<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, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from
__________ to __________
__________________________________
Commission file number 0-7903
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: 8,007,913 shares of the
Company's Common Stock ($.01-2/3 par value) were outstanding as of December 31,
1997.
<PAGE>
PART I
QUIXOTE CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended December 31,
--------------------------------
1997 1996
---- ----
<S> <C> <C>
Net sales.............................$ 24,452,000 $ 20,291,000
Cost of sales......................... 13,699,000 10,386,000
------------ ------------
Gross profit.......................... 10,753,000 9,905,000
Operating expenses:
Selling & administrative............ 7,135,000 7,730,000
Research & development.............. 730,000 1,049,000
------------ ------------
7,865,000 8,779,000
Operating profit...................... 2,888,000 1,126,000
------------ ------------
Other income (expense):
Interest income..................... 400,000 1,000
Interest expense.................... (103,000) (318,000)
Other............................... 1,000 (252,000)
------------ ------------
298,000 (569,000)
------------ ------------
Earnings from continuing operations
before income taxes................. 3,186,000 557,000
Provisions for income taxes........... 956,000 167,000
------------ ------------
Earnings from continuing operations... 2,230,000 390,000
------------ ------------
(Loss) earnings from discontinued
operations (net of tax)............. (1,980,000) 1,445,000
------------ ------------
Net earnings..........................$ 250,000 $ 1,835,000
============ ============
Per share data - basic:
Earnings from continuing operations.$ .28 $ .05
(Loss) earnings from discontinued
operations........................ (.25) .18
------------ ------------
Net earnings........................$ .03 $ .23
============ ============
Per share data - diluted:
Earnings from continuing operations.$ .28 $ .05
(Loss) earnings from discontinued
operations........................ (.25) .18
------------ ------------
Net earnings.......................$ .03 $ .23
============ ============
Shares used to compute net earnings:
Basic............................. 8,004,994 7,970,957
========= =========
Diluted........................... 8,065,569 8,956,857
========= =========
<FN>
See Notes to Consolidated Condensed Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION
QUIXOTE CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended December 31,
--------------------------------
1997 1996
---- ----
<S> <C> <C>
Net sales.............................$ 12,118,000 $ 9,195,000
Cost of sales......................... 7,161,000 4,884,000
------------ ------------
Gross profit.......................... 4,957,000 4,311,000
Operating expenses:
Selling & administrative............ 3,716,000 3,839,000
Research & development.............. 387,000 605,000
------------ ------------
4,103,000 4,444,000
Operating profit (loss)............... 854,000 (133,000)
------------ ------------
Other income (expense):
Interest income..................... 165,000
Interest expense.................... (102,000) (161,000)
Other............................... (136,000)
------------ ------------
63,000 (297,000)
------------ ------------
Earnings (loss) from continuing operations
before income taxes................. 917,000 (430,000)
Provision (benefit) for income taxes.. 275,000 (129,000)
------------ ------------
Earnings (loss) from continuing
operations......................... 642,000 (301,000)
------------ ------------
(Loss) earnings from discontinued
operations(net of tax).............. (1,980,000) 1,340,000
------------ ------------
Net (loss) earnings...................$ (1,338,000) $ 1,039,000
============ ============
Per share data-basic:
Earnings (loss) from continuing
operations........................$ .08 $ (.04)
(Loss) earnings from discontinued
operations........................ (.25) .17
------------ ------------
Net (loss) earnings.................$ (.17) $ .13
============ ============
Per share data-diluted:
Earnings (loss) from continuing
operations........................$ .08 $ (.04)
(Loss) earnings from discontinued
operations........................ (.25) .17
------------ ------------
Net (loss) earnings.................$ (.17) $ .13
============ ============
Shares used to compute net earnings (loss):
Basic.............................. 8,013,746 7,974,612
=========== ===========
Diluted ........................... 8,074,321 8,960,512
=========== ===========
<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 1997 1997
- -------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents...................$ 10,039,000 $ 18,463,000
Accounts receivable, net of allowances
for doubtful accounts of $171,000 at
December 31 and $165,000 at June 30........ 8,755,000 8,494,000
Refundable income taxes..................... 88,000 1,329,000
Inventories:
Raw materials............................. 1,982,000 2,414,000
Work in process........................... 946,000 978,000
Finished goods............................ 1,684,000 832,000
----------- ----------
4,612,000 4,224,000
----------- ----------
Deferred income tax assets.................. 887,000 887,000
Other current assets........................ 207,000 241,000
----------- ----------
Total current assets.......................... 24,588,000 33,638,000
----------- ----------
Property, plant and equipment, at cost........ 22,154,000 21,355,000
Less accumulated depreciation................. (9,265,000) (8,452,000)
----------- ----------
12,889,000 12,903,000
----------- ----------
Other assets.................................. 12,742,000 2,765,000
Assets of discontinued operations............. 5,702,000 5,914,000
----------- ----------
$ 55,921,000 $ 55,220,000
=========== ==========
<FN>
See Notes to Consolidated Condensed Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
QUIXOTE CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
December 31, June 30,
----------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1997
- -------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Current liabilities:
Current portion of long term debt.......... $ 530,000
Accounts payable........................... 1,640,000 $ 1,743,000
Dividends payable.......................... 1,042,000 1,039,000
Accrued expenses........................... 3,741,000 4,168,000
Liabilities of discontinued operations..... 2,236,000 6,049,000
----------- ------------
Total current liabilities.................... 9,189,000 12,999,000
----------- ------------
Deferred income tax liabilities.............. 566,000 566,000
Notes payable................................ 4,847,000
Shareholders' equity:
Common stock............................... 147,000 146,000
Capital in excess of par value of stock.... 30,998,000 30,269,000
Retained earnings.......................... 16,576,000 17,368,000
Treasury stock, at cost.................... (6,402,000) (6,128,000)
----------- -----------
Total shareholders' equity................... 41,319,000 41,655,000
----------- -----------
$ 55,921,000 $ 55,220,000
=========== ===========
<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,
--------------------------------
1997 1996
---- ----
<S> <C> <C>
Net earnings........................................$ 250,000 $ 1,835,000
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization..................... 1,172,000 7,064,000
Provision for losses on accounts receivable....... 6,000 467,000
Changes in operating assets and liabilities:
Accounts receivable............................. (267,000) (1,385,000)
Refundable income taxes......................... 1,241,000
Inventories..................................... (203,000) (339,000)
Other current assets............................ 34,000 (622,000)
Accounts payable and accrued expenses........... (890,000) 3,672,000
Discontinued operations-noncash charges and
working capital changes......................... (2,939,000) (636,000)
----------- -----------
Net cash(used in) provided by operating activities.. (1,596,000) 10,056,000
----------- -----------
Investing activities:
Purchase of property, plant and equipment......... (519,000) (2,312,000)
Cash paid for acquired business................... (4,822,000)
Other............................................. (183,000) (743,000)
----------- -----------
Net cash used in investing activities............... (5,524,000) (3,055,000)
----------- -----------
Financing activities:
Cash payments on note payable..................... (59,000) (3,500,000)
Payment of semi-annual cash dividend.............. (1,039,000) (946,000)
Proceeds from exercise of common stock options.... 68,000 61,000
Repurchase of common stock for treasury........... (274,000)
----------- -----------
Net cash used in financing activities............... (1,304,000) (4,385,000)
----------- -----------
Net change in cash and cash equivalents............ (8,424,000) 2,616,000
Cash and cash equivalents at beginning of period... 18,463,000 2,250,000
----------- -----------
Cash and cash equivalents at end of period..........$10,039,000 $ 4,866,000
=========== ===========
<FN>
Note: During the six months ended December 31, 1997, the Company made cash
payments of $285,000 for income taxes and paid $103,000 for interest. During the
same period last year the Company made cash payments of $902,000 for income taxes
and paid $2,053,000 for interest. In connection with the purchase of Roadway
Safety Service, the Company incurred debt of $5,436,000.
See Notes to Consolidated Condensed Financial Statements.
</TABLE>
<PAGE>
QUIXOTE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
(Unaudited)
1. The accompanying unaudited condensed consolidated financial statements
present information in accordance with generally accepted accounting
principles for interim financial information and applicable rules of
Regulation S-X. Accordingly, they do not include all information or
footnotes required by generally accepted accounting principles for complete
financial statements. Management believes the financial statements include
all normal accrual adjustments necessary for a fair presentation.
Operating results for the three month and six month periods ended December
31, 1997 do not necessarily reflect the results that may be expected for
the full year. For further information, refer to the consolidated
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended June 30, 1997.
Certain amounts in the June 30, 1997 financial statements have been
reclassified to conform to the December 31, 1997 financial statement
presentation.
2. During the second quarter, the Company recorded an additional net loss
from its discontinued operations of $1,980,000 or $0.25 per share which was
net of tax benefits of $1,320,000. The loss was recorded to provide for
current and anticipated costs associated with the Company s legal
contingencies, principally for certain DMI patent and antitrust lawsuits
with Pioneer Electronic Corporation and several of its affiliates. Please
see Item 1- Legal Proceedings for additional information.
In March 1997, the Company sold substantially all of the assets and
transferred significant operating liabilities of Disc Manufacturing, Inc.
(DMI) to Cinram Ltd. for $80,283,000 in cash. The transaction excluded
DMI's Huntsville, Alabama land and building as well as certain DMI
litigation. The results of operations of DMI are presented as discontinued
operations in the accompanying consolidated condensed statements of
operations for the quarter and six months ended December 31, 1996. For the
quarter ended December 31, 1996 DMI had net earnings of $1,340,000, which
was net of income taxes of $574,000. For the six months ended December 31,
1996 DMI had earnings of $1,445,000, which was net of income taxes of
$619,000.
3. On October 10, 1997, the Company and its wholly-owned subsidiary,
TranSafe Corporation, acquired certain assets and assumed certain contracts
from Roadway Safety Service, Inc. This transaction was accounted for as a
purchase and was effective as of October 1, 1997. The purchase price was
$10,258,000, of which $4,822,000 was paid in cash at closing and other
payments, the present value of which is $5,436,000, will be paid over the
next 10 years using a discount rate of 8.5%. Goodwill of approximately
$10,000,000 will be amortized over a 20 year life.
4. During the current period, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings Per Share". SFAS No. 128 requires
the presentation of basic earnings per share ("EPS") and, for companies
with potential dilutive securities, such as stock options and warrants,
diluted EPS. SFAS No. 128 is effective for annual and interim periods
ending after December 15, 1997 and requires restatement of EPS for prior
periods.
<PAGE>
The computation of basic and diluted earnings per share, as prescribed by
FASB 128, is as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net (loss) earnings per share
of common stock:
Basic...................... $(.17) $.13 $.03 $.23
Diluted.................... $(.17) $.14(2) $.03 $.25(2)
Numerator:
- -----------
Net (loss) earnings available to
common shareholders-basic:... $(1,338,000) $1,039,000 $ 250,000 $1,835,000
Adjustment for interest
expense and amortization
related to convertible
debentures................... 221,000(1) 443,000(1)
----------- ---------- ---------- ----------
Adjusted earnings for diluted
calculation.................. $(1,338,000) $1,260,000 $ 250,000 $2,278,000
=========== ========== ========== ==========
Denominator:
- -------------
Weighted average shares
outstanding-basic:........... 8,013,746 7,974,612 8,004,994 7,970,957
Effect of dilutive securities
Options*..................... 60,575 38,532 60,575 38,532
Convertible debt............. 947,368 947,368
---------- --------- --------- ---------
Weighted average of shares
outstanding-diluted.......... 8,074,321 8,960,512 8,065,569 8,956,857
========= ========= ========= =========
* There were outstanding options to purchase common stock at prices that exceeded
the average market price for the income statement period as follows:
Average market price per share. $ 8.48 $ 7.80 $ 8.48 $ 7.80
Number of shares............... 502,065 525,000 502,065 525,000
<FN>
Note:
(1) Net earnings for the diluted calculation are adjusted for interest expense and
deferred charge amortization, assuming exercise of the conversion privilege on the
8% convertible debentures.
(2) EPS for these periods are anti-dilutive and therefore are presented the same as
basic EPS on the Company's Consolidated Condensed Statements of Operations.
</TABLE>
<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 of fiscal 1998 increased 20% to
$24,452,000 from $20,291,000 for the first six months of fiscal 1997. This
was due to both internal sales growth as well as from the acquisition of
Roadway Safety Service which was completed in October 1997. Sales of Energy
Absorption's permanent crash cushion line of products increased due to
strong unit sales of the newer QuadGuard family of crash cushions, which
the Company began selling in the second half of last year. The QuadGuard
family of products replaces the Company's GREAT and GREAT CZ crash cushion
products. Sales dollars of the QuadGuard increased at a lesser rate due to
the lower selling price of this product compared to the GREAT products.
The Company also experienced sales increases in its truck-mounted attenuator
(TMA)TM and Triton Barrier product lines, as well as from parts sales.
Roadway Safety Service contributed sales of $1,339,000 for the current six
month period. Roadway Safety Service sells crash attenuators through its
own independent group of highway distributors. Sales of Safe-Hit s highway
delineators and Spin-Cast s custom molded products also increased during the
quarter. Sales of the Energite product line declined during the six month
period.
The gross profit margin in the first six months of the current year
decreased to 44.0% from 48.8% in the same period last year. This was due
principally to a change in sales mix from the GREAT crash cushion to the
lower margin newer QuadGuard crash cushion product line. In addition, the
gross margin at Safe-Hit, the Company s highway delineation company,
experienced lower margins as a result of costs and interruption in
operations from the move of its manufacturing operations to Energy
Absorption s Pell City, Alabama facility. Roadway Safety Service also
contributed to the decline in gross margin as its margins are lower than
those of Energy Absorption.
Selling and administrative expenses in the first six months of the current
year decreased 8% to $7,135,000 from $7,730,000 in the same period last
year due mainly to a decrease in corporate level administrative expenses.
Corporate level expenses decreased $825,000 in the current period from the
same period last year as a result of a decrease in personnel, consulting and
insurance expense. Selling and administrative expenses at Energy Absorption
and its subsidiaries remained at a level consistent with the same period
last year. Roadway Safety Service added $227,000 in selling and
administrative costs during the period.
Research and development expenses in the first six months of the current
year decreased 30% to $730,000 compared to $1,049,000 in the same period
last year. This was due to a reduction in the number of tests performed in
the current period related to last year's upgrade of the Company's product
line to a higher set of safety guidelines known as NCHRP 350. These
guidelines increase safety standards to accommodate heavier and higher
center of gravity vehicles such as sport utility vehicles and pick-up
trucks. During the current period, the Company continued with its testing
of a wider version of its QuadGuard crash cushion as well as with a
snowplowable road marker and other developmental products.
Interest income in the first six months of the current year was $400,000
compared to $1,000 in the same period last year. Interest income in the
current period relates to amounts earned on the Company's invested cash of
$10,039,000 as of December 31, 1997. Interest expense in the current six
month period was $103,000 compared to $318,000 in the same period last year.
Current period interest expense relates principally to the $5,436,000 in
debt payable in connection with the acquisition of Roadway Safety Service.
The decrease in interest expense is due to the substantial reduction of the
Company's long term debt in the third fiscal quarter last year upon receipt
of the proceeds from the sale of DMI, the Company's former compact disc
manufacturer. Other income was $1,000 in the current six month period
compared to other expenses of $252,000 in the same period last year.
The Company's effective tax rate for the current six month period was 30%
due to the anticipated realization of certain tax benefits during the
current year.
On October 10, 1997, the Company and its wholly-owned subsidiary, TranSafe
Corporation, acquired certain assets and assumed certain contracts from
Roadway Safety Service, Inc. The purchase price was $10,258,000 of which
$4,822,000 was paid in cash at closing and other payments, the present value
of which is $5,436,000, will be paid over the next 10 years using a discount
rate of 8.5%.
CURRENT YEAR QUARTER VERSUS PRIOR YEAR QUARTER
- -----------------------------------------------
Company's sales for the second quarter of fiscal 1998 increased 32% to
$12,118,000 from $9,195,000 for the second quarter of fiscal 1997 due to
internal sales at Energy Absorption as well as from the acquisition of
Roadway Safety Service. Sales of Energy Absorption's permanent crash
cushion line of products increased due to strong unit sales of the newer
QuadGuard family of crash cushions. Sales dollars of the QuadGuard
increased at a lesser rate due to the lower selling price of this product
compared to the GREAT . The Company also experienced sales increases for
its Triton Barrier and in parts sales. Sales of Safe-Hit s highway
delineators and Spin-Cast s custom molded products also increased during the
quarter. In addition, Roadway Safety Service, acquired in October,
contributed $1,339,000 in sales for the quarter. Offsetting this somewhat,
truck-mounted attenuator(TMA)TM and Energite sales declined slightly.
The gross profit margin in the second quarter of the current year decreased
to 40.9% from 46.9% in the second quarter last year. This was due to a
change in product sales mix from the GREAT crash cushion to the lower
margin new QuadGuard crash cushion product line. In addition, the gross
margin also declined due to the acquisition of Roadway Safety Service as its
gross margins are lower than those of Energy Absorption.
Selling and administrative expenses in the second quarter of the current
year decreased 3% to $3,716,000 from $3,839,000 in the second quarter last
year due mainly to a decrease in corporate level administrative expenses.
Selling and administrative expenses at Energy Absorption and its
subsidiaries decreased slightly during the quarter. Offsetting this
somewhat, Roadway Safety Service added selling and administrative expenses
of $227,000 during the quarter.
Research and development expenses in the second quarter of the current year
decreased 36% to $387,000 compared to $605,000 in the second quarter last
year. This was due to a reduction in the number of tests performed in the
current quarter related to last year's upgrade of the Company's product
line.
Interest income in the second quarter of the current year was $165,000
compared to $0 in the same quarter last year. Interest income in the
current quarter relates to
interest earned on the Company's invested cash of $10,039,000 as of December
31, 1997. Interest expense in the current quarter was $102,000 compared to
$161,000 in the same quarter last year. Current period interest expense
relates principally to the Company s $5,436,000 in debt payable in
connection with the acquisition of Roadway Safety Service. The decrease in
interest expense from the second quarter last year is due to the reduction
of the Company's long term debt in last years third fiscal quarter upon
receipt of the proceeds from the sale of DMI. Other expense was $0 in the
current quarter compared to $136,000 in the same period last year.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company had cash and cash equivalents of $10,039,000 and access to
additional funds of $40,000,000 under its bank arrangements as of December
31, 1997. Continuing operating activities were a source of cash for the
Company during the six month period providing $3,323,000. Discontinued
operations however, used cash of $4,919,000 primarily for legal fees related
to the Company s ongoing litigation and for other expenses including lease
commitments. This resulted in a net cash use from operating activities of
$1,596,000.
Cash of $5,524,000 was used for investing activities during the current six
month period of which $4,822,000 in cash was used for the purchase of the
assets of Roadway Safety Service. In addition, the Company purchased
equipment during the six month period totaling $519,000.
Financing activities used cash of $1,304,000 during the current six month
period principally to pay the Company's semi-annual cash dividend of
$1,039,000. Cash of $274,000 was used to purchase 31,985 shares of the
Company's own stock for the treasury. Additional shares may be purchased
from time to time. Cash of $68,000 was also received from the exercise of
stock options.
For the remainder of fiscal 1998, the Company anticipates needing less than
$1,000,000 in cash for capital expenditures. The Company may also need
additional cash as it considers acquiring businesses that complement its
existing operations. Also, the Company will require additional investments
in working capital to maintain growth. In addition, the Company may also
need funds to repurchase its own stock from time to time. These
expenditures will be financed either through the Company's invested cash,
cash generated from its operations, or from borrowings available under the
Company's revolving credit facility. The Company believes its existing
cash, cash generated from operations and funds available under its existing
credit facility are sufficient for all planned operating and capital
requirements.
FACTORS AFFECTING FUTURE PERFORMANCE
- ------------------------------------
The Company is currently in the process of evaluating the potential impact
of the Year 2000 issue on its business and the related expenses that would
foreseeably be incurred in attempting to remedy such impact. Management's
current estimate is that the costs associated with the year 2000 issue
should not have a material adverse effect on the results of operations or
financial position of the Company. However, even if the internal systems of
the Company are not materially affected by the Year 2000 issue, the Company
could be affected as a result of any disruption in the operation of the
various third-party enterprises with which the Company interacts.
The Intermodal Surface Transportation and Efficiency Act (ISTEA) which
provides authorization for federal funding of highway's and was the primary
source of funds for highway projects expired on September 30, 1997. An
extension of ISTEA was signed into law in December 1997 which provides for
continued federal highway funding until May 1, 1998. Any delay in the
passage of a new highway bill to replace the ISTEA extension, or in the
passage of another extension of ISTEA will result in a lack of funding for
Energy Absorption's products and could cause a material decline in revenues.
FORWARD LOOKING STATEMENTS
- --------------------------
Various statements made within the Management's Discussion and Analysis of
Financial Condition and Results of Operations and elsewhere in this
Quarterly Report on Form 10-Q constitute "forward looking statements" for
purposes of the Securities and Exchange Commission's "safe harbor"
provisions under the Private Securities Litigation Reform Act of 1995 and
Rule 3b-6 under the Securities Exchange Act of 1934, as amended. Investors
are cautioned that all forward looking statements involve risks and
uncertainties, including those detailed in the Company's filings with the
Securities and Exchange Commission. There can be no assurance that actual
results will not differ from the Company's expectations. Factors which
could cause materially different results include, among others,
uncertainties related to the introduction of the Company's products and
services; the successful completion and integration of acquisitions;
continued funding through the passage of new federal highway legislation;
and competitive and general economic conditions.
II
OTHER INFORMATION
ITEM 1. Legal Proceedings
- --------------------------
1. DISCOVISION ASSOCIATES V. DISC MANUFACTURING, INC. Case No. 95-21,
Consolidated with Case No. 95-345, U.S. District Court for the District of
Delaware. A trial on the issue of patent infringement was held in October
1997. Post-trial briefing was completed as of January 31, 1998 and a
decision from the trial judge is pending. A date for the second trial in
this matter (dealing with issues such as inequitable conduct, damages,
laches, estoppel and DMI's antitrust case) has not been set, but could be
scheduled for later in calendar 1998.
2. REPETITIVE STRESS INJURY LITIGATION. The appeal of the April 1997 jury
verdict in favor of Stenograph Corporation has been dismissed by the six
plaintiffs. Of the thirty-two cases filed to date against Stenograph, only
eight cases remain active; another nine cases have been dismissed, but
without prejudice to refile the complaints.
3. DISC MANUFACTURING, INC. ET AL. V. MASSEY ET AL., CV 90-1214L (MADISON
COUNTY CIRCUIT COURT, ALABAMA). A mediation between the parties is
scheduled for March 26, 1998.
4. ERNEST CHICO V. ENERGY ABSORPTION SYSTEMS, INC. ET AL., CAUSE NO. 45DO2-
9605-CT-391 (LAKE SUPERIOR COURT FOR THE STATE OF ILLINOIS). The Company's
motion for summary judgment has been denied except with respect to issues of
negligent installation.
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 19,
1997. The matters voted on at the Annual Meeting were as follows:
(i) The election of James H. DeVries, Leslie J. Jezuit and Lawrence C.
McQuade to serve as directors.
(ii) The approval of the amendment of the Company's 1993 Long-Term Stock
Ownership Incentive Plan.
(iii) The approval of the amendment to the Company's 1991 Director Stock
Option Plan.
(iv) The approval of the amendment to the Company's Certificate of
Incorporation.
(v) The approval of Coopers & Lybrand, L.L.P. as independent auditors for
the Company.
Messrs. DeVries, Jezuit and McQuade were elected and all other matters
were approved as follows:
VOTES
=====
ABSTAIN OR NO
FOR AGAINST WITHHELD VOTE
========================================================================
ELECTION OF DIRECTORS
James H. DeVries 6,221,412 628,568
Leslie J. Jezuit 6,230,529 619,451
Lawrence C. McQuade 6,225,993 623,987
APPROVAL OF AMENDMENT
OF 1993 LONG-TERM
STOCK OWNERSHIP
INCENTIVE PLAN 5,420,765 1,341,763 87,452
APPROVAL OF AMENDMENT
OF 1991 DIRECTOR
STOCK OPTION PLAN 5,433,607 1,312,904 103,469
APPROVAL OF AMENDMENT
OF CERTIFICATE OF
INCORPORATION 6,529,170 239,804 81,006
APPROVAL OF COOPERS
& LYBRAND, LLP 6,757,578 46,238 46,164
ITEM 5. Other Information
- --------------------------
None.
ITEM 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) On October 10, 1997, the Company filed a report on Form 8-K dated
October 10, 1997, reporting under "Item 2 Acquisition or Disposition of
Assets", that the Company and its wholly-owned subsidiary, TranSafe
Corporation, had acquired as of October 1, 1997 certain assets and assumed
certain contracts from Roadway Safety Service, Inc., Momentum Mangement,
Inc., and Fitch Barrel Corporation. As part of the acquisition, TranSafe
acquired certain Roadway distributorships and entered into a consulting
agreement with the principal shareholder of the Roadway business. The
purchase price for this business was $10,258,000, of which $4,822,000 was
paid in cash at closing and $5,436,000 will be paid over the next ten years
with interest at 8.5%.
(b) Exhibits
3(a) Restated Certificate of Incorporation dated Febrary 4, 1998.
10(f) Change of Control Agreement dated December 1, 1997 by and between
Quixote Corporation and Philip E. Rollhaus, Jr.; Change of Control Agreement
dated December 1, 1997 by and between Quixote Corporation and Leslie J.
Jezuit; Change of Control Agreement dated December 1, 1997 by and between
Quixote Corporation and George D. Ebersole; Change of Control Agreement
dated December 1, 1997 by and between Quixote Corporation and Daniel P.
Gorey.
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, 1997 to be signed on its behalf by the
undersigned thereunto duly authorized.
QUIXOTE CORPORATION
DATE: February 13, 1998 /s/ Daniel P. Gorey
----------------- ------------------------------
DANIEL P. GOREY
Chief Financial Officer,
Vice President and Treasurer
(Chief Financial & Accounting
Officer)
Exhibit 3 (a)
RESTATED CERTIFICATE OF INCORPORATION
OF
QUIXOTE CORPORATION
Quixote Corporation, a corporation organized and existing
under the laws of the State of Delaware, hereby certifies as
follows:
1. (a) The present name of the Corporation is Quixote
Corporation.
(b) The name under which the Corporation was originally
incorporated is Energy Absorption Systems, Inc., and the date
of filing the original certificate of incorporation of the
Corporation with the Secretary of State of the State of
Delaware is July 14, 1969.
2. The certificate of incorporation of the Corporation is
hereby amended by striking Articles One through Ninth thereof
and by substituting in lieu thereof new Articles One through
Eleventh which are set forth in the Restated Certificate of
Incorporation hereinafter provided for.
3. The provisions of the certificate of incorporation of
the Corporation as heretofore amended and/or supplemented, and
as herein amended, are hereby restated and integrated into the
single instrument which is hereinafter set forth, and which is
entitled Restated Certificate of Incorporation of Quixote
Corporation (referred to herein as the "Certificate of
Incorporation") without any further amendments other than the
amendments herein certified and without any discrepancy between
the provisions of the certificate of incorporation as
heretofore amended and supplemented and the provisions of the
said single instrument hereinafter set forth.
4. The amendments and the restatement of the restated
certificate of incorporation have been duly adopted by the
stockholders in accordance with the provisions of Sections 242
and 245 of the General Corporation Law of Delaware.
5. The certificate of incorporation of the Corporation,
as amended and restated herein, shall read in its entirety as
follows:
RESTATED CERTIFICATE OF INCORPORATION
OF
QUIXOTE CORPORATION
ARTICLE FIRST
The name of the Corporation is QUIXOTE CORPORATION.
ARTICLE SECOND
The address of the Corporation's registered office in the
State of Delaware is Corporation Trust Center, 1209 Orange St.,
Wilmington, County of New Castle, Delaware 19801 and the name
of the Corporation's registered agent at such address is The
Corporation Trust Company.
ARTICLE THIRD
The purpose of the Corporation is to engage in any lawful
act or activity for which corporations may be organized under
the General Corporation Law of Delaware, as amended from time
to time.
ARTICLE FOURTH
The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is
15,100,000 shares, consisting of 100,000 shares of Preferred
Stock, no par value, and 15,000,000 shares of Common Stock, par
value $.01-2/3 per share.
A. PREFERRED STOCK
1. Series. The Preferred Stock may be issued from time
to time in one or more series. All shares of any one series of
Preferred Stock shall be identical in all respects, except that
shares of any one series issued on different dates may differ
as to dates, if any, from which dividends thereon are to
cumulate.
2. Preferences. The Board of Directors of the
Corporation is expressly granted authority, at any time and
from time to time by the adoption of a resolution or
resolutions not inconsistent with the provisions of the
Certificate of Incorporation of the Corporation, to authorize
the issuance by the Corporation of one or more series of
Preferred Stock and to fix and determine with respect to each
such series all the designations, preferences, powers and
relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof, to the
full extent now or hereafter permitted by law, and including,
but without limiting the generality of the foregoing, the
following:
a. The number of shares of such series, which may
subsequently be increased (except as otherwise provided by the
resolution or resolutions of the Board of Directors providing
for the issuance of such series) or decreased (to a number not
less than the number of shares then outstanding) by resolution
or resolutions of the Board of Directors, and the distinctive
designation thereof;
b. The dividend rights of such series, the preferences,
if any, over any other class or series of stock, or of any
other class or series of stock over such series, as to
dividends, the extent, if any, to which shares of such series
shall be entitled to participate in dividends with shares of
any other series or class of stock, whether dividends on shares
of such series shall be fully, partially or conditionally
cumulative, or a combination thereof, and any limitations,
restrictions or conditions on the payment of such dividends;
c. The rights of such series, and the preferences, if
any, over any other class or series of stock, or of any other
class or series of stock over such series, in the event of any
voluntary or involuntary liquidation, dissolution or winding up
of the Corporation and the extent, if any, to which shares of
any such series shall be entitled to participate in such event
with any other series or class of stock;
d. Whether or not the shares of such series shall be
redeemable, and, if redeemable, the date or dates upon or after
which they shall be redeemable, the amount per share payable
thereon in the case of the redemption thereof, which amount may
vary at different redemption dates;
e. The terms of any purchase, retirement or sinking fund
which may be provided for the shares of such series;
f. The right, if any, of holders of shares of such series
to convert the same into, or exchange the same for Common
Stock, and the terms and conditions of such conversion or
exchange, as well as provisions for adjustment of the
conversion rate in such events as the Board of Directors shall
determine; and
g. The voting powers, if any, of such series in addition
to the voting powers provided by law.
3. Liquidation or Dissolution Rights. In the event of
any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the holders of Preferred
Stock of each series shall be entitled to receive only such
amount or amounts as shall have been fixed by the Certificate
of Incorporation or by the resolution or resolutions of the
Board of Directors providing for the issuance of such series.
A reorganization, consolidation or merger of the Corporation
into or with one or more other corporations or a sale, lease,
exchange or other disposition of all or substantially all of
the assets of the Corporation shall not be deemed to be a
voluntary or involuntary liquidation, dissolution or winding
up, within the meaning of the Certificate of Incorporation of
the Corporation.
B. SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred
Stock" and the number of shares constituting such series shall
be 10,000.
2. Dividends and Distributions.
a. Subject to the prior and superior rights of the
holders of any shares of any series of Preferred Stock ranking
prior and superior to the shares of Series A Junior
Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred
Stock shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the 15th day of
March, June, September, and December in each year (each such
date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of
Series A Junior Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a)
$10.00 or (b) subject to the provision for adjustment
hereinafter set forth, 1,000 times the aggregate per share
amount of all cash dividends, and 1,000 times the aggregate per
share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on
the Common Stock, par value $.01-2/3 per share, of the
Corporation since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction
of a share of Series A Junior Participating Preferred Stock.
In the event the Corporation shall at any time after July 15,
1988 (the "Rights Declaration Date") (i) declare any dividend
on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then
in each such case the amount to which holders of shares of
Series A Junior Participating Preferred Stock were entitled
immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
b. The Corporation shall declare a dividend or
distribution on the Series A Junior Participating Preferred
Stock as provided in paragraph B(2)(a) above immediately after
it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of
$10.00 per share on the Series A Junior Participating Preferred
Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
c. Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred
Stock from the Quarterly Dividend Payment Date next preceding
the date of issue of such shares of Series A Junior
Participating Preferred Stock, unless the date of issue of such
shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of
holders of shares of Series A Junior Participating Preferred
Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends
shall not bear interest. Dividends paid on the shares of
Series A Junior Participating Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-
by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the
determination of holders of shares of Series A Junior
Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date
shall be no more than 30 days prior to the date fixed for the
payment thereof.
3. Voting Rights. The holders of shares of Series A
Junior Participating Preferred Stock shall have the following
voting rights:
a. Subject to the provision for adjustment hereinafter
set forth, each share of Series A Junior Participating
Preferred Stock shall entitle the holder thereof to one vote on
all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such
case the number of votes per share to which holders of shares
of Series A Junior Participating Preferred Stock were entitled
immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior
to such event.
b. Except as otherwise provided herein or by law, the
holders of shares of Series A Junior Participating Preferred
Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of
stockholders of the Corporation.
c. (i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an amount
equal to six (6) quarterly dividends thereon, the occurrence of
such contingency shall mark the beginning of a period (herein
called a "default period") which shall extend until such time
when all accrued and unpaid dividends for all previous
quarterly dividend periods and for the current quarterly
dividend period on all shares of Series A Junior Participating
Preferred Stock then outstanding shall have been declared and
paid or set apart for payment. During each default period, all
holders of Preferred Stock (including holders of the Series A
Junior Participating Preferred Stock) with dividends in arrears
in an amount equal to six (6) quarterly dividends thereon,
voting as a class, irrespective of series, shall have the right
to elect two (2) Directors.
(ii) During any default period, such voting right of
the holders of Series A Junior Participating Preferred Stock
may be exercised initially at a special meeting called pursuant
to subparagraph (iii) of this Section 3(c) or at any annual
meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting right nor the
right of the holders of any other series of Preferred Stock, if
any, to increase, in certain cases, the authorized number of
Directors shall be exercised unless the holders of ten percent
(10%) in number of shares of Preferred Stock outstanding shall
be present in person or by proxy. The absence of a quorum of
the holders of Common Stock shall not affect the exercise by
the holders of Preferred Stock of such voting right. At any
meeting at which the holders of Preferred Stock shall exercise
such voting right initially during an existing default period,
they shall have the right, voting as a class, to elect
Directors to fill such vacancies, if any, in the Board of
Directors as may then exist up to two (2) Directors or, if such
right is exercised at an annual meeting, to elect two (2)
Directors. If the number which may be so elected at any
special meeting does not amount to the required number, the
holders of the Preferred Stock shall have the right to make
such increase in the number of Directors as shall be necessary
to permit the election by them of the required number. After
the holders of the Preferred Stock shall have exercised their
right to elect Directors in any default period and during the
continuance of such period, the number of Directors shall not
be increased or decreased except by vote of the holders of the
Preferred Stock as herein provided or pursuant to the rights of
any equity securities ranking senior to or pari passu with the
Series A Junior Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall,
during an existing default period, have previously exercised
their right to elect Directors, the Board of Directors may
order, or any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total number
of shares of Preferred Stock outstanding, irrespective of
series, may request, the calling of a special meeting of the
holders of Preferred Stock, which meeting shall thereupon be
called by the President, a Vice-President or the Secretary of
the Corporation. Notice of such meeting and of any annual
meeting at which holders of Preferred Stock are entitled to
vote pursuant to this paragraph (c) (iii) shall be given to
each holder of record of Preferred Stock by mailing a copy of
such notice to him at his last address as the same appears on
the books of the Corporation. Such meeting shall be called for
a time not earlier than 20 days and not later than 60 days
after such order or request or in default of the calling of
such meeting within 60 days after such order or request, such
meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than ten percent
(10%) of the total number of shares of Preferred Stock
outstanding. Notwithstanding the provisions of this paragraph
(c) (iii), no such special meeting shall be called during the
period within 60 days immediately preceding the date fixed for
the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common
Stock, and other classes of stock of the Corporation if
applicable, shall continue to be entitled to elect the whole
number of Directors until the holders of Preferred Stock shall
have exercised their right to elect two (2) Directors voting as
a class, after the exercise of which right (x) the Directors so
elected by the holders of Preferred Stock shall continue in
office until their successors shall have been elected by such
holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided
in paragraph (c) (ii) of this Section 3) be filled by vote of a
majority of the remaining Directors theretofore elected by the
holders of the class of stock which elected the Director whose
office shall have become vacant. References in this paragraph
(c) to Directors elected by the holders of a particular class
of stock shall include Directors elected by such Directors to
fill vacancies as provided in clause (y) of the foregoing
sentence.
(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Preferred Stock as a
class to elect Directors shall cease, (y) the term of any
Directors elected by the holders of Preferred Stock as a class
shall terminate, and (z) the number of Directors shall be such
number as may be provided for in the certificate of
incorporation or by-laws irrespective of any increase made
pursuant to the provisions of paragraph (c) (ii) of this
Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the certificate
of incorporation or by-laws). Any vacancies in the Board of
Directors effected by the provisions of clauses (y) and (z) in
the preceding sentence may be filled by a majority of the
remaining Directors.
d. Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock
as set forth herein) for taking any corporate action.
4. Certain Restrictions.
a. Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating
Preferred Stock as provided in Section B(2) are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A
Junior Participating Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to
the Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on any parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Participating Preferred
Stock, except dividends paid ratably on the Series A Junior
Participating Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A Junior Participating Preferred Stock,
provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation
or winding up) to the Series A Junior Participating Preferred
Stock;
(iv) purchase or otherwise acquire for consideration
any shares of Series A Junior Participating Preferred Stock, or
any shares of stock ranking on a parity with the Series A
Junior Participating Preferred Stock, except in accordance with
a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
b. The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation
could, under paragraph (a) of this Section 4, purchase or
otherwise acquire such shares at such time and in such manner.
5. Required Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired
by the Corporation in any manner whatsoever shall be retired
and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part
of a new series of Preferred Stock to be created by resolution
or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
6. Liquidation, Dissolution or Winding Up.
a. Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the Corporation, no distribution
shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred
Stock unless, prior thereto, the holders of shares of Series A
Junior Participating Preferred Stock shall have received $500
per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date
of such payment (the "Series A Liquidation Preference").
Following the payment of the full amount to the Series A
Liquidation Preference, no additional distributions shall be
made to the holders of shares of Series A Junior Participating
Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the
"Common Adjustment") equal to the quotient obtained by dividing
(i) the Series A Liquidation Preference by (ii) 1,000 (as
appropriately adjusted as set forth in subparagraph c below to
reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such
number in clause (ii); the ("Adjustment Number"). Following
the payment of the full amount of the Series A Liquidation
Preference and the Common Adjustment in respect of all
outstanding shares of Series A Junior Participating Preferred
Stock and Common Stock, respectively, holders of Series A
Junior Participating Preferred Stock and holders of shares of
Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio of
the Adjustment Number to 1 with respect to such Preferred Stock
and Common Stock, on a per share basis, respectively.
b. In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A
Liquidation Preference and the liquidation preferences of all
other series of preferred stock, if any, which rank on a parity
with the Series A Junior Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the
holders of such parity shares in proportion to their
liquidation preferences. In the event, however, that there are
not sufficient assets available to permit payment in full of
the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
c. In the event that the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such
case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number
by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or
other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case the shares of
Series A Junior Participating Preferred Stock shall at the same
time be similarly exchanged or changed in an amount per share
(subject to the provision for adjustment hereinafter set forth)
equal to 1,000 times the aggregate amount of stock, securities,
cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation shall at
any time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine
the outstanding Common Stock into a smaller number of shares,
then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of
Series A Junior Participating Preferred Stock shall be adjusted
by multiplying such amount by a fraction the numerator of which
is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior
to such event.
8. No Redemption. The share of Section A Junior
Participating Preferred Stock shall not be redeemable.
9. Ranking. The Series A Junior Participating Preferred
Stock shall rank junior to all other series of the
Corporation's Preferred Stock as to the payment of dividends
and the distribution of assets, unless the terms of any such
series shall provide otherwise.
10. Amendment. The Restated Certificate of Incorporation
of the Corporation shall not be further amended in any manner
which would materially alter or change the powers, preferences
or special rights of the Series A Junior Participating
Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the
outstanding shares of Series A Junior Participating Preferred
Stock, voting separately as a class.
11. Fractional Shares. Series A Junior Participating
Preferred Stock may be issued in fractions of a share which
shall entitle the holder, in proportion to such holder s
fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit
of all other rights of holders of Series A Junior Participating
Preferred Stock.
C. COMMON STOCK
Subject to the rights of the holders of the Preferred
Stock as provided in the foregoing Part A, the holders of
Common Stock shall, except as otherwise provided by law or by
the provisions of the Certificate of Incorporation, as from
time to time amended, (1) be entitled to one vote for each
share held by them, respectively, on all matters acted upon at
any meeting of stockholders, (2) be entitled to dividends when
and as declared by the Board of Directors of the Corporation
out of funds legally available therefor, and (3) upon any
voluntary or involuntary liquidation, dissolution or winding up
of the Corporation be entitled to share with the Preferred
Stock in the assets of the Corporation available for
distribution to its stockholders.
D. OTHER PROVISIONS
1. No holder of stock of any class of the Corporation nor
of any security convertible into, nor of any warrant, option or
right to purchase, subscribe for or otherwise acquire, stock of
any class of the Corporation, whether now or hereafter
authorized, shall as such holder, have any preemptive right
whatsoever to purchase, subscribe for or otherwise acquire,
stock of any class of the Corporation nor of any security
convertible into, nor of any warrant, option or right to
purchase, subscribe for or otherwise acquire, stock of any
class of the Corporation, whether now or hereafter authorized.
2. Anything contained in the Certificate of Incorporation
of the Corporation to the contrary notwithstanding, any and all
right, title, interest, and claim in or to any dividends
declared, or other distributions made, by the Corporation,
whether in cash, stock or otherwise, which are unclaimed by the
stockholder entitled thereto (a) with respect to any
distribution upon the liquidation, dissolution or winding up of
the Corporation, for a period of three years after the close of
business on the payment date (or such other period as the
Corporation may be required to continue in existence under the
General Corporation Law of Delaware, as amended from time to
time), and (b) with respect to any other distribution, for a
period of six years after the close of business on the payment
date, shall be and be deemed to be extinguished and abandoned.
Such unclaimed distribution in the possession of the
Corporation, its transfer agents or other agents or
depositaries, shall at such time become the absolute property
of the Corporation, free and clear of any and all claims of any
persons whatsoever. The Board of Directors of the Corporation,
in its sole discretion may make distributions described in
(a) above to such known stockholders of record (as of the
original payment date) upon a pro rata basis in the manner as
the Board of Directors may determined or, in lieu of such final
distribution, may set aside such unclaimed amount in an escrow
fund.
3. Unless otherwise provided by the General Corporation
Law of Delaware, and notwithstanding any provision herein to
the contrary except as provided in the second sentence of this
paragraph, the affirmative vote of the holders of at least
sixty percent (60%) of the votes entitled to be cast by the
holders of the issued and outstanding shares of the Corporation
shall be necessary to (a) amend the Corporation's Certificate
of Incorporation; (b) adopt or approve any agreement or plan of
merger or consolidation or any transaction including a merger
or consolidation of the Corporation; (c) elect directors; (d)
transfer all or substantially all of the Corporation's property
and assets; and (e) adopt or approve a plan of liquidation or
dissolution of the Corporation. The affirmative vote of the
holders of at least 65% of the outstanding Voting Stock, as
defined in Article Fifth, voting together as a single class,
shall be required to amend or repeal, or adopt any provisions
inconsistent with, paragraphs 3 and 4 of Part D of Article
Fourth, Article Seventh and Article Fifth.
4. Any action required or permitted to be taken by the
holders of any class of stock of the Corporation must be
effected at a duly called annual or special meeting of such
holders and may not be effected by any consent in writing by
such holders. Except as otherwise required by law and subject
to the rights of the holders of any class or series of stock
having a preference over the Common Stock as to dividends or
upon liquidation, special meetings of stockholders of the
Corporation may be called only by the Board of Directors
pursuant to a resolution approved by a majority of the entire
Board of Directors or as otherwise provided in the By-laws of
the Corporation.
ARTICLE FIFTH
A. Repurchase of Voting Stock
Any purchase by the Corporation of shares of Voting Stock
(as hereinafter defined) from an Interested Stockholder (as
hereinafter defined), other than pursuant to an offer to the
holders of all of the outstanding shares of the same class as
those so purchased, at a per share price in excess of the
Market Price (as hereinafter defined), at the time of such
purchase, of the shares so purchased, shall require the
affirmative vote of the holders of a majority of the voting
power of the Voting Stock not beneficially owned by the
Interested Stockholder, voting together as a single class.
1. Business Transactions.
a. In addition to any affirmative vote required by law or
this Certificate of Incorporation:
(1) any merger or consolidation of the Corporation
or any Subsidiary (as hereinafter defined) with (a) any
Interested Stockholder or (b) any other corporation (whether or
not itself an Interested Stockholder) which is, or after such
merger or consolidation would be, an Affiliate (as hereinafter
defined) of an Interested Stockholder; or
(2) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series
of transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate Fair Market
Value (as hereafter defined) of $10,000,000 or more; or
(3) the issuance or transfer by the Corporation or
any Subsidiary (in one transaction or a series of transactions)
of any securities of the Corporation or any Subsidiary to any
Interested Stockholder or any Affiliate of any Interested
Stockholder in exchange for cash, securities or other property
(or a combination thereof) having an aggregate Fair Market
Value of $10,000,000 or more; or
(4) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or on
behalf of an Interested Stockholder or any Affiliate of any
Interested Stockholder; or
(5) any reclassification of securities (including
any reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the Corporation
with any of its Subsidiaries or any other transaction (whether
or not with or into or otherwise involving an Interested
Stockholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares of
any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder or any Affiliate of any
Interested Stockholder;
shall require the affirmative vote of the holders of sixty
percent (60%) of the voting power of the Voting Stock not
beneficially owned by any Interested Stockholder, voting
together as a single class; provided, however, that no such
vote shall be required for the purchase by the Corporation of
shares of Voting Stock from an Interested Stockholder unless
such vote is required by Part A of this Article Fifth.
b. The provisions of paragraph 1(a) of Part B of this
Article Fifth shall not be applicable to any particular
Business Transaction (as hereinafter defined) and such Business
Transaction shall require only such affirmative vote as is
required by law and any other Article of this Certificate of
Incorporation, if all of the conditions specified in either of
the following sub-paragraphs (1) or (2) are satisfied:
(1) The Business Transaction shall have been
approved by a majority of the Disinterested Directors (as
hereinafter defined).
(2) All of the following conditions shall have been
satisfied:
(i) The aggregate amount of the cash and the Fair
Market Value, as of the date of the consummation of the
Business Transaction, of consideration other than cash to be
received per share by holders of Voting Stock in such Business
Transaction shall be at least equal to the higher of (x) the
highest price paid for any share of Voting Stock by any person
who is an Interested Stockholder within the two-year period
immediately prior to the time of the first public announcement
of the proposed Business Transaction (the "Announcement Date")
or in the transaction in which such person became an Interested
Stockholder, whichever price is the higher; or (y) the Fair
Market Value per share of the Corporation's Voting Stock on the
Announcement Date or on the date on which the Interested
Stockholder became an Interested Stockholder (the
"Determination Date"), whichever is higher. The price paid for
any share of Voting Stock shall be the amount of cash plus the
Fair Market Value of any other consideration to be received
therefor, determined at the time of payment thereof.
(ii) The consideration to be received by holders of
a particular class of outstanding Voting Stock shall be in cash
or in the same form as the Interested Stockholder has
previously paid for shares of such class of Voting Stock. If
the Interested Stockholder has paid for shares of any class of
Voting Stock with varying forms of consideration, the form of
consideration for such class of Voting Stock shall be either
cash or the form of consideration used to acquire the largest
number of shares of such class of Voting Stock previously
acquired by the Interested Stockholder.
(iii) After such Interested Stockholder has become
an Interested Stockholder and prior to the consummation of such
Business Transaction:
(x) there shall have been (aa) no reduction in
the annual rate of dividends paid on the Voting Stock (except
as necessary to reflect any subdivision of the Voting Stock),
except as approved by a majority of the Disinterested
Directors, and (bb) an increase in such annual rate of
dividends as necessary to reflect any reclassification
(including any reverse stock split), recapitalization,
reorganization or any similar transaction which has the effect
of reducing the number of outstanding shares of the Common
Stock, unless the failure to so increase such annual rate is
approved by a majority of the Disinterested Directors; and
(y) such Interested Stockholder shall have not
become the beneficial owner of any additional shares of Voting
Stock except as part of the transaction which results in such
Interested Stockholder becoming an Interested Stockholder.
(iv) After such Interested Stockholders has become
an Interested Stockholder, such Interested Stockholder shall
not have received the benefit, directly or indirectly (except
proportionately as a stockholder), of any loans, advances,
guarantees, pledges or other financial assistance or any tax
credits or other tax advantages provided by the Corporation,
whether in anticipation of or in connection with such Business
Transaction or otherwise.
(v) A proxy or information statement describing the
proposed Business Transaction and complying with the
requirements of the Securities Exchange Act of 1934 and the
rules and regulations thereunder (or any subsequent provisions
replacing such Act, rules or regulations) shall be mailed to
all stockholders of the Corporation at least 30 days prior to
the consummation of such Business Transaction (whether or not
such proxy or information statement is required to be mailed
pursuant to such Act or subsequent provisions).
2. Cumulative Voting. In any election of directors of
the Corporation on or after the date on which any 60%
Stockholder (as hereinafter defined) becomes a 60% Stockholder,
and until such time as no 60% Stockholder any longer exists,
there shall be cumulative voting for the election of directors
so that any holder of shares of Voting Stock entitled to vote
in such election may cumulate such stockholder's votes and give
one candidate a number of votes equal to the number of
directors to be elected multiplied by the number of votes to
which stockholder's shares are entitled, or distribute such
stockholder's votes on the same principle among as many
candidates as such stockholder sees fit. From and after the
date on which any 60% Stockholder becomes a 60% Stockholder,
and until such time as no 60% Stockholder any longer exists,
any person who is the beneficial owner (as hereinafter defined)
of shares of Voting Stock with a Market Price of $100,000 or
more shall have the right to nominate one or more candidates
for election to the Board of Directors of the Corporation in
any election of directors to be held, and such candidates shall
be entitled to include in any proxy statement or other
communication with respect to such election to be sent to the
holders of shares of Voting Stock by the Corporation during
such period, at the expense of the Corporation, descriptions
and other statements of such candidates which shall receive
equal space, coverage and treatment as is received by
candidates nominated by the Board of Directors or management of
the Corporation.
3. Interested Stockholder Obligations. It shall be the
duty of any Interested Stockholder:
(i) to give or cause to be given written notice to the
Corporation, immediately upon becoming an Interested
Stockholder, of such person's status as an Interested
Stockholder and of such other information as the Corporation
may reasonably require with respect to identifying all owners
and amount of ownership of the outstanding Voting Stock of
which such Interested Stockholder is a beneficial owner (as
defined herein), and
(ii) in any election or vote provided for or required by
this Article Fifth, to identify clearly the votes cast in such
election or vote that represent shares of Voting Stock
beneficially owned by such Interested Stockholder, by
indication on any proxy or proxies given by the Interested
Stockholder, by written notice to the Corporation or by equally
effective means;
provided, however, that the failure of an Interested
Stockholder to comply with the provisions of this paragraph 3
shall not in any way be construed to prevent the Corporation
from enforcing the provisions of paragraphs 1 and 2 of this
Part B and Part A of Article Fifth.
C. Definitions
1. Definitions. For the purposes of this Article Fifth,
the following definitions shall apply.
a. A "person" shall mean any individual, firm corporation
or other entity.
b. "Voting Stock" shall mean the outstanding shares of
capital stock of the Corporation entitled to vote generally in
the election of directors. In any vote required by or provided
for in this Article Fifth, each share of Voting Stock shall
have the number of votes granted to it generally in the
election of directors.
c. "Interested Stockholder" shall mean any person (other
than the Corporation or any Subsidiary) who or which:
(i) is the beneficial owner, directly or indirectly,
of more than 5% of the voting power of the outstanding Voting
Stock; or
(ii) is an Affiliate of the Corporation and at any
time within the two-year period immediately prior to the date
in question was the beneficial owner, directly or indirectly,
of 5% or more of the voting power of the then outstanding
Voting Stock; or
(iii) is an assignee of or has otherwise succeeded
to any shares of Voting Stock which were at any time within the
two-year period immediately prior to the date in question
beneficially owned by any Interested Stockholder, if such
assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving an public
offering within the meaning of the Securities Act of 1933.
d. "60% Stockholder" shall mean any person (other than
the Corporation or any Subsidiary) who or which:
(1) is the beneficial owner, directly or indirectly,
of 60% or more of the voting power of the outstanding Voting
Stock; or
(2) is an Affiliate of the Corporation and at any
time within the two-year period immediately prior to the date
in question was the beneficial owner, directly or indirectly,
of 60% or more of the voting power of the then outstanding
Voting Stock; or
(3) is an assignee of or has otherwise succeeded to
any shares of Voting Stock which were at any time within the
two-year period immediately prior to the date in question
beneficially owned by any 60% Stockholder, if such assignment
or succession shall have occurred in the course of a
transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
e. A person shall be a "beneficial owner" of any Voting
Stock:
(1) which such person or any of its Affiliates or
Associates (as hereinafter defined) beneficially owns, directly
or indirectly; or
(2) which such person or any of its Affiliates or
Associates has (a) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangements or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (b) the right to vote
pursuant to any agreement, arrangement or understanding; or
(3) which are beneficially owned, directly or
indirectly, by any other person with such person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Voting Stock.
f. For the purposes of determining whether a person is an
Interested Stockholder or a 60% Stockholder pursuant to sub-
paragraphs c and d of this paragraph 1, the number of shares of
Voting Stock deemed to be outstanding shall include shares
deemed owned through application of sub-paragraph e of this
paragraph 1 but shall not include any other shares of Voting
Stock which may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion
rights, warrants or options, or otherwise.
g. "Affiliate" and "Associate" shall have the respective
meaning ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of
1934, as in effect on December 31, 1984.
h. "Subsidiary" means any corporation of which a majority
of any class of equity security is owned directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definitions of Interested Stockholder and 60%
Stockholder set forth in sub-paragraphs c and d of this
paragraph 1, the term "Subsidiary" shall mean only a
corporation of which a majority of the voting power of the
capital stock entitled to vote generally in the election of
directors is owned, directly or indirectly, by the Corporation.
i. "Market Price" means: the last closing sale price
immediately preceding the time in question of a share of the
stock in question on the Composite Tape for New York Stock
Exchange-Listed Stocks, or, if such stock is not quoted on the
Composite Tape, on the New York Stock Exchange, or, if such
stock is not listed on such Exchange, on the principal United
States securities exchange registered under the Securities
Exchange Act of 1934 on which such stock is listed, or, if such
stock is not listed on any such Exchange, the last closing bid
quotation with respect to a share of such stock immediately
preceding the time in question on the National Association of
Securities Dealers, Inc. Automated Quotations System or any
system then in use (or any other system of reporting or
ascertaining quotations then available), or if such stock is
not so quoted, the fair market value at the time in question of
a share of such stock as determined by the Board of Directors
in good faith.
j. "Fair Market Value" means (i) in the case of stock,
the Market Price, and (ii) in the case of property other than
cash or stock, the fair market value of such property on the
date in question as determined by the Board of Directors in
good faith.
k. "Disinterested Director" means any member of the Board
of Directors of the Corporation (the "Board") who is
unaffiliated with the Interested Stockholder and was a member
of the Board prior to the time that the Interested Stockholder
became an Interested Stockholder, and any successor of a
Disinterested Director who is unaffiliated with the Interested
Stockholder and is recommended to succeed a Disinterested
Director by a majority of Disinterested Directors then on the
Board.
l. "Business Transaction" means any transaction referred
to in any one or more of the clauses (i) through (v) of
paragraph 1(a) of Part B.
m. In the event of any Business Transaction in which the
Corporation survives, the phrase "consideration to be received"
as used in paragraph 1(b)(2)(i) and (ii) of Part B shall
include shares of Voting Stock retained by the holders of such
shares.
2. Directors Duty to Determine Certain Facts. The
majority of the Disinterested Directors of the Corporation
shall have the power and duty to determine for the purpose of
this Article Fifth, on the basis of information known to them
after reasonable inquiry, all facts necessary to determine the
applicability of the various provisions of this Article Fifth,
including, (i) whether a person is an Interested Stockholder or
a 60% stockholder, (ii) the number of shares of Voting Stock
beneficially owned by any person, (iii) whether a person is an
Affiliate or Associate of another, (iv) whether the
requirements of paragraph 1(b)(2) of Part B have been met with
respect to any Business Transaction, and (v) whether the assets
which are the subject of any Business Transaction have, or the
consideration to be received for the issuance or transfer of
securities by the Corporation or any Subsidiary in any Business
Transaction has, an aggregate Fair Market Value of $10,000,000
or more. The good faith determination of a majority of the
Disinterested Directors shall be conclusive and binding for all
purposes of this Article Fifth.
3. No Effect on Fiduciary Obligations of Interested
Stockholders. Nothing contained in this Article Fifth shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
ARTICLE SIXTH
Additional provisions relating to the business of the
Corporation, its affairs, its rights or its powers, or the
rights or powers of its stockholders, directors or officers, in
furtherance of its business and purposes, and not in limitation
of the general powers now or hereafter conferred upon
corporations formed under the General Corporation Law of
Delaware, are as follows:
1. All of the powers conferred upon corporations formed
under the General Corporation Law of Delaware, as amended from
time to time, and the Certificate of Incorporation of the
Corporation, may be exercised by the Board of Directors of the
Corporation, except as may be provided otherwise by law, the
Certificate of Incorporation of the Corporation, or the by-laws
of the Corporation.
2. The books and records of the Corporation may be kept
outside the State of Delaware at such place or places as may
from time to time be designated by the Board of Directors or in
the by-laws of the Corporation.
3. Subject to the General Corporation Law of Delaware,
the by-laws shall determine the circumstances under which, and
the manner in which, the stockholders shall be permitted to
inspect the books, accounts and documents of the Corporation.
4. No election of directors need be by written ballot
unless the by-laws shall otherwise provide.
5. In the event that the Corporation pays criminal
penalties or civil damages, either voluntarily or involuntarily
and either as a result of a judgment against it which has
become final or in avoidance thereof, neither the Corporation,
the Board of Directors nor the officers shall be required to
seek or obtain nor shall the directors or officers be
personally liable for not seeking or obtaining, indemnification
or reimbursement from any director, officer or employee who was
or may have been responsible, in whole or in part, for the
acts, transactions or things with respect to which or as a
result of which such payments were made by the Corporation.
6. The stockholders of the Corporation shall not be
personally liable for the payment of the Corporation's debts,
except as they may be liable by reason of their own conduct or
acts.
7. In furtherance and not in limitation of the powers
conferred by the General Corporation Law of Delaware, or
elsewhere in the Certificate of Incorporation of the
Corporation, the Board of Directors is expressly authorized
without stockholder approval:
a. To provide for payment by the Corporation of
reasonable directors' fees and of the travel and other expenses
incurred by the directors in connection with attendance at
meetings or otherwise incurred on business for and on behalf of
the Corporation.
b. To set apart out of any of the funds of the
Corporation available for dividends, a reserve or reserves for
any proper purpose and to abolish any such reserve in the
manner in which it was created.
c. To authorize the issuance, from time to time, of any
or all shares of stock of the Corporation of any class at any
time authorized, any securities convertible into or
exchangeable for any such shares so authorized, and any
warrant, option or right to purchase, subscribe for or
otherwise acquire, shares of stock of the Corporation of any
class at any time authorized, in each case to such persons and
for such consideration and on such terms as the Board of
Directors from time to time in its discretion lawfully may
determine; provided, however, that the consideration for the
issuance of shares of stock of the Corporation having par value
shall not be less than such par value; and stock so issued, for
which the consideration has been paid to the Corporation, shall
be fully paid stock, and the holders of such stock shall not be
liable to any further call or assessments thereon.
d. To initiate, authorize, adopt, approve or ratify a
plan or plans for pensions, profit sharing, employee incentive,
insurance benefits of all types and descriptions and rights,
options, installment contracts or other arrangements for the
purchase of stock of any class of the Corporation and to make
the benefits of any such plan or plans available to the
directors, officers or employees of the Corporation or to
persons associated with or participating in the business of the
Corporation.
With respect to any plan or plans involving contracts or
other arrangements for the purchase of stock, the Board of
Directors may authorize the issuance of all the shares and the
issuance and delivery of a certificate or certificates
evidencing all the shares involved, to the person or persons
from time to time participating therein at the inception of
each such participation, or may direct that the delivery of
such certificate or certificates shall be withheld until all or
some specified portion of the required payments have been made;
and in either such case, the Board of Directors may provide
that such participating person or persons shall enjoy the same
voting and dividend rights with respect to said shares as
though the same were fully paid and non-assessable. No such
plan or plans shall be construed as involving a loan by the
Corporation or as a loan by the Corporation which is secured by
its shares. Any such plan or plans or any such similar
arrangement in which a predecessor corporation of the
Corporation and the directors, officers, employees or business
associates or such predecessor corporation were participants
may be adopted and ratified, in whole or in part, by a majority
of the Board of Directors of the Corporation and by a majority
vote of the stockholders of the Corporation at any annual or
special meeting thereof. If such approval is obtained, then to
the extent that said plan or plans or arrangements of the
predecessor corporation are approved, the same shall thereupon
be and become a plan or plans of the Corporation, and any
shares of the Corporation issued pursuant thereto, any votes
cast by the holders thereof with respect to such shares and any
dividends paid with respect to such shares, either prior to or
after such approval, shall be deemed to have been validly
issued, validly cast and validly paid.
e. To make, adopt, alter, amend or repeal the by-laws of
the Corporation.
8. In furtherance and not in limitation of the general
powers conferred upon corporations under the General
Corporation Law, of Delaware and the objects and purposes
herein set forth, it is expressly provided that the Corporation
shall also have the following powers:
a. To manufacture, produce, process, invent, develop,
use, distribute, buy, sell, import, export and generally trade
and deal in, as principal, agent, broker, distributor or
otherwise, energy absorption products and systems in all forms
and of every kind and description, food products of every kind
and description, chemical and chemical products of every kind
and description, biologicals and pharmaceuticals of every kind
and description, metallic and non-metallic minerals of every
kind and description, plastics and plastic products of every
kind and description, fabrics and all other products, machinery
and equipment of every kind and description, and generally to
engage in the manufacturing and merchandising business, and to
do all things necessary or convenient to engage in and conduct
the above business and to do all things necessary or beneficial
for the accomplishment of the above purposes.
b. To license others to manufacture, produce, process,
develop, use, distribute, export, import and sell any of the
things and products hereinabove referred to.
c. To carry on any other lawful business or businesses
whatsoever that may be deemed by the Corporation to be
desirable and that may promote the interests of the
Corporation.
d. To purchase, by the issuance or sale of stock or other
securities of the Corporation, or to otherwise acquire, hold,
hypothecate, sell or otherwise transfer, stock or other
securities of or tangible or intangible assets of, and to gain
control of, corporations and unincorporated businesses, either
foreign or domestic, engaged or about to engage, either
directly or indirectly, in one or more of the businesses
described above.
e. To acquire by purchase, lease or otherwise, improved
or unimproved real estate located anywhere within or without
the United States of America, and interests of any kind
therein; to own, hold, use, occupy, improve, develop, alter,
enlarge, rebuild and manage said real estate and any
improvements thereon; to erect or cause to be elected plants,
factories, warehouses, buildings and structures of any kind and
description, with their appurtenances; to lease, mortgage and
otherwise lien or encumber any and all such real estate and any
improvements thereon; and to sell, exchange, transfer or
otherwise dispose of any or all the Corporation's interests in
any of or all said real estate and any improvements thereon.
f. To manufacture, purchase, lease or otherwise acquire
equipment, goods, wares, merchandise and other personal
property of any and every class and description, and interests
of any and every kind therein; to own, hold, lease, hypothecate
and use said property; and to sell, trade, deal in or otherwise
dispose of any of and all the Corporation's interests in any or
all of said property.
g. To enter into, make, perform and become assignee of
and to execute and deliver performance bonds in connection
therewith, contracts of every kind and description with any
person, firm, association or corporation, and with the United
States of America or any territory, state, county, municipality
or any department, agency, commission, corporation or political
sub-division thereof, and with any foreign government, colony,
body politic or political entity thereof.
h. To acquire, hold, use, sell, assign, lease, grant
licenses in respect of, mortgage, pledge, or otherwise dispose
of letters patent, patent rights, patent applications,
licenses, privileges, inventions, improvements, processes,
copyrights, service marks, trademarks, tradenames, and the
like, either of the United States or of a foreign country,
relating to or useful in connection with the business of the
Corporation.
i. To lend money or extend credit or both to any person,
firm, association or corporation that purchases, leases or
otherwise acquires real or personal property from the
Corporation; to lend money or extend credit to or guarantee the
payment of dividends, interest or other obligations of, or
otherwise financially assist, any person, firm, association or
corporation, whenever such loan, credit extension, guarantee or
other financial assistance is deemed by the Corporation to be
desirable and to promote the interests of the Corporation.
j. To acquire the good will, business, rights, assets and
property of, and to undertake or assume the whole or any part
of the obligations or liabilities of, any person, firm,
association or corporation; to pay for the same in cash, the
stock or other securities of the Corporation or otherwise; to
hold or in any manner to dispose of the whole or any part of
the property so purchased or acquired; to conduct in any lawful
manner the whole or any part of the business so acquired, and
to exercise all the powers necessary or convenient and manage
such business; and to merge or consolidate with any corporation
in such manner as may be permitted by law.
k. To borrow or raise monies for the purposes of the
Corporation and in furtherance of the powers as herein defined,
and, from time to time, without limit as to amount, to draw,
make, accept, endorse, execute and issue, and to redeem,
purchase, resell and reissue, promissory notes, drafts, bills
of exchange, warrants, bonds, debentures, convertible or
otherwise, and other negotiable or non-negotiable instruments
and evidences of indebtedness, and to secure the payment of any
thereof and of the interest thereon by mortgage upon or pledge,
conveyance or assignment in trust of the whole or any part of
the property of the Corporation, whether at the time owned or
thereafter acquired, and to sell, pledge or otherwise dispose
of such bonds or other obligations of the Corporation for its
own corporate purposes.
l. To purchase, hold, sell and transfer the shares of its
own stock; provided it shall not use its funds or property for
the purchase of its own shares of stock when such use would
cause any impairment of its capital, except as may be permitted
by law, and provided, further, that shares of its own stock
belonging to it shall not be voted upon directly or indirectly.
m. To have offices, keep its books and records of
account, conduct its business and promote its purposes within
and without the State of Delaware and other States of the
United States of American and its Territories and Possessions
and the District of Columbia, and in foreign countries, without
restriction as to place or amount.
n. The powers specified in the foregoing clauses of this
Article shall, except where otherwise expressed, be in nowise
limited or restricted by reference to, or inference from, the
terms of any other clause in the Certificate of Incorporation
of the Corporation, but shall be regarded as independent
powers; and it is hereby expressly provided that the foregoing
enumeration of specific powers shall not be held to limit or
restrict in any manner any other powers of this Corporation.
9. To the full extent that is shall from time to time
have power under applicable law and in the manner from time to
time prescribed or permitted under applicable law, the
Corporation shall indemnify any director or officer and the
Corporation may indemnify any employee or agent, who was or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, and including actions or suits
by or in the right of the Corporation by reason of the fact
that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise. The provisions of this section shall continue for
the benefit of a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such a person.
ARTICLE SEVENTH
There shall be between three and nine directors of the
Corporation, as determined by the By-Laws. The directors of
the Corporation shall be divided into three classes as nearly
equal in number as possible. There shall be at least one
director in each class. At each annual meeting, directors to
replace those directors who terms expire at such annual meeting
shall be elected to hold office until the third succeeding
annual meeting. If the number of directors is changed, any
newly created directorships or any decrease in directorships
shall be so apportioned among the classes as to make all
classes as nearly equal in number as possible. If the number
of directors is increased by the Board of Directors and any
newly created directorships are filled by the Board, there
shall be no classification of the additional directors until
the next annual meeting of stockholders.
ARTICLE EIGHTH
The Board of Directors, by resolution or resolutions
passed by three-fourths of the entire Board of Directors, may
designate from among its members an execute committee and other
committees, each consisting of three or more directors, and
each of which, to the extent provided in this Certificate of
Incorporation, the by-laws and in such resolution or
resolutions, shall have the authority of the Board of
Directors, except as may be provided otherwise by law. The
Chairman of the Board and the President shall be members ex
officio of any executive committee or finance committee. An
executive committee or any other committee shall act only at
such times as the Board of Directors is not in session and in
no case to the exclusion of the right of the Board of Directors
at any time to act as a Board upon any business of the
Corporation. Each such committee shall cease to exist and
function in any capacity upon the termination of its authority
by resolution or resolutions passed by a majority of the entire
Board of Directors. As used in this paragraph, "entire Board
of Directors" means the total number of directors which the
Corporation would have if there were no vacancies.
All action by any committee of the Board of Directors
shall be referred to the Board of Directors at its meeting next
succeeding each action, and shall be subject to revision or
alteration by the Board of Directors, provided that no rights
or acts of third parties shall be affected by any such revision
or alteration. Subject to such applicable resolutions as may
be adopted by the Board, each committee shall fix its own rules
of procedure and shall meet where and as provided in such
rules, but in any case the presence of a majority shall be
necessary to constitute a quorum.
ARTICLE NINTH
Directors may be removed at any time by a vote of the
holders of three-fourths of the stock entitled to vote, except
that directors elected by any class of stock, voting separately
as a class, may be removed only by a majority vote of such
class, voting separately as a class, so long as the voting
power of such class shall continue.
ARTICLE TENTH
A director of a Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the
General Corporation Law of the State of Delaware, as the same
exists or hereafter may be amended, or (iv) for any transaction
from which the director derived an improper personal benefit.
If the General Corporation Law of the State of Delaware
hereafter is amended to authorize the further elimination or
limitation of the liability of directors, then the liability of
a director of the Corporation, in addition to the limitation on
personal liability provided herein, shall be limited to the
fullest extent permitted by the amended General Corporation Law
of the State of Delaware. Any repeal or modification of this
Article by the stockholders of the Corporation shall be
prospective only, and shall not adversely affect any limitation
on the personal liability of a director of the Corporation
existing at the time of such repeal or modification.
ARTICLE ELEVENTH
The Corporation reserves the right to amend, change or
repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by
statute and in this certificate and all rights conferred herein
upon the stockholders and directors and granted subject to this
reservation.
IN WITNESS WHEREOF, said Quixote Corporation has caused
this Restated Certificate of Incorporation to be signed by its
President, and attested by its Secretary, this 4th day of
February, 1998.
QUIXOTE CORPORATION
By:/s/ Leslie J. Jezuit
Its:President
Attest:
/s/ Joan R. Riley
Secretary
Exhibit 10 (f)
CHANGE OF CONTROL AGREEMENT BETWEEN
DANIEL P. GOREY AND
QUIXOTE CORPORATION
THIS CHANGE OF CONTROL AGREEMENT, dated as of December 1, 1997 (the
"Agreement"), is by and between Quixote Corporation, a Delaware corporation
having its principal offices at One East Wacker Drive, Chicago, IL, 60601
("the Company"), and Daniel P. Gorey, an employee of the Company (the
"Employee").
WHEREAS, the Employee is presently serving as an employee and elected
officer of the Company; and
WHEREAS, the Board of Directors of the Company ("the Board") has
recognized and continues to recognize that the Employee's contribution to
the growth and success of the Company has been, and is expected to continue
to be, substantial and desires to assure the Company of the Employee's
continued employment by assuring him of fair treatment if that relationship
is terminated; and
WHEREAS, the Company and the Employee agree that, as a result of
various factors, it is desirable to enter into this Change of Control
Agreement; and
WHEREAS, the Company desires to retain the Employee's services and the
Employee is willing to continue his employment as an employee and elected
officer of the Company on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and conditions contained herein and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. Certain Defined Terms.
(a)"Change of Control", as used herein, shall mean a change in control
of a nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Securities Exchange
Act of 1934 ( Exchange Act ); provided that, without limitation, such a
change in control shall be deemed to have occurred if : (i) any person (as
that term is defined in Section 13(d) and Section 14(d) of the Exchange
Act) is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing twenty percent (20%) or more of the
combined voting power of the Company s then outstanding securities; or (ii)
during any period of two consecutive years, individuals who at the
beginning of such period constitute all members of the Board who are not
employed by the Company (the Outside Directors ) shall cease for any
reason to constitute at least a majority of the Outside Directors, unless
the election of each Outside Director, who was not an Outside Director at
the beginning of such period, was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning
of such period; or, (iii) there shall be consummated (A) any consolidation
or merger of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the Company s common
stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Company s common
stock immediately prior to the merger have the same proportionate ownership
of common stock of the surviving corporation immediately after the merger,
or (B) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the assets
of the Company, or, (iv) the stockholders of the Company approve a plan or
proposal for the liquidation or dissolution of the Company.
(b) "Constructive Termination", as used herein, shall mean any one or
more of the following occurrences within three (3) years following the
Effective Date of a Change of Control: (i) the Employee is assigned any
duties inconsistent in any material adverse respect with the Employee's
position, authority, duties or responsibilities immediately prior to the
Effective Date of the Change of Control referred to above, or any other
action by the Company which results in a diminution in any material adverse
respect of the Employee's position, authority, duties or responsibilities
as the same existed immediately prior to the Effective Date of the Change
of Control referred to above, (ii) the Employee's total compensation (when
taken as a whole including fringe benefits and the manner of determining
incentive compensation) is changed in a material adverse way or the Company
fails to obtain the assumption of the obligation to perform this Agreement
by any successor as contemplated in Section 8 hereof, or (iii) the Company
requires the Employee to be based outside of a radius of thirty (30) miles
from the location of the Company's present corporate offices (except for
required travel on Company business to an extent substantially consistent
with the Employee's business travel obligations immediately prior to such
change in control); provided, however, that none of the foregoing shall be
a Constructive Termination if any of the foregoing actions are taken by the
Company for Cause (as defined in subsection 1(d) hereof).
(c) "Effective Date", as used herein, shall mean the first date on
which a Change of Control (as defined in Section 1(a)) occurs.
(d) "Cause" For purposes of this Agreement, the Company shall have
"Cause" to terminate the Employee's employment upon (i) the willful failure
by the Employee to substantially perform his duties, other than such
failure resulting from the Employee's incapacity due to physical or mental
illness, (ii) the willful engaging by the Employee in gross misconduct
materially and demonstrably injurious to the Company or its subsidiaries or
(iii) the commission by the Employee of a crime which is a felony. For the
purpose of this subsection (d), no act, or the failure to act, on the
Employee's part shall be considered "willful" unless done, or omitted to be
done, by him not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company or subsidiaries.
Notwithstanding the foregoing, the Employee shall not be deemed to have
been terminated for Cause under subsections (i), (ii) or (iii) of the first
sentence of this subsection (d), unless and until there shall have been
delivered to the Employee a copy of a resolution, duly adopted by the
affirmative vote of not less than two-thirds (2/3) of the entire membership
of the Company's Board of Directors at a meeting of the Board called and
held for that purpose (after reasonable notice to the Employee and an
opportunity for him, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board, the Employee
was guilty of conduct set forth above in clause (i), (ii) or (iii) of the
first sentence of this subsection (d) and specifying the particulars
thereto in detail.
(e) "Disability" For purposes of this Agreement, an Employee's
"Disability" shall occur if the Employee is absent from his duties as an
employee of the Company on a full-time basis for six (6) consecutive months
following a Change of Control of the Company and if he qualifies for long-
term disability under the Company's long-term disability insurance plan.
2. Termination. If the Employee is terminated for a reason other than
death, Disability, Cause or voluntary resignation not constituting a
Constructive Termination, or is subject to a Constructive Termination (a
Constructive Termination or termination for a reason other than death,
Disability, Cause or voluntary resignation not constituting a Constructive
Termination referred to herein as a "Termination"), within three (3) years
following the Effective Date of a Change of Control, the Employee will be
entitled to receive the benefits set forth below:
(a) Accelerated Vesting. If a Termination of the Employee occurs within
three (3) years following the Effective Date of a Change of Control, the
vesting of all rights listed on Exhibit A ("Rights") shall be accelerated
to the date on which the Employee is terminated or is subject to a
Constructive Termination.
(b) Salary Continuation. If a Termination of the Employee occurs within
three (3) years following the Effective Date of a Change of Control:
(i) The Employee shall have a right to receive his full base salary
through the date of Termination at the rate in effect at the time
Termination occurs, and in lieu of any further salary payment to the
Employee for periods subsequent to the date of Termination, the Company
shall pay to the Employee in cash an amount equal to three (3) times the
sum of (A) the higher of the Employee's base salary at the date of
Termination or on the date when a Change of Control of the Company occurs
plus (B) the average of the bonus payment plus other incentive compensation
made to the Employee for the two (2) full fiscal years preceding the fiscal
year in which a Change of Control of the Company occurs. At the option of
the Employee, such payment shall be made in a lump sum not later than 5
days after the date of Termination or in substantially equal semimonthly
installments, commencing no later than the fifth day following the date of
Termination and continuing for a period of thirty-six (36) months following
the date of Termination. In the event (A) the Company shall fail to make
any payment to the Employee which is required under this subsection within
ten (10) days of the date that such payment is due and (B) such failure to
pay continues, following written notification by the Employee to the
Company of such failure to make payment, for more than seven (7) additional
days thereafter, all remaining installments or payments payable to the
Employee shall be accelerated and shall become immediately due and payable
by the Company, without any discounting to present value, with interest
accruing on any unpaid portion thereof at the rate of twelve percent (12%)
per annum.
(ii) The Company shall provide to Employee all benefits he was
entitled to immediately prior to the date of Termination during the Salary
Continuation Period, as defined below, including but not limited to all
group insurance plans in which the Employee was entitled to participate
immediately prior to the date of the Termination, provided that the
Employee's continued participation is possible under the terms of such
plans (as, for example, it may not possible if the Employee elects the lump
sum payment option described in subsection 2(b)(i) above), failing which
the Company shall arrange to provide the Employee with alternative benefits
and/or insurance substantially similar to those provided under the then
current benefit and insurance plans unless it is not commercially feasible
to do so. If the cost of providing such benefits is more than 150% of the
cost of providing such benefits for the Employee prior to the date of
Termination, then the parties agree that it shall be deemed not
commercially feasible to do so.
(iii) The Salary Continuation Period as used in this Section 2(b)
shall mean three (3) years from the date of a Termination of the Employee.
(c) Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in subsection 2(b) by seeking other
employment or otherwise, nor shall the amount of any payment provided for
in subsection 2(b) be reduced by any compensation earned by the Employee as
a result of employment by another employer after the date of Termination,
or otherwise.
3. Rights Apply Only on Change of Control. The rights granted under
this Change of Control Agreement only apply upon a Change of Control and
subsequent Termination and supersede the severance or other similar rights
accruing upon a Change of Control and subsequent Termination under any
other agreement, including without limitation the Key Employee Severance
Agreement, dated as of February 17, 1989, as amended by and between the
Company and the Employee (the "Key Employee Severance Agreement").
4. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois applicable to
agreements made and to be performed in Illinois, without giving effect to
conflicts of law principles.
5. Headings. The section headings of this Agreement are for
reference only and are to be given no effect in the construction or
interpretation of this Agreement.
6. Severability. If any part or provision of this Agreement shall be
declared invalid or unenforceable by a court of competent jurisdiction,
said provision or part shall be ineffective to the extent of such
invalidity or unenforceability only, without in any way affecting the
remaining parts or provisions of this Agreement.
7. Waiver. Any party may waive compliance by another party with any
of the provisions of this Agreement. No waiver of any provision shall be
construed as a waiver of any other provision. Any waiver must be in
writing.
8. Binding Effect; Assignment. This Agreement shall be binding on and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to
create any third party beneficiary rights in any person or entity
(including any employee or person engaged by the Company in any capacity)
not a party to this Agreement. The Company will require any successor
(whether direct or indirect, by merger, purchase, consolidation or
otherwise) of the Company to make an express assumption of the obligations
hereunder and cause any successor (whether direct or indirect, by merger,
purchase, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to agree to perform all parts and
provisions under this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had
taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement
and shall entitle Employee to compensation from the Company in the same
amount and on the same terms as he would be entitled to hereunder if he is
subject to a Construction Termination, except for purposes of implementing
the foregoing, the date on which any such succession becomes effective
shall be deemed the date of Termination. As used in this Agreement,
Company shall mean the Company as hereinbefore defined and any successor
to the business and/or assets of the Company which executes and delivers
the agreement provided for in this section 8, or which otherwise becomes
bound by all the terms and provisions of this Agreement by operation of
law.
This Agreement and all rights of the Employee hereunder shall inure to
the benefit of, and be enforceable by the Employee s personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Employee should die after any
amounts shall become payable to him hereunder, all such amounts, unless
otherwise provided for herein, shall be paid in accordance with the terms
of this Agreement to the Employee s devisee, legatee or other designee or,
if there be no such devisee or other designee, to the Employee s estate.
9. Legal Fees. The Company shall pay, or reimburse the Employee for,
all legal fees and expenses incurred by the Employee as a result of any
Termination of his employment hereunder after a Change of Control of the
Company, including all such fees and expenses, if any, incurred contesting
or disputing in good faith any such Termination or in seeking to obtain or
enforce any right or benefit provided by this Agreement.
10. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
in Chicago, Illinois in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however,
that the Employee shall be entitled to seek specific performance of his
right to be paid until the date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
11. Counterparts. This Agreement may be signed in any number of
counterparts and all such counterparts shall be read together and construed
as but one and the same document.
12. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally, or sent by facsimile transmission, receipt confirmed, one day
after sent by recognized overnight courier, or five (5) days after deposit
in the United States mail, postage prepaid, registered or certified mail,
return receipt requested, to the parties at the following addresses (or to
such other address as a party may have specified by notice duly given to
the other party in accordance with this provision):
If to the Employee:
At the Employee's then current business or residence address as shown on
the records of the Company, with a copy to such other person as the
Employee may have specified by notice duly given to the Company in
accordance with this provision.
If to the Company:
Quixote Corporation
One East Wacker Drive
Chicago, IL 60601
Attention: President
IN WITNESS WHEREOF the parties have executed this Agreement, in
triplicate, on the date first written above.
Quixote Corporation Employee
/s/ Philip E. Rollhaus, Jr. /s/ Daniel P. Gorey
- ------------------------------- -------------------------
By: Its Chief Executive Officer Daniel P. Gorey
EXHIBIT A
All rights granted to Employee under the Company s plans including, but not
limited to the following:
1993 Long-Term Stock Ownership Plan
Incentive Savings Plan<PAGE>
CHANGE OF CONTROL AGREEMENT BETWEEN
GEORGE D. EBERSOLE AND
QUIXOTE CORPORATION
THIS CHANGE OF CONTROL AGREEMENT, dated as of December 1, 1997 (the
"Agreement"), is by and between Quixote Corporation, a Delaware corporation
having its principal offices at One East Wacker Drive, Chicago, IL, 60601
("the Company"), and George D. Ebersole (the "Employee").
WHEREAS, the Employee is presently serving as an employee and elected
officer of Energy Absorption Systems, Inc., a subsidiary of the Company;
and
WHEREAS, the Board of Directors of the Company ("the Board") has
recognized and continues to recognize that the Employee's contribution to
the growth and success of the Company has been, and is expected to continue
to be, substantial and desires to assure the Company of the Employee's
continued employment by assuring him of fair treatment if that relationship
is terminated; and
WHEREAS, the Company and the Employee agree that, as a result of
various factors, it is desirable to enter into this Change of Control
Agreement; and
WHEREAS, the Company desires to retain the Employee's services and the
Employee is willing to continue his employment as an employee and elected
officer of Energy Absorption Systems, Inc. on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and conditions contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto agree as follows:
1. Certain Defined Terms.
(b) "Change of Control", as used herein, shall mean a change in
control of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934 ( Exchange Act ); provided that, without
limitation, such a change in control shall be deemed to have occurred if :
(i) any person (as that term is defined in Section 13(d) and Section 14(d)
of the Exchange Act) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing twenty percent (20%)
or more of the combined voting power of the Company s then outstanding
securities; or (ii) during any period of two consecutive years, individuals
who at the beginning of such period constitute all members of the Board who
are not employed by the Company (the Outside Directors ) shall cease for
any reason to constitute at least a majority of the Outside Directors,
unless the election of each Outside Director, who was not an Outside
Director at the beginning of such period, was approved by a vote of at
least two-thirds of the directors then still in office who were directors
at the beginning of such period; or, (iii) there shall be consummated (A)
any consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the
Company s common stock would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of the
Company s common stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (B) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Company, or, (iv) the
stockholders of the Company approve a plan or proposal for the liquidation
or dissolution of the Company.
(b) "Constructive Termination", as used herein, shall mean any one or
more of the following occurrences within three (3) years following the
Effective Date of a Change of Control: (i) the Employee is assigned any
duties inconsistent in any material adverse respect with the Employee's
position, authority, duties or responsibilities immediately prior to the
Effective Date of the Change of Control referred to above, or any other
action by the Company which results in a diminution in any material adverse
respect of the Employee's position, authority, duties or responsibilities
as the same existed immediately prior to the Effective Date of the Change
of Control referred to above, (ii) the Employee's total compensation (when
taken as a whole including fringe benefits and the manner of determining
incentive compensation) is changed in a material adverse way or the Company
fails to obtain the assumption of the obligation to perform this Agreement
by any successor as contemplated in Section 8 hereof, or (iii) the Company
requires the Employee to be based outside of a radius of thirty (30) miles
from the location of the Company's present corporate offices (except for
required travel on Company business to an extent substantially consistent
with the Employee's business travel obligations immediately prior to such
change in control); provided, however, that none of the foregoing shall be
a Constructive Termination if any of the foregoing actions are taken by the
Company for Cause (as defined in subsection 1(d) hereof).
(c) "Effective Date", as used herein, shall mean the first date on
which a Change of Control (as defined in Section 1(a)) occurs.
(d) "Cause" For purposes of this Agreement, the Company shall have
"Cause" to terminate the Employee's employment upon (i) the willful failure
by the Employee to substantially perform his duties, other than such
failure resulting from the Employee's incapacity due to physical or mental
illness, (ii) the willful engaging by the Employee in gross misconduct
materially and demonstrably injurious to the Company or its subsidiaries or
(iii) the commission by the Employee of a crime which is a felony. For the
purpose of this subsection (d), no act, or the failure to act, on the
Employee's part shall be considered "willful" unless done, or omitted to be
done, by him not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company or subsidiaries.
Notwithstanding the foregoing, the Employee shall not be deemed to have
been terminated for Cause under subsections (i), (ii) or (iii) of the first
sentence of this subsection (d), unless and until there shall have been
delivered to the Employee a copy of a resolution, duly adopted by the
affirmative vote of not less than two-thirds (2/3) of the entire membership
of the Company's Board of Directors at a meeting of the Board called and
held for that purpose (after reasonable notice to the Employee and an
opportunity for him, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board, the Employee
was guilty of conduct set forth above in clause (i), (ii) or (iii) of the
first sentence of this subsection (d) and specifying the particulars
thereto in detail.
(e) "Disability" For purposes of this Agreement, an Employee's
"Disability" shall occur if the Employee is absent from his duties as an
employee of the Company on a full-time basis for six (6) consecutive months
following a Change of Control of the Company and if he qualifies for long-
term disability under the Company's long-term disability insurance plan.
2.Termination. If the Employee is terminated for a reason other than
death, Disability, Cause or voluntary resignation not constituting a
Constructive Termination, or is subject to a Constructive Termination (a
Constructive Termination or termination for a reason other than death,
Disability, Cause or voluntary resignation not constituting a Constructive
Termination referred to herein as a "Termination"), within three (3) years
following the Effective Date of a Change of Control, the Employee will be
entitled to receive the benefits set forth below:
(a) Accelerated Vesting. If a Termination of the Employee occurs
within three (3) years following the Effective Date of a Change of Control,
the vesting of all rights listed on Exhibit A ("Rights") shall be
accelerated to the date on which the Employee is terminated or is subject
to a Constructive Termination.
(b) Salary Continuation. If a Termination of the Employee occurs
within three (3) years following the Effective Date of a Change of Control:
(i) The Employee shall have a right to receive his full base salary
through the date of Termination at the rate in effect at the time
Termination occurs, and in lieu of any further salary payment to the
Employee for periods subsequent to the date of Termination, the Company
shall pay to the Employee in cash an amount equal to three (3) times the
sum of (A) the higher of the Employee's base salary at the date of
Termination or on the date when a Change of Control of the Company occurs
plus (B) the average of the bonus payment plus other incentive compensation
made to the Employee for the two (2) full fiscal years preceding the fiscal
year in which a Change of Control of the Company occurs. At the option of
the Employee, such payment shall be made in a lump sum not later than 5
days after the date of Termination or in substantially equal semimonthly
installments, commencing no later than the fifth day following the date of
Termination and continuing for a period of thirty-six (36) months following
the date of Termination. In the event (A) the Company shall fail to make
any payment to the Employee which is required under this subsection within
ten (10) days of the date that such payment is due and (B) such failure to
pay continues, following written notification by the Employee to the
Company of such failure to make payment, for more than seven (7) additional
days thereafter, all remaining installments or payments payable to the
Employee shall be accelerated and shall become immediately due and payable
by the Company, without any discounting to present value, with interest
accruing on any unpaid portion thereof at the rate of twelve percent (12%)
per annum.
(ii) The Company shall provide to Employee all benefits he was
entitled to immediately prior to the date of Termination during the Salary
Continuation Period, as defined below, including but not limited to all
group insurance plans in which the Employee was entitled to participate
immediately prior to the date of the Termination, provided that the
Employee's continued participation is possible under the terms of such
plans (as, for example, it may not possible if the Employee elects the lump
sum payment option described in subsection 2(b)(i) above), failing which
the Company shall arrange to provide the Employee with alternative benefits
and/or insurance substantially similar to those provided under the then
current benefit and insurance plans unless it is not commercially feasible
to do so. If the cost of providing such benefits is more than 150% of the
cost of providing such benefits for the Employee prior to the date of
Termination, then the parties agree that it shall be deemed not
commercially feasible to do so.
(iii) The Salary Continuation Period as used in this Section 2(b)
shall mean three (3) years from the date of a Termination of the Employee.
(c) Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in subsection 2(b) by seeking other
employment or otherwise, nor shall the amount of any payment provided for
in subsection 2(b) be reduced by any compensation earned by the Employee as
a result of employment by another employer after the date of Termination,
or otherwise.
3. Rights Apply Only on Change of Control. The rights granted under
this Change of Control Agreement only apply upon a Change of Control and
subsequent Termination and supersede the severance or other similar rights
accruing upon a Change of Control and subsequent Termination under any
other agreement, including without limitation the Key Employee Severance
Agreement, dated as of February 17, 1989, as amended, by and between the
Company and the Employee (the "Key Employee Severance Agreement").
4. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois applicable to
agreements made and to be performed in Illinois, without giving effect to
conflicts of law principles.
5. Headings. The section headings of this Agreement are for reference
only and are to be given no effect in the construction or interpretation of
this Agreement.
6. Severability. If any part or provision of this Agreement shall be
declared invalid or unenforceable by a court of competent jurisdiction,
said provision or part shall be ineffective to the extent of such
invalidity or unenforceability only, without in any way affecting the
remaining parts or provisions of this Agreement.
7. Waiver. Any party may waive compliance by another party with any
of the provisions of this Agreement. No waiver of any provision shall be
construed as a waiver of any other provision. Any waiver must be in
writing.
8. Binding Effect; Assignment. This Agreement shall be binding on and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to
create any third party beneficiary rights in any person or entity
(including any employee or person engaged by the Company in any capacity)
not a party to this Agreement. The Company will require any successor
(whether direct or indirect, by merger, purchase, consolidation or
otherwise) of the Company to make an express assumption of the obligations
hereunder and cause any successor (whether direct or indirect, by merger,
purchase, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to agree to perform all parts and
provisions under this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had
taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement
and shall entitle Employee to compensation from the Company in the same
amount and on the same terms as he would be entitled to hereunder if he is
subject to a Construction Termination, except for purposes of implementing
the foregoing, the date on which any such succession becomes effective
shall be deemed the date of Termination. As used in this Agreement,
Company shall mean the Company as hereinbefore defined and any successor
to the business and/or assets of the Company which executes and delivers
the agreement provided for in this section 8, or which otherwise becomes
bound by all the terms and provisions of this Agreement by operation of
law.
This Agreement and all rights of the Employee hereunder shall inure to
the benefit of, and be enforceable by the Employee s personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Employee should die after any
amounts shall become payable to him hereunder, all such amounts, unless
otherwise provided for herein, shall be paid in accordance with the terms
of this Agreement to the Employee s devisee, legatee or other designee or,
if there be no such devisee or other designee, to the Employee s estate.
9. Legal Fees. The Company shall pay, or reimburse the Employee for,
all legal fees and expenses incurred by the Employee as a result of any
Termination of his employment hereunder after a Change of Control of the
Company, including all such fees and expenses, if any, incurred contesting
or disputing in good faith any such Termination or in seeking to obtain or
enforce any right or benefit provided by this Agreement.
10. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
in Chicago, Illinois in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however,
that the Employee shall be entitled to seek specific performance of his
right to be paid until the date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
11. Counterparts. This Agreement may be signed in any number of
counterparts and all such counterparts shall be read together and construed
as but one and the same document.
12. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally, or sent by facsimile transmission, receipt confirmed, one day
after sent by recognized overnight courier, or five (5) days after deposit
in the United States mail, postage prepaid, registered or certified mail,
return receipt requested, to the parties at the following addresses (or to
such other address as a party may have specified by notice duly given to
the other party in accordance with this provision):
If to the Employee:
At the Employee's then current business or residence address as shown on
the records of the Company, with a copy to such other person as the
Employee may have specified by notice duly given to the Company in
accordance with this provision.
If to the Company:
Quixote Corporation
One East Wacker Drive
Chicago, IL 60601
Attention: President
IN WITNESS WHEREOF the parties have executed this Agreement, in
triplicate, on the date first written above.
Quixote Corporation Employee
/s/ Philip E. Rollhaus, Jr. /s/ George D. Ebersole
- ------------------------------- --------------------------
By: Its Chief Executive Officer George D. Ebersole
EXHIBIT A
All rights granted to Employee under the Company s plans including, but not
limited to:
1993 Long-Term Stock Ownership Incentive Plan
Incentive Savings Plan<PAGE>
CHANGE OF CONTROL AGREEMENT BETWEEN
LESLIE J. JEZUIT AND
QUIXOTE CORPORATION
THIS CHANGE OF CONTROL AGREEMENT, dated as of December 1, 1997 (the
"Agreement"), is by and between Quixote Corporation, a Delaware corporation
having its principal offices at One East Wacker Drive, Chicago, IL, 60601
("the Company"), and Leslie J. Jezuit, the President of the Company (the
"Employee").
WHEREAS, the Employee is presently serving as an employee and elected
officer of the Company; and
WHEREAS, the Board of Directors of the Company ("the Board") has
recognized and continues to recognize that the Employee's contribution to
the growth and success of the Company has been, and is expected to continue
to be, substantial and desires to assure the Company of the Employee's
continued employment by assuring him of fair treatment if that relationship
is terminated; and
WHEREAS, the Company and the Employee agree that, as a result of
various factors, it is desirable to enter into this Change of Control
Agreement; and
WHEREAS, the Company desires to retain the Employee's services and the
Employee is willing to continue his employment as an employee and elected
officer of the Company on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and conditions contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto agree as follows:<PAGE>
1. Certain Defined Terms.
(c) "Change of Control", as used herein, shall mean a change in control of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange
Act of 1934 ( Exchange Act ); provided that, without limitation, such a
change in control shall be deemed to have occurred if : (i) any person (as
that term is defined in Section 13(d) and Section 14(d) of the Exchange
Act) is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing twenty percent (20%) or more of the
combined voting power of the Company s then outstanding securities; or (ii)
during any period of two consecutive years, individuals who at the
beginning of such period constitute all members of the Board who are not
employed by the Company (the Outside Directors ) shall cease for any
reason to constitute at least a majority of the Outside Directors, unless
the election of each Outside Director, who was not an Outside Director at
the beginning of such period, was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning
of such period; or, (iii) there shall be consummated (A) any consolidation
or merger of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the Company s common
stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Company s common
stock immediately prior to the merger have the same proportionate ownership
of common stock of the surviving corporation immediately after the merger,
or (B) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the assets
of the Company, or, (iv) the stockholders of the Company approve a plan or
proposal for the liquidation or dissolution of the Company.
(b) "Constructive Termination", as used herein, shall mean any one or
more of the following occurrences within three (3) years following the
Effective Date of a Change of Control: (i) the Employee is assigned any
duties inconsistent in any material adverse respect with the Employee's
position, authority, duties or responsibilities immediately prior to the
Effective Date of the Change of Control referred to above, or any other
action by the Company which results in a diminution in any material adverse
respect of the Employee's position, authority, duties or responsibilities
as the same existed immediately prior to the Effective Date of the Change
of Control referred to above, (ii) the Employee's total compensation (when
taken as a whole including fringe benefits and the manner of determining
incentive compensation) is changed in a material adverse way or the Company
fails to obtain the assumption of the obligation to perform this Agreement
by any successor as contemplated in Section 8 hereof, (iii) the Company
requires the Employee to be based outside of a radius of thirty (30) miles
from the location of the Company's present corporate offices (except for
required travel on Company business to an extent substantially consistent
with the Employee's business travel obligations immediately prior to such
change in control) or (iv) the Employee is removed from, or is not re-
elected to, the Board of the Company or any successor thereto; provided,
however, that none of the foregoing shall be a Constructive Termination if
any of the foregoing actions are taken by the Company for Cause (as defined
in subsection 1(d) hereof).
(c) "Effective Date", as used herein, shall mean the first date on
which a Change of Control (as defined in Section 1(a)) occurs.
(d) "Cause" For purposes of this Agreement, the Company shall have
"Cause" to terminate the Employee's employment upon (i) the willful failure
by the Employee to substantially perform his duties, other than such
failure resulting from the Employee's incapacity due to physical or mental
illness, (ii) the willful engaging by the Employee in gross misconduct
materially and demonstrably injurious to the Company or its subsidiaries or
(iii) the commission by the Employee of a crime which is a felony. For the
purpose of this subsection (d), no act, or the failure to act, on the
Employee's part shall be considered "willful" unless done, or omitted to be
done, by him not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company or subsidiaries.
Notwithstanding the foregoing, the Employee shall not be deemed to have
been terminated for Cause under subsections (i), (ii) or (iii) of the first
sentence of this subsection (d), unless and until there shall have been
delivered to the Employee a copy of a resolution, duly adopted by the
affirmative vote of not less than two-thirds (2/3) of the entire membership
of the Company's Board of Directors at a meeting of the Board called and
held for that purpose (after reasonable notice to the Employee and an
opportunity for him, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board, the Employee
was guilty of conduct set forth above in clause (i), (ii) or (iii) of the
first sentence of this subsection (d) and specifying the particulars
thereto in detail.
(e) "Disability" For purposes of this Agreement, an Employee's
"Disability" shall occur if the Employee is absent from his duties as an
employee of the Company on a full-time basis for six (6) consecutive months
following a Change of Control of the Company and if he qualifies for long-
term disability under the Company's long-term disability insurance plan.
2. Termination. If the Employee is terminated for a reason other than
death, Disability, Cause or voluntary resignation not constituting a
Constructive Termination, or is subject to a Constructive Termination (a
Constructive Termination or termination for a reason other than death,
Disability, Cause or voluntary resignation not constituting a Constructive
Termination referred to herein as a "Termination"), within three (3) years
following the Effective Date of a Change of Control, the Employee will be
entitled to receive the benefits set forth below:<PAGE>
(a) Accelerated Vesting.
If a Termination of the Employee occurs
within three (3) years following the Effective Date of a Change of Control,
the vesting of all rights listed on Exhibit A ("Rights") shall be
accelerated to the date on which the Employee is terminated or is subject
to a Constructive Termination.
(b) Salary Continuation. If a Termination of the Employee occurs
within three (3) years following the Effective Date of a Change of Control:
(i) The Employee shall have a right to receive his full base salary
through the date of Termination at the rate in effect at the time
Termination occurs, and in lieu of any further salary payment to the
Employee for periods subsequent to the date of Termination, the Company
shall pay to the Employee in cash an amount equal to three (3) times the
sum of (A) the higher of the Employee's base salary at the date of
Termination or on the date when a Change of Control of the Company occurs
plus (B) the average of the bonus payment plus other incentive compensation
made to the Employee for the two (2) full fiscal years preceding the fiscal
year in which a Change of Control of the Company occurs. At the option of
the Employee, such payment shall be made in a lump sum not later than 5
days after the date of Termination or in substantially equal semimonthly
installments, commencing no later than the fifth day following the date of
Termination and continuing for a period of thirty-six (36) months following
the date of Termination. In the event (A) the Company shall fail to make
any payment to the Employee which is required under this subsection within
ten (10) days of the date that such payment is due and (B) such failure to
pay continues, following written notification by the Employee to the
Company of such failure to make payment, for more than seven (7) additional
days thereafter, all remaining installments or payments payable to the
Employee shall be accelerated and shall become immediately due and payable
by the Company, without any discounting to present value, with interest
accruing on any unpaid portion thereof at the rate of twelve percent (12%)
per annum.
(ii) The Company shall provide to Employee all benefits he was entitled to
immediately prior to the date of Termination during the Salary Continuation
Period, as defined below, including but not limited to all group insurance
plans in which the Employee was entitled to participate immediately prior
to the date of the Termination, provided that the Employee's continued
participation is possible under the terms of such plans (as, for example,
it may not possible if the Employee elects the lump sum payment option
described in subsection 2(b)(i) above), failing which the Company shall
arrange to provide the Employee with alternative benefits and/or insurance
substantially similar to those provided under the then current benefit and
insurance plans unless it is not commercially feasible to do so. If the
cost of providing such benefits is more than 150% of the cost of providing
such benefits for the Employee prior to the date of Termination, then the
parties agree that it shall be deemed not commercially feasible to do so.
(iii) The Salary Continuation Period as used in this Section 2(b) shall
mean three (3) years from the date of a Termination of the Employee.
(c) Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in subsection 2(b) by seeking other
employment or otherwise, nor shall the amount of any payment provided for
in subsection 2(b) be reduced by any compensation earned by the Employee as
a result of employment by another employer after the date of Termination,
or otherwise.
3. Rights Apply Only on Change of Control. The rights granted under
this Change of Control Agreement only apply upon a Change of Control and
subsequent Termination and supersede the severance or other similar rights
accruing upon a Change of Control and subsequent Termination under any
other agreement, including without limitation the Key Employee Severance
Agreement, dated as of April 30, 1996, by and between the Company and the
Employee (the "Key Employee Severance Agreement"); provided, however, that
this Agreement shall not amend, modify or supersede in any way the letter
agreement between the Company and Employee as attached as Exhibit 10(d) to
the Company s 10-Q Report for the quarter ended December 31, 1995 filed
with the Securities and Exchange Commission.
4. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois applicable to
agreements made and to be performed in Illinois, without giving effect to
conflicts of law principles.
5. Headings. The section headings of this Agreement are for reference
only and are to be given no effect in the construction or interpretation of
this Agreement.
6. Severability. If any part or provision of this Agreement shall be
declared invalid or unenforceable by a court of competent jurisdiction,
said provision or part shall be ineffective to the extent of such
invalidity or unenforceability only, without in any way affecting the
remaining parts or provisions of this Agreement.
7. Waiver. Any party may waive compliance by another party with any
of the provisions of this Agreement. No waiver of any provision shall be
construed as a waiver of any other provision. Any waiver must be in
writing.
8. Binding Effect; Assignment. This Agreement shall be binding on and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to
create any third party beneficiary rights in any person or entity
(including any employee or person engaged by the Company in any capacity)
not a party to this Agreement. The Company will require any successor
(whether direct or indirect, by merger, purchase, consolidation or
otherwise) of the Company to make an express assumption of the obligations
hereunder and cause any successor (whether direct or indirect, by merger,
purchase, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to agree to perform all parts and
provisions under this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had
taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement
and shall entitle Employee to compensation from the Company in the same
amount and on the same terms as he would be entitled to hereunder if he is
subject to a Construction Termination, except for purposes of implementing
the foregoing, the date on which any such succession becomes effective
shall be deemed the date of Termination. As used in this Agreement,
Company shall mean the Company as hereinbefore defined and any successor
to the business and/or assets of the Company which executes and delivers
the agreement provided for in this section 8, or which otherwise becomes
bound by all the terms and provisions of this Agreement by operation of
law.
This Agreement and all rights of the Employee hereunder shall inure to
the benefit of, and be enforceable by the Employee s personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Employee should die after any
amounts shall become payable to him hereunder, all such amounts, unless
otherwise provided for herein, shall be paid in accordance with the terms
of this Agreement to the Employee s devisee, legatee or other designee or,
if there be no such devisee or other designee, to the Employee s estate.
9. Legal Fees. The Company shall pay, or reimburse the Employee for,
all legal fees and expenses incurred by the Employee as a result of any
Termination of his employment hereunder after a Change of Control of the
Company, including all such fees and expenses, if any, incurred contesting
or disputing in good faith any such Termination or in seeking to obtain or
enforce any right or benefit provided by this Agreement.
10. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
in Chicago, Illinois in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however,
that the Employee shall be entitled to seek specific performance of his
right to be paid until the date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
11. Counterparts. This Agreement may be signed in any number of
counterparts and all such counterparts shall be read together and construed
as but one and the same document.
12. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally, or sent by facsimile transmission, receipt confirmed, one day
after sent by recognized overnight courier, or five (5) days after deposit
in the United States mail, postage prepaid, registered or certified mail,
return receipt requested, to the parties at the following addresses (or to
such other address as a party may have specified by notice duly given to
the other party in accordance with this provision):
If to the Employee:
At the Employee's then current business or residence address as shown on
the records of the Company, with a copy to such other person as the
Employee may have specified by notice duly given to the Company in
accordance with this provision.
If to the Company:
Quixote Corporation
One East Wacker Drive
Chicago, IL 60601
Attention: Chairman <PAGE>
IN WITNESS WHEREOF the parties have executed this Agreement, in triplicate,
on the date first written above.
Quixote Corporation Employee
Philip E. Rollhaus, Jr. Leslie J. Jezuit
- ------------------------------- ----------------------
By: Its Chief Executive Officer Leslie J. Jezuit
EXHIBIT A
All rights granted to Employee under the Company s plans including, but not
limited to the following:
1993 Long-Term Stock Ownership Incentive Plan
1991 Director Stock Option Plan
Incentive Savings Plan
<PAGE>
CHANGE OF CONTROL AGREEMENT BETWEEN
PHILIP E. ROLLHAUS, JR. AND
QUIXOTE CORPORATION
THIS CHANGE OF CONTROL AGREEMENT, dated as of December 1, 1997 (the
"Agreement"), is by and between Quixote Corporation, a Delaware corporation
having its principal offices at One East Wacker Drive, Chicago, IL, 60601
(the "Company"), and Philip E. Rollhaus, Jr., the Chairman and Chief
Executive Officer of the Company (the "Employee").
WHEREAS, Philip E. Rollhaus, Jr. is presently serving as the Chairman
and Chief Executive Officer of the Company; and
WHEREAS, the Board of Directors of the Company ("the Board") has
recognized and continues to recognize that the Employee's contribution to
the growth and success of the Company has been, and is expected to continue
to be, substantial and desires to assure the Company of the Employee's
continued employment by assuring him of fair treatment if that relationship
is terminated upon a change of control of the Company; and
WHEREAS, the Company and the Employee agree that, as a result of
various factors, it is desirable to enter into this Change of Control
Agreement; and
WHEREAS, the Company desires to retain the Employee's services and the
Employee is willing to continue his employment as an employee of the
Company on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and conditions contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto agree as follows:
1. Certain Defined Terms.
(a). "Change of Control", as used herein, shall mean a change in
control of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934 ( Exchange Act ); provided that, without
limitation, such a change in control shall be deemed to have occurred if :
(i) any person (as that term is defined in Section 13(d) and Section 14(d)
of the Exchange Act) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing twenty percent (20%)
or more of the combined voting power of the Company s then outstanding
securities; or (ii) during any period of two consecutive years, individuals
who at the beginning of such period constitute all members of the Board who
are not employed by the Company (the Outside Directors ) shall cease for
any reason to constitute at least a majority of the Outside Directors,
unless the election of each Outside Director, who was not an Outside
Director at the beginning of such period, was approved by a vote of at
least two-thirds of the directors then still in office who were directors
at the beginning of such period; or, (iii) there shall be consummated (A)
any consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the
Company s common stock would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of the
Company s common stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (B) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Company, or, (iv) the
stockholders of the Company approve a plan or proposal for the liquidation
or dissolution of the Company.
(d) "Constructive Termination", as used herein, shall mean any one or
more of the following occurrences within three (3) years following the
Effective Date of a Change of Control: (i) the Employee is assigned any
duties inconsistent in any material adverse respect with the Employee's
position, authority, duties or responsibilities immediately prior to the
Effective Date of the Change of Control referred to above, or any other
action by the Company which results in a diminution in any material adverse
respect of the Employee's position, authority, duties or responsibilities
as the same existed immediately prior to the Effective Date of the Change
of Control referred to above, (ii) the Employee's total compensation (when
taken as a whole including fringe benefits and the manner of determining
incentive compensation) is changed in a material adverse way or the Company
fails to obtain the assumption of the obligation to perform this Agreement
by any successor as contemplated in Section 8 hereof, (iii) the Company
requires the Employee to be based outside of a radius of thirty (30) miles
from the location of the Company's present corporate offices (except for
required travel on Company business to an extent substantially consistent
with the Employee's business travel obligations immediately prior to such
Change of Control) or (iv) the Employee is removed from, or is not re-
elected to, the Board of the Company or any successor thereto; provided,
however, that none of the foregoing shall be a Constructive Termination if
any of the foregoing are taken by the Company for Cause (as defined in
subsection 1(d) hereof).
(e) "Effective Date", as used herein, shall mean the first date on
which a Change of Control (as defined in Section 1(a)) occurs.
(f) "Cause" For purposes of this Agreement, the Company shall have
"Cause" to terminate the Employee's employment upon (i) the willful failure
by the Employee to substantially perform his duties, other than such
failure resulting from the Employee's incapacity due to physical or mental
illness, (ii) the willful engaging by the Employee in gross misconduct
materially and demonstrably injurious to the Company or its subsidiaries or
(iii) the commission by the Employee of a crime which is a felony. For the
purpose of this subsection (d), no act, or the failure to act, on the
Employee's part shall be considered "willful" unless done, or omitted to be
done, by him not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company or subsidiaries.
Notwithstanding the foregoing, the Employee shall not be deemed to have
been terminated for Cause under subsections (i), (ii) or (iii) of the first
sentence of this subsection (d), unless and until there shall have been
delivered to the Employee a copy of a resolution, duly adopted by the
affirmative vote of not less than two-thirds (2/3) of the entire membership
of the Company's Board of Directors at a meeting of the Board called and
held for that purpose (after reasonable notice to the Employee and an
opportunity for him, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board, the Employee
was guilty of conduct set forth above in clause (i), (ii) or (iii) of the
first sentence of this subsection (d) and specifying the particulars
thereto in detail.
(g). "Disability" For purposes of this Agreement, an Employee's
"Disability" shall occur if the Employee is absent from his duties as an
employee of the Company on a full-time basis for six (6) consecutive months
following a Change of Control of the Company and if he qualifies for long-
term disability under the Company's long-term disability insurance plan.
1. Termination. If the Employee is terminated for a reason other than
death, Disability, Cause or voluntary resignation not constituting a
Constructive Termination, or is subject to a Constructive Termination (a
Constructive Termination or termination for a reason other than death,
Disability, Cause or voluntary resignation not constituting a Constructive
Termination referred to herein as a "Termination"), within three (3) years
following the Effective Date of a Change of Control, the Employee will be
entitled to receive the benefits set forth below:
(a) Accelerated Vesting. If a Termination of the Employee occurs
within three (3) years following the Effective Date of a Change of Control,
the vesting of all rights listed on Exhibit A ("Rights") shall be
accelerated to the date on which the Employee is terminated or is subject
to a Constructive Termination.
(b) Salary Continuation. If a Termination of the Employee occurs
within three (3) years following the Effective Date of a Change of Control:
(i) The Employee shall have a right to receive his full base salary
through the date of Termination at the rate in effect at the time
Termination occurs, and in lieu of any further salary payment to the
Employee for periods subsequent to the date of Termination, the Company
shall pay to the Employee in cash an amount equal to three (3) times the
sum of (A) the higher of the Employee's base salary at the date of
Termination or on the date when a Change of Control of the Company occurs
plus (B) the average of the bonus payment plus other incentive compensation
made to the Employee for the two (2) full fiscal years preceding the fiscal
year in which a Change of Control of the Company occurs. At the option of
the Employee, such payment shall be made in a lump sum not later than 5
days after the date of Termination or in substantially equal semimonthly
installments, commencing no later than the fifth day following the date of
Termination and continuing for a period of thirty-six (36) months following
the date of Termination. In the event (A) the Company shall fail to make
any payment to the Employee which is required under this subsection within
ten (10) days of the date that such payment is due and (B) such failure to
pay continues, following written notification by the Employee to the
Company of such failure to make payment, for more than seven (7) additional
days thereafter, all remaining installments or payments payable to the
Employee shall be accelerated and shall become immediately due and payable
by the Company, without any discounting to present value, with interest
accruing on any unpaid portion thereof at the rate of twelve percent (12%)
per annum.
(ii) The Company shall provide to Employee all benefits he was
entitled to immediately prior to the date of Termination during the Salary
Continuation Period, as defined below, including but not limited to all
group insurance plans in which the Employee was entitled to participate
immediately prior to the date of the Termination, provided that the
Employee's continued participation is possible under the terms of such
plans (as, for example, it may not possible if the Employee elects the lump
sum payment option described in subsection 2(b)(i) above), failing which
the Company shall arrange to provide the Employee with alternative benefits
and/or insurance substantially similar to those provided under the then
current benefit and insurance plans unless it is not commercially feasible
to do so. If the cost of providing such benefits is more than 150% of the
cost of providing such benefits for the Employee prior to the date of
Termination, then the parties agree that it shall be deemed not
commercially feasible to do so. Notwithstanding anything to the contrary
contained herein, the Company shall provide to Employee term life insurance
to age 72, at the level of not less than two (2) times the annual amount of
the Employee's base salary payments during the Salary Continuation Period,
and the Company shall pay any and all premiums associated with such
insurance until the Employee attains age 72.
(iii) "Salary Continuation Period" as used in this Section 2(b) shall mean
a period of three (3) years following the date of a Termination.
(c) Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in Section 2(b) by seeking other
employment or otherwise, nor shall the amount of any payment provided for
in Section 2(b) be reduced by any compensation earned by the Employee as a
result of employment by another employer after the date of Termination, or
otherwise.
2. Rights Apply Only on Change of Control. The rights granted under
this Change of Control Agreement only apply upon a Change of Control and
subsequent Termination and, in such circumstances, supersede the severance
or other similar rights accruing upon a Change of Control and subsequent
Termination under any other agreement, including without limitation the
Executive Employment Agreement, dated as of June 24, 1991, by and between
the Company and the Employee, as amended (the "Executive Employment
Agreement"); and except in the circumstance of a Change of Control and
subsequent Termination, the Executive Employment Agreement shall govern in
the event of a conflict between this Agreement and the Executive Employment
Agreement.
3. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois applicable to
agreements made and to be performed in Illinois, without giving effect to
conflicts of law principles.
4. Headings. The section headings of this Agreement are for reference
only and are to be given no effect in the construction or interpretation of
this Agreement.
5. Severability. If any part or provision of this Agreement shall be
declared invalid or unenforceable by a court of competent jurisdiction,
said provision or part shall be ineffective to the extent of such
invalidity or unenforceability only, without in any way affecting the
remaining parts or provisions of this Agreement.
6. Waiver. Any party may waive compliance by another party with any
of the provisions of this Agreement. No waiver of any provision shall be
construed as a waiver of any other provision. Any waiver must be in
writing.
8. Binding Effect; Assignment. This Agreement shall be binding on and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to
create any third party beneficiary rights in any person or entity
(including any employee or person engaged by the Company in any capacity)
not a party to this Agreement. The Company will require any successor
(whether direct or indirect, by merger, purchase, consolidation or
otherwise) of the Company to make an express assumption of the obligations
hereunder and cause any successor (whether direct or indirect, by merger,
purchase, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to agree to perform all parts and
provisions under this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had
taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement
and shall entitle Employee to compensation from the Company in the same
amount and on the same terms as he would be entitled to hereunder if he is
subject to a Construction Termination, except for purposes of implementing
the foregoing, the date on which any such succession becomes effective
shall be deemed the date of Termination. As used in this Agreement,
Company shall mean the Company as hereinbefore defined and any successor
to the business and/or assets of the Company which executes and delivers
the agreement provided for in this section 8, or which otherwise becomes
bound by all the terms and provisions of this Agreement by operation of
law.
This Agreement and all rights of the Employee hereunder shall inure to
the benefit of, and be enforceable by the Employee s personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Employee should die after any
amounts shall become payable to him hereunder, all such amounts, unless
otherwise provided for herein, shall be paid in accordance with the terms
of this Agreement to the Employee s devisee, legatee or other designee or,
if there be no such devisee or other designee, to the Employee s estate.
7. Legal Fees. The Company shall pay, or reimburse the Employee for,
all legal fees and expenses incurred by the Employee as a result of any
Termination of his employment hereunder after a Change of Control of the
Company, including all such fees and expenses, if any, incurred contesting
or disputing in good faith any such Termination or in seeking to obtain or
enforce any right or benefit provided by this Agreement.
8. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
in Chicago, Illinois in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however,
that the Employee shall be entitled to seek specific performance of his
right to be paid until the date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
9. Counterparts. This Agreement may be signed in any number of
counterparts and all such counterparts shall be read together and construed
as but one and the same document.
10. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or sent by facsimile transmission, receipt confirmed, one day
after sent by recognized overnight courier, or five (5) days after deposit
in the United States mail, postage prepaid, registered or certified mail,
return receipt requested, to the parties at the following addresses (or to
such other address as a party may have specified by notice duly given to
the other party in accordance with this provision):
If to the Employee:
At the Employee's then current business or residence address as shown on
the records of the Company, with a copy to such other person as the
Employee may have specified by notice duly given to the Company in
accordance with this provision.
If to the Company:
Quixote Corporation
One East Wacker Drive
Chicago, IL 60601
Attention: President
IN WITNESS WHEREOF the parties have executed this Agreement, in
triplicate, on the date first written above.
Quixote Corporation Employee
/s/ Leslie J. Jezuit /s/ Philip E. Rollhaus, Jr.
- -------------------- ----------------------------
By: Its President Philip E. Rollhaus, Jr.
EXHIBIT A
All rights granted to Employee under the Company s plans including, but not
limited to the following:
1993 Long-Term Stock Ownership Incentive Plan
1991 Director Stock Option Plan
Incentive Savings Plan
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 10,039,000
<SECURITIES> 0
<RECEIVABLES> 8,926,000
<ALLOWANCES> 171,000
<INVENTORY> 4,612,000
<CURRENT-ASSETS> 24,588,000
<PP&E> 22,154,000
<DEPRECIATION> 9,265,000
<TOTAL-ASSETS> 55,921,000
<CURRENT-LIABILITIES> 9,189,000
<BONDS> 4,847,000
0
0
<COMMON> 147,000
<OTHER-SE> 41,172,000
<TOTAL-LIABILITY-AND-EQUITY> 55,921,000
<SALES> 24,452,000
<TOTAL-REVENUES> 24,452,000
<CGS> 13,699,000
<TOTAL-COSTS> 13,699,000
<OTHER-EXPENSES> 7,865,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 103,000
<INCOME-PRETAX> 3,186,000
<INCOME-TAX> 956,000
<INCOME-CONTINUING> 2,230,000
<DISCONTINUED> (1,980,000)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 250,000
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
