the Company, all shares of the Restricted Stock which have not yet vested
will become fully vested on the effective date of such change in control or
merger. Also includes 2,234 shares allocated to Dr. Schwartz under the ESOP;
7,563 shares held for his benefit in the Market Facts Stock Fund of the
Profit Sharing Plan; 13,000 shares subject to options exercisable within 60
days; and 7,600 shares held in trust for the benefit of his children.
(9) The shares beneficially owned by Mr. Sherwood include 2,037,332 shares held
of record by the Partnership and 5,400 shares subject to options exercisable
by Mr. Sherwood within 60 days. The Partnership also holds 100 shares of
Series B Stock. The General Partner has the sole voting and dispositive
power over the Common Stock and Series B Stock held by the Partnership, and
Mr. Sherwood has voting control over 52.6% of the outstanding voting
securities of the General Partner. He may therefore be deemed to
beneficially own all of such shares. See also note (5) above.
(10) Includes 3,200 shares allocated to Mr. Sullivan under the ESOP; 16,791
shares held for his benefit in the Market Facts Stock Fund of the Profit
Sharing Plan; and 11,400 shares subject to options exercisable within 60
days.
(11) Includes 5,400 shares subject to options exercisable within 60 days.
(12) Includes 11,200 shares with respect to which voting and investment powers
are shared; 21,919 shares allocated to executive officers under the ESOP;
91,562 shares held for the benefit of executive officers in the Market Facts
Stock Fund of the Profit Sharing Plan; and 98,600 shares subject to options
exercisable within 60 days. Also includes 2,037,332 shares of Common Stock
held of record by the Partnership.
A-6
<PAGE>
CURRENT DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information with respect to the
current directors and executive officers of the Company.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AGE FOR LAST FIVE YEARS DIRECTOR SINCE
- -------------------------- --- ------------------------------------------------------------ --------------------
<S> <C> <C> <C>
William W. Boyd........... 72 Chairman of the Board of Sterling Plumbing Group, Inc., January 24, 1994
Rolling Meadows, Illinois. Mr. Boyd is a trustee of the
Stein, Roe and Farnham Mutual Funds. Mr. Boyd is also a
trustee of Elmhurst College, as well as a director of
CumminsBAllison Corp. and Kohler Company.
Verne B. Churchill........ 66 Chairman of the Board of Directors of the Company since March 13, 1967
1996; prior thereto, Chairman and Chief Executive Officer of
the Company.
Lawrence W. Labash........ 51 Executive Vice President of the Company since October 1998; January 24, 1994
prior thereto, Senior Vice President of the Company.
Jeffery A. Oyster......... 33 Since 1995, a partner of ZS Fund L.P., a New York-based August 5, 1997
investment partnership which provides financial advisory
services to the Company; and since 1996, an officer and
director of MFI Associates, Inc., a financial advisory
services firm(2); prior thereto, Vice President of Davenport
Management, Inc., a Connecticut-based private equity
partnership.
Thomas H. Payne........... 53 President and Chief Executive Officer of the Company since December 7, 1982
1996; prior thereto, President and Chief Operating Officer
of the Company.
Karen E. Predow........... 50 Division Manager, Customer Sciences Division of AT&T, February 3, 1993
Basking Ridge, New Jersey since 1994; prior thereto, Vice
President of The Chase Manhattan Bank, N.A., New York, New
York.
Sanford M. Schwartz....... 47 Executive Vice President of the Company. October 28, 1992
Ned L. Sherwood........... 49 Managing partner of ZS Fund L.P., a New York-based June 6, 1996
investment partnership of which Zaleski, Sherwood & Co.,
Inc., (a private investment firm of which Mr. Sherwood has
been president since 1985) is the general partner and which
provided financial advisory services to the Company; also
since 1996 an officer and director of MFI Associates, Inc.,
a financial advisory services firm. Mr. Sherwood is also a
director of Sun Television Appliances, Inc., Kaye Group,
Inc., and Mazel Stores, Inc.(1)
</TABLE>
A-7
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AGE FOR LAST FIVE YEARS DIRECTOR SINCE
- -------------------------- --- ------------------------------------------------------------ --------------------
<S> <C> <C> <C>
Timothy J. Sullivan....... 45 Chief Financial Officer of the Company since 1997 and Senior August 21, 1997
Vice President of the Company since 1996; prior thereto,
Vice President of the Company. Mr. Sullivan is also
Treasurer and Assistant Secretary of the Company.
Jack R. Wentworth......... 70 Arthur M. Weimer Professor Emeritus of Business April 17, 1988
Administration and former Dean, Graduate School of Business,
Indiana University, Bloomington, Indiana. Dr. Wentworth is
also a director of Kimball International, Inc. and Lone Star
Industries, Inc.
</TABLE>
- ------------------------
(1) Additional information regarding ZS Fund L.P., MFI Associates, Inc. and Mr.
Sherwood's election to the Board of Directors is included under "Certain
Transactions--Investment Agreement; Rights of Series B Stock" and "Certain
Transactions--Financial Advisory Agreements."
(2) Additional information regarding ZS Fund L.P., MFI Associates, Inc. and Mr.
Oyster's election to the Board of Directors is included under "Certain
Transactions--Investment Agreement; Rights of Series B Stock" and "Certain
Transactions--Financial Advisory Agreements."
REMUNERATION OF NAMED EXECUTIVES
The Summary Compensation Table which follows includes, for each of the
fiscal years ended December 31, 1998, 1997 and 1996, individual compensation for
services to the Company and its subsidiaries paid to: (i) the Chief Executive
Officer, and (ii) the four other executive officers of the Company (together,
the "Named Executives").
A-8
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
--------------------------------------------------- UNDERLYING
OTHER ANNUAL OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) (SHARES)(2) COMPENSATION(3)
- ------------------------------ --------- ---------- ---------- ---------------- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Thomas H. Payne .............. 1998 $ 232,803 $ 400,000 -- 10,000 $ 9,417
President, Chief Executive 1997 $218,880 $300,000 -- 20,000 $9,136
Officer and Director 1996 $190,734 $200,000 -- 40,000 $6,509
1998 $ 195,180 $ -- -- 3,000 $ 9,417
Verne B. Churchill ........... 1997 $223,860 $150,000 -- 10,000 $9,136
Chairman of the Board 1996 $216,400 $150,000 -- 12,000 $6,509
Lawrence W. Labash ........... 1998 $ 170,323 $ 150,000 -- 13,000 $ 9,417
Executive Vice President 1997 $162,300 $105,000 -- 10,000 $9,094
and Director 1996 $147,000 $85,000 -- 20,000 $6,509
Sanford M. Schwartz .......... 1998 $ 218,117 $ 75,000 -- 5,000 $ 9,417
Executive Vice President 1997 $210,766 $50,000 -- 10,000 $9,136
and Director 1996 $200,236 $35,000 -- 20,000 $6,509
Timothy J. Sullivan .......... 1998 $ 175,243 $ 90,000 -- 5,000 $ 9,417
Chief Financial Officer, 1997 $159,580 $60,000 -- 6,000 $9,136
Senior Vice President 1996 $140,435 $30,000 -- 20,000 $6,509
and Director
</TABLE>
- ------------------------
(1) The total amount of perquisites and other personal benefits did not exceed
the lesser of $50,000 or 10% of total annual salary and bonus for any of the
Named Executives for any year shown.
(2) The options granted in 1998, 1997 and 1996 were granted pursuant to the
Company's 1996 Stock Plan.
(3) These amounts represent, for each of the Named Executives, amounts
contributed for their accounts pursuant to the Profit Sharing Plan and the
ESOP. Pursuant to the Profit Sharing Plan, the amounts credited to the Named
Executives in 1998, 1997 and 1996, respectively, were as follows: Mr. Payne,
$7,756, $8,135 and $5,786; Mr. Churchill, $7,756, $8,135 and $5,786; Mr.
Labash, $7,756, $8,093 and $5,786; Dr. Schwartz, $7,756, $8,135 and $5,786;
and Mr. Sullivan, $7,756, $8,135 and $5,786.
Pursuant to the ESOP, the amounts credited to the accounts of the Named
Executives in 1998, 1997 and 1996, respectively, were as follows: Mr. Payne,
$1,661, $1,001 and $723; Mr. Churchill, $1,661, $1,001 and $723; Mr. Labash,
$1,661, $1,001 and $723; Dr. Schwartz, $1,661, $1,001 and $723; and Mr.
Sullivan, $1,661, $1,001 and $723.
A-9
<PAGE>
STOCK OPTIONS
OPTION GRANTS IN LAST FISCAL YEAR
Shown below is information with respect to grants of nonqualified stock
options during the fiscal year ended December 31, 1998, to the Named Executives
which are reflected in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS(1) FOR OPTION TERM
------------------------------------------------- ------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS 5% 10%
UNDERLYING GRANTED TO ----------------------- -----------------------
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION STOCK DOLLAR STOCK DOLLAR
NAME GRANTED 1998(2) PRICE DATE PRICE(4) GAINS PRICE(4) GAINS
- -------------------- ---------- ------------ ----------- ---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Payne............... 10,000 6.96% $ 15.94 1/21/08 $ 25.96 $ 100,200 $ 41.34 $ 254,000
Churchill........... 3,000 2.09% $ 15.94 1/21/08 $ 25.96 $ 30,060 $ 41.34 $ 76,200
Labash.............. 5,000 3.48% $ 15.94 1/21/08 $ 25.96 $ 50,100 $ 41.34 $ 127,000
8,000 5.57% $ 25.13 10/27/08 $ 40.93 $ 126,400 $ 65.18 $ 320,400
Schwartz............ 5,000 3.48% $ 15.94 1/21/08 $ 25.96 $ 50,100 $ 41.34 $ 127,000
Sullivan............ 5,000 3.48% $ 15.94 1/21/08 $ 25.96 $ 50,100 $ 41.34 $ 127,000
</TABLE>
- ------------------------
(1) These Nonqualified Stock Options ("NSOs") were granted pursuant to the
Company's 1996 Stock Plan (the "1996 Plan") and may not be exercised until
they vest. These NSOs vest 20% after 1 year, 40% after 2 years, 60% after 3
years, 80% after 4 years and 100% after 5 years, provided that on death,
retirement, permanent disability or a change of control, these NSOs may
become fully vested at the discretion of the Plan Committee.
(2) Based on 143,750 options granted to all employees.
(3) Based on the average closing sale price of the Common Stock of the Company
reported by Nasdaq as of the close of business on the three most recent
trading days including the date of grant.
(4) The share price represents the price of the Common Stock if the assumed
annual rates of stock price appreciation are achieved.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
Shown below is information with respect to options exercised by the Named
Executives during 1998 and unexercised options held by the Named Executives at
December 31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED REALIZED OPTIONS AT 12/31/98 AT 12/31/98
NAME ON EXERCISE ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---------------------------------------- ----------------- ------------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Payne................................... 0 $ 0 20,000/50,000 $ 398,180/$829,120
Churchill............................... 0 $ 0 6,800/18,200 $ 129,954/$290,736
Labash.................................. 0 $ 0 10,000/33,000 $ 199,090/$421,520
Schwartz................................ 0 $ 0 10,000/25,000 $ 199,090/$414,560
Sullivan................................ 0 $ 0 9,200/21,800 $ 188,590/$372,560
</TABLE>
A-10
<PAGE>
EMPLOYMENT AGREEMENTS
In October 1996, Messrs. Payne, Sullivan and Labash entered into Employment
Agreements with the Company (the "1996 Agreements"). The 1996 Agreements
commenced on October 28, 1996 and continue until terminated in accordance with
their provisions. The 1996 Agreements provide for an initial base annual salary,
and may be terminated by the Company without cause at any time, or by the
officer upon sixty days written notice. The Company furnishes life insurance
coverage to the officers pursuant to the 1996 Agreements in an amount equal to
one year's salary and bonus, and if a 1996 Agreement is terminated by the
Company without cause, the officer shall be entitled to receive his base salary
through the first anniversary of the date of the Company's notice of
termination.
In October 1997, Dr. Schwartz entered into an Employment Agreement with the
Company. The Agreement commenced on October 1, 1997 and continues until
terminated in accordance with its provisions. The Agreement carries terms
substantially identical to the 1996 Agreements.
Each of the above Agreements provides that employment terminates upon the
officer's death, and may be terminated by the Company for cause, upon the
officer's disability, or by mutual agreement. In addition, such Agreements
provide that the initial salaries thereunder may be adjusted upward to conform
to alterations in the Company's compensation policy for officers. They also
provide for reimbursement of expenses, the right to participate in the Company's
benefit programs and eligibility for an annual bonus consistent with the
provisions and goals set by the Board of Directors for each bonus year. Such
Agreements contain confidentiality and noncompete restrictions during the term
of employment and for a period of one year thereafter.
CERTAIN TRANSACTIONS
INVESTMENT AGREEMENT; RIGHTS OF SERIES B STOCK
In June 1996, the Company entered into an Investment Agreement (the
"Investment Agreement") among MFI Investors L.P. (the "Partnership"), MFI
Associates, Inc., the sole general partner of the Partnership (the "General
Partner") and the Company, whereby the Partnership acquired an ownership
interest in the Company's Common Stock and 100 shares of Series B Stock.
Mr. Ned L. Sherwood, a director of the Company, is an officer and director
of the General Partner and has an interest as a limited partner of the
Partnership. Mr. Jeffery A. Oyster, also a director of the Company, is also an
officer and director of the General Partner. Mr. Sherwood and Mr. Oyster are two
of the five voting stockholders of the General Partner.
The Series B Stock entitles the Partnership to elect three directors (the
"Series B Directors"), subject to decrease to two directors if its Common Stock
ownership is below 20%, one director if its Common Stock ownership is below 10%,
and no directors if its Common Stock ownership is less than 5%. Presently, the
Partnership has the right to elect one director in the class of directors
elected at the 1999 Annual Meeting (the "1999 Class"), and two directors in the
class elected at the 1998 Annual Meeting (the "1998 Class"). Mr. Oyster is
presently serving as a director in the 1998 Class and Mr. Sherwood is presently
serving as a director in the 1999 Class. The Partnership may exercise its right
to elect another director in the 1998 Class at any time. Such director may not
be a stockholder, partner, director, officer or employee of the Partnership or
the General Partner, and may not be an employee or former employee of the
Company. Any vacancy in a Series B Directorship may be filled only with a
nominee of the remaining Series B Directors or the Partnership as the holder of
the outstanding shares of Series B Stock.
As long as the Partnership beneficially owns in excess of 15% of the Common
Stock, it shall have the right to have at least one Series B Director on the
Audit and Compensation Committees of the Board, and as long as any shares of
Series B Stock are outstanding, the Company may not increase its board of
A-11
<PAGE>
directors to consist of more than 11 directors. Except as required by law, the
Series B Stock has no other voting rights.
Upon the sale of the Partnership's shares of Common Stock pursuant to the
Option Agreement, the Partnership's right to elect the Series B Directors and
right to have a Series B Director on the Audit and Compensation Committees of
the Board of Directors shall terminate.
With respect to the election or removal of directors (other than those
elected by the Partnership as holder of the Series B Stock), the Investment
Agreement provides that the Common Stock held by the Partnership is to be voted
proportionally in accordance with the vote of the Company's public stockholders
(defined as stockholders other than the Partnership and certain executive
officers of the Company).
With respect to other matters submitted to a vote of Company stockholders,
the Partnership may vote 19.9% of the total combined voting power of all voting
securities of the Company then outstanding according to its own discretion, and
shall vote proportionally in accordance with the votes cast by the Company's
public stockholders any of its shares in excess of 19.9%; provided that, with
the Company's consent, the Partnership granted a proxy to Parent pursuant to the
Option Agreement in connection with actions related to the Merger Agreement. See
Item 3--Option and Voting Agreement.
FINANCIAL ADVISORY AGREEMENTS
In connection with the Investment Agreement, the Company and ZS Fund L.P.
entered into a Financial Advisory Agreement (the "1996 Advisory Agreement"),
whereby ZS Fund L.P. made available to the Company certain financial advisory
services. The 1996 Advisory Agreement was scheduled to terminate upon the
earliest to occur of June 6, 2001; the first date that the Partnership owned
less than 5% of the outstanding Shares; or a change of control of the
Partnership. Pursuant to a Termination Agreement, the Company and ZS Fund L.P.
mutually agreed to terminate the 1996 Advisory Agreement as of December 31,
1997. Subsequently, the Company and ZS Fund L.P. entered into a Financial
Advisory Agreement dated as of January 1, 1998 in connection with the Company's
acquisition of Strategy Research Corporation and Tandem Research Associates,
Inc. In August 1998, the Company and ZS Fund L.P. entered into another Financial
Advisory Agreement in connection with the Company's acquisition of Product
Intelligence, Inc. ZS Fund L.P. is a New York based investment partnership. Ned
L. Sherwood and Jeffery A. Oyster are partners in ZS Fund L.P. and are also
directors of the Company. Pursuant to the Financial Advisory Agreements entered
into during 1998, the Company paid ZS Fund L.P. $429,166.67 in the aggregate.
Under the terms of the Financial Advisory Agreements, the Company is also
obligated to indemnify ZS Fund L.P. against any liabilities it may incur in
connection with its services under the Financial Advisory Agreements.
EMPLOYEE LOANS
The Company provides loans to certain of its executive officers in the form
of promissory notes and demand notes for the purpose of exercising stock
options, purchasing stock of the Company and paying withholding taxes on the
vesting of restricted stock. These loans bear interest at various rates ranging
from 7.75% to 9.00%. The largest aggregate amount of the above indebtedness
outstanding for any executive officer which exceeded $60,000 from January 1,
1998 to the date of this Proxy Statement were as follows: Mr. Payne, $100,377;
Mr. Churchill, $64,969; Dr. Schwartz, $165,000; and Mr. Sullivan, $123,912. The
outstanding principal balances of these loans as of April 27, 1999 are as
follows: Mr. Payne, $83,500; Mr. Churchill, $0; Dr. Schwartz $0; and Mr.
Sullivan, $117,116. Mr. Sullivan's loans include a promissory note issued April
1, 1994 in the amount of $40,500 that provides for repayment of principal
equally over ten years beginning in 1995; provided, however, that principal
payments are forgiven every two years if he remains employed by the Company on
the payment due date commencing with the payment due in 1996.
A-12
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
At the Compensation Committee's request, Mr. Payne recommended 1998 bonuses
for Messrs. Churchill, Schwartz, Sullivan and Labash, and he conferred with the
Committee regarding these recommendations.
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee"),
throughout 1998 and subsequently, has been composed of three non-executive
directors: Jack R. Wentworth, Chairman, Karen E. Predow and Ned L. Sherwood.
The Committee is primarily responsible for establishing the compensation
benefits for each of the Named Executives. In addition, the Committee
constitutes the "Plan Committee" responsible for the administration of the 1996
Stock Plan. Accordingly, the Committee has the responsibility of selecting
individuals to receive awards under the 1996 Stock Plan, and determining the
amount of such awards.
The key components of the compensation program for the Named Executives in
1998 were base salary, annual bonus and long-term incentives in the form of
stock options.
On September 29, 1998, the Committee reviewed the salaries of the Named
Executives and approved the following increases: Thomas H. Payne from $225,160
to $250,000; Lawrence W. Labash from $163,800 to $185,000; Dr. Sanford M.
Schwartz from $212,836 to $230,000; and Timothy J. Sullivan from $171,600 to
$185,000. These increases were effective as of August 29, 1998.
These increases were made due to the increased responsibilities of each of
the individuals awarded an increase. Mr. Sullivan has assumed during the year
the responsibilities of Chief Financial Officer; Mr. Labash has assumed
responsibility for approximately 65% of the business of the Company excluding
recent acquisitions; Dr. Schwartz, though relinquishing his management of the
New York business, has assumed responsibility for the merger and acquisition
work of the Company along with the businesses acquired and the Company's
Canadian business. No salary adjustment was made for Mr. Churchill because of
his reduced time commitments to the Company.
In February 1999, at the Committee's request, Mr. Payne, Chief Executive
Officer, made bonus and stock option recommendations to acknowledge the 1998
accomplishments of Messrs. Churchill, Labash, Schwartz and Sullivan, and he
conferred with the Committee regarding the rationale for these recommendations.
Thereafter, the Committee independently determined bonuses and stock option
awards for 1998 for the Named Executives. The Committee awarded nonqualified
stock options ("NSOs") in the amount of 3,000 shares to Mr. Churchill; to Mr.
Payne a bonus of $400,000 and NSOs for 12,000 shares; to Mr. Labash a bonus of
$150,000 and NSOs of 6,000 shares; to Dr. Schwartz a bonus of $75,000 and NSOs
for 6,000 shares; and to Mr. Sullivan a bonus of $90,000 and NSOs of 6,000
shares.
The exercise price of the NSOs for each of these Named Executives is $24.44,
based on the average closing sale price of the Common Stock of the Company
reported by NASDAQ as of the close of business on the three most recent trading
days including the date of grant. The NSOs vest in 20% increments over five
years. These option grants to each of the Named Executives were based on the
continued improved financial results of the Company in 1998 and recommendations
from senior management. The NSOs awarded to Mr. Payne were determined solely by
the Committee.
The Committee determined that increasing Mr. Payne's bonus award from
$300,000 for 1997 to $400,000 for 1998 and the option award were appropriate
considering the increases in revenues and earnings for the Company from 1997 to
1998, and the excellent manner in which Mr. Payne led the Company.
A-13
<PAGE>
Though Mr. Churchill continued to perform in an excellent fashion as
Chairman of the Board, in light of his part-time status with the Company, the
Committee was of the view that omitting a bonus was appropriate at this time but
that a stock option award of 3,000 shares, similar to the non-employee
Directors, was appropriate.
The Committee viewed Mr. Labash's contribution as Executive Vice President
with significant oversight responsibility of the Client Service Units as having
been of material importance to the Company's core growth during the last fiscal
year, and accordingly, Mr. Labash was deserving of the increase in bonus and
stock award indicated.
When Dr. Schwartz joined the Company in July 1992, he was awarded 400,000
shares of Common Stock, subject to a ten-year vesting schedule. The shares vest
at the rate of 10% each year, commencing January 5, 1993 and ending January 5,
2002. Prior to vesting, the shares are subject to restrictions on transfer and
forfeiture, if Dr. Schwartz's employment with the Company should terminate. As
of December 31, 1998, Dr. Schwartz held 261,400 of the 400,000 shares awarded,
of which 120,000 are still subject to forfeiture. Such 261,400 shares have an
aggregate value of $6,796,400, based on the closing price of the shares on
December 31, 1998. There was no agreed bonus or formula for a bonus in light of
the incentive nature of the restricted stock award. However, the Committee
viewed the bonus and stock award of Dr. Schwartz as appropriate in light of his
achievements particularly in the merger and acquisition activities on behalf of
the Company.
The Committee viewed the bonus and stock option award to Mr. Sullivan as
appropriate in light of his success this year as Chief Financial Officer in
maintaining effective cost controls while the Company was experiencing rapid
expansion and acquisition activity.
Effective January 1, 1994, the allowable deduction for federal income tax
purposes of compensation paid by the Company to the Named Executives is
$1,000,000 per executive per year. This limitation does not apply to
compensation that is based upon the attainment of performance goals or paid
pursuant to a written contract that was in effect on February 17, 1993.
Except as otherwise described above, the Committee's determinations
regarding 1998 compensation were not subject to specific criteria but were based
upon more general criteria as the Committee in its discretion considered to be
relevant, including the Committee's perception of the individual's performance
and the overall financial and earnings performance of the Company.
Jack R. Wentworth, Chairman
Karen E. Predow
Ned L. Sherwood
A-14
<PAGE>
TOTAL RETURN COMPARISON
The following graph sets forth a five-year comparison of cumulative total
returns for: (i) the Company (which is traded on The Nasdaq National Market);
(ii) the Center for Research in Securities Prices ("CRSP") Index for Nasdaq
Stock Market (U.S. Companies); and (iii) a peer group selected in good faith by
the Company (the "Peer Group"). In identifying the Peer Group, companies with
business descriptions similar to that of the Company were selected. The Peer
Group includes the following companies: Find/ SVP, Inc.; infoUSA Inc. Class A
and Class B Common Stock; M/A/R/C, Inc.; Market Facts, Inc.; NFO Worldwide,
Inc.; Opinion Research Corporation; and Total Research Corporation. All returns
were calculated assuming dividend reinvestment and the returns of each company
have been weighted according to market capitalization at the beginning of each
period indicated.
PERFORMANCE GRAPH FOR MARKET FACTS, INC.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NASDAQ STOCK
<S> <C> <C>
MARKET Market
FACTS, INC. (U.S. Companies)
12/31/93 100.0 100.0
12/30/94 122.7 97.8
12/29/95 198.6 138.3
12/31/96 588.1 170.0
12/31/97 1,094.6 208.6
12/31/98 1,699.0 293.2
Symbol CRSP Total Returns Index
Notes:
The lines represent annual index levels derived from compounded daily returns that include all
A. dividends.
B. The indexes are reweighted daily, using the market capitalization on the previous trading day.
If the annual interval, based on the fiscal year-end, is not a trading day, the preceding
C. trading day is used.
D. The index level for all series was set to 100.0 on 12/31/93.
<CAPTION>
<S> <C>
Self-Determined
Peer Group
12/31/93 100.0
12/30/94 120.1
12/29/95 187.7
12/31/96 226.0
12/31/97 262.5
12/31/98 176.4
Symbol
Notes:
A.
B.
C.
D.
</TABLE>
A-15
<PAGE>
BOARD OF DIRECTORS AND COMMITTEE DATA
During 1998, five Board meetings were held. All directors of the Company
attended all of the Board meetings held during the year.
The Board of Directors does not have a standing nominating committee. The
Audit Committee currently consists of Mr. Boyd as Chairman, Dr. Wentworth and
Mr. Sullivan. The duties of the Audit Committee are to advise the Company on its
engagement of independent public accountants and to review all reports of the
Company's audit performed by its independent public accountants. The Audit
Committee held two meetings during 1998, and all members of this committee
attended each meeting.
In 1998, the Compensation Committee and the Plan Committee each consisted of
Dr. Wentworth as Chairman, Dr. Predow and Mr. Sherwood. The functions performed
by the Compensation Committee are to establish the compensation and benefits for
each of the Named Executives and, as the Plan Committee, to administer the 1996
Stock Plan. The Compensation Committee held two meetings in 1998 and the Plan
Committee held 12 meetings in 1998, and all members attended each committee
meeting.
Throughout 1998, the Company maintained an arrangement whereby directors who
are not officers and employees of the Company or ZS Fund L.P. each received an
attendance fee of $4,000 for each meeting at which they were present. Such
directors who are members of the Audit or Compensation Committee received an
additional $2,000 for each meeting of the Audit and/or Compensation Committee at
which they were present. Directors who are also officers and employees of the
Company, as well as employees of the ZS Fund L.P., are not paid for their
services as directors as such, nor for their attendance at board or committee
meetings. No director received more than the standard arrangement for services
as a director during the last fiscal year.
The directors are also eligible to participate in the Company's 1996 Plan.
The five directors who are not also officers or employees of the Company each
received options to purchase 3,000 shares of Common Stock in January 1998.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and any person who own more than 10% of the Company's Common
Stock to report their initial ownership of the Company's Common Stock and
changes in that ownership to the Commission. Specific due dates for these
reports have been established and the Company is required to disclose in this
Proxy Statement any failure to timely file these reports during 1998. All of
these filing requirements were timely satisfied except that Mr. Lawrence W.
Labash, a Director and Executive Vice President of the Company, filed one late
report regarding the grant of an option to purchase 8,000 shares of Common
Stock.
A-16
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
Exhibit 99 Form of Offer to Purchase, dated May 4, 1999 (incorporated by reference to
(a)(1) Exhibit (a)(1) to Parent and Purchaser's Tender Offer Statement on Schedule
14D-1 dated May 4, 1999 (the "Schedule 14D-1").
Exhibit 99 Letter of Transmittal (incorporated by reference to Exhibit (a)(2) to the
(a)(2) Schedule 14D-1).
Exhibit 99 Summary Advertisement as published on May 4, 1999 (incorporated by
(a)(3) reference to Exhibit (a)(7) to the Schedule 14D-1).
Exhibit 99 Press Release of Parent dated April 30, 1999 (incorporated by reference to
(a)(4) Exhibit (a)(8) to the Schedule 14D-1).
Exhibit 99 Press Release of the Company and Parent dated April 30, 1999 (incorporated
(a)(5) by reference to Exhibit (a)(9) to the Schedule 14D-1).
Exhibit 99 Opinion of Schroder & Co. Inc. dated April 28, 1999 and affirmed April 29,
(a)(6) 1999.*
Exhibit 99 Letter to Stockholders of the Company dated May 7, 1999 from Verne B.
(a)(7) Churchill and Thomas H. Payne.*
Exhibit 99 Agreement and Plan of Merger, dated as of April 29, 1999 by and among
(c)(1) Parent, Purchaser and the Company (incorporated by reference to Exhibit
(c)(1) to the Schedule 14D-1).
Exhibit 99 Option and Voting Agreement, dated as of April 29, 1999 between Parent and
(c)(2) Verne B. Churchill, Lawrence W. Labash, Jeffery A. Oyster, Thomas H. Payne,
Sanford M. Schwartz, Ned L. Sherwood, Timothy J. Sullivan and MFI
Investors, L.P. (incorporated by reference to Exhibit (c)(2) to the
Schedule 14D-1).
Exhibit 99 Second Amendment to Rights Agreement dated as of April 29, 1999 between the
(c)(3) Company and First Chicago Trust Company of New York.
</TABLE>
- ------------------------
*Included in copies of the Schedule 14D-9 mailed to stockholders.
<PAGE>
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[LOGO]
Exhibit (a)(6)
April 28, 1999
Board of Directors
Market Facts, Inc.
3040 West Salt Creek Lane
Arlington Heights, IL 60005
Members of the Board of Directors:
We understand that Market Facts, Inc. ("Market Facts" or the "Company") and
Aegis Group plc ("Aegis") have entered into an Agreement and Plan of Merger
substantially similar to a draft agreement dated as of April 25, 1999 (the
"Agreement"), whereby a wholly owned subsidiary of Aegis (the "Purchaser"), will
make a cash tender offer (the "Tender Offer") to purchase up to 100% of the
issued and outstanding shares of Common Stock, par value $1.00 per share (the
"Shares"), of the Company for $31.00 per share net to the seller in cash (the
"Per Share Amount"). It is further proposed that the Purchaser will merge with
and into the Company (the "Merger") following consummation of the Offer, and
that the Shares not tendered and accepted pursuant to the Tender Offer will
thereupon be converted into the right to receive the Per Share Amount.
You have requested our opinion, as investment bankers, as to the fairness,
from a financial point of view, of the Per Share Amount to be received by
holders of Market Facts Common Stock in the Transaction (the "Opinion"). It is
understood that the Opinion shall be used by you solely in connection with your
consideration of the fairness of the Per Share Amount to be received by holders
of Market Facts Common Stock and for no other purpose, and that Market Facts
will not furnish the Opinion or any other material prepared by Schroder & Co.
Inc. ("Schroders") to any other person or persons or use or refer to the Opinion
for any other purpose without Schroders' prior written approval. Schroders
understands and agrees that its Opinion may be referred to and reproduced in
full in a Schedule 14D-9 to be filed with the Securities and Exchange Commission
in connection with the Tender Offer and in any proxy document mailed to Market
Facts' common stockholders.
Schroders, as part of its investment banking business, is regularly engaged
in the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, secondary distributions of listed
and unlisted securities, private placements and valuations for estate, corporate
and other purposes.
- --------------------------------------------------------------------------------
SCHRODER & CO. INC.
Equitable Center, 787 Seventh Avenue
Telephone 212-492-6000 New York, NY 10019-6016
<PAGE>
Board of Directors
Market Facts, Inc.
April 28, 1999
Page Two
In connection with our opinion set forth herein, we have, among other
things:
i. reviewed: the Company's Annual Reports on Form 10-K filed with the
Securities and Exchange Commission for the years ended December 31, 1996,
1997 and 1998; the Company's draft balance sheet as of March 31, 1999 and
draft income statement for the three months ended March 31, 1999; and its
Proxy Statement dated March 25, 1999;
ii. reviewed the Company's projected financial results for the years 1999
through 2001, as provided by management on March 30, 1999;
iii. visited the principal office of the Company and conducted discussions with
the senior management of the Company concerning its historical and
projected financial results as presented and described in (i) and (ii)
above;
iv. performed various financial analyses, as we deemed appropriate, of Market
Facts using generally accepted analytical methodologies, including: (i) the
application to the historical and financial results of Market Facts of the
public trading multiples of companies which we deemed reasonably
comparable; and (ii) the application to the financial results of Market
Facts of the multiples reflected in recently reported public mergers and
acquisitions for businesses which we deemed reasonably comparable. We did
not perform a discounted cash flow analysis since projections were only
provided through 2001;
v. reviewed the historical trading prices and volumes of Market Facts Common
Stock on NASDAQ from January 1, 1994 to April 27, 1999;
vi. reviewed the draft Agreement and Plan of Merger dated April 25, 1999;
vii. discussed the transaction with Aegis senior management;
viii. reviewed Aegis's Report and Accounts for the years ended December 31, 1997
and 1998; its Interim Statement for the six months ended June 1998; and
reviewed research reports on Aegis by HSBC Securities, dated January 5,
1999, Merrill Lynch & Co., dated March 2, 1999 and April 15, 1999, and by
Credit Suisse First Boston (Europe) Limited, dated March 3, 1999;
ix. performed such other financial studies, analyses, inquiries and
investigations as we deemed appropriate.
In our review and analysis and in formulating our opinion, we have assumed
and relied upon the accuracy and completeness of all information supplied or
otherwise made available to us by Market Facts or obtained by us from other
sources, and upon the assurance of Market Facts' management that they are not
aware of any information or facts that would make the information provided to us
materially incomplete or misleading. We have not attempted to independently
verify any of such information. We have not undertaken an independent appraisal
of the assets or liabilities (contingent or otherwise) of Market Facts, nor have
we been furnished with any such appraisals. In addition, we have not reviewed
any information with respect to Aegis other than that referred to in item (viii)
in the preceding paragraph.
- --------------------------------------------------------------------------------
SCHRODER & CO. INC.
Equitable Center, 787 Seventh Avenue
New York, NY 10019-6016
<PAGE>
Board of Directors
Market Facts, Inc.
April 28, 1999
Page Three
Our Opinion is necessarily based upon financial, economic, market and other
conditions as they exist and can be evaluated by us on the date hereof. We
disclaim any undertaking or obligation to advise any person of any change in any
fact or matter affecting our Opinion which may come or be brought to our
attention after the date of the Opinion unless specifically requested to do so.
Our Opinion does not constitute a recommendation as to any action the Board
of Directors of the Company or any shareholder of the Company should take in
connection with the Agreement or any aspect thereof or alternative thereto.
Without limitation to the foregoing, this letter does not constitute a
recommendation to any shareholder with respect to whether to tender their shares
in the Tender Offer or to vote in favor of the Merger, and should not be relied
upon by any shareholder as such. In rendering our Opinion, we have not been
engaged as an agent or fiduciary of the Company's shareholders or of any other
third party. Our Opinion relates solely to the fairness, from a financial point
of view, to the shareholders of the Company of the Per Share Amount to be
received by the holders of Market Facts Common Stock. Except as expressly set
forth herein, we express no opinion herein as to the structure, terms or effect
of any other aspect of the Tender Offer, Merger, or the Agreement.
Based upon and subject to all the foregoing, we are of the opinion, as
investment bankers, that as of the date hereof, the Per Share Amount to be
received by the holders of Market Facts Common Stock pursuant to the Agreement
is fair, from a financial point of view, to such holders.
Very truly yours,
<TABLE>
<S> <C> <C>
SCHRODER & CO. INC.
By: [SIG]
Ivan L. Lustig
Managing Director
</TABLE>
- --------------------------------------------------------------------------------
SCHRODER & CO. INC.
Equitable Center, 787 Seventh Avenue
New York, NY 10019-6016
<PAGE>
- --------------------------------------------------------------------------------
[LOGO]
April 29, 1999
Board of Directors
Market Facts, Inc.
3040 West Salt Creek Lane
Arlington Heights, IL 60005
Members of the Board of Directors:
As of April 28, 1999, Schroder & Co. Inc. ("Schroders") delivered to you a
fairness opinion (the "Fairness Opinion"), which is incorporated herein by this
reference, as investment bankers, as to the fairness, from a financial point of
view, of the Per Share Amount to be received by the holders of Market Facts
Common Stock in the Tender Offer and the Merger.
You have requested that Schroders confirm that the opinion set forth in the
Fairness Opinion remains true and correct as of the date hereof. All capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to them in the Fairness Opinion.
Schroders hereby confirms, subject to and based on all of the assumptions,
limitations and qualifications set forth in the Fairness Opinion and such other
updated and/or additional information that Schroders believed was necessary or
appropriate to render this letter that Schroders is of the opinion, as
investment bankers, that, as of the date hereof, the Per Share Amount to be
received by the holders of Market Facts Common Stock in the Tender Offer and the
Merger is fair to such holders from a financial point of view.
Very truly yours,
<TABLE>
<S> <C> <C>
SCHRODER & CO. INC.
By: [SIG]
Ivan L. Lustig
Managing Director
</TABLE>
- --------------------------------------------------------------------------------
SCHRODER & CO. INC.
Equitable Center, 787 Seventh Avenue
Telephone 212-492-6000 New York, NY 10019-6016
<PAGE>
Exhibit 99(a)(7)
May 7, 1999
Dear Stockholder:
We are pleased to inform you that on April 29, 1999, Market Facts, Inc. (the
"Company") and Aegis Group plc ("Aegis") entered into an Agreement and Plan of
Merger (the "Merger Agreement") which provides for the acquisition by Aegis of
all of the Company's stock. Aegis is the parent of the Carat Group of operating
companies, one of the world's leading group of media communications specialists.
Under the Merger Agreement, Aegis Acquisition Corp., a wholly owned
subsidiary of Aegis ("Purchaser"), has commenced a cash tender offer (the
"Offer") to purchase all of the shares of the Company's common stock at a price
of $31.00 per share, net to the seller in cash. Subject to the satisfaction of
certain conditions set forth in the Merger Agreement, the Offer will be followed
by a merger (the "Merger") in which the holders of any remaining Company shares
(other than dissenting shares) will be converted into the right to receive
$31.00 per share, in cash. The Offer is currently scheduled to expire at 12:00
midnight New York City time on Tuesday, June 1, 1999, unless extended.
The Board of Directors has unanimously approved the Merger Agreement with
Aegis and the transactions contemplated thereby, and has determined that the
Offer and the Merger are fair to, and in the best interests of, the Company's
stockholders. The Board of Directors recommends that stockholders accept the
Offer and tender their shares pursuant to the Offer.
In determining to approve the Merger Agreement and the transactions
contemplated thereby, the Board gave careful consideration to a number of
factors described in the attached Schedule 14D-9, including the opinion of
Schroder & Co. Inc., our financial advisor, that the cash consideration to be
received by the holders of the Company's shares pursuant to the Offer and the
Merger is fair, from a financial point of view, to such holders.
The enclosed Schedule 14D-9 describes the background of this transaction,
the reasons for the Board's recommendation, and other important information.
Accompanying this letter and the Schedule 14D-9 is the Offer to Purchase and
related materials, including a Letter of Transmittal to be used for tendering
your shares. These documents describe the terms and conditions of the Offer and
provide instructions as to how to tender your shares. All of the enclosed
documents contain important information and we urge you to read them carefully.
We sincerely thank you for your support of the Company and its management
over the years.
<TABLE>
<S> <C>
[SIG]
Verne B. Churchill
Chairman of the Board
[SIG]
Thomas H. Payne
Chief Executive Officer
</TABLE>
<PAGE>
EXHIBIT 99.(c)(3)
SECOND AMENDMENT TO RIGHTS AGREEMENT
This SECOND AMENDMENT TO RIGHTS AGREEMENT (the "Amendment") is made and
entered into as of April 29, 1999 by and between MARKET FACTS, INC., a
Delaware corporation (the "Company"), and FIRST CHICAGO TRUST COMPANY OF NEW
YORK (the "Rights Agent"). Capitalized terms used but not defined herein
shall have the meaning given to them in the Merger Agreement (as defined
below).
RECITALS
A. The Company is entering into an Agreement and Plan of Merger (as the
same may be amended from time to time, the "Merger Agreement") by and among
Aegis Group, plc, a company incorporated under the laws of England and Wales
("Parent"), Aegis Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent (the "Purchaser"), and the Company,
pursuant to which, among other things, it is proposed that the Purchaser will
make a cash tender offer to purchase up to 100% of the shares of the
Company's common stock, par value $1.00 per share, and, upon the
consummation thereof, that Purchaser, or another direct or indirect
wholly-owned subsidiary of Parent, will merge with and into the Company.
B. The Company and the Rights Agent are parties to that certain Rights
Agreement dated as of July 26, 1989, as amended by that certain First
Amendment to Rights Agreement dated as of June 5, 1996 (the "Rights
Agreement").
C. The Company and the Rights Agent desire to further amend the terms
of the Rights Agreement in connection with the execution and delivery of the
Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing, and the mutual
agreements set forth herein, the Company and the Rights Agent hereby agree as
follows:
1. The definition of "Acquiring Person" set forth in Section 1(a) of
the Rights Agreement is hereby amended by adding the following sentence to
the end of such definition:
"Notwithstanding the foregoing, no Person shall be or become an
Acquiring Person by reason of the execution and delivery of (1) the
Agreement and Plan of Merger dated as of April 29, 1999 by and among
Aegis Group, plc, a company incorporated under the laws of England
and Wales ("Parent"), Aegis Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Parent (the
"Purchaser"), and the Company (as the same may be amended from time
to time, the "Merger Agreement") and/or the consummation of any of
the transactions contemplated thereby, including the
1
<PAGE>
consummation of the Offer (as defined in the Merger Agreement),
and/or (2) the Option and Voting Agreement(s) dated as of April 29,
1999 by and among Parent and the Company's stockholders named
therein (the "Option Agreements") and/or the consummation of any of
the transactions contemplated thereby."
2. The definition of "Shares Acquisition Date" set forth in Section 1(m)
of the Rights Agreement is hereby amended by adding the following sentence to
the end of such definition:
"Notwithstanding anything else set forth in this Agreement, a Shares
Acquisition Date shall not be deemed to have occurred solely by
reason of (1) the commencement of the Offer (as defined in the
Merger Agreement), (2) the public announcement, or the execution and
delivery, of the Merger Agreement and/or the consummation of any of
the transactions contemplated thereby, including the consummation of
the Offer (as defined in the Merger Agreement), and/or (3) the
execution and delivery of the Option Agreements and/or the
consummation of any of the transactions contemplated thereby."
3. Section 3(a) of the Rights Agreement shall be amended by adding the
following sentence to the end thereof:
"Notwithstanding anything else set forth in this Agreement, no
Distribution Date shall be deemed to have occurred solely by reason
of (1) the commencement of the Offer (as defined in the Merger
Agreement), (2) the execution and delivery of the Merger Agreement
and/or any of the transactions contemplated thereby, including the
consummation of the Offer (as defined in the Merger Agreement),
and/or (3) the execution and delivery of the Option Agreements
and/or the consummation of any of the transactions contemplated
thereby."
4. Section 7(a)(i) of the Rights Agreement shall be amended in its entirety
to read as follows:
"(i) the earlier of (1) the acceptance by Parent (or a wholly-owned
subsidiary of Parent) of the Shares pursuant to the Offer (as such
terms are defined in the Merger Agreement), or (2) the Close of
Business on August 7, 1999 (the "Final Expiration Date"),"
2
<PAGE>
5. The first sentence of Section 13 of the Rights Agreement shall be
amended by adding the following after the words "such case" in the
sixteenth line thereof:
"(other than in connection with the transactions contemplated by the
Merger Agreement)"
6. The Rights Agreement, as amended by this Amendment, shall remain in
full force and effect in accordance with its terms.
7. This Amendment may be executed in any number of counterparts, each of
such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute by one
and the same instrument.
8. If any term or provision of this Amendment is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms and provisions of this
Amendment shall remain in full force and effect and shall in no way
be affected, impaired or invalidated.
9. This Amendment shall be deemed to be a contract made under the laws
of the State of Delaware and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable
to contracts to be made and performed entirely within such State.
* * * *
3
<PAGE>
IN WITNESS WHEREOF, the Company and the Rights Agent have caused this
Amendment to be duly executed and attested, all as of the date and year first
above written.
MARKET FACTS, INC.
Attest:
By: /s/ Wesley S. Walton By: Timothy J. Sullivan
----------------------------------- ----------------------------
Wesley S. Walton Timothy J. Sullivan
Secretary Senior Vice President
FIRST CHICAGO TRUST COMPANY
Attest: OF NEW YORK
By: /s/ Mary Garcia By: Joanne Gorostiola
----------------------------------- ----------------------------
Mary Garcia Joanne Gorostiola
Customer Service Representative Assistant Vice President
4
