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FIRST DIVISION
June 6, 2005

No. 1-04-1061

Plaintiff-appellant, William Blair & Company, L.L.C. (hereinafter Blair), appeals from thedenial of its motion for summary judgment and the grant of summary judgment in favor ofdefendants-appellees FI Liquidation Corporation, formerly known as Forms, Inc., also known asSpectra Graphics, Newton Business Forms Corporation, and Newton Business FormsCorporation (hereinafter collectively Spectra). Blair contends that the undisputed evidencerevealed in the extrinsic submissions of the parties established that Spectra owed Blair fees undera contract in which Spectra hired Blair to help arrange for Spectra's sale to or merger withanother company. At worst, Blair argues, the evidence was equivocal, requiring resolutionthrough a trial. Spectra, on the other hand, contends that the circuit court correctly determinedthat the undisputed evidence allowed only the conclusion that Spectra owed Blair no fees. Forthe following reasons we reverse and remand.

I.  FACTUAL BACKGROUND

This case arises from cross-motions for summary judgment. As such, the followingfactual background is based on the parties' pleadings, affidavits, depositions, admissions, andexhibits. These include, in pertinent part, the contract (engagement letter) between Blair andSpectra and various drafts of that contract, several business letters, various documents created byBlair in connection with its contractual obligations, the depositions of Blair and Spectrapersonnel, as well as the affidavits and reports of the parties' experts. The parties do not disputethe facts contained within these submissions but only the inferences that can be drawn from thesefacts and their significance under the controlling principles of contract law.

In the spring of 1995, Laurence Weiss, one of Spectra's cofounders, contacted Blair, aninvestment banking firm, to help arrange for Spectra's sale to or merger with another company. On April 3, 1995, Blair initially presented its standard engagement letter to Spectra whichproposed that Blair would provide the following services:

"a. Blair will familiarize itself to the extent it deems appropriate with thebusiness, operations, financial condition and prospects of the Company and itssubsidiaries;

b. Blair will prepare a valuation of the Company and present it in suchform as it shall consider appropriate to the Board of Directors of the Company;

c. Blair will identify a number of possible participants in the PossibleTransaction [sale or merger], which participants may include parties to whom Blairhas rendered or is now rendering investment banking services;

d. Upon receipt of express authorization from the Company, Blair willapproach one or more of such possible participants, using material prepared by theCompany with the assistance of Blair;

e. Blair will participate with the Company and its counsel in negotiationsrelating to the Possible Transaction; and

f. Blair will participate in meetings of the Board of Directors of theCompany (such participation to be in person or by telephone, as appropriate) atwhich the Possible Transaction is to be considered and, as appropriate, shall reportto the Board of Directors with respect thereto."

In exchange for these services, the proposed engagement letter provided in section two:

"The Company agrees to pay Blair a quarterly retainer fee of $25,000,payable in advance, with the first installment due upon the execution of theengagement letter. In the event that the Possible Transaction is consummated, theCompany will pay or cause to be paid to Blair a fee equal to 1.5% of the totalconsideration received by the Company and its stockholders as a result of suchconsummation, less the aggregate of all fees theretofore paid pursuant to thisSection 2."

Section five of the proposed engagement letter, which the parties referred to as the "tailprovision," allowed for either party to terminate their relationship at any time with written notice,providing however:

"if the Company shall consummate any Possible Transaction within twenty-fourmonths following such termination with any party (i) which Blair has identified, (ii)in respect of which Blair has rendered advice or (iii) with which the Company hasdirectly or indirectly held discussions prior to such termination, then Blair shall beentitled to the full amount of the fee contemplated by the last sentence of Section 2hereof."

Spectra did not accept the engagement letter as written, but returned it to Blair with somehandwritten changes. Most notable of Spectra's changes were those in the tail provision: "twenty-four months" was changed to "twelve months," subsections (i) and (ii) were deleted, and the word"substantive" was inserted before "discussions."

On May 3, 1995, Blair wrote back to Spectra asking, among other things, that the word"substantive" be deleted. During a telephone conversation on May 31, 1995, Weiss indicated thatSpectra was unwilling to delete "substantive" unless "material" was put in its place. JohnEttelson, a principal of Blair, commented that Blair would prefer neither qualifier, but chose tostay with "substantive" rather than use "material."

Blair incorporated these agreed-upon changes into a new draft of the engagement letterthat the parties signed on August 24, 1995. The services Blair agreed to perform remainedidentical to those enumerated in its original proposed engagement letter. However, section twoof the engagement letter, which described Blair's fees, was changed to following:

"The Company agrees to pay Blair a quarterly retainer fee of $25,000, dueupon the execution of this engagement letter. In the event that the PossibleTransaction is consummated, the Company will pay or cause to be paid to Blair afee equal to (i) 1.5% of the Total Consideration received up to $30 million, plus(ii) 6% of the Total Consideration received over $30 million by the Company andits stockholders as a result of such consummation, less the aggregate of all feestheretofore paid pursuant to this Section 2. 'Total Consideration' shall mean allcash and securities (whether debt or equity) paid for the stock and/or assets of theCompany (including any payment for preferred stock, unexercised stock optionsor noncompete arrangements) in the Possible Transaction. Total Considerationshall not include the repayment or assumption of the Company's funded debt orother liabilities as disclosed on the balance sheet as of the date of closing of thepossible transaction." (Emphasis added to show changes from the original.)

Additionally, the relevant part of the tail provision was changed to the following:

"if the Company shall consummate any Possible Transaction within twelve monthsfollowing such termination with any party with which Blair or the Company hasdirectly or indirectly held substantive discussions prior to such termination, thenBlair shall be entitled to the full amount of the fee contemplated by the lastsentence of Section 2 hereof." (Emphasis added.)

Shortly thereafter, Spectra deferred any activity under that engagement letter because ofwhat it described as "temporary production problems." Approximately 2