<PAGE>
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
______________________________
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the period ended December 31, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from
__________ to __________
__________________________________
Commission file number 0-7903
I.R.S. Employer Identification Number 36-2675371
QUIXOTE CORPORATION
(a Delaware Corporation)
One East Wacker Drive
Chicago, Illinois 60601
Telephone: (312) 467-6755
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES XX NO
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 7,863,168 shares of the
Company's Common Stock ($.01-2/3 par value) were outstanding as of December
31, 1995.
<PAGE>
PART I
FINANCIAL INFORMATION
QUIXOTE CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended December 31,
--------------------------------
1995 1994
---- ----
<S> <C> <C>
Net sales.............................$ 43,697,000 $ 42,573,000
Cost of sales......................... 30,423,000 27,183,000
------------ ------------
Gross profit.......................... 13,274,000 15,390,000
Selling & administrative expenses..... 10,110,000 10,622,000
Research & development expenses....... 875,000 798,000
------------ ------------
10,985,000 11,420,000
Operating profit...................... 2,289,000 3,970,000
------------ ------------
Other income (expenses):
Interest income..................... 92,000 55,000
Interest expense.................... (1,627,000) (917,000)
Other............................... (242,000) (125,000)
------------ ------------
(1,777,000) (987,000)
------------ ------------
Earnings from continuing operations
before income taxes................... 512,000 2,983,000
Provisions for income taxes........... 195,000 1,134,000
------------ ------------
Earnings from continuing operations... 317,000 1,849,000
------------ ------------
Loss from discontinued operations
(net of taxes)........................ (972,000)
------------ ------------
Net earnings..........................$ 317,000 $ 877,000
============ ============
Per share data:
Earnings from continuing operations.$ .04 $ .23
Loss from discontinued operations... (.12)
------------ ------------
Net earnings..........................$ .04 $ .11
============ ============
Weighted average common and common
equivalent shares outstanding......... 7,989,747 8,181,186
============ ============
<FN>
See Notes to Consolidated Condensed Financial Statements
</TABLE>
<PAGE>
QUIXOTE CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended December 31,
--------------------------------
1995 1994
---- ----
<S> <C> <C>
Net sales.............................$ 88,699,000 $ 83,849,000
Cost of sales......................... 60,250,000 52,830,000
------------ ------------
Gross profit.......................... 28,449,000 31,019,000
Selling & administrative expenses..... 20,442,000 20,278,000
Research & development expenses....... 1,753,000 1,547,000
------------ ------------
22,195,000 21,825,000
Operating profit...................... 6,254,000 9,194,000
------------ ------------
Other income (expenses):
Interest income..................... 169,000 102,000
Interest expense.................... (3,184,000) (1,780,000)
Other............................... (408,000) (231,000)
------------ ------------
(3,423,000) (1,909,000)
------------ ------------
Earnings from continuing operations
before income taxes................... 2,831,000 7,285,000
Provisions for income taxes........... 1,076,000 2,768,000
------------ ------------
Earnings from continuing operations... 1,755,000 4,517,000
------------ ------------
Discontinued operations (net of tax):
Actual loss from operations......... (1,087,000) (1,552,000)
Estimated loss on disposition of
discontinued operations............. (10,913,000)
------------ ------------
Loss from discontinued operations..... (12,000,000) (1,552,000)
------------ ------------
Net earnings (loss)...................$(10,245,000) $ 2,965,000
============ ============
Per share data:
Earnings from continuing operations.$ .22 $ .55
Loss from discontinued operations... (1.50) (.19)
------------ ------------
Net earnings (loss)...................$ (1.28) $ .36
============ ============
Weighted average common and common
equivalent shares outstanding......... 7,989,635 8,178,515
============ ============
<FN>
See Notes to Consolidated Condensed Financial Statements
</TABLE>
<PAGE>
QUIXOTE CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
<TABLE>
<CAPTION>
December 31, June 30,
-----------------------------------
ASSETS 1995 1995
- -----------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash & cash equivalents.....................$ 2,162,000 $ 2,093,000
Accounts receivable, net of allowances
for doubtful accounts of $2,505,000 at
December 31 and $2,738,000 at June 30...... 28,397,000 28,092,000
Inventories:
Raw materials............................... 8,092,000 6,383,000
Work in process............................. 1,109,000 1,128,000
Finished goods.............................. 2,346,000 2,140,000
------------ ------------
11,547,000 9,651,000
Other current assets.......................... 4,120,000 3,348,000
------------ ------------
Total current assets.......................... 46,226,000 43,184,000
------------ ------------
Property, plant and equipment, at cost........ 155,342,000 142,626,000
Less accumulated depreciation................. (59,887,000) (51,912,000)
------------ ------------
95,455,000 90,714,000
------------ ------------
Other assets including $6,000,000
certificate of deposit........................ 20,923,000 22,326,000
Net assets of discontinued operations......... 760,000 13,362,000
------------ ------------
$163,364,000 $169,586,000
============ ============
<FN>
See Notes to Consolidated Condensed Financial Statements.
</TABLE>
<PAGE>
QUIXOTE CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
<TABLE>
<CAPTION>
December 31, June 30,
--------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY 1995 1995
- -----------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Current liabilities:
Current portion of long-term debt..........$ 975,000 $ 975,000
Accounts payable........................... 9,328,000 19,086,000
Accrued expenses........................... 17,918,000 16,077,000
Income taxes payable....................... 1,903,000 3,470,000
------------ ------------
Total current liabilities.................... 30,124,000 39,608,000
------------ ------------
Long-term debt............................... 82,450,000 68,000,000
Deferred income taxes........................ 3,063,000 3,063,000
Shareholders' equity:
Common stock............................... 143,000 143,000
Capital in excess of par value of stock.... 29,268,000 29,268,000
Retained earnings.......................... 23,789,000 34,977,000
Treasury stock, at cost.................... (5,473,000) (5,473,000)
------------ ------------
47,727,000 58,915,000
------------ ------------
$163,364,000 $169,586,000
============ ============
<FN>
See Notes to Consolidated Condensed Financial Statements.
</TABLE>
<PAGE>
QUIXOTE CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended December 31,
--------------------------------
1995 1994
------- -------
<S> <C> <C>
Cash from operating activities:
Earnings from continuing operations.................$ 1,755,000 $ 4,517,000
Loss from discontinued operations...................(12,000,000) (1,552,000)
----------- -----------
Net earnings (loss).................................(10,245,000) 2,965,000
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation...................................... 7,975,000 6,014,000
Amortization...................................... 858,000 1,086,000
Provision for losses on accounts
receivable........................................ 74,000 18,000
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable...... (379,000) 2,190,000
Increase in inventories and other current
assets.......................................... (2,668,000) (1,588,000)
Increase (decrease) in accounts payable
and accrued expenses............................ 1,226,000 (20,000)
Decrease in income taxes payable................ (1,567,000) (1,198,000)
Discontinued operations-noncash charges and
working capital changes........................... 12,602,000
----------- -----------
Net cash provided by operating activities........... 7,876,000 9,467,000
----------- -----------
Investing activities:
Purchase of property, plant and equipment.........(21,941,000) (16,629,000)
Capitalized systems, design and software costs.... (339,000) (495,000)
Decrease in funds deposited with IDB trustee...... 1,536,000
Other............................................. (652,000) (83,000)
----------- -----------
Net cash used in investing activities...............(21,396,000) (17,207,000)
----------- -----------
Financing activities:
Borrowings (payments) on revolving line of credit. 14,450,000 10,025,000
Payment of semi-annual dividend................... (861,000) (853,000)
Proceeds from exercise of stock options........... 237,000
Repurchase of company stock for Treasury.......... (100,000)
----------- -----------
Net cash provided by financing
activities....................................... 13,589,000 9,309,000
----------- -----------
Increase in cash and cash equivalents............... 69,000 1,569,000
Cash and cash equivalents at beginning of period.... 2,093,000 1,021,000
----------- -----------
Cash and cash equivalents at end of period..........$ 2,162,000 $ 2,590,000
=========== ===========
<FN>
Note: During the six months ended December 31, 1995, the Company made cash payments of
$451,000 for income taxes and paid $2,866,000 for interest. During the same period last
year the Company made cash payments of $3,015,000 for income taxes and paid $1,466,000
for interest.
See Notes to Consolidated Condensed Financial Statements.
</TABLE>
<PAGE>
QUIXOTE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
(Unaudited)
1. The interim financial statements are prepared pursuant to the
requirements for reporting on Form 10-Q. The June 30, 1995 balance sheet
data was derived from audited financial statements, adjusted for the
reclassification of assets and liabilities related to the discontinued
operations discussed in Note 2 below, but does not include all disclosures
required by generally accepted accounting principles. The interim
financial statements and notes thereto should be read in conjunction with
the financial statements and notes included in the Company's latest annual
report on Form 10-K. In the opinion of management, the interim financial
statements reflect all adjustments of a normal recurring nature necessary
for a fair presentation of the results for interim periods. The current
period results of operations are not necessarily indicative of results
which ultimately will be reported for the full fiscal year ending June 30,
1996.
2. On September 28, 1995, the measurement date, the Company adopted a plan
to dispose of Integrated Information Services, Inc., a document imaging and
computerized litigation support company, and Litigation Sciences, Inc., a
litigation consulting firm, and to abandon the concept of Legal
Technologies, Inc. as a full service provider to the legal community.
As a result, the Company recorded a loss during the first quarter
consisting of $2,213,000 (net of income tax benefits of $1,475,000) for the
estimated operating losses of these businesses from the measurement date
through the estimated date of disposition and $8,700,000 (net of income tax
benefits of $5,800,000) for the estimated loss on their disposition. In
addition, losses of $1,087,000 (net of income tax benefits of $725,000)
were incurred by these businesses during the first quarter until the
measurement date (September 28, 1995). These results are presented as
discontinued operations in the Company's Consolidated Condensed Statements
of Operations for the six months ended December 31, 1995. The previously
issued Consolidated Condensed Statements of Operations for the quarter and
six months ended December 31, 1994 have been restated to reflect those
results as discontinued operations. Net sales for the discontinued
businesses for the six months ending December 31, 1995 and 1994 were
$7,413,000 and $9,260,000 respectively. Net sales for the discontinued
businesses for the quarter ending December 31, 1995 and 1994 were
$3,753,000 and $4,386,000 respectively. The assets of these businesses
consist principally of accounts receivable, inventories and equipment, and
net of their liabilities have been reflected separately in the Company's
Consolidated Condensed Balance Sheets.
In connection with the decision to discontinue these businesses, the
Company violated certain covenants of its Revolving Credit Facility
including the tangible net worth and leverage covenants as of September 30,
1995. In November 1995, the Company was granted an increase in its
revolving credit facility to $70 million from $60 million and received a
waiver for all its covenant violations. The revolving credit agreement was
also amended to adjust certain covenants for future periods.
3. In December 1995, Disc Manufacturing, Inc. settled a lawsuit with
three former employees. The cost of the settlement, including legal fees
was $584,000 and was expensed in the Company's second quarter.
<PAGE>
Subsequent Events:
- --------------------
4. On January 5, 1996, Energy Absorption Systems, Inc., and Quantic
Industries, Inc. (Quantic), agreed to extend certain provisions of the
"Surviving Stockholder Agreement" from January 6, 1996, to February 29,
1996. This agreement with certain stockholders of Quantic, among other
things, grants those stockholders a right to require Energy Absorption to
purchase all of their shares (52.5% of the common stock) of Quantic for
$8.7 million.
5. On January 10, 1996, Energy Absorption entered into an agreement with
Barrier Systems, Inc., to sell and assign all of its rights to certain
patents related to the movable traffic barrier system. Energy sold the
patents for $1,960,000, which will result in a gain of approximately
$350,000, to be recorded in the Company's third quarter of fiscal 1996.
6. On January 25, 1996, Stenograph Corporation sold certain assets of
Litigation Sciences, Inc. (LSI) for the assumption of certain liabilities
of LSI. The remaining assets and liabilities of LSI retained by
Stenograph include accounts receivable and liabilities under certain lease
obligations.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CURRENT YEAR-TO-DATE VERSUS PRIOR YEAR-TO-DATE
- ---------------------------------------------------
The Company's sales for the first six months fiscal 1996 increased 6% to
$88,699,000 from $83,849,000 in the same period last year due to revenue
growth at Disc Manufacturing, Inc. (DMI). Sales at DMI increased 12% in the
six month period to $51,422,000 from $45,873,000 in the same period last
year due to strong growth in unit sales of CD-ROM discs. CD-ROM unit sales
increased 102% during the six month period from the same period last year.
Audio CD unit sales however decreased 16% in the six month period from the
same period last year. This decline in audio CD sales was due to the loss
of a major customer, BMG Music as discussed below, and also to a general
softness in the music industry. As a result of declines in the average
unit selling price of these products, CD-ROM sales dollars increased 57%
during the six month period and CD audio sales dollars declined 19% from
the same period last year. Sales at Energy Absorption for the six months
were $22,288,000, level with last year sales of $22,210,000. Sales at
Stenograph Corporation decreased 5% in the first six months to $14,989,000
from $15,766,000 in the same period last year. Sales of domestic computer-
aided transcription (CAT) hardware and software decreased offset somewhat
by an increase in international sales.
The gross profit margin in the current six month period decreased to 32.1%
from 37.0% in the same period last year due to margin reductions at DMI.
DMI's gross profit margin decreased principally as a result of a decrease
in the selling prices of its products, particularly CD-ROM products. In
addition, DMI's unit costs increased slightly because of additional costs
(principally depreciation) due to its plant expansion without sufficient
capacity utilization to offset these costs. The Company expects to
experience continued pressure on disc selling prices which may have a
limiting effect on its gross profit margins. Stenograph Corporation's
gross profit margin increased due to production efficiencies resulting in
reduced material and labor costs. Energy Absorption's gross profit margin
for the current six month period increased slightly due to a change in
product mix.
Selling and administrative expenses in the current six month period
increased slightly to $20,442,000 from $20,278,000 in the same period last
year. DMI's selling and administrative expenses increased principally due
to an increase in legal expense due to the settlement of a lawsuit (as
discussed in footnote 3 to the Consolidated Condensed Financial Statements)
and to an increase in CD-ROM selling and marketing expenses as that market
expands. Energy Absorption's selling and administrative expenses increased
due to increased marketing expenses. Stenograph Corporation's selling and
administrative expenses decreased due to the settlement of litigation last
year requiring additional expense of $685,000 that was recorded in last
years six month period.
Research and development expenses in current six month period increased 13%
to $1,753,000 compared to $1,547,000 in the same period last year. This
was due to an increase in R&D expenditures at Stenograph Corporation
related to the development of an update to its Premier Power computer-aided
transcription software. This increase in R&D at Stenograph Corporation was
offset partially by a decrease in R&D at Energy Absorption as result of,
among other things, reduced expenditures on its sewer rehabilitation
technology.
<PAGE>
Interest income in the current six month period was $169,000 compared to
$102,000 in the same period last year due to an increase in the rate of
interest earned on its $6 million restricted certificate of deposit.
Interest expense in the current six month period increased 79% to
$3,184,000 from $1,780,000 in the same quarter last year. This was due to
the increase in debt to $83,425,000 as of December 31, 1995 compared to
$49,000,000 at the same time last year. Other expenses in the current
six month period increased to $408,000 compared to $231,000 in the same
period last year.
During the first quarter, the Company adopted a plan to dispose of
Integrated Information Services, Inc., a document imaging and computerized
litigation support company and Litigation Sciences, Inc., a litigation
consulting firm, and to abandon the concept of Legal Technologies, Inc. as
a full service provider to the legal community.
As a result, the Company recorded a loss of $12 million during the first
quarter consisting of $3.3 million (net of income tax benefits of $2.2
million) for the estimated operating losses of these businesses through the
date of disposition and $8.7 million (net of income tax benefits of $5.8
million) for the estimated loss on their disposition. These results are
presented as discontinued operations in the Company's Consolidated
Condensed Statements of Operations. The assets of these businesses consist
principally of accounts receivables, inventories and equipment and net of
their liabilities have been reflected separately in the Company's
Consolidated Condensed Balance Sheets.
In connection with the decision to discontinue these businesses, the
Company violated certain covenants of its Revolving Credit Facility
including the tangible net worth and leverage covenants as of September 30,
1995. In November 1995, the Company was granted an increase in its
revolving credit facility to $70 million from $60 million by its bank group
and in addition, received a waiver for all its covenant violations. In
addition, the bank group amended the revolving credit agreement adjusting
these covenants for future periods.
Also during the period, DMI was notified by BMG Music, a major customer,
that it is terminating its purchase agreement with DMI effective December
31, 1995. In fiscal 1995 BMG accounted for 38% of DMI's total sales. DMI
is currently trying to replace this business but has only been partially
successful to date due to, among other things, the current overcapacity in
the industry. To the extent DMI is unsuccessful replacing this business,
profits and cash flows may be materially affected.
CURRENT YEAR QUARTER VERSUS PRIOR YEAR QUARTER
- ----------------------------------------------
The Company's sales for the second quarter of fiscal 1996 increased 3% to
$43,697,000 from $42,573,000 in the same quarter last year due to revenue
growth at Energy Absorption Systems and Disc Manufacturing, Inc.
Sales at Energy Absorption for the current quarter increased 9% to
$10,074,000 from $9,283,000 in the same quarter last year due to an
increase in sales of its GREAT (TM) product, offset somewhat by a decrease
in sales of the TMA (truck-mounted attenuator). Sales at DMI increased 4%
in the current quarter to $25,993,000 from $25,032,000 in the same quarter
last year due to strong growth in unit sales of CD-ROM discs. CD-ROM unit
<PAGE>
sales increased 97% during the quarter from the same period last year.
Audio CD unit sales however decreased 34% in the quarter from the same
quarter last year. As a result of declines in the average unit selling
price of these products, CD-ROM sales dollars increased 59% during the
quarter and CD audio sales dollars declined 37% from the same period last
year. Sales at Stenograph Corporation decreased 8% in the current quarter
to $7,630,000 from $8,258,000 in the same period last year. Sales of
lower margin third party computer hardware including computers and related
peripherals continued to decline. Also contributing to the sales decline
at Stenograph was a decline in it's Stentura product line.
The gross profit margin in the current quarter decreased to 30.4% from
36.1% in the same period last year due to margin reductions at DMI. DMI's
gross profit margin decreased as a result of a decrease in the selling
prices of its products, particularly CD-ROM products. In addition, DMI's
unit costs increased because of additional costs (mainly depreciation) due
to its plant expansion without sufficient capacity utilization to offset
these costs. The Company expects to experience continued pressure on disc
selling prices and lower than expected volumes which may have a limiting
effect on its gross profit margins. Stenograph Corporation's gross
profit margin increased due to production efficiencies resulting in reduced
material and labor costs. Energy Absorption's gross profit margin for the
quarter increased due to a change in product mix.
Selling and administrative expenses in the current quarter decreased 5% to
$10,110,000 from $10,622,000 in the same quarter last year due to
Stenograph Corporation. Stenograph Corporation's selling and
administrative expenses decreased due to the settlement of litigation last
year requiring an additional expense accrual of $685,000 that was recorded
in last years second quarter. Offsetting this decrease in selling and
administrative expenses, DMI's selling and administrative expenses
increased principally due an increase in legal expense due to the
settlement of a lawsuit (as discussed in footnote 3 to the Consolidated
Condensed Financial Statements) and to the increase in CD-ROM selling and
marketing expenses as that market expands. Energy Absorption's selling and
administrative expenses also increased due to increased marketing expenses.
Research and development expenses in current quarter increased 10% to
$875,000 from $798,000 in the same period last year. This was due to an
increase in R&D expenditures at Stenograph Corporation related to the
development of an update to its Premier Power computer-aided transcription
software. This increase in R&D at Stenograph Corporation was offset
partially by a decrease in R&D at Energy Absorption as result of, among
other things, reduced expenditures on its sewer rehabilitation technology.
Interest income in the current quarter was $92,000 compared to $55,000 in
the same quarter last year due to an increase in the rate of interest
earned on its $6 million restricted certificate of deposit. Interest
expense in the current quarter increased 77% to $1,627,000 from $917,000
in the same quarter last year. This was due to the increase in debt to
$83,425,000 as of December 31, 1995 compared to $49,000,000 at the same
time last year. Other expenses in the current quarter increased to
$242,000 from $125,000 last year.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company has cash of $2,162,000 and additional funds of $6,550,000
available under its bank arrangements at December 31, 1995. Operating
activities were a source of cash for the Company for the first six months
of fiscal 1996 providing cash of $7,876,000.
Cash of $21,396,000 was used during the six month period for investing
activities. The Company's primary investing activity was the purchase of
$21,941,000 in plant and equipment. These capital expenditures were made
primarily at DMI for the final phase of its expansion program to increase
its capacity to 200 million gross discs annually.
Financing activities provided cash of $13,589,000 principally from
borrowings under the Company's bank facilities offset somewhat by the
payment of a semiannual cash dividend to its shareholders.
During the balance of fiscal 1996, the Company anticipates the need for
approximately $4,000,000 in cash for capital expenditures. In addition,
the Company may have a need for $8.7 million in the event that certain
shareholders of Quantic Industries, Inc. exercise their right to put their
Quantic shares to the Company. The Company may also need additional cash
as it considers acquiring additional businesses that complement its
existing operating segments. Also, each of the Company's operating
segments will require additional investments in working capital to maintain
growth. These expenditures will be financed either through cash generated
from operations or from borrowings available under the Company's revolving
credit facility. The Company may also consider divesting its remaining
legal businesses to generate additional cash. The Company believes its
cash generated from operations and funds available under its existing
credit facility or increases in its credit facility are sufficient for all
planned operating and capital requirements.
II
OTHER INFORMATION
ITEM 1. Legal Proceedings
- --------------------------
1. REPETITIVE STRESS INJURY LITIGATION. A total of thirty cases have been
filed to date against Stenograph Corporation and, in some cases, the
Company. See the Company's Form 10-K Report for the fiscal year ended June
30, 1995, Item 3, for additional information.
2. THOMSON S. A. V. TIME WARNER ET AL., Case No. 94-83 (U. S. District
Court for the District of Delaware). The February 1996 trial date has been
postponed to an undetermined date in July 1996. See the Company's Form 10-
K Report for the fiscal year ended June 30, 1995, Item 3, for additional
information.
3. SHERRELL SEARS V. ENERGY ABSORPTION SYSTEMS, Case No. CV-94-128
(Circuit Court of St. Clair County, Alabama). The Company's motion for
summary judgment was granted on December 7, 1995, dismissing all claims
against the Company. Plaintiff has the right to appeal the decision.
See the Company's Form 10-K Report for the fiscal year ended June 30,
1995, Item 3, for additional information.
<PAGE>
4. ASHBY V. DISC MANUFACTURING, INC., Case No. CV-95-N-0247 NE (U.S.
District Court for the Northern District of Alabama). This matter was
settled in December 1995. In exchange for a lump sum payment to
plaintiffs, plaintiffs agreed to dismiss all claims against Disc
Manufacturing, Inc. See the Company's Form 10-K Report for the fiscal year
ended June 30, 1995 for additional information.
ITEM 2. Changes in Securities
- -----------------------------
None.
ITEM 3. Default upon Senior Securities
- ---------------------------------------
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
The Company's Annual Meeting of Shareholders was held on November 16,
1995. The matters voted on at the Annual Meeting were as follows:
(i) The election of William G. Fowler and Robert D. van Roijen, Jr. to
serve as directors.
(ii) The approval of Coopers & Lybrand, L.L.P. as independent auditors for
the Company.
Messrs. Fowler and van Roijen were elected and all other matters were
approved as follows:
VOTES
Abstain or
For Against Withheld No Vote
----- ------- ---------- -------
Election of Directors
William G. Fowler 6,675,033 106,314
Robert D. van Roijen 6,638,729 142,618
Approval of Coopers and
Lybrand, L.L.P. 6,686,359 38,498 56,490
ITEM 5. Other Information
- --------------------------
None.
<PAGE>
ITEM 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibit 11. Statement regarding Computation of Earnings per Share.
(b) There were no reports filed on Form 8-K for the quarter ended December
31, 1995.
(c) Exhibits
* Management contract, compensatory plan or agreement
10.(a) Seventh Amendment to Loan Agreement dated as of November 10,
1995 by and among the Company, Energy Absorption Systems, Inc., Disc
Manufacturing, Inc., Stenograph Corporation, Discovery Products, Inc. f/k/a
Stenograph Legal Services, Inc., Spin-Cast Plastics, Inc., Composite
Components, Inc., Integrated Information Services, Inc., Litigation
Sciences, Inc., Safe-Hit Corporation, and The Northern Trust Company , NBD
Bank and LaSalle National Bank.
(b) Second Amendment to Lease Agreement between the Company and
United Insurance Company of America dated January 30, 1995.
(c) Third Amendment to Lease Agreement between the Company and
United Insurance Company of America dated January 18, 1996.
(d)* Letter Agreement between the Company and Leslie J. Jezuit
dated December 15, 1995.
(e) Agreement dated January 5, 1996 amending the Surviving
Stockholders Agreement dated April 12, 1995 between Energy Absorption
Systems, Inc. and Quantic Industries, Inc., James S. Fetherston, Charles G.
Davis, Jr., individually and as trustee, and certain other parties.
(f) Assignment Agreement dated January 10, 1996 between Energy
Absorption Systems, Inc. and Barrier Systems, Inc.
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report on Form 10-Q for the
quarter ended December 31, 1995 to be signed on its behalf by the
undersigned thereunto duly authorized.
QUIXOTE CORPORATION
DATE: February 8, 1996 /s/Myron R. Shain
---------------------- ------------------------
MYRON R. SHAIN
EXECUTIVE VICE PRESIDENT -
FINANCE
(Chief Financial & Accounting
Officer)
<PAGE>
EXHIBIT 10(a)
EXECUTION COPY
SEVENTH AMENDMENT TO LOAN AGREEMENT
THIS SEVENTH AMENDMENT TO LOAN AGREEMENT ("Seventh Amendment"), dated as
of November 10, 1995, is by and among QUIXOTE CORPORATION, a Delaware
corporation ("Quixote"), ENERGY ABSORPTION SYSTEMS, INC., a Delaware
corporation ("EAS"), DISC MANUFACTURING, INC., a Delaware corporation ("DMI"),
LEGAL TECHNOLOGIES, INC., a Delaware Corporation ("LTI"), STENOGRAPH
CORPORATION, a Delaware corporation ("Stenograph"), DISCOVERY PRODUCTS, INC.
f/k/a STENOGRAPH LEGAL SERVICES, INC., a Delaware corporation ("SLS"), SPIN-
CAST PLASTICS, INC., an Indiana corporation ("Spin-Cast"), COURT TECHNOLOGIES,
INC., a Delaware corporation ("Court"), COMPOSITE COMPONENTS, INC., a Delaware
corporation ("CCI"), INTEGRATED INFORMATION SERVICES, INC., a Delaware
corporation ("IIS"), LITIGATION SCIENCES, INC., a Delaware corporation
("LSI"), and SAFE-HIT CORPORATION, a Nevada corporation (Safe-Hit"), the
lenders ("Lenders") named in the Loan Agreement referred to below, and THE
NORTHERN TRUST COMPANY, an Illinois banking corporation ("Northern"), as agent
for the Lenders (Northern, in such capacity, being "Agent"). Quixote, EAS,
DMI, LTI, Stenograph, SLS, Spin-Cast, Court, CCI, IIS, LSI, and Safe-Hit are
individually and collectively referred to herein as "Borrower".
RECITALS
A. Quixote, EAS, DMI, Stenograph, SLS, Spin-Cast, Court, CCI, IIS, LTI,
LSI, Safe-Hit, Agent and Lenders entered into a certain Loan Agreement dated
as of June 26, 1992 as amended by a First Amendment to Loan Agreement, dated
as of June 30, 1992, as further amended by a Second Amendment to Loan
Agreement dated as of May 28, 1993, as further amended by a Third Amendment to
Loan Agreement dated as of June 26, 1993, as further amended by a Fourth
Amendment to Loan Agreement dated May 31, 1994, as further amended by a Fifth
Amendment to Loan Agreement dated December 15, 1994, and as further amended by
a Sixth Amendment to Loan Agreement dated April 3, 1995 (as so amended and as
the same may be hereafter amended, restated, supplemented or otherwise
modified, the "Loan Agreement").
B. Pursuant to the terms of the Loan Agreement, and at the request of
Borrower, the parties wish to further amend the Loan Agreement.
C. In consideration of the mutual agreements contained herein, and
subject to the terms and conditions hereof, the parties hereto agree as
follows:
1. Amendment.
1.1 Terms Used. Terms used but not otherwise defined herein are used
with the same meanings as provided therefor in the Loan Agreement.
1.2 Section 1 of the Loan Agreement. Section 1 of the Loan Agreement is
hereby amended by deleting the definition of Maximum Revolving Credit Loan and
inserting the following in its stead:
<PAGE>
"'Maximum Revolving Credit Loan' shall mean an amount equal to $70,000,000,
subject to reduction as provided in Section 2.4."
1.3 Section 2.1 of the Loan Agreement. Section 2.1 of the Loan
Agreement is hereby amended by deleting the first and second sentences of such
Section and inserting the following in its stead:
"The maximum aggregate amount of the Revolving Credit Loan to be made by each
Lender (such Lender's "Revolving Credit Loan Commitment") shall be the amount
set below such Lender's name on the signature pages to the Seventh Amendment
to Loan Agreement dated as of November 10, 1995. The aggregate principal
amount of the Revolving Credit Loan Commitments is $70,000,000."
1.4 Section 6.3 of the Loan Agreement. Section 6.3 of the Loan
Agreement is hereby amended by deleting subsections (b) - (f) thereof and
inserting the following in their stead.
"(b) (i) at the end of the Fiscal Quarter ending December 31, 1995, a positive
Consolidated Net Income for such Fiscal Quarter, (ii) at the end of the Fiscal
Quarter ending March 31, 1996, for the two Fiscal Quarter period then ended, a
positive Consolidated Net Income and (iii) at the end of each succeeding
Fiscal Quarter, for the three Fiscal Quarter period then ended, a positive
Consolidated Net Income, (in each case certified by Quixote at the end of such
Fiscal Quarter).
(c) (i) at the end of the Fiscal Year ended June 30, 1996, a positive
Consolidated Net Income from its continuing operations and (ii) at the end of
each Fiscal Year thereafter, a positive Consolidated Net Income, (in each case
certified by Quixote at the end of such Fiscal Year).
(d) at all times Consolidated Tangible Net Worth (which shall be certified by
Quixote at the end of each Fiscal Year) equal to or greater than
(i) for the 1996 Fiscal Year, $36,000,000;
(ii) for the 1997 Fiscal Year, the sum of (A) $36,000,000 plus
(B) 50% of Quixote's positive Consolidated Net Income for the 1996 Fiscal
Year;
(iii) for the 1998 Fiscal Year, the sum of (A) the required
Consolidated Tangible Net Worth for the 1997 Fiscal Year plus (B) 50% of
Quixote's positive Consolidated Net Income for the 1997 Fiscal Year; and
(iv) for each Fiscal Year thereafter, the sum of (A) the required
Consolidated Tangible Net Worth for the previous Fiscal Year and (B) 50% of
Quixote's positive Consolidated Net Income for the previous Fiscal Year.
(e) at the end of each Fiscal Quarter, a Consolidated Cash Flow to
Consolidated Fixed Charges Ratio (which shall be certified by Quixote at the
end of each Fiscal Quarter) for the four Fiscal Quarter period then ended
<PAGE>
equal to or greater than 2.0 to 1.0; provided, however, that with respect to
the Fiscal Quarters ending on or prior to June 30, 1996 such ratio shall be
measured for the period beginning October 1, 1995 and ending at the end of
such Fiscal Quarter.
(f) at the end of each Fiscal Quarter, a Consolidated Funded Debt to Adjusted
Capitalization Percentage (which shall be certified by Quixote at the end of
each Fiscal Quarter) equal to or less than:
(i) 66% for the 1996 Fiscal Year;
(ii) 63% for the 1997 Fiscal Year; and
(iii) 60% for the 1998 Fiscal Year and each Fiscal Year
thereafter."
1.5 Section 8 of the Loan Agreement. Section 8 of the Loan Agreement is
hereby amended by deleting it in its entirety and inserting the following in
its stead:
"The agreement of Lenders to extend Revolving Credit Loans to Borrower and of
Borrower to borrow money from Lenders pursuant to this Agreement and the
Revolving Credit Notes shall continue for a period ending on October 31, 1998
("Original Term") and on each October 31, commencing October 31, 1996, shall
be subject to extension for successive one-year periods ("Renewal Terms") with
the consent of all the Lenders and the Borrower."
1.6 Section 7.9 of the Loan Agreement. Section 7.9 of the Loan
Agreement is hereby amended by deleting it and inserting the following in its
stead:
"7.9 Capital Expenditures. Borrower shall not and shall not permit any of
its Subsidiaries to make Capital Expenditures within any Fiscal Year that, in
the aggregate, shall exceed (i) for the 1996 Fiscal Year, the lesser of (A)
$20,000,000 or (B) the sum of Quixote's Consolidated Net Income attributable
to its continuing operations plus depreciation and amortization for the 1996
Fiscal Year and (ii) for each Fiscal Year thereafter, the sum of Quixote's
Consolidated Net Income plus depreciation and amortization for such Fiscal
Year."
1.7 Exhibit B to the Loan Agreement. Exhibit B to the Loan Agreement is
hereby amended by deleting it in its entirety and inserting in lieu thereof a
new Exhibit B, which is attached hereto as Annex 1.
2. Consent and Approval. The Agent and each of the Lenders hereby
consent to and approve an investment by EAS of up to $1,200,000 in a joint
venture to be known as FIP-Energy Absorption Systems LLC. Notwithstanding
anything to the contrary contained in the Loan Agreement, neither Borrower nor
any Subsidiary of Borrower shall make any other investment in such joint
venture. This consent and approval shall be limited precisely as written and
shall not be deemed to approve any other transaction not otherwise in
compliance with the terms and conditions of the Loan Agreement.
3. Term Loan Agreement. The parties hereto hereby agree that that
<PAGE>
certain Term Loan Agreement (the "Term Loan Agreement") dated as of August 4,
1995 among the parties hereto shall be terminated on the date hereof. The
parties hereto hereby agree that all obligations owing under the Term Loan
Agreement by the Borrowers (as defined therein) shall be satisfied by the
Agent increasing the amount of the Revolving Credit Loan by $10,000,000 on the
date hereof and Quixote hereby directs the Agent to make such a Revolving
Credit Loan.
4. Waiver. The Lenders hereby waive any and all Defaults or Events of
Default caused by Borrower's failure to comply with the terms of subsections
6.3(b) through 6.3(f) of the Loan Agreement during the first Fiscal Quarter of
the 1996 Fiscal Year. This waiver shall be limited precisely as written and
shall not be deemed to prejudice the Lenders' rights and remedies with respect
to any future Defaults or Events of Default.
5. Representation and Warranties. In order to induce the Lenders to
enter into this Seventh Amendment, each Borrower represents and warrants that:
5.1 The representations and warranties set forth in Section 4 of
the Agreement, as hereby amended, are true, correct and complete on the date
hereof as if made on and as of the date hereof and that there exists no
Default of Event of Default on the date hereof.
5.2 The execution and delivery by each Borrower of this Seventh
Amendment has been duly authorized by proper corporate proceedings of each
Borrower and this Seventh Amendment, and the Agreement, as amended by this
Seventh Amendment, constitutes a valid and binding obligation of each
Borrower.
5.3 Neither the execution and delivery by each Borrower of this
Seventh Amendment, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof will violate any law,
rule, regulation, order, writ, judgment, injunction, decree or award binding
on any Borrower or any Borrower's articles of incorporation or by-laws or the
provisions of any indenture, instrument or agreement to which any Borrower is
a party or is subject, or by which it or its property, is bound, or conflict
with or constitute a default thereunder.
6. Effective Date. This Seventh Amendment shall become effective as of
the date first above written (the "Effective Date") upon receipt by the Agent
of (i) four (4) copies of this Amendment duly executed by each Borrower, the
Agent and all Lenders, (ii) Revolving Credit Notes executed by each Borrower
in favor of each of the Lenders substantially in the form of Annex 1 hereto
(the "Replacement Notes"), (iii) copies for each Lender of a certificate
executed by each Borrower certifying (a) board resolutions authorizing the
execution and delivery of this Seventh Amendment and the Replacement Notes and
authorizing the borrowings contemplated thereby and (b) incumbency, and (iv) a
$36,000 closing fee.
7. Reference to Loan Agreement. From and after the Effective Date
hereof, each reference in the Loan Agreement to "this Agreement", "hereof", or
"hereunder" or words of like import, and all references to the Loan Agreement
in any and all agreements, instruments, documents, notes, certificates and
other writings of every kind and nature shall be deemed to mean the Loan
Agreement, as amended by this and all previous Amendments.
<PAGE>
8. Miscellaneous.
8.1 Except as specifically set forth herein, the Loan Agreement and
all provisions of contained therein shall remain and continue in full force
and effect.
8.2 The execution delivery and effectiveness of this Seventh
Amendment shall not, except as expressly provided for herein, operate as a
waiver of (i) any right, power or remedy of the Lenders or the Agent under the
Loan Agreement, or (ii) any Default or Event of Default under the Loan
Agreement.
8.3 This Seventh Amendment shall be governed by, and construed and
enforced in accordance with, the laws of the State of Illinois applicable to
contracts made and performed in such State, without regard to the principles
thereof regarding conflict of laws.
8.4 This Seventh Amendment may be executed in any number of
separate counterparts, each of which shall, collectively and separately,
constitute one agreement.
<PAGE>
IN WITNESS WHEREOF, this Seventh Amendment has been duly executed as of
the date first written above.
THE NORTHERN TRUST COMPANY,
as Agent and as Lender
By: /s/ Daniel J. Honegger
-----------------------------
Name: Daniel J. Honegger
Title: Second Vice President
Revolving Credit Loan
Commitment: $23,333,334
LA SALLE NATIONAL BANK,
as Lender
By: /s/ Betty T. Latson
----------------------------
Name: Betty T. Latson
Title: First Vice President
Revolving Credit Loan
Commitment: $23,333,333
NBD BANK,
as Lender
By: /s/ Peter K. Gillespie
----------------------------
Name: Peter K. Gillespie
Title: Vice President
Revolving Credit Loan
Commitment: $23,333,333
<PAGE>
QUIXOTE CORPORATION ENERGY ABSORPTION SYSTEMS, INC.
By: /s/ Myron R. Shain By: /s/ Myron R. Shain
- ---------------------- ----------------------
Name: Myron R. Shain Name: Myron R. Shain
Title: Executive Vice President-Finance Title: Vice President
DISC MANUFACTURING, INC. STENOGRAPH CORPORATION
By: /s/Myron R. Shain By: /s/ Myron R. Shain
- --------------------- ----------------------
Name: Myron R. Shain Name: Myron R. Shain
Title: President Title: Vice President
LEGAL TECHNOLOGIES, INC. DISCOVERY PRODUCTS
By: /s/ Myron R. Shain By: /s/ Myron R. Shain
- ---------------------- ----------------------
Name: Myron R. Shain Name: Myron R. Shain
Title: Vice President Title: Vice President
INTEGRATED INFORMATION SERVICES,INC. SPIN-CAST PLASTICS, INC.
By: /s/ Myron R. Shain By: /s/ Myron R. Shain
- ---------------------- ----------------------
Name: Myron R. Shain Name: Myron R. Shain
Title: Vice President Title: Vice President
LITIGATION SCIENCES, INC. COURT TECHNOLOGIES, INC.
By: /s/ Myron R. Shain By: /s/ Myron R. Shain
- ---------------------- ----------------------
Name: Myron R. Shain Name: Myron R. Shain
Title: Vice President Title: Vice President
SAFE-HIT CORPORATION COMPOSITE COMPONENTS, INC.
By: /s/ Myron R. Shain By: /s/ Myron R. Shain
- ---------------------- ----------------------
Name: Myron R. Shain Name: Myron R. Shain
Title: Vice President Title: Vice President
Document Number: SEVENTH.AMD
<PAGE>
EXHIBIT 10 (b)
SECOND AMENDMENT TO LEASE
THIS SECOND AMENDMENT TO LEASE is made and entered into as of the 30th
day of January, 1995, between UNITED INSURANCE COMPANY OF AMERICA, as
"Landlord", and QUIXOTE CORPORATION, as "Tenant".
WHEREAS, Landlord and Tenant previously entered into a Lease (the
"Lease"), pursuant to which Landlord leased to Tenant, and Tenant leased
from Landlord, the premises commonly known as Suite 3000 on the 30th floor
of the One East Wacker Drive Building, Chicago, Illinois, on the terms and
provisions therein set forth.
WHEREAS, Landlord and Tenant thereafter entered into an amendment to
the Lease (the "First Lease Amendment"), pursuant to which Suite 2320,
located on the 23rd floor of the One East Wacker Drive Building, Chicago,
Illinois (the "Expansion Space"), was added to the Premises under the
Lease, on the terms and provisions set forth in the First Lease Amendment.
WHEREAS, Tenant recently expressed its desire to delete the Expansion
Space from the Premises, and Landlord and Tenant have reached an agreement
with respect to the deletion of the Expansion Space from the Premises, and
they wish to set forth their agreement in said respects in writing.
NOW, THEREFORE, in consideration of the reciprocal agreements herein
contained, and other good and valuable consideration, the adequacy and
receipt whereof hereby is acknowledged, the parties hereto agree as
follows:
1. the above recitals are incorporated in and made an express part of
this Second Amendment to Lease.
2. As of December 31, 1994, the Expansion Space shall be deemed
deleted from the Premises under the Lease; as of said date, the increases
in the Base Rent which were set forth in paragraph 4 of the First Lease
Amendment no longer shall be applicable; and as of said date, Tenant shall
have no further rights or options as set forth in the First Lease
Amendment. After said date, the Premises shall consist only of the
Premises originally described in the Lease, and the Base Rent that is due
and payable by Tenant under the Lease shall be reduced to the Base Rent
originally set forth in the Lease.
3. Landlord hereby acknowledges receipt from Tenant of a Termination
Fee, which was paid by Tenant to Landlord in consideration for Landlord's
deletion of the Expansion Space from the Premises; and Landlord hereby
acknowledges that Tenant has vacated and surrendered to Landlord possession
of the Expansion Space.
4. Except as expressly stated herein, the Lease shall be and
remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Lease
Termination Agreement as of the date and year above first written.
LANDLORD: TENANT:
United Insurance Company of America Quixote Corporation
By:/s/ David F. Bengston By:/s/ Myron R. Shain
-------------------------- --------------------------
Its: Vice President Its: Vice President
-------------------------- --------------------------
<PAGE>
EXHIBIT 10 (c)
THIRD AMENDMENT TO LEASE
THIS THIRD AMENDMENT TO LEASE is made and entered into as of the 18th day
of January, 1996, between UNITED INSURANCE COMPANY OF AMERICA, as "Landlord",
and QUIXOTE CORPORATION, as "Tenant".
WHEREAS, Landlord and Tenant previously entered into a Lease (the
"Lease"), pursuant to which Landlord leased to Tenant, and Tenant leased from
Landlord, the premises commonly known as Suite 3000 on the 30th floor of the
One East Wacker Drive Building, Chicago, Illinois, on the terms and conditions
therein set forth.
WHEREAS, Landlord and Tenant thereafter entered into an amendment to the
Lease (the "First Lease Amendment");, pursuant to which Suite 2320, located on
the 23rd floor of the One East Wacker Drive Building, Chicago, Illinois, was
added to the Premises under the Lease, on the terms and conditions set forth
in the First Lease Amendment.
WHEREAS, thereafter entered into a second amendment to the Lease (the
"Second Lease Amendment"), pursuant to which Suite 2320 was deleted from the
Premises under the Lease, on the terms and conditions set forth in the Second
Lease Amendment.
WHEREAS, Tenant has expressed its desire to add additional space to the
Premises under the Lease, and Landlord and Tenant have reached an agreement
with respect thereto.
NOW, THEREFORE, in consideration of the reciprocal agreements herein
contained, and other good and valuable consideration, the adequacy and receipt
whereof hereby is acknowledged, the parties hereto agree as follows:
1. the above recitals are incorporated in and made an express part of
this Third Amendment to Lease.
2. As of February 1, 1996, certain space located on the 29th floor of
the One East Wacker Drive Building, Chicago, Illinois, known as Suite 2900 and
shown on Exhibit A-2 attached hereto and made a part hereof (the "Expansion
Space") shall be added to the Premises under the Lease.
3. Effective February 1, 1996, the Base Rent that is payable by Tenant
under the Lease shall be increased by the following amounts for the following
periods:
DATE ANNUAL RENT MONTHLY RENT
---- ----------- ------------
2/1/96 - 1/31/97 $11,157.72 $ 929.81
2/1/97 - 1/31/98 $11,380.87 $ 948.41
2/1/98 - 1/31/99 $11,608.49 $ 967.38
2/1/99 - 1/31/00 $11,840.66 $ 986.72
2/1/00 - 1/31/01 $12,077.47 $1,006.46
2/1/01 - 1/31/02 $12,319.02 $1,026.59
2/1/02 - 1/31/03 $12,565.40 $1,047.12
2/1/03 - 1/31/04 $12,816.71 $1,068.06
2/1/04 - 2/28/04 $ 1,089.42 $1.089.42
If the Expansion Space is ready for occupancy hereunder and Tenant takes
possession of the same prior to February 1, 1996, the Base Rent shall be
increased for the period prior to February 1, 1996 by an amount equal to
$929.81 divided by 31 multiplied by the number of remaining days in January of
1996 from and after the date that Tenant takes possession; and Tenant's
Proportionate Share shall be increased as hereinafter provided as of the date
that Tenant so takes possession.
4. Effective February 1, 1996, Tenant's Proportionate Share of
Additional Rent under the Lease shall be increased by 0.0042 (0.42%).
<PAGE>
5. As soon as reasonably possible hereafter, Landlord shall paint the
Expansion Space with building standard paint and shall carpet and pad the
Expansion Space with building standard carpet and pad, in colors as shall be
selected by Tenant from Landlord's available selections. In all other
respects, Landlord is leasing to Tenant, and Tenant is leasing from Landlord,
the Expansion Space in its existing condition, "as is"; and Landlord is making
no promise, agreement, representation or warrant to Tenant with respect to the
condition, repair, alteration or improvement of the Expansion Space.
6. Subject to the rights, if any, of Sussman, Selig & Ross, Tenant shall
have the "right of first refusal" to lease any other space on the 29th floor
of the Building, as provided in this Paragraph 6. If Landlord obtains a
letter of intent or a written lease executed by a prospective tenant for the
leasing of any space on the 29th floor of the Building, Landlord shall give
Tenant written notice thereof, together with a copy of the letter of intent or
written lease (as the case may be). Tenant then shall have seven (7) business
days in which to notify Landlord in writing that Tenant wishes to lease the
subject space on all of the terms and conditions set forth in the letter of
intent or written lease (as the case may be). If Tenant so notifies Landlord,
Tenant shall be deemed to have exercised its right of first refusal to lease
the subject space; and Landlord and Tenant shall enter into a written
amendment to this Lease, adding the subject space to the Premises and
incorporating all of the business terms and conditions set forth in the letter
of intent or written lease (as the case may be), including but not limited to
those concerning rent, security deposit, length of term, Tenant's
proportionate share, construction of tenant improvements and other tenant
concessions. Notwithstanding the foregoing, the length of the term for the
leasing of the subject space shall be coterminous with the Term of this Lease
if Tenant exercises its right to first refusal during the first thirty-six
(36) full calendar months hereafter. Such amendment shall be entered into
between Landlord and Tenant within five (5) business days after Tenant
exercises its right of first refusal as aforesaid or fails to execute a
written lease amendment pursuant thereto as aforesaid, Tenant's right of first
refusal shall be deemed to have lapsed with respect to the subject space; and
Landlord will be free to enter into a written lease with the prospective
tenant on substantially the same terms and conditions as are contained in the
letter of intent or written lease that was tendered by the prospective tenant.
7. Except as expressly stated herein, the Lease shall be and remain in
full force and effect.
IN WITNESS WHEREOF, the parties have executed this Third Amendment to
Lease as of the date and year above first written.
LANDLORD: TENANT:
United Insurance Company of America Quixote Corporation
By:/s/ David F. Bengston By:/s/ Myron R. Shain
--------------------------- ---------------------------
Its: Vice President Its: Vice President
--------------------------- ---------------------------
<PAGE>
EXHIBIT 10 (d)
Mr. Leslie J. Jezuit
2530 Saint Regis
Richmond, VA 23236
Dear Les,
On behalf of the Board of Directors of Quixote Corporation it is with
pleasure that I offer to you the position as President and Chief Operating
Officer of Quixote Corporation commencing December 29, 1995.
In this position you will be reporting directly to me in my capacity
as Chairman and Chief Executive Officer of Quixote Corporation. Reporting
to you, as of December 29, 1995, will be Myron R. Shain in his capacity
as Chief Financial Officer of Quixote Corporation and in his capacity as
President and Chief Operating Officer of Disc Manufacturing, Inc. (DMI)
and James H. DeVries in his capacity as General Counsel as it relates to
the activities of DMI.
Reporting to me until a future date, which shall be mutually agreed
upon between us, will be George D. Ebersole in his capacity as President
and Chief Operating Officer of Energy Absorption System, Inc. (EASI) and
James H. DeVries as Secretary of Quixote Corporation and in his capacity
as President and Chief Operating Officer of Legal Technologies, Inc.
(LTI) and in his capacity as General Counsel as it relates to the
activities of Quixote Corporation, EASI and LTI.
You shall also be elected by the Board of Directors of DMI to the
position of Vice-Chairman of DMI, reporting to me as Chairman.
The following are the terms of your employment with Quixote
Corporation which I believe are acceptable to you.
-Basic Salary: $22,920 per month, half payable on the 15th and half
payable on the 30th of each month. We will provide a base salary review
after the first six months of employment.
-Annual Cash Bonus: A guaranteed bonus of $100,000 for the first
year's employment, payable $50,000 on July 1, 1996 and $50,000 on
December 31, 1996. In addition, should your annual bonus for Fiscal
1997 as determined by the officers bonus plan as approved by the
Compensation Committee of the board exceed $50,000, you will receive
the greater amount.
-Stock Options: An initial award of 40,000 shares. You will be
eligible for future awards as recommended by the CEO and determined and
approved by the Compensation Committee.
-Company Automobile: The company will provide you with a leased
automobile and all related expenses. The automobile type will be a
top-line Audi or Lincoln Continental.
-Downtown Luncheon Club: The company will reimburse you for the
inititation fee, monthly dues and all business related expenses.
-Term of Employment and Service: The initial term of employment
shall be one year. If a termination for any reason other than cause
occurs within the first year, the company shall not be obligated for any
additional payments other than those outlined in this letter.
<PAGE>
-If a termination occurs for any reason other than cause after the
first year's employment, you shall receive one year's base salary paid
monthly. In addition, the company will provide you with reasonable
outplacement services.
-Benefits: You will participate in our standard benefit plans,
including 401K and group life, health and dental with the executive
supplement.
-Retirement: You would be eligible to participate in our plan
consistent with its terms of eligibility.
-Vacation: You will receive three weeks vacation after one year's
employment. In addition, as requested, we will provide one week's paid
vacation from August 26 to 30, as you have currently planned.
-Relocation: The company shall provide the following assistance in
relocating your family to the Chicago area. Any additional expenses you
anticipate incurring must receive the approval of the CEO.
-Up to two house hunting trips for you and Janet, which would not
exceed a total of seven days.
-Purchase expenses for the new residence including legal and
recording fees, stamp duties, escrow fees, survey fees, title insurance
and search costs, and loan placement charges other than points.
-Selling expenses for the old residence which would include
appraisal fees, broker/agent commission, legal fees including title costs,
stamp duties, mortgage or other legally required costs.
-Principal interest, taxes and insurance monthly costs in the amount
of $2,519.37 on the current residence for a period not to exceed one year.
Principal payments made will be reimbursed to Quixote upon closing.
The home must be listed at the average of two independent appraisals,
unless they differ by more than 10%. If they differ by more than 10%, a
third appraisal should be secured.
-The company will guarantee a loan in the amount of your current
home equity of $145,000 and pay the interest on it until your current
house sells and closes, for a period not to exceed one year.
-Interim accommodation costs for up to six months which are limited to
lodging, meals and laundry, and may be extended month to month with
prior approval of the CEO for unusual circumstances, but in any
event not to exceed one year. In addition, you may travel home
every other weekend at company expense and where possible combine
these home visits with business related travel.
-Transportation, insurance, packing and unpacking of household
contents including up to two automobiles.
-A one-time relocation allowance of $15,000 to cover all relocation
items not specifically identified in this letter.
-A "gross up" equal to the tax liability created by the direct
reimbursement of eligible and approved expenses related to your
relocation.
Should this be your understanding of the conditions of your
employment with Quixote Corporation, please acknowledge your agreement
and acceptance by signing the enclosed copy of this letter and returing
it to me.
<PAGE>
I, and your colleagues at Quixote Corporation, look forward to
welcoming you to Quixote Corporation and to working closely with you in
the months and the years ahead to make Quixote Corporation a bigger and
more profitable enterprise.
Sincerely,
/s/ Philip E. Rollhaus
-----------------------------
ACCEPTED
/s/ Leslie J. Jezuit Date: December 18, 1995
- -------------------------------- -------------------------------
<PAGE>
EXHIBIT 10 (e)
AGREEMENT
January 5, 1996
Reference is made to that certain Surviving Stockholders Agreement (the
"Surviving Stockholders Agreement") dated April 12, 1995 by and among Quantic
Industries, Inc. (the "Company"), James S. Fetherston ("Fetherston"), Charles
G. Davis, Jr., individually and as trustee ("Davis"), Energy Absorption
Systems, Inc. ("Energy"), and certain other parties. The parties hereto
hereby agree that the Surviving Stockholders Agreement is modified as
follows:
1. The date appearing in Section 5(a) of the Surviving Stockholders
Agreement is hereby changed from January 6, 1996 to February 29, 1996.
2. The date appearing in Section 5(b) of the Surviving Stockholders
Agreement is hereby changed from January 6, 1996 to February 29, 1996.
3. The date appearing in Section 6(b) of the Surviving Stockholders
Agreement is hereby changed from January 6, 1996 to February 29, 1996.
4. The date appearing in the first paragraph of Section 7 of the
Surviving Stockholders Agreement is hereby changed from January 6, 1996 to
February 29, 1996.
Agreed to and accepted as of the date first written above.
Quantic Industries, Inc.
By:/s/ James S. Fetherston /s/ James S. Fetherston
-------------------------------- ----------------------------
Its: Chairman James S. Fetherston
--------------------------------
/s/ Charles G. Davis, Jr.
------------------------------
Energy Absorption Systems, Inc. Charles G. Davis, Jr.,
individually and as Trustee of
By:/s/ Philip E. Rollhaus, Jr. Charles G. Davis, Jr. 1990
-------------------------------- Trust Agreement dated 1/27/90
Its: Chairman
--------------------------------
<PAGE>
EXHIBIT 10 (f)
ASSIGNMENT AGREEMENT
This Assignment Agreement is effective as of this 10th day of
January, 1996 by and between Energy Absorption Systems, Inc., a Delaware
corporation ("Energy"), and Barrier Systems, Inc., a California corporation
("BSI").
W I T N E S S E T H:
WHEREAS, Energy owns the entire right, title and interest in and to
certain Patents (as defined herein) related to Barriers (as defined herein)
and to methods or devices for moving such Barriers, and certain Licenses
(as defined herein) granted in connection with such Patents; and
WHEREAS, Energy desires to sell and assign all of its right, title and
interest in the Patents subject only to the Licenses to BSI, and BSI
desires to buy and accept such assignment of the Patents subject to the
Licenses, all in exchange for the consideration described herein;
NOW, THEREFORE, IT IS AGREED:
1 Definitions.
1.1 Patents. "Patents" means the patents and patent applications
listed in Schedule 1.1 and all related patents or patent applications if
any, whether previously or subsequently filed, which correspond to or claim
the priority of any of the patents and patent applications listed in
Schedule 1.1 and attached hereto, including all divisions, continuations,
continuations-in-part and reissues thereof.
1.2 Licenses. "Licenses" shall mean the licenses of the Patents
listed in Schedule 1.2 and attached hereto.
1.3 Barriers. "Barriers" means (a) any transferable roadway barrier
having an upper end defining continuous lifting ledges for receiving
rollers that lift and suspend the barrier, and (b) any barrier transport
device with a rigid conveyor having a fixed S-shaped configuration that
lifts and suspends a barrier as it moves across one or more traffic lanes.
1.4 CMR License. "CMR License" means the Agreement of November 2,
1983 between the Commissioner of Main Roads ("CMR") and Quick-Steel
Engineering Party Limited ("Quick-Steel Engineering") whereunder CMR, as
Licensor, grants to Quick-Steel Engineering, as Licensee, a non-exclusive
license to manufacture, use and sell moveable lane dividing strip
structures for roadways pursuant to an Australian Patent No. 482604.
<PAGE>
2 Assignment.
2.1 Assignment of Patents. Energy hereby assigns to BSI its entire
right, title and interest in and to the Patents, subject only to the
Licenses, and its rights, if any, to past damages arising from the Patents.
2.2 Assignment of Licenses. Energy hereby assigns to BSI its entire
right, title and interest in and to the Licenses.
2.3 Assignment of Litigation. Energy will assign to BSI, at BSI's
request, all of Energy's right, title and interest in and to the
Litigation,
as such term is defined in Section 5.4 below.
3 Consideration.
3.1 Payments. In exchange for the assignments described in
Section 2, BSI hereby agrees to pay Energy One Million Nine Hundred Sixty
Thousand and Sixty-Eight Dollars and Ninety Cents ($1,960,068.90) on the
date hereof.
3.2 Assumption of Licenses. As further consideration for the
assignments described in Section 2, BSI hereby assumes all of the
obligations of Energy under the Licenses, and will indemnify Energy against
any and all liabilities (including but not limited to reasonable attorneys
fees) arising after the date hereof from the Licenses and from the
assignment of the Licenses to BSI.
3.3 Forgiveness of Royalties. Energy hereby forgives, releases and
cancels in full BSI's obligation to pay to Energy royalties that are not
yet payable on the date hereof, pursuant to the terms of that certain
amended and restated License Agreement between Quick-Steel Engineering
Party Limited and Barrier Systems, Inc. dated May 1, 1989, amending and
restating the Agreement between Quick-Steel Engineering and Carson
Manufacturing Company dated May 10, 1983 (the "BSI License").
4 CMR License.
4.1 Acknowledgments by BSI. BSI acknowledges that it is aware of the
terms of the CMR License. BSI acknowledges that Section 10(b) of the CMR
License prohibits the licensee from assigning its rights thereunder without
the prior consent in writing of CMR, and that such consent shall not be
unreasonably withheld. BSI further acknowledges that Energy has not
obtained the consent of CMR to its assignment to BSI of the CMR License.
<PAGE>
4.2 Conflict with CMR License. Energy represents and warrants that,
to the best of its knowledge without any investigation and based solely on
the representations of Quick-Steel Engineering (i) the devices described in
the Patents are not "Improvements" as that term is defined in the CMR
License, and (ii) the present commercial versions of the products covered
by the Patents do not embody the "Technology" and are not licensed
"Products" as those terms defined in the CMR License. Energy represents and
warrants that Energy has not paid and is not liable for the payment of any
royalties to CMR pursuant to the CMR License.
4.3 Consent of CMR. Notwithstanding the assignment by Energy of
whatever rights and interests it may have in the CMR License, BSI
acknowledges that Energy does not intend to seek the consent of CMR in
connection with this transaction. BSI will consummate the transactions
contemplated herein without requiring Energy to obtain CMR's consent to the
assignment of its interests in the CMR License.
5 Further Assistance.
5.1 Communication with Patent Advisors; Files and Records.
Energy will promptly instruct its patent advisors for each of the Patents
to disclose and release all files related to the Patents to BSI. Energy
will cooperate with BSI, at BSI's expense, in all reasonable ways in
further prosecution and other activities related to the Patents.
5.2 Documentation of Assignments. Energy will promptly execute any
additional documents required by BSI to carry out the assignments of this
Agreement, including recordable assignments for the Patents.
5.3 Notices to Licenseholders. Energy will cooperate with BSI to
send appropriate written notices pertaining to the assignment of the
Licenses, as required by the Licenses or as otherwise reasonably requested
by BSI.
5.4 Canadian Litigation. BSI recognizes and acknowledges that upon
consummation of the assignment to BSI of the Patents and Licenses, Energy
will take action to remove itself from all litigation pending in Canada
relating to the Patents ("Litigation"). Energy will cooperate with BSI
concerning the Litigation; provided, however, if BSI elects to pursue the
Litigation after the assignment of the Patents and Licenses, BSI agrees to
indemnify and hold Energy harmless from any damages Energy suffers arising
after the date hereof from BSI's continued participation in the Litigation.
<PAGE>
6 Covenants of Energy.
6.1 Non-Disclosure. Energy agrees that (except as otherwise required
in the performance of its obligations hereunder) it will not directly or
indirectly use for the benefit of anyone other than BSI, or disclose to
others, any confidential information or data relating to Barriers,
including, without limitation, confidential information and data relating
to Barriers, the Patents, and Licenses; provided however, BSI acknowledges
and agrees that Energy's parent company may disclose information regarding
this Agreement and the transactions contemplated herein in order to comply
with its public company reporting obligations under the securities laws.
6.2 Records. Energy shall deliver to BSI within five (5) days of the
date hereof the originals and all copies of all records and confidential
information and data related to Barriers, the Patents, and Licenses
including without limitation, notes, lists, models, drawings and sketches,
blueprints and technical documentation, prepared by Energy or its assignor
(or their agents) or otherwise in Energy's possession, on or prior to the
date of this Agreement.
6.3 Non-competition. For a period from the date hereof until three
(3) years after the last to expire of the Patents, Energy shall not sell
directly or indirectly any product that would infringe the Patents or that
could be substituted for existing applications of the Product in the
Territory as of the date hereof without prior approval of BSI; provided,
however, that the foregoing restriction shall not apply to any Energy
product or product line, including future modifications of such products,
which are identified in Schedule 6.3 attached hereto and incorporated
herein. For purposes of this Section 6.3, (i) Product shall mean a
moveable barrier system as described in United States patent numbers
4,498,803, 4,500,225 or 4,624,601 consisting of a series of moveable
barriers, transfer vehicle(s) and ancillary equipment necessary to allow
the barrier system to function properly, and (ii) Territory shall mean
those countries of the world where any of the Patents have been issued.
7 Representations and Warranties of Energy.
7.1 Accuracy and Completeness of Disclosure. Energy represents and
warrants: (a) Schedule 1.1 lists all of the patents and patent applications
which both (i) are in any way related to Barriers or to methods or devices
for moving Barriers and (ii) are owned in whole or in part by Energy; and
(b)(i) Schedule 1.2 lists all of the licenses which have been granted in
connection with such Patents, and (ii) that except as listed on Schedule
1.2, there are no other agreements, arrangements, contracts or
understandings which govern or relate to the Patents and the Licenses.
<PAGE>
7.2 Ownership. Energy represents and warrants that as of the date of
this Agreement, Energy holds all right, title and interest in and to the
patents and patent applications of Schedule 1.1 (except for the rights
granted to third parties by the Licenses of Schedule 1.2).
7.3 Right to Assign. Energy represents and warrants that subject to
the provisions of Section 4 and the Licenses, Energy has the right to
assign the rights assigned by this Agreement, except as required by the CMR
License.
7.4 Payment of Maintenance Fees. Energy represents and warrants that
all maintenance fees on the Patents due on or before December 31, 1995 have
been paid by Energy.
7.5 No Conflicting Agreements. Energy represents and warrants that
it is not a party to any other agreement, the terms and conditions of
which, would prevent or interfere with its obligations under this
Agreement. Energy represents and warrants that to the best of Energy's
knowledge, except as set forth on Schedule 7.5, there are no disputes
between Energy and any third party to said Licenses, and there are no
disputes between Energy and any third party to any other agreements,
contracts, understandings or arrangements regarding the subject matter of
this Agreement.
7.6 Information Regarding Licenses, Contracts. Energy represents and
warrants that it has delivered to BSI true, accurate and complete copies of
all Licenses and all other contracts, agreements, understandings or
arrangements which govern or relate to Barriers, the Patents, and the
Licenses. Except with respect to the BSI License, Energy hereby represents
and warrants that it is not in default under or in breach or violation of
any term or provision of any of the Licenses, or any other contract,
agreement, understanding or arrangement which governs or relates to
Barriers, the Patents or the Licenses, and, to Energy's knowledge, no other
party to any License or any other such contract, agreement, understanding
or arrangement is in default thereunder, except as set forth on Schedules
7.5 and 7.8.
7.7 Status of Licenses, Contracts. Energy represents and warrants
that the parties to the Licenses described on Schedule 1.2 have made
reports and paid royalties through the dates set forth on Schedule 7.7.
7.8 No Infringement Actions. Energy represents and warrants (a) that
there are no infringement actions or any other legal proceedings, pending
or, to Energy's best knowledge, threatened, with respect to the Patents
except as set forth on Schedule 7.8, and (b) that, to the best of Energy's
knowledge, the systems claimed in the Patents do not infringe any other
patent or rights.
<PAGE>
8 Representations and Warranties of BSI.
8.1 Right to Enter Agreement. BSI represents and warrants that it
has the power and authority to enter into this Agreement and to undertake
the obligations contemplated herein.
8.2 No Conflicting Agreements. BSI represents and warrants that it
is not a party to any other agreement, the terms and conditions of which,
would prevent or interfere with its obligations under this Agreement. BSI
represents and warrants that except as set forth on Schedule 8.2, there are
no disputes between BSI, Energy or, to BSI's best knowledge, any third
party to said Licenses, and there are no disputes between BSI and any third
party to any other agreements, contracts, understandings or arrangements
regarding the subject matter of this Agreement.
8.3 Copies of Licenses, Contracts. BSI represents and warrants that
it has received from Energy copies of all Licenses and all other contracts,
agreements, understandings or arrangements listed on Schedule 1.2 attached
hereto.
8.4 No Infringement Actions. BSI represents and warrants that to the
best of its knowledge there are no infringement actions or any other legal
proceedings, pending or threatened, with respect to the Patents except as
set forth on Schedule 7.8, and that the systems shown in the Patents do not
infringe any other patent or rights.
8.5 Disclosure. BSI represents and warrants that to the best of its
knowledge, Schedule 1.2 lists all of the Licenses that are in any way
related to the Patents.
9 Miscellaneous Provisions
9.1 Expenses. All expenses incurred by any party hereto shall be
borne by the party incurring the same.
9.2 Notices. Any notice expressly provided for under this Agreement
shall be in writing, and shall be deemed given and effective when delivered
in hand or received by courier or telecopy or, if mailed, on the third day
after the date of mailing if sent by certified or registered mail, return
receipt requested, postage prepaid, addressed to such party at the address
for such party set below. Any party and any representative designated
below may, by notice to the others, change its address for receiving such
notices.
<PAGE>
Address for notices to Energy:
George D. Ebersole, President
Energy Absorption Systems, Inc.
One E. Wacker Drive, Suite 3000
Chicago, Illinois 60601
Fax No. (312) 467-9928
with a copy to:
Anne Hamblin Schiave
McBride Baker & Coles
500 West Madison Street, 40th Floor
Chicago, Illinois 60606
Fax No. (312) 993-9350
Address for notices to BSI:
John W. Duckett, President
Barrier Systems, Inc.
1100 East William Street, Suite 206
Carson City, NV 89701-3104
Fax No. (702) 885-2598
with a copy to:
John V. Erickson, Esq.
Collette & Erickson
555 California Street, Suite 4350
San Francisco, CA 94104
Fax No. (415) 788-6929
9.3 Severability. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
9.4 Third Party Beneficiaries. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
<PAGE>
9.5 Assignment and Benefits of Agreement. This Agreement shall be
binding upon and shall inure to the benefit of the parties or their
respective successors, but may not be assigned by any of the foregoing
without the written consent of the others. Except as aforesaid, nothing in
this Agreement, express or implied, is intended to confer upon any person
other than the parties hereto and their said successors and assigns, any
rights under or by reason of this Agreement.
9.6 Construction of Agreement. Section headings shall have no effect
on the interpretation of this Agreement. This Agreement has been
negotiated by the respective parties hereto and their attorneys and the
language hereof shall not be construed for or against any party. A
reference to a Section, an Exhibit or a Schedule shall mean a section in or
an exhibit or schedule to this Agreement unless otherwise explicitly set
forth.
9.7 Entire Agreement; Counterparts, Etc. This Agreement and
Schedules and Exhibits attached hereto constitute the entire agreement
among the parties as to the subject matter of this Agreement. This
Agreement may be executed in one or more counterparts, all of which shall
constitute one and the same instrument.
9.8 Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Illinois.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above.
ENERGY ABSORPTION SYSTEMS, INC.
By: /s/George D. Ebersole
---------------------------------
George D. Ebersole, President
BARRIER SYSTEMS, INC.
By: /s/John W. Duckett
---------------------------------
John W. Duckett, President
<PAGE>
Schedule 1.1
Patents
Title of Inventor Country Patent Date
Patent Number Issued
- -------- -------- ------- ------ ------
Transferable John P. Australia 535,245 29/6/84
Roadway Lane Quittner
Divider
Transferable John P. Australia 576,754 3/1/89
Lane Divider Quittner
Transferable John P. Austria 0125817* 18/3/87
Lane Divider Quittner
Transferable John P. Belgium 125,817* 18/3/87
Lane Divider Quittner
Transferable John P. Canada 1,176,848 30/10/84
Roadway Lane Quittner
Divider
Transferable John P. Canada 1,208,469 29/7/86
Roadway Lane Quittner
Divider
Transferable John P. Canada 1,230,001 08/12/87
Lane Divider Quittner
Transferable John P. Canada 1,232,784 16/2/88
Lane Divider Quittner
Transferable John P. Federal 0125817* 18/3/87
Lane Divider Quittner Republic
of Germany
Transferable John P. France 125,817* 18/3/87
Lane Divider Quittner
Transferable John P. Italy 125,817* 18/3/87
Lane Divider Quittner
Transferable John P. Japan 1732493 17/2/93
Lane Divider Quittner
Transferable John P. Luxembourg 125,817* 18/3/87
Lane Divider Quittner
Transferable John P. Malaysia U1-9102410 27/12/91
Lane Divider Quittner (Pending) (Filing Date)
<PAGE>
Transferable John P. Malaysia U1-9102411 27/12/91
Lane Divider (Pending) (Filing Date)
Transferable John P. The 125,817* 18/3/87
Lane Divider Quittner Netherlands
Transferable John P. Sweden 125,817* 18/3/87
Lane Divider Quittner
Transferable John P. Switzerland 125,817* 18/3/87
Lane Divider Quittner
Transferable John P. United 125,817* 18/3/87
Lane Divider Quittner Kingdom
Moveable Lane John P. United 4,498,803 12/02/85
Barrier Quittner States
Locking System
Transferable John P. United 4,500,225 19/02/85
Roadway Lane Quittner States
Divider
Transferable John P. United 4,624,601 25/11/86
Roadway Lane Quittner States
Divider
* Energy has discovered that the disclosure of Australian Patent No.
535,245 qualifies as prior art against these patents, which will narrow the
scope of the patents.
<PAGE>
Schedule 1.2
Licenses
1. Amended and Restated License Agreement between Quick-Steel
Engineering Party Limited and Barrier Systems, Inc. dated May 1, 1989,
amending and restating the Agreement between Quick-Steel Engineering and
Carson Manufacturing Company dated May 10, 1983.
2. Agreement between Quick-Steel Engineering Party Limited and Carson
Manufacturing Company dated May 10, 1983, which may have been amended from
time to time.
3. Agreement between Quick-Steel Engineering Party Limited and
Techniques Speciale De Securite dated December 1, 1983 relating to a
transferable roadway lane divider, and amended on April 16, 1984.
4. Agreement between Quick-Steel Engineering Party Limited and
Techniques Speciale De Securite dated December 1, 1983 relating to a
moveable media strip.
5. Transfer of License Agreement between EMT-International BV. and
Techniques Speciale De Securite dated July 1, 1987. [deemed rescinded]
6. License Agreement between the Commissioner of Main Roads and Quick-
Steel Engineering Party Limited, dated November 2, 1983.
<PAGE>
Schedule 6.3
Permanent Mounted Attenuators
G-R-E-A-T (Registered Trademark) System
Hi-Dro (Registered Trademark) Sandwich System
Hex-Foam (Registered Trademark) Sandwich System
The N-E-A-T'
LMA (Registered Trademark)
Hi-Dro' Cell Cluster
Brakemaster (Registered Trademark) System
Work Zone Attenuators
Energite (Registered Trademark) Inertial Barrier
Systems
The N-E-A-T'
G-R-E-A-T (Registered Trademark) CZ
TRITON (Registered Trademark) BARRIER
Truck Mounted Attenuators
Hex Foam (Registered Trademark) TMA
Alpha 1000 (Registered Trademark)
Alpha 2001 MD (Registered Trademark)
Alpha 60 MD (Registered Trademark)
LS-PRO TMA
Cushion Wall'
Barrier Gate (Registered Trademark)
Guardrail and GuardRail End Treatments
Sentre (Registered Trademark)
Trend (Registered Trademark)
W-Beam
Thrie Beam
RTA'
Longitudinal Barrier
TRITON (Registered Trademark) BARRIER
Miscellaneous Products
MP-3 (Registered Trademark) Anchors
QuadGuard Attenuator
<PAGE>
Schedule 7.5
Conflicting Agreements, Disputes
1. Energy and TSS believe that Gaillednat of 17, Rue Pierre
Rigaud, 94200 Ivry Sur Seine, France is infringing the patents.
2. Energy believes that TSS may not be paying royalties on all
royalty-bearing transactions. See correspondence between Messrs. Dreznes
and Tabaillon dated June 19, 1995, attached hereto.
<PAGE>
Schedule 7.7
Royalty Payment Schedule
Royalty Payments On Royalty Payments
Sales Made Since Made On Sales Made
License 7/1/94 for Period Ended
- -----------------------------------------------------------------------
BSI $ 546,157.74 September 30, 1995
TSS 93,373.41 September 30, 1995
<PAGE>
Schedule 7.8
Infringement Actions and Other
Legal Proceedings
1. Canada Federal Court File No. T-2197-92.
Energy Absorption Systems, Inc., Plaintiff, and 2859-7888 Quebec
Inc., Richard Capuano, 2704927 Canada Inc., Les Services de Beton
Universels Ltee, Defendants.
2. Canada Federal Court File No. T-2394-94
Energy Absorption Systems, Inc., Plaintiff, and D.I.M.S. Construction
Inc., Defendant.
3. Canada Federal Court No. T-1154-95
Energy Absorption Systems, Inc., Plaintiff, and Gilles Richer,
Signalisation LASM Inc., 9015-2539 Quebec Inc., Richard Bourdon, LaCroix
Industries, 2842-6351 Quebec Inc., c.o.b. as Signalisation Laurentienne,
Mole Construction Inc., John Doe, Jane Doe, and Doe Corporation,
Defendants.
4. Quebec Superior Court Action No. 500-05-009072-925
2704927 Canada Inc., Plaintiff, and Les Services de Beton Universels
Ltee, Defendant, and Energy Absorption Systems, Inc., Intervenant.
<PAGE>
Schedule 8.2
BSI Disputes
None.
<PAGE>
EXHIBIT 11
QUIXOTE CORPORATION AND SUBSIDIARIES
Computation of Net Earnings Per Average Common
and Common Equivalent Share
<TABLE>
<CAPTION>
For the Three Months Ended
December 31, 1995
-------------------------
Fully
Primary Diluted
---------- ----------
<S> <C> <C>
Net earnings as reported $ 317,000 $ 317,000
Add interest expense and deferred charge
amortization (net of income taxes) 245,000 (1)
---------- ----------
Adjusted net earnings for computation (A) $ 317,000 $ 562,000
========== ==========
Average common shares outstanding would be
adjusted for the additional shares that
would be issued assuming conversion of the
debentures and exercise of stock options
as follows:
Weighted average shares outstanding 7,863,168 7,863,168
Shares assumed issued upon conversion of
debentures 1,051,316
Incremental shares outstanding assuming
exercise of stock options using the
treasury stock method 126,579 126,579
--------- ---------
Average common and common equivalent shares
outstanding (B) 7,989,747 9,041,063
========= =========
Net earnings per common and common
equivalent shares (A/B) $ .04 $ .06
========= =========
<FN>
Notes:
(1) Net earnings for the full diluted calculation are adjusted for interest expense and
deferred charge amortization, assuming exercise of the conversion privilege on the 8%
convertible debentures.
</TABLE>
<PAGE>
EXHIBIT 11
QUIXOTE CORPORATION AND SUBSIDIARIES
Computation of Net Earnings Per Average Common
and Common Equivalent Share
<TABLE>
<CAPTION>
For the Six Months Ended
December 31, 1995
--------------------------
Fully
Primary Diluted
---------- ----------
<S> <C> <C>
Net loss as reported $(10,245,000) $(10,245,000)
Add interest expense and deferred charge
amortization (net of income taxes) 490,000 (1)
------------ ------------
Adjusted net loss for computation (A) $(10,245,000) $ (9,755,000)
============ ============
Average common shares outstanding would be
adjusted for the additional shares that
would be issued assuming conversion of the
debentures and exercise of stock options
as follows:
Weighted average shares outstanding 7,863,056 7,863,056
Shares assumed issued upon conversion of
debentures 1,051,316
Incremental shares outstanding assuming
exercise of stock options using the
treasury stock method 126,579 126,579
----------- -----------
Average common and common equivalent shares
outstanding (B) 7,989,635 9,041,951
=========== ===========
Net loss per common and common
equivalent share (A/B) $ (1.28) $ (1.08)
=========== ===========
<FN>
Notes:
(1) Net earnings for the fully diluted calculation are adjusted for interest expense and
deferred charge amortization, assuming exercise of the conversion privilege on the 8%
convertible debentures.
</TABLE>
<PAGE>
EXHIBIT 11
QUIXOTE CORPORATION AND SUBSIDIARIES
Computation of Net Earnings per Average Common
and Common Equivalent Share
<TABLE>
<CAPTION>
For the Three Months Ended
December 31, 1994
-------------------------
Fully
Primary Diluted
---------- ----------
<S> <C> <C>
Net earnings as reported $ 877,000 $ 877,000
Add interest expense and deferred charge
amortization (net of income taxes) 245,000 (1)
---------- ----------
Adjusted net earnings for computation (A) $ 877,000 $1,122,000
========== ==========
Average common shares outstanding would be
adjusted for the additional shares that
would be issued assuming conversion of the
debentures and exercise of stock options
as follows:
Weighted average shares outstanding 7,815,798 7,815,798
Shares assumed issued upon conversion of
debentures 1,051,316
Incremental shares outstanding assuming
exercise of stock options using the
treasury stock method 365,388 365,388
--------- ---------
Average common and common equivalent shares
outstanding (B) 8,181,186 9,232,502
========= =========
Net earnings per common and common
equivalent shares (A/B) $ .11 $ .12
========= =========
<FN>
Notes:
(1) Net earnings for the full diluted calculation are adjusted for interest expense and
deferred charge amortization, assuming exercise of the conversion privilege on the 8%
convertible debentures.
</TABLE>
<PAGE>
EXHIBIT 11
QUIXOTE CORPORATION AND SUBSIDIARIES
Computation of Net Earnings Per Average Common
and Common Equivalent Share
<TABLE>
<CAPTION>
For the Six Months Ended
December 31, 1994
--------------------------
Fully
Primary Diluted
---------- ----------
<S> <C> <C>
Net earnings as reported $2,965,000 $2,965,000
Add interest expense and deferred charge
amortization (net of income taxes) 491,000 (1)
---------- ----------
Adjusted net earnings for computation (A) $2,965,000 $3,456,000
========== ==========
Average common shares outstanding would be
adjusted for the additional shares that
would be issued assuming conversion of the
debentures and exercise of stock options
as follows:
Weighted average shares outstanding 7,813,127 7,813,127
Shares assumed issued upon conversion of
debentures 1,051,316
Incremental shares outstanding assuming
exercise of stock options using the
treasury stock method 365,388 365,388
--------- ---------
Average common and common equivalent shares
outstanding (B) 8,178,515 9,229,831
========= =========
Net earnings per common and common
equivalent share (A/B) $.36 $.37
========= =========
<FN>
Notes:
(1) Net earnings for the fully diluted calculation are adjusted for interest expense and
deferred charge amortization, assuming exercise of the conversion privilege on the 8%
convertible debentures.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 2,162,000
<SECURITIES> 0
<RECEIVABLES> 30,902,000
<ALLOWANCES> 2,505,000
<INVENTORY> 11,547,000
<CURRENT-ASSETS> 46,226,000
<PP&E> 155,342,000
<DEPRECIATION> 59,887,000
<TOTAL-ASSETS> 163,364,000
<CURRENT-LIABILITIES> 30,124,000
<BONDS> 82,450,000
0
0
<COMMON> 143,000
<OTHER-SE> 47,584,000
<TOTAL-LIABILITY-AND-EQUITY> 163,364,000
<SALES> 88,699,000
<TOTAL-REVENUES> 88,699,000
<CGS> 60,250,000
<TOTAL-COSTS> 60,250,000
<OTHER-EXPENSES> 22,195,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,184,000
<INCOME-PRETAX> 2,831,000
<INCOME-TAX> 1,076,000
<INCOME-CONTINUING> 1,755,000
<DISCONTINUED> (12,000,000)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,245,000)
<EPS-PRIMARY> (1.28)
<EPS-DILUTED> (1.28)
</TABLE>
