<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
QUIXOTE CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
NOTICE AND AGENDA OF THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD WEDNESDAY, NOVEMBER 15, 2000
--------------------
TO THE STOCKHOLDERS OF QUIXOTE CORPORATION:
The Annual Meeting of Stockholders of Quixote Corporation (the "Company")
will be held on Wednesday, November 15, 2000, at 10:00 a.m., Central Standard
Time, in the Assembly Room at The Northern Trust Company, 50 South LaSalle
Street, Chicago, Illinois 60675 for the following purposes:
1. To elect two (2) directors to serve for a three-year term expiring at
the Annual Meeting of Stockholders to be held in 2003;
2. To approve an amendment to the Company's 1993 Long-Term Stock Ownership
Incentive Plan;
3. To ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent auditors; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record at the close of business on September 18, 2000,
will be entitled to notice of, and to vote at, the meeting.
Stockholders are encouraged to attend the meeting in person. Whether or not
you attend the meeting, your vote is important. As a cost-savings measure and an
added convenience for the Company's stockholders, we are offering voting by
telephone and the Internet this year. Registered holders and most "street name"
holders will find instructions on the enclosed proxy card. We urge you to use
either of the electronic voting alternatives available, or sign, date and mail
the enclosed proxy card in the envelope provided at your earliest convenience.
No postage is required if mailed in the United States.
WE APPRECIATE YOUR COOPERATION AND WE THANK YOU.
By order of the Board of Directors,
/s/ Joan R. Riley
JOAN R. RILEY
SECRETARY
Chicago, Illinois
October 4, 2000
<PAGE>
I M P O R T A N T
A PROXY STATEMENT AND PROXY CARD ARE SUBMITTED WITH THIS NOTICE. ALL
STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND TO VOTE PROMPTLY.
STOCKHOLDERS ARE ENCOURAGED TO VOTE THEIR SHARES ELECTRONICALLY BY FOLLOWING
THE INSTRUCTIONS ON THE PROXY CARD, OR SIGN, DATE AND RETURN THE ENCLOSED
PROXY FORM IN THE ENVELOPE PROVIDED. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES. A LIST OF STOCKHOLDERS ENTITLED TO VOTE AT THE ANNUAL MEETING
WILL BE AVAILABLE FOR INSPECTION BY ANY STOCKHOLDER FOR ANY PURPOSE GERMANE
TO THE MEETING DURING ORDINARY BUSINESS HOURS FOR A PERIOD OF TEN DAYS PRIOR
TO THE MEETING AT THE PRINCIPAL OFFICES OF THE COMPANY, ONE EAST WACKER
DRIVE, 30TH FLOOR, CHICAGO, ILLINOIS.
<PAGE>
[LOGO]
OCTOBER 4, 2000
------------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD WEDNESDAY, NOVEMBER 15, 2000
--------------------
PROXY SOLICITATION
This Proxy Statement is furnished to stockholders of Quixote Corporation
(the "Company"), on or about October 4, 2000, in connection with the
solicitation of proxies on behalf of the Board of Directors to be voted at the
Annual Meeting of Stockholders on Wednesday, November 15, 2000, at 10:00 a.m.,
Central Standard Time, in the Assembly Room at The Northern Trust Company, 50
South LaSalle Street, Chicago, Illinois 60675, and at any adjournment thereof.
The person voting the enclosed proxy may revoke it at any time before it is
exercised by writing to the Secretary of the Company at its principal office,
One East Wacker Drive, Chicago, Illinois 60601, or by attending the Annual
Meeting and voting in person, in which case any prior proxy given will be
automatically revoked.
Properly executed proxies received prior to the meeting will be voted at the
meeting. If a stockholder designates how the proxy is to be voted on any
business to come before the meeting, the signed proxy will be voted in
accordance with such designation. If a stockholder fails to designate how his or
her proxy should be voted, the signed proxy will be voted: (1) FOR the election
of the nominees named below as Directors; (2) FOR the approval of the amendment
of the 1993 Long-Term Stock Ownership Incentive Plan (the "Long-Term Plan"); and
(3) FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the
Company's independent auditors.
The costs of this solicitation will be paid by the Company. Such costs
include preparation, printing and mailing of the Notice of Annual Meeting, Proxy
Card and this Proxy Statement. The officers and employees of the Company and its
subsidiaries may solicit proxies personally or by telephone and facsimile.
Arrangements will be made with brokerage houses and other custodians, nominees
and fiduciaries for proxy material to be sent to the principals, and the Company
will reimburse such persons for their reasonable out-of-pocket expenses. The
Company has also retained the firm of Morrow & Co., Inc. to assist in the
solicitation of proxies at a cost of approximately $7,500 plus reasonable
out-of-pocket expenses.
1
<PAGE>
VOTING AT THE ANNUAL MEETING
Stockholders of record owning the Company's common stock, $.01 2/3 par value
("Common Stock"), at the close of business on September 18, 2000, will be
entitled to vote at the Annual Meeting. On that date, 7,359,886 shares of Common
Stock were outstanding. Each outstanding share of Common Stock entitles the
holder to one vote upon each matter presented at the Annual Meeting. The
affirmative vote of a majority of all of the shares of Common Stock of the
Company present in person or represented by proxy and entitled to vote at the
meeting is necessary to approve the amendment of the Long-Term Plan and to
ratify the selection of PricewaterhouseCoopers LLP as independent auditors for
the Company. The nominees for Director will be elected if they receive the
affirmative vote of at least sixty percent of all votes entitled to be cast at
this meeting.
Shares voted as abstentions on any matter (or a "withhold vote for" as to
Directors) will be counted as shares that are present and entitled to vote for
purposes of determining a quorum at the meeting and as unvoted, although present
and entitled to vote, for purposes of determining the approval of each matter as
to which the stockholder has abstained. Abstentions and withheld votes have the
effect of votes against a matter.
Pursuant to the New York Stock Exchange rules, brokers who hold shares of
Common Stock as nominees will have discretionary authority to vote those shares
on the proposals. However, if a broker submits a proxy that indicates the broker
does not have discretionary authority (known as "broker non-votes"), such
non-votes will be counted as shares that are present and entitled to vote for
purposes of determining a quorum at the meeting, but will not be considered as
present and entitled to vote with respect to such matters. Accordingly, broker
non-votes will have the effect of votes against a matter.
While the Notice of Annual Meeting calls for the transaction of such other
business as may properly come before the meeting, management has no knowledge of
any matters to be presented for action by the stockholders except as already set
forth. The enclosed proxy gives discretionary authority to the persons holding
those proxies to vote in accordance with their best judgment as to any other
business.
ELECTION OF DIRECTORS
At the Annual Meeting, two (2) Directors are to be elected to serve three
year terms until the Annual Meeting to be held in 2003 and until their
successors are elected and qualified. The Company is soliciting proxies to vote
for its nominees, James H. DeVries and Lawrence C. McQuade, as Directors of the
Company.
All proxies will be voted in accordance with the stated instructions. If any
nominee ceases to be a candidate for election for any reason, the proxy will be
voted for a substitute nominee designated by the Board. The Board of Directors
currently has no reason to believe that either nominee will be either unwilling
or unable to serve as a Director if elected. Proxies given by stockholders
cannot be voted for more than two (2) persons. The nominees for Director will be
elected if they receive the affirmative vote of at least sixty percent (60%) of
all votes entitled to be cast at this meeting.
INFORMATION CONCERNING NOMINEES FOR DIRECTOR AND DIRECTORS CONTINUING IN OFFICE.
The information appearing in this section in regard to age and principal
occupation or employment has been furnished to the Company by the respective
nominees for Director and by the respective Directors continuing in office.
Information relating to the beneficial ownership of the Company's Common Stock
by Directors and nominees for Director is set forth in the table on page 19.
2
<PAGE>
NOMINEES FOR DIRECTOR FOR A THREE-YEAR TERM
EXPIRING IN 2003
JAMES H. DEVRIES
Mr. DeVries, 68, is a business consultant to various companies and since
1969 has served as a Director of the Company. Prior to his retirement from the
Company in June 1997, Mr. DeVries served as Executive Vice President, General
Counsel and Secretary of the Company, and as Secretary of Energy Absorption
Systems, Inc. Mr. DeVries is a former member of the Board of Directors of the
Sanford Corporation.
LAWRENCE C. MCQUADE
Mr. McQuade, 73, is Chairman of Qualitas International (since 1994). In
addition, he serves as a Director of Bunzl P.L.C. (since 1991), of Oxford
Analytica, Inc. (since 1988) and is a founding partner of River Capital
International L.L.C. Mr. McQuade served as a Director of Eurotech, Ltd. from
1998 to 1999 and as Chairman of the Czech & Slovak American Enterprise Fund from
August 1995 to March 1996. Mr. McQuade was Vice Chairman of Prudential Mutual
Fund Management, Inc. from 1988 through April 1995. He was Executive Vice
President and a Director of W.R. Grace & Co. from 1975 to 1987. In 1967 to 1969
he served as Assistant Secretary, U.S. Department of Commerce. He is a graduate
of Yale University, Oxford University (Rhodes Scholar), and Harvard Law School.
Mr. McQuade has served as a Director of the Company since February 1992 and is a
member of the Audit and Compensation Committees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE ELECTION OF
MR. DEVRIES AND MR. MCQUADE AS DIRECTORS OF THE COMPANY.
DIRECTORS CONTINUING IN OFFICE
WILLIAM G. FOWLER
Mr. Fowler, 72, is of counsel to the law firm of Van Cott, Bagley,
Cornwall & McCarthy of Salt Lake City, Utah. He joined the Board in
January 1973. Mr. Fowler is the Chairman of the Audit and Compensation
Committees. His current term as Director expires at the Annual Meeting to be
held in 2001.
ROBERT D. VAN ROIJEN, JR.
Mr. van Roijen, 61, has been the President of Tox Financial Company, a
private investment firm, since 1988. He is also a partner of Patience Partners
LLC, a fund manager, and is a director of St. Leonard's Corporation and Security
Storage Company. Mr. van Roijen was formerly associated with Control Laser
Corporation, serving in various capacities from 1977 to 1987, including as
Chairman of the Board and as President and Chief Executive Officer. Mr. van
Roijen is a former director of Sonex Research, Inc., AMBAR Corp., Commonwealth
Scientific and Applied Digital Technology. Mr. van Roijen has served as a
Director of the Company since May 1993 and is a member of the Audit and
Compensation Committees. His current term as Director expires at the Annual
Meeting to be held in 2001.
PHILIP E. ROLLHAUS, JR.
Mr. Rollhaus, 66, is Chairman of the Board and has served in that capacity
and as a Director of the Company since it was founded in 1969. Mr. Rollhaus also
served since 1969 as Chief Executive Officer of the Company until his retirement
from that position on September 30, 1999 and as President of the Company until
Mr. Leslie J. Jezuit's election to that office in January 1996. Mr. Rollhaus is
Chairman of Energy Absorption Systems, Inc., a wholly-owned subsidiary of the
Company. Mr. Rollhaus is a former member of the Board of
3
<PAGE>
Directors of the Keller Graduate School of Management and of DeVry, Inc. His
current term as Director expires at the Annual Meeting to be held in 2002.
LESLIE J. JEZUIT
Mr. Jezuit, 54, was elected Chief Executive Officer of the Company effective
October 1, 1999 and has served as President and Chief Operating Officer of the
Company since January 1996. He is also President and Chief Executive Officer and
a Director of Energy Absorption Systems, Inc. Mr. Jezuit has served as a
Director of the Company since May 1997. Prior to joining the Company,
Mr. Jezuit served from 1991 to 1995 as President and Chief Operating Officer of
Robertshaw Controls Company, a $500 million manufacturer of HVAC, appliance and
pneumatic controls. He also served as Vice President and General Manager of the
Cutler-Hammer division of Eaton Corporation (1985-1991); in various positions at
Federal Signal Corporation, including Group President and Vice President of
Corporate Development (1980-1985); as Vice President of Marketing at Mead
Digital Systems (1975-1980); and in various management positions at the Graphic
Systems Division of Rockwell International (1968-1975). Mr. Jezuit is a former
member of the Board of Directors of Prospectus Plus, Inc. His current term as
Director expires at the Annual Meeting to be held in 2002.
AUDIT AND COMPENSATION COMMITTEES
The Audit Committee consists of three non-employee directors: William G.
Fowler, Lawrence C. McQuade and Robert D. van Roijen, Jr. The Audit Committee
recommends to the Board the accounting firm to be employed as the Company's
independent auditors; consults with the auditors regarding the audit; reviews
the auditors' report or proposed report and resulting letter of comments to
management; consults with the auditors and management regarding the adequacy of
internal controls and performs such other duties as directed by the Board in
fulfilling its responsibility for objective oversight of the accounting,
auditing and reporting practices of the Company.
The Compensation Committee of the Board consists of three non-employee
directors: William G. Fowler, Lawrence C. McQuade and Robert D. van Roijen, Jr.
The Compensation Committee determines adjustments to salaries, bonuses and other
forms of compensation (including stock option grants) afforded the executive
officers of the Company, and performs such other duties as directed by the
Board.
The Audit and Compensation Committees were formerly the Audit/Compensation
Committee and had two meetings during fiscal 2000. The Board of Directors does
not have a nominating committee. The Board of Directors as a whole performs the
functions normally performed by a nominating committee.
REMUNERATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS
In fiscal 2000, Directors who were also employees of the Company were paid a
fee of $1,000 for each day of scheduled meetings of the Board, plus expenses.
Non-employee Directors were paid a fee of $2,000 for each day of scheduled
meetings of the Board and the Audit/Compensation Committee, plus traveling and
related expenses, and $500 for each telephone conference meeting. There were
four scheduled meetings and one telephone conference meeting of the Board in
fiscal 2000. The two Audit/Compensation meetings were held on regularly
scheduled Board meeting days so Committee members did not receive additional
compensation for those meetings.
Present and future Directors are eligible to receive stock options as
granted from time to time by the Board of Directors pursuant to the Company's
1991 Director Stock Option Plan (the "Director Plan"). Options are granted under
the Director Plan at 100% of fair market
4
<PAGE>
value on the grant date and require continued service as a Director for at least
one year from the grant date as a condition of exercise. On August 27, 1999, the
Company granted each of the Directors options to purchase 10,000 shares of
Common Stock at $13.32 per share and on February 24, 2000, granted each of the
Directors options to purchase 13,000 shares at $13.45 per share.
The Company maintains accidental death and disability insurance coverage in
the amount of $500,000 on behalf of each of the non-employee Directors, payable
to the designated beneficiary of each Director. The Company paid premiums of
$235.00 for each Director to provide such insurance in fiscal 2000.
SUMMARY COMPENSATION TABLE
The following table summarizes the total compensation earned or paid for
services rendered in all capacities during each of the years ended June 30,
2000, 1999 and 1998, by the named Executive Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
------------------------------------------------- -----------------------------------------
OTHER RESTRICTED
ANNUAL STOCK OPTIONS/ ALL OTHER
SALARY BONUS COMPENSATION(1) AWARD(S)(2) SARS COMPENSATION(3)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
---------------------------------- -------- -------- -------- ---------------- ----------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Philip E. Rollhaus, Jr............ 2000 275,000 -0- 55,151 -0- 23,000 50,210
Chairman, Quixote Corporation 1999 465,000 265,000 163,637 122,700 37,000 6,500
and Energy Absorption 1998 445,000 240,000 140,213 169,200 60,000 5,000
Systems, Inc. (4)
Leslie J. Jezuit.................. 2000 330,000 277,000 73,370 -0- 103,000 6,750
President and Chief Executive 1999 310,000 225,000 151,196 110,430 32,000 6,600
Officer,
Quixote Corporation and Energy 1998 290,000 210,000 152,515 644,972 54,445 5,000
Absorption
Systems, Inc. (5)
Daniel P. Gorey................... 2000 185,000 105,000 35,649 -0- 45,000 6,339
Vice President, Chief Financial 1999 175,000 90,000 102,873 49,080 18,000 6,437
Officer
and Treasurer 1998 165,000 80,000 89,772 42,300 30,000 5,737
Joan R. Riley..................... 2000 150,000 67,000 27,876 -0- 27,000 6,330
Vice President, General Counsel 1999 135,000 50,000 43,376 24,540 12,000 6,308
and
Secretary 1998 125,000 45,000 46,117 356,996 18,000 5,495
</TABLE>
------------------------------
(1) The amounts disclosed for Messrs. Jezuit, Gorey and Ms. Riley include cash
paid under the Quixote Corporation Long-Term Stock Ownership Incentive Plan
(the "Long-Term Plan") to cover the federal, state and other taxes arising
from the restricted stock issued in the fiscal year to them pursuant to the
Long-Term Plan. The amounts disclosed for Messrs. Rollhaus and Jezuit also
include compensation of $4,000 paid to them for their services as Directors
of the Company. Perquisites and other personal benefits are disclosed for
Mr. Rollhaus, which includes an automobile allowance of $20,885 and $18,384
in medical reimbursements under the Company's Exec-U-Care Plan. The
aggregate amount of perquisites and other personal benefits for
Messrs. Jezuit, Gorey and Ms. Riley did not exceed the lesser of $50,000 or
ten percent (10%) of the total annual salary and bonus reported for each of
them and, therefore, is not included.
(2) Restricted stock awards under the retirement provisions of the Long-Term
Plan were granted to Mr. Rollhaus in 1993, to Mr. Gorey in 1997 and
Mr. Jezuit and Ms. Riley in 1998. The number of shares covered by these
restricted stock awards and the number of shares vested, respectively, are
as follows: Mr. Rollhaus - 91,530/91,530 shares; Mr. Jezuit - 63,384/17,286
shares; Mr. Gorey - 51,409/11,424 shares; Ms. Riley - 39,161/6,528 shares.
The remaining restricted stock covered by the awards granted to Mr. Jezuit,
Mr. Gorey and Ms. Riley will be issued in equal annual installments on
June 30 of the next eight, fourteen and fifteen years, respectively, subject
to the continuation of employment and transferability restrictions described
below, and subject to the Company's right to terminate Mr. Jezuit's and
Ms. Riley's agreement at any time after July 1, 2003 and, in the case of
Mr. Gorey, at any time after July 1, 2002.
In order to receive an annual issuance of restricted stock, the executive
must be employed by the Company or its subsidiaries on the last day of the
fiscal year in which such stock issued (except in the case of his death,
disability or termination of employment other than for cause). The executive
may not sell or transfer any restricted stock received under the Long-Term
Plan until the earlier of the date his employment is terminated or the date
he reaches retirement age (whether he actually
5
<PAGE>
retires at that time or not). Pursuant to the terms of the Long-Term Plan,
dividends are paid only on shares of restricted stock issued and delivered
to the named Executive.
The number and value of each employee's aggregate restricted stock holdings,
as of June 30, 2000 were as follows: Mr. Jezuit - 17,286/$259,290;
Mr. Gorey - 11,424/$171,360; Ms. Riley - 6,528/$97,920.
(3) Amounts shown for Messrs. Rollhaus, Jezuit, Gorey and Ms. Riley for fiscal
2000 are matching contributions by the Company under the Company's 401(k)
Plan. The amount shown for Mr. Rollhaus includes the Company's matching
contribution of $6,235 under the Company's 401(k) Plan and the trade-in
value of a Company car transferred to him in the amount of $43,975.
(4) Mr. Rollhaus retired from his position as Chief Executive Officer of the
Company on September 30, 1999. Effective October 1, 1999 the Company entered
into a new employment agreement with Mr. Rollhaus which was renewed
effective July 1, 2000 and provides for payment of an annual salary of
$275,000.
(5) Mr. Jezuit was elected Chief Executive Officer of the Company effective
October 1, 1999.
STOCK OPTION GRANTS IN FISCAL YEAR 2000
The following table shows the options granted to the named Executive
Officers during fiscal 2000 and the potential realizable value of those grants
(on a pre-tax basis) determined in accordance with SEC rules. The information in
this table shows how much the named Executive Officers may eventually realize in
future dollars under three hypothetical situations: if the price of the
Company's Common Stock does not increase, and if the stock gains 5% or 10% in
value per year, compounded over the life of the options. These amounts represent
assumed rates of appreciation, and are not intended to forecast future
appreciation of the Company's Common Stock.
The options described in this table have exercise prices equal to the
current market value of a share of Common Stock on the date they were granted.
Unless the Company's stock price appreciates and the recipient continues to be
employed (or serve as a director) until the options vest, the options will have
no value.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(2)
--------------------------------------------- ------------------------------
% OF TOTAL
OPTIONS
GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#)(1) YEAR ($/SH) DATE 0% 5%($) 10%($)
--------------------------------------------- -------- ---------- -------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Philip E. Rollhaus, Jr....................... 10,000 2.6% 13.32 08/27/09 0 83,769 212,286
13,000 3.4% 13.45 02/24/10 0 109,962 278,666
Leslie J. Jezuit............................. 10,000 2.6% 13.32 08/27/09 0 83,769 212,286
13,000 3.4% 13.45 02/24/10 0 109,962 278,666
30,000 7.8% 13.32 08/27/04 0 110,402 243,960
25,000 6.5% 14.91 11/23/04 0 102,984 227,568
25,000 6.5% 13.45 02/24/05 0 92,900 205,284
Daniel P. Gorey.............................. 25,000 6.5% 13.32 08/27/04 0 92,002 203,300
20,000 5.2% 13.45 02/24/05 0 74,320 164,227
Joan R. Riley................................ 15,000 3.9% 13.32 08/27/04 0 55,201 121,980
12,000 3.1% 13.45 02/24/05 0 44,592 98,536
</TABLE>
------------------------------
(1) The options which expire on August 27, 2009 and February 24, 2010 were
granted on August 27, 1999 and February 24, 2000 under the Director Plan and
the options which expire August 27, 2004, February 24, 2005 and
November 23, 2004 were granted on the same dates under the Long-Term Plan
except that the November option was granted November 23, 1999. All options
were granted at the Current Market Price (as defined in the Plans) on such
dates. The options become exercisable in
6
<PAGE>
one-third installments, beginning one year after grant. All option rights
under the Long-Term Plan lapse upon termination of employment except for
limited exercise periods. In the event of a change in control of the Company
(as defined in the Long-Term Plan and Director Plan), the Plans give each
optionee the right, within 30 days of such change in control, to exercise
his options, notwithstanding the other provisions of the Plans.
(2) The potential realizable value to all stockholders at the appreciation rates
of 0%, 5% and 10% would be $0, $30,620,730 and $67,663,806 (based on shares
outstanding at June 30, 2000 and assuming such shares were purchased for
$15.00 on June 30, 2000 and held until June 30, 2005).
AGGREGATED OPTION EXERCISES AND OPTION VALUES TABLE
The following table shows information concerning the exercise of stock
options by each of the named Executive Officers during fiscal 2000, and the
value of all remaining exercisable and unexercisable options at June 30, 2000,
on a pre-tax basis.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
6/30/00(#) AT 6/30/00($)(1)
SHARES ACQUIRED VALUE REALIZED --------------------------- ---------------------------
NAME ON EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------------------------- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Philip E. Rollhaus, Jr............. 0 0 171,333 43,500 885,031 94,555
Leslie J. Jezuit................... 38,400 $287,000 104,712 126,333 670,444 201,616
Daniel P. Gorey.................... 17,000 $125,370 30,000 58,000 170,480 113,380
Joan R. Riley...................... 5,000 $ 46,250 32,000 35,000 204,465 66,280
</TABLE>
------------------------------
(1) Based on the closing price of the Company's Common Stock as reported on the
NASDAQ-NMS on June 30, 2000 ($15.00).
EMPLOYMENT AGREEMENTS AND TERMINATION BENEFITS
The Company had an employment agreement with Philip E. Rollhaus, Jr. during
fiscal year 2000, which expired June 30, 2000. In addition to providing for the
payment of a base annual salary of $275,000 and other employee benefits, the
employment agreement provides for special separation pay and benefits in the
event of termination of his employment under certain circumstances. Effective
July 1, 2000, the Company extended the term of the Agreement to June 30, 2001.
The Company also has an employment letter agreement with Leslie J. Jezuit which
provides for the payment of one year's base salary, payable monthly, if his
employment is terminated for any reason other than cause.
The Company also has a change of control agreement with each of Philip E.
Rollhaus, Jr., Leslie J. Jezuit, Daniel P. Gorey and Joan R. Riley that were
entered into as of December 1, 1997 (the "Change of Control Agreements"). The
Board of Directors believes that the Change of Control Agreements assure fair
treatment of the Executive Officers in relation to their careers with the
Company by assuring them of some financial security. The Agreements also protect
the stockholders by encouraging the Executive Officers to continue to devote
their attention to their duties without distraction in a potentially disturbing
circumstance and neutralizing any bias they might have in evaluating proposals
for the acquisition of the Company. The Change of Control Agreements provide if,
within three (3) years after a change of control of the Company, the employment
of the executive is terminated other than (i) by death or disability, (ii) by
the Company or employing subsidiary for cause, or (iii) by the executive's
voluntary resignation not constituting a constructive termination as defined in
the Agreement, the Company will pay the executive a separation payment equal to
300% of the sum of his base salary and average yearly bonus payment for the last
two years. The Agreements define a "change of control" as a change in the stock
ownership of a magnitude which requires the filing of reports under the
Securities Exchange Act of 1934, as amended (the
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"Exchange Act"). For the purposes of the Agreements, a "change of control" shall
be deemed to have occurred if any of the following occur: (i) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the beneficial owner of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding securities; (ii) if
during any period of two consecutive years, there is a change in the composition
of the Board of Directors of the Company such that 50% of the non-employee Board
members have not been slated by the Board for re-election; (iii) a consolidation
or merger occurs and the Company is not the surviving company or the Company
sells all or substantially all of its assets; or (iv) the Company is liquidated
or dissolved. The term "constructive termination" is generally defined by the
Agreements to mean any unfavorable change in the executive's or employee's
position, duties, compensation or benefits and "cause" is generally defined as
willful conduct of an executive or employee demonstrably injurious to the
Company or employing subsidiary. The Agreements also contain provisions for the
payment of legal expenses incurred by the executives as a result of any
termination of employment after a change in control.
REPORT OF THE COMPENSATION
COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Compensation Committee" or "Committee")
acts on behalf of the Board of Directors and is composed of three independent,
non-employee Directors. It is responsible for establishing compensation policies
for the Company's executive officers, reviewing the recommendations of the
Chairman and the President and Chief Executive Officer, evaluating compensation
awards of comparative companies, and determining the compensation and other
remuneration afforded the Executive Officers of the Company. Three officers are
defined as "Executive Officers": Leslie J. Jezuit, President, Chief Executive
Officer and Chief Operating Officer; Daniel P. Gorey, Vice President, Chief
Financial Officer and Treasurer; and, Joan R. Riley, Vice President, General
Counsel, Secretary and Director of Investor Relations. Executive compensation
determinations of the Committee are reviewed and subject to approval by the
entire Board. Action regarding awards under the 1993 Long-Term Stock Ownership
Incentive Plan (the "Plan") is made solely by the Compensation Committee in
compliance with Rule 16b-3 of the Securities Exchange Act.
COMPENSATION PRINCIPLES AND POLICIES OF THE COMPANY
The Compensation Committee ensures that the Executive Officers of the
Company are fairly compensated in accordance with the standards and policies of
the Company. The Company philosophy, as implemented by the Committee, is
intended to promote substantive growth of the Company and enhance stockholder
value. In evaluating management's performance in implementing these objectives,
the Compensation Committee considers the Company's financial performance during
the past year, the Executives' performance during the same period, salaries and
bonuses for executives of comparable businesses, as well as the attainment of
strategic goals. Among those goals has been a 15% annual revenue and earnings
growth commitment to shareholders, now exceeded for the third year in a row.
By any measure, the Company's performance in fiscal 2000 was outstanding.
Fourth quarter results were especially strong. Sales and earnings from
continuing operations for the fiscal year showed net sales increasing 16% from
$71,987,000 to $83,770,000, and earnings from continuing operations increasing
18% from $7,562,000 to $8,919,000. Earnings per diluted share from continuing
operations have grown 20% from $.92 per share in fiscal 1999 to $1.10 for the
past year. At year end, a healthy backlog of $10,600,000 will give strong
impetus to sales and profits in fiscal 2001.
The Compensation Committee also evaluates management's performance in
dealing with competition and economic issues, as well as attaining the Company's
near and long-term
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strategies and goals. Accordingly, the attainment by management and employees of
strategic objectives and demonstrable financial results weigh heavily upon the
Committee's evaluation process. During fiscal 2000, the Board and management
cooperatively continued to implement the restated corporate goal of
consolidating and expanding the Company's highway and transportation safety
business. International sales, a special target for expansion, increased 56%. A
recent acquisition, Nu-Metrics, Inc., which is a major entity in the intelligent
transportation systems market, contributed $7,477,000 to sales and $2,570,000 to
net operating profits.
The Committee regularly engages the services of an independent compensation
consultant to evaluate compensation levels and to advise it regarding
competitive influences as well as the practices of peer entities regarding
compensation policies.
The Company's compensation program includes base salary and the
consideration of annual cash bonus and stock option awards. All three components
are material and interrelated in determining the total compensation of
executives. This program provides incentives compatible with near and long-term
management goals of the Company and its competitiveness in the marketplace,
while recognizing individual performance. Cash bonuses and stock options are
also intended to provide additional compensation to Executive Officers in
recognition of their individual achievements. As a group, the Chairman and the
Executive Officers own approximately 335,342 shares of Company Common Stock, or
an average of about 83,835 common shares per individual. Executive stock
ownership is important to the Company and aligns key management with
stockholders' interests.
The Compensation Committee will consider special achievements for
recognition. In fiscal 2000, management's achievements also included the
favorable resolution of litigation and the sale of vacant property in
Huntsville, Alabama for $460,000.
BASE SALARY AND ANNUAL BONUS
The annual review and adjustments, as appropriate, of each officer's base
salary takes into account the officer's personal performance as well as
substantive assessments of the officer's responsibilities. Each of the affected
Executives has assumed new and additional responsibilities during the fiscal
year: Mr. Jezuit became Chief Executive Officer in addition to his roles as
President and Chief Operating Officer, Mr. Gorey assumed responsibility for
corporate human relations and administrative functions, and Ms. Riley was
appointed a Vice President in addition to her roles as General Counsel, Director
of Investor Relations and Secretary of the Company. Fair, just and competitive
compensation motivates executives to assume these additional duties and
responsibilities, as well as invest the extra time and effort to respond
favorably to their added burdens.
The financial success for fiscal 2000 is in large part attributable to
management's skill and dedication. The introduction of new products and new
business opportunities supports the Committee's recommendations and Board
approval of reasonable cost-of-living adjustments to executive salaries and
bonuses.
The Committee has recommended a material policy change respecting base
salary, a policy adopted by the Board, limiting increases to approximately 5%
per annum, an amount paralleling cost-of-living increases. Bonuses will reflect
rewards for individual performance and other contributions to compensation
evaluations, as discussed above.
Mr. Philip E. Rollhaus, Jr., founder, Chairman of the Board and former Chief
Executive Officer who has directed the management team through essentially all
31 years of the Company's existence, retired from his management role effective
September 30, 1999. He continues to serve as Chairman of the Board and as an
employee at a substantially reduced salary. Mr. Jezuit, the Company President
and Chief Operating Officer, became Chief Executive
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Officer on October 1, 1999. Mr. Jezuit's salary was increased from $330,000 in
fiscal 2000 to $353,000 in fiscal 2001 and he received a cash bonus of $277,000
for fiscal year 2000.
STOCK OPTIONS
The Company utilizes stock options which are granted pursuant to the Plan.
Stock options universally are accepted as an incentive to increase the Company's
value. Options generally vest over a three-year period and are exercisable over
a specified period of time following the date of grant, which is typically five
years. Option recipients must be employed by the Company at the time of vesting
and at the time the options are exercised. The Company cannot attract and retain
highly talented and qualified management employees without granting stock
options. For the last three fiscal years, the Company has granted options to
employees to purchase an annual average of 220,000 shares at the current market
price on the date of grant. In fiscal 2000, the Committee granted Mr. Jezuit
employee stock option awards to purchase 80,000 shares of the Company's Common
Stock at the then-current market value of the stock. These awards were
discretionary to insure his strong interest in promoting the enhancement of the
stock's value--important to employees and stockholders alike.
STOCK BASED RETIREMENT PLAN
The Company maintains a stock-based retirement plan (the "Retirement Plan"),
which is a component of the Plan and was approved by the stockholders in 1993 to
provide its executives with a competitive retirement program.
Under the Retirement Plan, which is in lieu of any supplemental executive
retirement program, the Compensation Committee makes annual awards of restricted
Company stock to selected key executives. The share awards, together with a cash
award intended to cover the concomitant income tax burden, are calculated under
accepted actuarial principles as the number required to provide a targeted
competitive retirement benefit. The targeted benefit, however, will be achieved
at retirement only if the value of the Company's stock grows at a sustained
compounded level established by the Board. Furthermore, in order to receive each
year's award, the executive must remain in the employ of the Company through the
end of the fiscal year in which it is awarded (except in the case of the
Officer's death, disability or termination of employment other than for cause
during that year), and he or she must have retained all restricted shares
previously awarded under the Retirement Plan. The Compensation Committee
believes that the Retirement Plan mutually benefits the Company, its
stockholders and its most senior executives.
OTHER COMPENSATION
The Company has an Incentive Savings Plan (the "Plan") which offers all
employees (subject to certain eligibility requirements), including the named
Executive Officers, tax advantages pursuant to Section 401(k) of the Internal
Revenue Code. On January 1, 2000, the Company increased its matching
contribution to the Plan from $.60 to $.70 on each dollar of the first 7% of
compensation contributed by the participant, subject to legal maximums imposed
by the Internal Revenue Code. Contributions are made by participants by means of
a payroll deduction program. The total aggregate amount of the Company's
matching contribution for the named Executive Officers is included in the
Summary Compensation Table on page 5.
The Company maintains an Exec-U-Care Medical Reimbursement Plan which
provides additional health and life insurance protection for certain Officers of
the Company and its subsidiaries, in addition to the group health and life
insurance policies provided to all employees. The participants in the
Exec-U-Care Plan include Messrs. Rollhaus, Jezuit, Gorey and
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Ms. Riley. The total aggregate cost to the Company during fiscal year 2000 under
the Plan for those Executive Officers was less than $22,000.
LIMITATION ON DEDUCTIBILITY OF COMPENSATION
In 1993, the tax laws were amended by the addition of Section 162(m) of the
Internal Revenue Code. Effective for fiscal years beginning after 1993, that
Section limits the deductibility of compensation paid by a publicly-held company
to its chief executive officer and to the four other officers who are most
highly compensated. Generally, amounts paid in excess of $1 million to a covered
executive, other than performance-based compensation, cannot be deducted. No
Executive Officer was affected by this limitation in fiscal 2000.
COMPENSATION COMMITTEE
William G. Fowler, Chairman
Lawrence C. McQuade
Robert D. van Roijen, Jr.
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COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Audit and Compensation Committees are William G.
Fowler, who serves as Chairman of each Committee, Lawrence C. McQuade and
Robert D. van Roijen, Jr. There are no Committee interlocks as defined by the
SEC rules.
COMMON STOCK PERFORMANCE GRAPH
The following graph compares the five year cumulative total return of the
Company's Common Stock with the Russell 2000 Index and the Nasdaq Non-Financial
Index, assuming the investment of $100 on June 30, 1995 and the reinvestment of
dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG QUIXOTE CORPORATION, THE RUSSELL 2000 INDEX AND
THE NASDAQ NON-FINANCIAL INDEX AND
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
QUIXOTE CORPORATION RUSSELL 2000 NASDAQ NON-FINANCIAL
<S> <C> <C> <C>
Jun-95 100.00 100.00 100.00
Jun-96 55.62 121.12 126.96
Jun-97 67.94 155.33 149.16
Jun-98 106.65 186.21 194.68
Jun-99 108.33 175.57 288.28
Jun-00 135.94 170.60 445.30
</TABLE>
* $100 INVESTED ON 6/30/95 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS
FISCAL YEAR ENDING JUNE 30.
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CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS
See "Employment Agreements and Termination Benefits" and the "Summary
Compensation Table" for a description of certain transactions and business
relationships involving management of the Company.
APPROVAL OF THE AMENDMENT
OF THE QUIXOTE CORPORATION
1993 LONG-TERM STOCK OWNERSHIP INCENTIVE PLAN
The Board of Directors has adopted, subject to approval of the stockholders,
an amendment to the 1993 Long-Term Stock Ownership Incentive Plan (the
"Long-Term Plan"). The amendment increases the aggregate number of shares
available for grant under the Long-Term Plan from 1,545,000 shares to 1,895,000
shares, an increase of 350,000 shares, in order to assure that an adequate
number of shares is available for grant during the remainder of the term of the
Long-Term Plan. There are currently less than 100 shares available for option
grants under the Long-Term Plan. The Long-Term Plan expires June 30, 2003,
except that options may not be granted after August 19, 2001. No other amendment
is being made to the Long-Term Plan.
The purpose of the Long-Term Plan is to advance the growth and prosperity of
the Company and its subsidiaries by providing officers and key employees with
additional incentives. The Company's Board of Directors as well as the
Compensation Committee believe that the Company's future success and
profitability will depend to a great extent on its ability to continue to
attract, retain and motivate highly qualified individuals and that an effective
compensation policy for these individuals includes not only a competitive annual
salary, but also long-term incentives linked to stockholder return and Company
performance. The Company believes an important role is played by stock-based
incentives in retaining the services of outstanding personnel and in encouraging
such employees to have greater personal financial investment and stock ownership
in the Company.
Because the granting of Options (as defined below) and other Awards (as
defined below) under the provisions of the amended Long-Term Plan will continue
to be entirely in the discretion of the Compensation Committee, it is not
possible to designate the employees to whom Awards will be granted under the
amended Long-Term Plan or the number of shares to be covered by such Awards. It
is expected that the aggregate number of persons eligible to participate under
the Long-Term Plan will not exceed 50. Grants of Awards under the Long-Term Plan
made during the year ended June 30, 2000 are shown in the table on page 6.
The following is a summary of the principal provisions of the Long-Term
Plan. Capitalized terms used in this summary which are not defined herein have
the meanings ascribed to them in the Long-Term Plan. A copy of the Long-Term
Plan will be available at the forthcoming Annual Meeting of Stockholders or in
advance of the meeting to any stockholder to whom this Proxy Statement is
furnished upon written or oral request directed to: Joan R. Riley, Secretary,
Quixote Corporation, One East Wacker Drive, Chicago, Illinois 60601; telephone
number (312) 467-6755.
GENERAL INFORMATION
The Long-Term Plan provides for the granting of stock options and retirement
awards (payable in cash and stock) (collectively, the "Awards"). Such Awards,
which will expire not more than 10 years after their respective Grant Dates, may
be granted alone or in conjunction with one or more other Awards.
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Options may be granted to any employee (including officers) of the Company
or of any of its subsidiaries. Retirement Awards (as defined below) may be
granted only to key executives who have completed ten (10) years of continuous
service for the Company or its subsidiaries although the Compensation Committee
may, in its discretion, waive the ten (10) year service requirement under
appropriate circumstances.
SCOPE OF THE LONG-TERM PLAN
The Long-Term Plan provides that an aggregate of 1,545,000 shares of the
Company's Common Stock are available and reserved for delivery on account of
Awards and the exercise of Awards, with 1,195,00 shares of Common Stock
available and reserved for delivery on account of options and 350,000 shares of
Common Stock available and reserved for delivery on account of Retirement Stock
Awards (as defined below). If any Award expires or terminates without having
been exercised or distributed in full or is forfeited, the shares of Common
Stock associated with such expired or terminated Award shall become available
for other Awards. The amendment adds 350,000 shares of the Company's Common
Stock to the Long-Term Plan, with all of those shares of Common Stock reserved
and available for delivery on account of options.
Common Stock issued under the Long-Term Plan may be either newly issued
shares, shares purchased on the open market, treasury shares or any combination
thereof. In addition, certain benefits under the Long-Term Plan may be payable
in cash.
PLAN ADMINISTRATION
Except for certain duties and responsibilities expressly reserved by the
Board or delegated to another committee pursuant to the terms of the Long-Term
Plan, the Long-Term Plan will be administered by a committee of the Board
composed of not less than three directors who are not employees of the Company
(the "Committee"). The Committee under the Long-Term Plan is the Compensation
Committee, whose members are identified on page 12.
Among other things, the Committee has exclusive discretion (subject to the
provisions of the Long-Term Plan): to select the persons to whom, and the times
when, Awards are to be granted, as well as the type, size and terms of such
Awards; within certain limits, to modify the terms of any Award which has been
granted; to interpret the Long-Term Plan and prescribe rules and regulations
thereunder; to accelerate the exercisability of, and to waive the restrictions
and conditions applicable to, Awards; and, subject to certain restrictions, to
extend the time during which Awards may be exercised, but not beyond 10 years
after the Grant Date of an Award. Options cannot be repriced without stockholder
approval. The determinations of the Committee are conclusive and final. No
Committee member is liable for any action or determination made in good faith.
AWARDS UNDER THE LONG-TERM PLAN
STOCK OPTIONS. The Long-Term Plan provides both for incentive stock options
("ISOs") specifically tailored to the provisions of the Internal Revenue Code of
1986 (the "Code") and for options not qualifying as ISOs ("Non-Qualified
Options"), each of which may (but need not) be granted in conjunction with other
Awards.
Pursuant to the Long-Term Plan, the Committee shall determine the exercise
price to be paid by an optionee (the "Option Price") for each share issued in
connection with an ISO or a Non-Qualified Option (collectively referred to as
"Options"). The Option Price cannot be less than 100% of the Current Market
Value of the Common Stock on the Grant Date. Payment of the Option Price may be
made in cash or through the exchange of Common Stock held by the optionee for at
least six months. The Committee may allow a grantee to use a Company loan to
fund the amounts needed for the Option Price.
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The fair market value of ISOs granted under the Long-Term Plan and
exercisable for the first time by a grantee during a particular calendar year
shall not exceed, in the aggregate, $100,000. Such fair market value shall be
determined as of the date on which the ISOs are granted. Non-Qualified Options
are not subject to this restriction.
If an optionee ceases to be employed by the Company or any subsidiary for
any reason other than his death, total disability or retirement, the optionee
may, at the discretion of the Committee, be granted the right to exercise any
Option at any time within thirty (30) days after such termination, to the extent
the right to exercise such option has accrued, such Option has not previously
been exercised and such Option has not expired; PROVIDED, HOWEVER, that if the
optionee's employment is terminated by the Company or any subsidiary for cause,
fraud, breach of fiduciary duty, or other dishonesty, the optionee's rights to
exercise any option shall expire on the last day of his employment. If an
optionee retires and such optionee has been in the employ of the Company or a
subsidiary continuously from the date such Option was granted until retirement,
the optionee may, within the three (3) month period after such retirement,
exercise such Option to the extent that such three month period is included in
the remainder of the applicable Option's term. If an optionee dies or becomes
totally disabled while employed by the Company or a subsidiary and previously
has not fully exercised his or her Options, his or her Options may be exercised
to the extent that those Options had not previously been exercised, at any time
within one year after his death or disability (absent earlier expiration of the
Option) by the optionee or his legally appointed guardian, in the case of
disability, or in the case of an optionee's death, by the executors or
administrators of his or her estate or the person who acquires the Option
directly from the optionee by bequest or inheritance.
RETIREMENT AWARDS. Under the Long-Term Plan, the Committee may make awards
of Company Common Stock ("Retirement Stock Awards") and cash sufficient to pay
the federal, state and other taxes arising from such awards ("Retirement Cash
Awards") to provide a retirement benefit for senior executives of the Company
and its Subsidiaries. The Retirement Stock Awards and Retirement Cash Awards are
collectively referred to as "Retirement Awards".
Each Retirement Award is made pursuant to a written agreement between the
Company and the executive which provides for the award of a set aggregate amount
of Retirement Stock to be issued in at least five equal annual installments,
together with a Retirement Cash Award in an amount to be calculated annually in
accordance with a formula determined by the Committee and set forth in the
agreement. Dividends are paid only on Retirement Stock which has been issued and
delivered to an executive. In order to receive an annual issuance of a
Retirement Award, the executive must be employed by the Company or its
Subsidiaries on the last day of the Company's fiscal year in which such stock is
issued except in case of death, disability or termination of employment other
than for cause. The executive may not sell or transfer any Retirement Stock he
receives while he is employed by the Company or its Subsidiaries. The transfer
restrictions lapse on the earlier of the date (i) when the executive's
employment is terminated or (ii) when the executive reaches his normal
retirement age, regardless of whether he actually retires at that time.
AMENDMENT AND TERMINATION
The Long-Term Plan terminates on the tenth anniversary of its effective
date, but Options may not be granted under the Long-Term Plan after August 19,
2001. The Board of Directors may from time to time, insofar as permitted by law,
suspend, revise or amend the Long-Term Plan in any respect whatsoever except
that, without the approval of the stockholders, no such revision or amendment
shall: (1) change the number of shares subject to the Long-Term Plan;
(2) change the designation of the class of employees eligible to receive Awards;
(3) decrease the price at which Options may be granted; (4) remove the
administration of the Long-Term
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<PAGE>
Plan from the Committee; (5) render any Committee member eligible to receive an
Award under the Long-Term Plan while serving on the Committee; (6) extend the
period during which Awards may be granted; or (7) amend the Long-Term Plan in
any manner that will cause the Options issued under it to fail to qualify as
ISOs. The Board of Directors is specifically directed to revise, modify or amend
the Long-Term Plan, without the approval of the stockholders, as may be
necessary to satisfy the requirements of the Internal Revenue Code, as amended,
to assure that the Options granted thereunder may be treated as ISOs.
Termination of the Long-Term Plan will not affect any Awards then outstanding.
OTHER TERMS AND CONDITIONS
Awards granted under the Long-Term Plan will be evidenced by written
agreements consistent with the Long-Term Plan in such form as the Committee may
prescribe. Neither the Long-Term Plan nor such agreements confer any right to
continued employment upon any grantee.
Awards (other than shares of Retirement Stock) are generally
non-transferable other than by will or the laws of descent and may be exercised,
during a grantee's lifetime, only by the grantee. Restrictions with respect to
Retirement Stock are described above.
Adjustments in the amount of Awards issuable under the Long-Term Plan and in
any Awards outstanding may be made in order to preserve the benefits or
potential benefits intended to be made available to participants, in the event
of merger, consolidation, reorganization, the sale of all or substantially all
of the assets of the Company, recapitalization, reclassification, stock splits,
stock dividends or similar events.
The holder of an Award will have no rights as a stockholder with respect to
any shares of Common Stock covered by such Award until the date the Common Stock
relating to such Award is issued and delivered to such holder.
VOTING INFORMATION FOR THE PROPOSAL
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock present in person or represented by proxy and entitled to
vote at the Annual Meeting is required to approve the amendment to the Long-Term
Plan.
RECOMMENDATION
The Board believes that adoption of the amendment of the Long-Term Plan is
advisable to increase the share authorization for its stock-based plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE LONG-TERM
PLAN.
FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS
GRANTED UNDER THE LONG-TERM PLAN
The following discussion is intended as a brief summary of the federal
income tax treatment of the Options granted under the Long-Term Plan, under the
laws and regulations in effect as of the date of this proxy statement. The
summary is not intended to be exhaustive, does not constitute tax advice and
does not describe state, local or foreign tax consequences.
The granting of a Non-Qualified Option authorized under the Plan will not be
a taxable event. Non-Qualified Options include options which do not qualify as
ISOs. When a Non-Qualified Option is exercised, the optionee generally will be
taxed on an amount of compensation income equal to the excess of the market
value of the option shares at the time of exercise over the amount paid for such
shares. However, under certain circumstances, the
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<PAGE>
income of an optionee who exercises a Non-Qualified Option and who is subject to
Section 16(b) of the Securities Exchange Act of 1934 (the "1934 Act") may be
measured on the basis of the market value of the Option shares as of the date
the sale of the option shares at a profit is no longer subject to suit under
Section 16(b) of the 1934 Act, unless the optionee makes an election under
Section 83(b) of the Internal Revenue Code of 1986, as amended (the "Code"),
within thirty (30) days of the exercise of the Non-Qualified Option. Upon the
sale or other disposition of Non-Qualified Option shares, the difference between
the proceeds received and the sum of the option price plus the compensation
income recognized as described above will be capital gain or loss. While
compensation income is subject to federal income tax at a maximum rate of 39.6%,
capital gains recognized by individuals are now taxed at various rates described
below. Capital losses will be deductible against capital gains, if any, plus up
to $3,000 of an individual's other income; individuals may carry forward any
unused capital losses indefinitely.
The Plan authorizes the granting of ISOs to key employees of the Company.
ISOs are intended to qualify as "incentive stock options" as defined in Section
422 of the Code. Generally, the optionee recognizes no income on the grant or
the exercise of an ISO. If the shares acquired by the exercise of an ISO are
disposed more than two years from the Grant Date and more than one year from the
date of exercise, the optionee will recognize a capital gain or loss measured by
the difference between the sale proceeds and the option price. If the ISO shares
are sold before the end of the above described holding periods, however, the
optionee will recognize compensation income in an amount equal to the difference
between the lesser of the market value of the shares on the date of exercise or
the sale price of such shares and the Option Price, with the balance of any
remaining gain taxed as capital gain.
In the year of exercise of an ISO, an individual optionee must increase his
or her alternative minimum taxable income by an amount equal to the difference
between the market price of the Company Common Stock subject to the ISO on the
date of exercise and the option price for purposes of computing liability for
the alternative minimum tax. A taxpayer's alternative minimum taxable income is
subject to the alternative minimum tax, which can now be as high as 28% but is
payable only to the extent it exceeds the taxpayer's regular income tax.
Capital gains are taxed at different rates depending on whether they are
considered "short-term capital gains", which arise from the sale of capital
assets held for one year or less, or "long-term capital gains", which arise from
the sale of capital assets held for more than one year. Short-term capital gains
are generally taxed at the same rates applicable to ordinary income. The maximum
tax rate applicable to long-term capital gains from the sale or exchange of
capital assets, such as option shares acquired under the Plan, is 20%. However,
individuals in the 15% income tax bracket (e.g., for the 2000 tax year, single
filers with $26,250 or less of taxable income or married persons filing jointly
with taxable income of $43,850 or less) will pay tax at a maximum rate of 10% on
their long-term capital gains. The maximum rate on long-term capital gains will
be reduced to 18% (8% for individuals in the 15% income tax bracket) for assets
sold or exchanged after December 31, 2000, and held for more than five years;
however, the 18% rate will only apply to the disposition of assets acquired
after December 31, 2000, and for purposes of determining eligibility for this
lower rate, the holding period of option shares will begin on the date that the
option is granted. The lower tax rates described above will also apply for
purposes of the alternative minimum tax.
Optionees may, at the discretion of the Committee in the case of the
Long-Term Plan, pay all or part of the exercise price for their Options by
delivering Company Common Stock already owned by them. Based on a Revenue Ruling
published by the Internal Revenue Service, if shares of Company Common Stock
already owned by an optionee are used to pay the exercise price of a
Non-Qualified Option, no gain or loss will be recognized with respect
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to the disposition of the previously owned shares. However, the tax basis of the
shares delivered as payment will carry over to the shares received upon the
exercise of the Option, share for share, to the extent the number of shares
received equals the number of shares delivered as payment. The optionee will
recognize ordinary income equal to the fair market value on the exchange date of
the balance of shares received in the exchange (the number of shares received in
excess of the number of shares delivered). The tax basis of these shares will be
equal to the taxable income recognized by the optionee in the exchange.
Under proposed Treasury Department Regulations, an optionee who exercises an
ISO by surrendering previously acquired Company Common Stock generally will not
recognize taxable gain or loss upon the exchange. The optionee's tax basis of
the shares delivered as payment will carry over to the equivalent number of
shares received and the tax basis in the remaining shares will be zero. All
shares received will be subject to the holding period restrictions applicable to
ISOs; upon the disposition of any such shares prior to the expiration of these
holding periods, the shares with the lowest tax basis will be deemed to be
disposed of first. If payment of the exercise price of an ISO is made with
Company Common Stock acquired by an earlier exercise of an ISO that has not been
held by the optionee for the applicable holding periods, the optionee will
recognize ordinary income to the same extent as if the surrendered stock had
been sold in a premature disposition of shares subject to an ISO, but will
realize no capital gain or loss in the exchange. However, the stock acquired by
this exercise of an ISO will qualify for favorable tax treatment.
The Company will be entitled to claim a tax deduction for the amount of
compensation income recognized by an optionee upon the exercise of a
Non-Qualified Option. No such deduction will be available to the Company as the
result of the exercise of an ISO unless the ISO shares are sold or disposed
before the relevant holding periods expire, in which case the Company would be
allowed a tax deduction equal to the compensation income recognized by the
optionee.
The Long-Term Plan is neither qualified under Section 401 of the Code nor
subject to any provisions of the Employee Retirement Income Security Act of
1974.
APPROVAL OF AUDITORS
The Directors have recommended that the stockholders approve
PricewaterhouseCoopers LLP, a certified public accounting firm, as independent
auditors for the Company. A representative of PricewaterhouseCoopers LLP is
expected to be present at the Annual Meeting and will have an opportunity to
make an independent statement if he or she desires to do so. The representative
is expected to be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the outstanding shares
of the Company's Common Stock represented at the meeting and entitled to vote is
necessary to approve PricewaterhouseCoopers LLP as the Company's auditors.
The Board of Directors recommends a vote approving PricewaterhouseCoopers
LLP as the Company's auditors.
18
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The chart below sets forth, as of September 19, 2000 information to the best
of the Company's knowledge with respect to the persons who beneficially owned in
excess of five percent of the Company's Common Stock; the total number of shares
of the Company's Common Stock beneficially owned by each Director and named
Executive Officer; and the total number of shares of the Company's Common Stock
beneficially owned by the Directors and Executive Officers of the Company, as a
group.
<TABLE>
<CAPTION>
AMOUNT APPROXIMATE
BENEFICIALLY PERCENTAGE(%)
NAME OF BENEFICIAL OWNER OWNED(1) OF CLASS(1)
------------------------------------------------------------ ------------ -------------
<S> <C> <C>
FMR Corp. (2)............................................... 1,188,400 16.2
Investment Counselors of Maryland (3)....................... 504,500 6.9
Wisconsin State Investment Board (4)........................ 456,100 6.2
J. L. Kaplan Associates (5)................................. 428,600 5.8
Dimensional Fund Advisors (6)............................... 415,800 5.7
STI Capital Management (7).................................. 373,300 5.1
Philip E. Rollhaus, Jr. (8)................................. 380,714 5.0
James H. DeVries (8)........................................ 209,835 2.8
Leslie J. Jezuit............................................ 205,406 2.7
William G. Fowler (9)....................................... 163,846 2.2
Daniel P. Gorey............................................. 90,109 1.2
Lawrence C. McQuade......................................... 68,834 *
Joan R. Riley............................................... 64,321 *
Robert D. van Roijen, Jr.................................... 63,734 *
Directors and Executive Officers as a group (8 persons
including those individuals named above) (8)(9)........... 1,246,799 15.5
</TABLE>
------------------------
* Less than one percent (1%).
(1) The shares reported in the above table include shares of Common Stock which
can be acquired within 60 days of September 19, 2000, through the exercise
of options ("Option Shares") as follows: Mr. Rollhaus - 191,167 shares;
Mr. Jezuit - 128,713 shares; Mr. Gorey - 44,334 shares; Ms. Riley - 41,000
shares; Mr. DeVries - 72,834 shares; Mr. Fowler - 72,834 shares;
Mr. McQuade - 62,834 shares; Mr. van Roijen - 47,834 shares; and Directors
and Executive Officers as a group - 661,550 shares. Each individual's Option
Shares are also included in the number of shares of the Company issued and
outstanding for purposes of calculating the percentage ownership of each
individual in accordance with the rules and regulations of the Exchange Act.
Certain of these persons also have options not exercisable within 60 days of
September 19, 2000, by which they can acquire the following additional
shares of Common Stock: Mr. Rollhaus - 33,666 shares; Mr. Jezuit - 102,332
shares; Mr. Gorey - 58,666 shares; Ms. Riley - 36,000 shares; Mr. DeVries -
33,666 shares; Mr. Fowler - 33,666 shares; Mr. McQuade - 33,666 shares;
Mr. van Roijen - 33,666 shares; and Directors and Executive Officers as a
group - 365,328 shares. These shares are not included in the above table or
in the percentage ownership calculations.
(2) Based upon information set forth in a Schedule 13F for the period ending
June 30, 2000. Fidelity Management & Research Company, a wholly-owned
subsidiary of FMR Corp., is the beneficial owner of the listed shares as a
result of acting as investment adviser to various investment companies. The
listed shares are owned primarily by one investment company, Fidelity
Low-Priced Stock Fund (the "Fund"). The address for FMR Corp. and the Fund
is 82 Devonshire Street, Boston, Massachusetts 02109.
19
<PAGE>
(3) Based upon information set forth in a Schedule 13F filing for the period
ending June 30, 2000. The address for Investment Counselors of Maryland is
803 Cathedral Street, Baltimore, Maryland 21201.
(4) Based on information set forth in a Schedule 13F filing for the period
ending June 30, 2000. The address for the Wisconsin State Investment Board
is P.O. Box 7842, Madison, Wisconsin 53707.
(5) Based upon information set forth in a Schedule 13F filing for the period
ending June 30, 2000. The address for J. L. Kaplan Associates is 222
Berkeley Street, Suite 2010, Boston, Massachusetts 02116.
(6) Based upon information set forth in a Schedule 13F for the period ending
June 30, 2000. Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, furnishes investment advice to four investment companies
and serves as investment manager to certain other investment vehicles (the
"Portfolio"). In its role as investment advisor and investment manager,
Dimensional possesses both voting and investment power over the listed
shares. All listed shares are owned by the Portfolio and Dimensional
disclaims beneficial ownership of all such shares. The address for
Dimensional is 1299 Ocean Avenue, Santa Monica, California 90401.
(7) Based upon information set forth in a schedule 13F for the period ending
June 30, 2000. The address for STI Capital Management is 200 South Orange
Avenue, Orlando, Florida 32801-3495.
(8) Messrs. Rollhaus and DeVries may be deemed to be the beneficial owner of
3,000 and 5,492 shares of Common Stock, respectively, owned by their family
members. These shares are not included in the above table. Messrs. Rollhaus
and DeVries disclaim beneficial ownership of these shares.
(9) Mr. Fowler has a beneficial interest in 890 shares of Common Stock held by
his retirement plan. These shares are not included in the above table.
20
<PAGE>
MISCELLANEOUS
STOCKHOLDER PROPOSALS FOR THE ANNUAL MEETING TO BE HELD IN 2001
Under the rules and regulations of the Securities and Exchange Commission,
proposals of stockholders intended to be presented at the Annual Meeting to be
held in 2001 must be received by the Company on or before May 31, 2001, to be
considered for inclusion in the Company's proxy statement relative to that
meeting. The persons named in the Board's proxy for the 2001 Annual Meeting will
be entitled to exercise the discretionary voting authority conferred by such
proxy on any shareholder proposal which is not included in the Company's Proxy
Statement if the shareholder making such proposal does not give the Company
notice before May 31, 2001. Such proposals should be in writing and sent to
Ms. Joan R. Riley, Secretary--Quixote Corporation, One East Wacker Drive,
Chicago, IL 60601.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and Executive Officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Executive
Officers, Directors and greater than ten percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on review of the copies of such reports furnished to the
Company and written representations that no other reports were required during
fiscal year 2000, the Company believes that all Section 16(a) filing
requirements applicable to the Company's Officers and Directors and ten percent
shareholders were complied with by such persons except that Robert D. van
Roijen, Jr. failed to file on a timely basis a report relating to a purchase of
1,000 shares of the Company's Common Stock.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
The Company will be pleased to make its Annual Report on Form 10-K, as filed
with the Securities and Exchange Commission, available without charge to
interested parties. Written requests for the report should be directed to
Ms. Joan R. Riley, Secretary--Quixote Corporation, One East Wacker Drive,
Chicago, IL 60601.
21
<PAGE>
SKU#0524-PS-00
<PAGE>
Appendix A
QUIXOTE CORPORATION
1993 LONG-TERM STOCK OWNERSHIP INCENTIVE PLAN
As Amended August 16, 2000
THE PLAN. Quixote Corporation, a Delaware corporation (the "Company"),
hereby amends and restates the substantive provisions of the Quixote Corporation
1991 Incentive Stock Option Plan (the "1991 Plan"), to establish the Quixote
Corporation 1993 Long-Term Stock Ownership Incentive Plan as set forth herein
and as may from time to time be amended (the "Plan"), in order to add provisions
which will provide the Company with the ability to provide its senior executives
with stock-based retirement benefits linked to increases in the value of the
Company's Stock. The Plan is effective as of June 30, 1993 subject to the
approval by a majority of the stockholders at the first annual meeting of
stockholders held after the Effective Date. Until such time as stockholder
approval of the Plan is obtained, the 1991 Plan will continue to exist and
operate independently of the Plan. Options granted and outstanding under the
1991 Plan following stockholder approval of the Plan shall be governed by the
provisions of the Plan. Nothing in this Plan is intended to, or shall be deemed
to, modify, amend or alter any of the rights and benefits of holders of options
granted under the 1991 Plan or provide any additional benefits to such holders.
1. PURPOSE
The purposes of the Plan are to encourage selected employees of the
Company and its Subsidiaries who are capable of having an impact on the
performance of the Company to acquire a long-term proprietary interest in the
growth and performance of the Company, to generate an increased incentive to
contribute to the Company's future success and prosperity (thus enhancing the
value of the Company for the benefit of its stockholders), and to enhance the
ability of the Company and its Subsidiaries to attract and retain qualified
individuals upon whom the sustained progress, growth, and profitability of the
Company depend. It is further intended that options issued pursuant to this Plan
shall constitute "incentive stock options" within the meaning of Sec. 422A of
the Internal Revenue Code (such options are referred to herein as "Incentive
Stock Options"). In the event that stock options granted pursuant to this Plan
do not satisfy the requirements specified under Internal Revenue Code Sec. 422A,
such options shall be "nonqualified stock options."
2. DEFINITIONS
As used in the Plan, terms defined immediately after their use shall
have the respective meanings provided by such definitions and the terms set
forth below shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
(a) "Affiliate" is a person that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with
the Company.
(b) "Award" means options, Retirement Stock Awards or Retirement Cash
Awards granted under the Plan.
(c) "Award Agreement" has the meaning specified in Section 4(b)(v).
<PAGE>
(d) "Board" means the Board of Directors of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended. References
to a particular section of the Code shall include references to successor
provisions.
(f) "Committee" means the committee of the Board appointed pursuant to
Section 4.
(g) "Company" has the meaning set forth in the introductory paragraph.
(h) "Current Market Price" of the Stock means at any date the last reported
sales price determined in the regular way or, in case no such reported sales
takes place on such day, the average of the last reported bid and asked prices
determined in the regular way, in either case on the principal national
securities exchange on which the Stock is admitted to trading or listed, or if
not listed or admitted to trading on any national securities exchange, the
average of the closing bid and asked prices as reported by NASDAQ or other
similar organization if NASDAQ is no longer reporting such information, or if
not so available, the fair market price as determined by the Board.
(i) "Disability" means, as relates to the exercise of an Incentive Stock
Option after termination of employment, a disability within the meaning of
Section 22(e)(3) of the Code, and for all other purposes, a mental or physical
condition which, in the opinion of the Committee, renders a Grantee unable or
incompetent to carry out the job responsibilities which such Grantee held or the
tasks to which such Grantee was assigned at the time the disability was
incurred, and which is expected to be permanent or for an indefinite duration
exceeding one year.
(j) "Effective Date" means June 30, 1993; provided that the Plan and any
Retirement Awards granted prior to the 1993 annual meeting of the Company's
stockholders are subject to approval of the Plan by the stockholders at such
annual meeting.
(k) "Grant Date" means the date on which the Committee grants the Award or
such later date as specified in advance by the Committee; provided however, that
references to the Grant Date of an option under this Plan shall, with respect to
options granted under the 1991 Plan prior to stockholder approval of the Plan,
refer to the date of grant of such option under the 1991 Plan.
(l) "Grantee" means an individual who has been granted an Award.
(m) "Including" or "includes" means "including, without limitation," or
"includes, without limitation."
(n) "1934 Act" means the Securities Exchange Act of 1934, as amended.
References to a particular section of, or rule under, the 1934 Act shall include
references to successor provisions.
(o) "Option Price" means the per share purchase price of Stock subject to
an option.
(p) "Plan" has the meaning set forth in the introductory paragraph.
2
<PAGE>
(q) "Retirement" means a termination of employment with the Company and its
Subsidiaries any time after attaining age 60.
(r) "SEC" means the Securities and Exchange Commission.
(s) "Section 16 Grantee" means a person subject to potential liability
under Section 16(b) of the 1934 Act with respect to transactions involving
equity securities of the Company.
(t) "Stock" means the common stock of the Company, $0.01-2/3 par value.
(u) "Subsidiary" means (i) with respect to Incentive Stock Options, a
corporation as defined in Section 424(f) of the Code with the Company being
treated as the employer corporation for purposes of this definition, and (ii)
for all other purposes any entity in which the Company directly or through
intervening subsidiaries owns at least a majority interest of the total combined
voting power or value of all classes of stock or, in the case of an
unincorporated entity, at least a majority in the capital and profits.
(v) "10% Owner" means a person who owns stock (including stock treated as
owned under Section 424(d) of the Code) possessing more than 10% of the total
combined voting power of all classes of stock of the Company.
3. SCOPE OF THE PLAN
(a) An aggregate of One Million Eight Hundred and Ninety-Five Thousand
(1,895,000) shares of Stock are hereby made available and reserved for delivery
on account of Awards and the exercise of Awards, with One Million Five Hundred
and Forty-Five Thousand (1,545,000) shares of Stock being made available and
reserved for delivery on account of options and Three Hundred Fifty Thousand
(350,000) shares of stock being made available and reserved for delivery on
account of Retirement Stock Awards. The limitations established by the preceding
sentences shall be subject to adjustment as provided in Section 18 of the Plan.
Such shares may be treasury shares, newly issued shares, or shares
purchased on the open market (including private purchases) in accordance with
applicable securities laws, or any combination of the foregoing, as may be
determined from time to time by the Board or the Committee.
(b) To the extent an Award shall expire or terminate for any
reason without having been exercised in full (including a cancellation and
re-grant of an option), or shall be forfeited, without, in either case, the
Grantee having enjoyed any of the benefits of Stock ownership (other than voting
rights or dividends that are also forfeited), the shares of Stock (including
Retirement Stock) associated with such Award shall become available for other
Awards.
(c) For purposes of this Section 3,
(i) The aggregate number of shares covered by a Retirement Award Agreement
shall be counted on the Grant Date of such Award (without respect to the timing
of the Company's obligation to issue and deliver such shares) against
3
<PAGE>
the aggregate number of shares of Stock available for granting Retirement Stock
Awards under the Plan; and
(ii) the shares of Stock underlying outstanding options (without respect to
any vesting schedule) shall be counted while the Award is outstanding against
the aggregate number of shares of Stock available for granting Awards under the
Plan; and
(iii) in the event of a stock-for-stock exercise of an option, the gross
number of shares of Stock subject to the option exercised, not the net number of
shares actually issued upon exercise shall be counted against the aggregate
number of shares of Stock available for granting Awards under the Plan.
4. ADMINISTRATION
(a) Subject to Section 4(b), the Plan shall be
administered by a committee ("Committee") which shall consist of not less than
three persons who are Directors of the Company and who are not employees of the
Company. Membership on the Committee shall be subject to such other limitations
as the Board deems appropriate to permit transactions in Stock pursuant to the
Plan to be exempt from liability under Section 16(b) of the 1934 Act pursuant to
Rule 16b-3 thereunder. Unless the Board adopts a resolution naming other
individuals to serve on the Committee, the Committee shall consist of all
Directors of the Company who are not employees of the Company. The Board may
from time to time remove members from, or add members to the Committee.
Vacancies on the Committee, however caused, shall be filled by the Board. The
Committee shall select one of its members as Chairman, and shall hold meetings
at such times and places as it may determine. A majority of the Committee at
which a quorum is present, or acts approved in writing by all of the members of
the Committee, shall be the valid acts of the Committee. No member of the
Committee shall be eligible to receive any grant of any Awards under this Plan.
(b) The Committee, unless otherwise determined by the
Board, shall have full and final authority, in its discretion, but subject to
the express provisions of the Plan, as follows:
(i) to grant Awards;
(ii) to determine (A) when Awards may be granted,
and (B) whether or not specific Awards shall be identified with other specific
Awards, and if so, whether they shall be exercisable cumulatively with or
alternatively to such other specific Awards;
(iii) to interpret the Plan and to make all
determinations necessary or advisable for the administration of the Plan;
(iv) to prescribe, amend, and rescind rules and
regulations relating to the Plan, including rules with respect to the
exercisability and non-forfeitability of Awards upon the termination of
employment of a Grantee;
(v) to determine the terms and provisions and
any restrictions or conditions (including specifying such performance criteria
as the Committee deems appropriate, and imposing restrictions with respect to
Stock acquired upon exercise of an option or Retirement Award, which
4
<PAGE>
restrictions may continue beyond the Grantee's termination of employment) of the
written agreements by which all Awards shall be evidenced ("Award Agreements")
which need not be identical and, with the consent of the Grantee where required
by contract law, to modify any such Award Agreement at any time;
(vi) to impose, incidental to an Award,
conditions with respect to competitive employment or other activities, to the
extent such conditions do not conflict with the Plan;
(vii) to accelerate the exercisability of, and to
accelerate or waive any or all of the restrictions and conditions applicable to
any Award or any group of Awards;
(viii) subject to Section 6(c), to extend the time
during which any Award or group of Awards may be exercised;
(ix) to make such adjustments or modifications to
Awards to Grantees working outside the United States as are necessary and
advisable to fulfill the purposes of the Plan which are not in conflict with the
Plan; and
(x) to impose such additional conditions,
restrictions, and limitations upon the grant, exercise or retention of Awards as
the Committee may, before or concurrently with the grant thereof, deem
appropriate, including requiring simultaneous exercise of related identified
Awards, and limiting the percentage of Awards which may from time to time be
exercised by a Grantee.
The determination of the Committee on all matters relating to the Plan
or any Award Agreement shall be conclusive and final. No member of the Committee
or the Board shall be liable for any action or determination made in good faith
with respect to the Plan or any Award.
(c) The Board may, in its discretion, reserve to itself
or delegate to another committee of the Board, any or all of the authority and
responsibility of the Committee with respect to Awards to Grantees who are not
Section 16 Grantees at the time any such delegated authority or responsibility
is exercised. Such other committee may consist of two or more Directors who may,
but need not be, officers or employees of the Company or of any of its
Subsidiaries. To the extent that the Board has reserved to itself or delegated
to such other committee the authority and responsibility of the Committee, all
references to the Committee in the Plan shall be to the Board or such other
committee.
5. ELIGIBILITY
Awards may be granted to any key employee (including any officer) of
the Company or any of its Subsidiaries; provided, however, that Retirement
Awards may be granted only to executive officers of the Company or its
Subsidiaries who have completed 10 years of continuous service for the Company
or its Subsidiaries; provided further that the Committee may, under appropriate
circumstances and in its discretion, waive the requirement of ten years
continuous service for a particular executive officer. In selecting the
individuals to whom Awards may be granted, as well as in determining the number
of shares of Stock subject to, and the other terms and conditions
5
<PAGE>
applicable to, each Award, the Committee shall take into consideration such
factors as it deems relevant in promoting the purposes of the Plan.
6. TERMS AND CONDITIONS OF OPTION GRANTS
Stock options granted by the Committee pursuant to the Plan shall be
evidenced by Award Agreements in such form as the Committee shall from time to
time approve, which agreements shall comply with and be subject to the following
terms and conditions:
(a) Each option shall state the number of shares to which
it pertains.
(b) The Option Price of any option shall not be less than
100% of the Current Market Price of the Stock on the business day immediately
preceding the Grant Date.
(c) Any option granted under this Plan may be considered
a Incentive Stock Option to the extent that it:
(i) shall only be granted to individuals who are
employed by the Company or any of its Subsidiaries on the Grant Date;
(ii) shall not be granted to a 10% Owner unless
the Option Price is at least 110% of the Current Market Price of the Stock
subject to such option on the Grant Date and shall be exercisable for a period
of not more than five (5) years from the Grant Date;
(iii) except as provided in (ii) above, shall be
exercisable for a period of not more than 10 years from the Grant Date, and
shall be subject to earlier termination as provided herein or in the applicable
Award Agreement;
(iv) shall not have an aggregate fair market
value (determined for each Incentive Stock Option at its Grant Date) of Stock
with respect to which Incentive Stock Options are exercisable for the first time
by such Grantee during any calendar year (under the Plan and any other employee
stock option plan of the Grantee's employer or any parent or Subsidiary thereof
determined in accordance with the provisions of Section 422 of the Code), which
exceeds $100,000; and
(v) shall require the Grantee to notify the
Company of any disposition of any Stock issued pursuant to the exercise of the
Incentive Stock Option under the circumstances described in Section 421(b) of
the Code (relating to certain disqualifying dispositions), within 10 days of
such disposition.
Subject to the foregoing, the Committee shall have full authority and
discretion in fixing the Option Price and the terms and conditions of the option
Awards and shall be fully protected in doing so.
(d) All options shall be granted on or before August 19,
2001.
(e) Options shall not be assignable or transferable other
than by will or the laws of descent and distribution and may be exercised during
6
<PAGE>
the Grantee's lifetime only by the Grantee; provided, however, that the Grantee
may, to the extent provided in the Plan in any manner specified by the
Committee, designate in writing a beneficiary to exercise his/her option after
the Grantee's death.
(f) Subject to Section 4(b)(vii) and such terms and
conditions as the Committee may impose, each option shall be exercisable in one
or more installments. Each option shall be exercised by delivery to the Company
of written notice of intent to purchase a specific number of shares of Stock
subject to the option. The Option Price of any shares of Stock as to which an
option shall be exercised shall be paid in full at the time of the exercise.
Payment may, at the election of the Grantee, be made in any one or any
combination of the following:
(i) United States dollars in cash or by check;
(ii) Stock held by the Grantee for at least 6
months prior to exercise of the option, valued at its Current Market Price on
the date of written notice of optionee's election to exercise the option; or
(iii) with the approval of the Committee, shares
of Retirement Stock held by the Grantee for at least 6 months prior to exercise
of the option, valued at the Current Market Price of a share of Stock on the
date of exercise.
(g) Except as expressly provided in this Plan or the
Award Agreement, no option may be exercised prior to twelve months from its
Grant Date. Subject to the right of cumulation provided in the next sentence of
this Section 6(g), each option shall be exercisable to the extent provided for
in the Award Agreement as determined by the Committee in its discretion. To the
extent not exercised, installments shall accumulate and be exercisable, in whole
or in part, in any subsequent period, prior to the expiration of the term
described in the Award Agreement, provided that no option may be exercised more
than ten years from its Grant Date. Notwithstanding the preceding sentence, in
the event that the optionee is a 10% Owner (determined on the Grant Date) of the
Company, no option intended to qualify as an Incentive Stock Option may be
exercised more than five years from the date it is granted. During the lifetime
of the optionee, the option shall be exercisable only by him and shall not be
assignable or transferable by him and no other person shall acquire any rights
therein.
(h) In the event that an optionee shall cease to be
employed by the Company for any reason other than his death, Disability, or
Retirement, subject to the condition that no option shall be exercisable after
the expiration of ten years from its Grant Date (five years for an option which
is intended to qualify as an Incentive Stock Option that is granted to a 10%
Owner on the Grant Date), such optionee may, at the discretion of the Committee,
be granted the right to exercise the option at any time within thirty (30) days
after such termination of employment to the extent his right to exercise such
option had not expired pursuant to Section 6(g) of this Plan, had vested and had
not previously been exercised; provided, however, that if the employment of the
optionee is terminated by the Company or any of its Subsidiaries for cause,
fraud, breach of fiduciary duty, or other dishonesty, the optionee's rights to
exercise the option otherwise provided herein shall expire on the last day of
his employment. Whether authorized leave of absence
7
<PAGE>
or absence for military or governmental service, or any other reason, shall
constitute termination of employment, for the purposes of the Plan, shall be
determined by the Committee, which determination shall be final and conclusive.
(i) (i) In the event an optionee terminates his
employment with the Company or any Subsidiary because of a Disability, the
Disabled optionee or a lawfully appointed custodian thereof may exercise an
option granted pursuant to this Plan for a period of twelve months from the date
of termination of employment to the extent his right to exercise such option had
not expired pursuant to Section 6(g) of this Plan and had not previously been
exercised at the date of such termination.
(ii) If the employment of an optionee with the
Company or any Subsidiary is terminated by reason of the optionee's Retirement
and the optionee has been in the employ of either the Company or a Subsidiary
continuously from the date such option was granted until such Retirement (except
for leaves of absence approved in writing by the President of the Company or the
President of the Subsidiary for which the optionee works), the entire
unexercised portion of such option may be exercised by the optionee at any time
or times in whole or in part during the three-month period after such retirement
to the extent that such three-month period is included in the remainder of such
option's term.
(j) If the optionee shall die while in the employ of the
Company or any Subsidiary and shall not have fully exercised the option, the
unexercised portion of an option may be exercised at any time within one year
after the optionee's death by the executors or administrators of the optionee or
by any person or persons who shall have acquired the option directly from the
optionee by bequest or inheritance, subject to the condition that no option
shall be exercisable after the expiration of ten years from its Grant Date (five
years for an optionee under an Incentive Stock Option who is a 10% Owner on the
Grant Date).
No option shall be transferable by the optionee otherwise than
by will or the laws of descent and distribution.
7. TERMS AND CONDITIONS OF RETIREMENT AWARDS
Grants of Stock and cash Awards intended to fund retirement benefits
for senior executives (the "Retirement Stock Awards" and "Retirement Cash
Awards" (each more fully described below), respectively, and collectively the
"Retirement Awards") pursuant to the Plan shall be authorized by the Committee
and shall be evidenced by agreements in such form as the Committee shall from
time to time approve (each a "Retirement Award Agreement"), which agreements
shall comply with and be subject to the following terms and conditions:
(a) The Committee may grant Retirement Awards to any
individual eligible under Section 5 to receive such Retirement Awards.
(b) The Committee shall, in its discretion, determine the
amount, if any, that a Grantee shall pay for shares of Retirement Stock. Awards
shall be granted for no cash consideration or for such minimal cash
consideration as may be required by applicable law. If any such cash
consideration is required, payment shall be made in full by the Grantee before
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the delivery of the shares and in any event no later than 10 days after the
Grant Date for such shares. In the discretion of the Committee and to the extent
permitted by law, payment may also be made in accordance with Section 11.
(c) Each Retirement Award Agreement shall state the
number of shares of Stock and the amount of cash to which it pertains.
(d) The Retirement Award Agreement shall provide for an
aggregate Award of Retirement Stock which the Company will agree to issue and
deliver to the Grantee. Such Retirement Stock Award will be issued and delivered
to the Grantee in equal annual installments commencing with the Grant Date and
continuing over a period of years to be determined by the Committee and set
forth in the Retirement Award Agreement, subject to the requirement that the
Grantee be employed by the Company or any Subsidiary on the last day of the
fiscal year in which Retirement Stock is issued and delivered; provided however,
the Retirement Award Agreement may include a provision which excepts from this
requirement the Grantee's death, disability or other involuntary termination of
employment (excluding for cause) which occurs during the same fiscal year.
Unless otherwise provided in the Agreement, the Retirement Award Agreement will
have an initial term of five (5) years. In its discretion, the Committee may
provide that the term of a Retirement Award Agreement be automatically extended
for additional one-year periods until the Company gives the Grantee notice of
its intention not to extend the Agreement at the end of its then-current term.
(e) The Grantee may not sell, transfer, pledge,
hypothecate, or otherwise transfer any shares of Retirement Stock he or she
receives under the Plan during any period in which he or she is employed by the
Company or any Subsidiary; provided, however, that following the earlier of (i)
termination of the employment of the Grantee with the Company or any Subsidiary
or (ii) the Grantee's attainment of normal retirement age (whether or not
Grantee actually retires), all such restrictions with respect to Retirement
Stock which has been issued and delivered to such Grantee prior to such time
shall terminate. Notwithstanding the above, no Grantee may sell, transfer,
pledge, hypothecate any shares of Retirement Stock he or she receives during the
six months immediately following the later of Grant Date or the date the Plan is
approved by the Company's stockholders unless the Grantee dies before the
expiration of the six month period. Each share of Retirement Stock subject to
such restrictions shall bear an appropriate legend specifying that such share is
non-transferable and subject to the restrictions set forth in the Plan and the
Retirement Award Agreement. When all applicable restrictions have ended, the
Company shall cause certificates for such shares to be issued or reissued
without such legend.
(f) In connection with any Retirement Stock Award, the
Committee may grant cash bonus awards ("Retirement Cash Awards") to Grantees
solely in order to, and in an amount it determines will, cover the federal and
state income tax liability, and any other tax liability, to the Grantee, created
by, or arising in connection with, the receipt of the Retirement Award by the
Grantee. The Retirement Award Agreement shall provide that Retirement Cash
Awards will be calculated annually at the time of the issuance of an annual
installment of Retirement Stock to which the Retirement Cash Award relates by
using the same maximum marginal federal and state income tax percentage which
was used in the prior year and the Current Market Price of the Retirement
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Stock being issued in such year on the date of such issuance (unless the
Committee approves an adjustment to that formula).
(g) The Retirement Award shall be issued and delivered to
the Grantee in accordance with the terms set forth in the Retirement Award
Agreement; provided, however, that the Company shall have no obligation to issue
or deliver any Retirement Award under a Retirement Award Agreement to any
Grantee following (i) the termination of his employment with the Company or its
Subsidiaries or (ii) any breach of the Grantee's obligations under the
Retirement Award Agreement.
(h) Any other provision of the Plan or the Retirement
Award Agreement to the contrary notwithstanding, the Committee may at any time
remove or limit any restrictions, if it determines that conditions, including
but not limited to, changes in the economy, changes in competitive conditions,
changes in laws or government regulations, changes in generally accepted
accounting principles, changes in the Company's accounting policies,
acquisitions or dispositions, or the occurrence of other unusual, unforseen, or
extraordinary events, so warrant.
(i) Notwithstanding the fact that the Company delivers
notice of its intention not to extend the term of a Retirement Award Agreement
at the end of its then current term (if such Agreement provides for such a
notice), the Company shall remain obligated to issue and deliver all scheduled
annual Retirement Awards in accordance with the Retirement Award Agreement.
8. NOTIFICATION UNDER CODE SECTION 83(b)
The Committee may, on the Grant Date or any later date, prohibit a
Grantee from making the election described in this Section 8. If the Committee
has not prohibited such Grantee from making such election, and the Grantee, in
connection with the exercise of any option or the grant of Retirement Stock,
makes the election permitted under Section 83(b) of the Code (i.e., an election
to include in such Grantee's gross income in the year of transfer the amounts
specified in Section 83(b) of the Code), such Grantee shall notify the Company
of such election within 10 days of filing notice of the election with the
Internal Revenue Service, in addition to any filing and notification required
pursuant to regulations issued under the authority of Section 83(b) of the Code.
9. MANDATORY WITHHOLDING OF TAXES
(a) Whenever under the Plan, cash or shares of Stock are
to be delivered upon exercise or payment of an Award or any other event occurs
which subjects the Grantee to income taxes with respect to rights and benefits
hereunder, the Company shall be entitled to require as a condition of delivery
of the Award (i) that the Grantee remit an amount sufficient to satisfy all
federal, state, and local withholding tax requirements related thereto, (ii) the
withholding of such sums from compensation otherwise due to the Grantee or from
any shares of Stock due to the Grantee under the Plan, or (iii) any combination
of the foregoing.
(b) If any disqualifying disposition described in Section
6(c)(v) is made with respect to shares of Stock acquired by exercising an
Incentive Stock Option granted pursuant to the Plan or any election described
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in Section 8 is made, then the person making such disqualifying disposition or
election shall remit to the Company an amount sufficient to satisfy all federal,
state, and local withholding taxes thereby incurred; provided that, in lieu of
or in addition to the foregoing, the Company shall have the right to withhold
such sums from compensation otherwise due to the Grantee or from any shares of
Stock due to the Grantee under the Plan.
10. LOANS
With the approval of the Committee, the Grantee may borrow from the
Company all or any portion of the funds needed to pay the Option Price or to pay
for Retirement Stock on such terms and conditions as the Committee deems
appropriate, provided that (i) the interest rate for any such loan by the
Company shall not be less than the "applicable federal rate" (as defined by Code
Section 1274(d)(1)(A)) in effect on the date of such loan or any other rate as
necessary to avoid the imputation of interest under the Code or other applicable
law, (ii) proceeds of the loan are used solely to pay either the exercise price
of an option or to pay for Retirement Stock granted pursuant to this Plan, and
(iii) the Grantee executes a promissory note and such other documents as the
Committee deems appropriate to evidence the Grantee's indebtedness to the
Company, and pledges the Stock received in exchange for such borrowed funds as
Collateral for such loan.
11. SECURITIES LAW MATTERS
(a) If the Committee deems it necessary to comply with
the Securities Act of 1933, Committee may require a written investment intent
representation by the Grantee and may require that a restrictive legend be
affixed to certificates for shares of Stock.
(b) If, based upon the opinion of counsel for the
Company, the Committee determines that the exercise or non-forfeitability of, or
delivery of benefits pursuant to, any Award would violate any applicable
provision of (i) federal or state securities laws or (ii) the listing
requirements of any national securities exchange on which are listed any of the
Company's equity securities, then the Committee may postpone any such exercise,
non-forfeitability or delivery, as the case may be, but the Company shall use
its best efforts to cause such exercise, non-forfeitability or delivery to
comply with all such provisions at the earliest practicable date.
(c) With respect to Section 16 Grantees, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the 1934 Act. To the extent that any provision of
the Plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.
12. FUNDING; RESERVES
Cash benefits payable under the Plan to any person shall be paid
directly by the Company. The Company shall not be required to fund, or otherwise
segregate assets to be used for payment of, cash benefits under the Plan.
Neither the Plan nor any Award shall create or be construed to create a trust or
separate fund of any kind or a fiduciary relationship between the Company or any
Subsidiary and a Grantee or any other person. To the extent
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that any person acquires a right to receive payments from the Company or any
Subsidiary pursuant to an Award, such right shall be no greater than the right
of an unsecured general creditor of the Company or any Subsidiary. The Board
shall cause the Company to reserve shares of Stock from its authorized but
unissued shares for the purpose of making available shares of Stock to fund the
Awards.
13. NO EMPLOYMENT RIGHTS
Neither the establishment of the Plan, nor the granting of any Award
nor the execution of an Award Agreement shall be construed to (a) give any
Grantee the right to remain employed by the Company or any of its Subsidiaries
or to any benefits not specifically provided by the Plan or an Award Agreement,
or (b) in any manner modify the right of the Company or any of its Subsidiaries
to modify, amend, or terminate any of its employee benefit plans. Further, the
Company or Subsidiary may at any time dismiss a Grantee from employment, free
from any liability, or any claim under the Plan, unless otherwise expressly
provided in the Plan or in any Award Agreement.
14. RIGHTS AS A STOCKHOLDER
A Grantee shall not, by reason of any Award have any right as a
stockholder of the Company with respect to the shares of Stock which may be
deliverable in the future upon exercise of such Award, or otherwise as provided
in an Award Agreement, until Stock has been actually issued and delivered to the
Grantee. Shares of Retirement Stock issued and delivered to a Grantee in
accordance with the Retirement Award Agreement shall confer on the Grantee all
rights of a stockholder of the Company, except as otherwise provided in the Plan
or the specific Retirement Award Agreement.
15. NATURE OF PAYMENTS
Any and all grants, payments of cash, or deliveries of shares of Stock
hereunder shall constitute special incentive payments to the Grantee and shall
not be taken into account in computing the amount of salary or compensation of
the Grantee for the purposes of determining any pension, retirement, death or
other benefits under (a) any pension, retirement, profit-sharing, bonus, life
insurance or other employee benefit plan of the Company or any of its
Subsidiaries or (b) any agreement between the Company or any Subsidiary, on the
one hand, and the Grantee, on the other hand, except as such plan or agreement
shall otherwise expressly provide.
16. NON-UNIFORM DETERMINATIONS
Determinations made by the Committee or the Board under the Plan do not
need to be uniform and may be made by the Committee or the Board selectively
among persons who receive, or are eligible to receive, Awards (whether or not
such persons are similarly situated). Without limiting the generality of the
foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations and to enter into non-uniform and
selective Award Agreements, as to (a) the identity of the Grantees, (b) the
terms and provisions of Awards, and (c) the treatment under Section 13 of
terminations of employment. Notwithstanding the foregoing, the Committee's
interpretation of Plan provisions shall be uniform as to similarly situated
Grantees.
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17. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION
(a) Subject to any required action by the Stockholders,
the Committee shall make such adjustment, as it shall deem equitable, to any or
all of:
(i) the aggregate numbers of shares of Stock
available under Sections 3(a) and 3(b);
(ii) the number of shares of Stock subject to an
option or shares of Retirement Stock covered by an Award;
(iii) the Option Price;
(iv) the Retirement Cash Award;
(v) any other terms or provisions of any
outstanding grants of options or Retirement Awards:
to reflect a stock dividend, stock split, reverse stock split, share
combination, recapitalization, merger, consolidation, acquisition of property or
shares, separation, asset spin-off, reorganization, stock rights offering,
liquidation or similar event, of or by the Company, or, if deemed appropriate,
the Committee may make provisions for a cash payment to the holder of an
outstanding Award; provided, however, if the Company shall be the surviving
corporation in any merger or consolidation, each outstanding option or Award
Agreement shall pertain to and apply to the securities to which a holder of the
number of shares of Stock subject to the option or Award Agreement would have
been entitled; and provided further, upon a dissolution or liquidation of the
Company, or a merger or consolidation in which the Company is not the surviving
corporation, or a change in control of the Company, as defined in subsection (b)
below, each optionee shall have the right to exercise his option in whole or in
part notwithstanding the provisions of Section 6(g) above: (i) immediately prior
to such dissolution or liquidation or merger or consolidation in which the
Company is not the surviving corporation, and thereafter; or (ii) after such
change of control. However, with respect to Awards of Incentive Stock Options no
such adjustment shall be authorized to the extent that the authority to make
such adjustments would cause the Plan to violate Section 422(b)(1) of the Code
or any successor provision thereto and the number of shares subject to any Award
denominated in shares of Stock shall always be a whole number.
(b) "Change of control" of the Company 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 20 percent, 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
13
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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 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.
(c) In the event of a change in the Stock of the Company
as presently constituted, which is limited to a change of all of its authorized
shares with par value into the same number of shares with a different par value
or without par value, the shares resulting from any such change shall be deemed
to be the Stock within the meaning of the Plan.
(d) Except as hereinbefore expressly provided in this
Section 18, the Grantee shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock of
any class or by reason of any change of control, dissolution, liquidation,
merger, or consolidation or spin-off of assets or stock of another corporation,
and any issue of the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Stock subject to Awards.
The grant of an Award pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge,
consolidate, dissolve, liquidate, sell, or transfer all or any part of its
business or assets.
18. AMENDMENT OF THE PLAN
Upon recommendation of the Committee, the Board of Directors of the
Company may insofar as permitted by law, from time to time, with respect to any
shares at the time not subject to options or Award Agreements, suspend or
discontinue the Plan or revise or amend it in any respect whatsoever except
that, without approval of the stockholders, no such revision or amendment shall:
change the number of shares subject to the Plan; change the designation of the
class of employees eligible to receive Awards; decrease the price at which
Options may be granted; remove the administration of the Plan from the Committee
other than as expressly provided by the Plan; extend the period during which
Awards may be granted; or render any member of the Committee eligible to receive
an Awards under the Plan while serving thereon. Furthermore, the Plan may not
without the approval of the stockholders be amended in any manner that will
cause Options issued under it to fail to qualify as Incentive Stock Options.
14
<PAGE>
Except as provided in this Section 19, the Board shall, from time to
time, revise, modify, or amend the Plan, in part or in total, without approval
of the stockholders, as may be necessary to satisfy the requirements of the Code
and any amendments or revisions thereof, such that certain stock options which
are granted under the Plan may qualify as Incentive Stock Options, and to
satisfy all other applicable laws and regulations.
19. TERMINATION OF THE PLAN
The Plan shall terminate on the tenth (10th) anniversary of the
Effective Date or at such earlier time as the Board may determine. Any
termination, whether in whole or in part, shall not affect any Award then
outstanding under the Plan.
20. OTHER COMPENSATION PLANS
Nothing contained in the Plan shall prevent the Company or any
Affiliate from adopting or continuing in effect other or additional compensation
arrangements, and such arrangements may be either generally applicable or
applicable only in specific cases.
21. NO ILLEGAL TRANSACTIONS
The Plan and all Awards granted pursuant to it are subject to all laws
and regulations of any governmental authority which may be applicable thereto;
and notwithstanding any provision of the Plan or any Award, Grantees shall not
be entitled to exercise Awards or receive the benefits thereof and the Company
shall not be obligated to deliver any Stock or pay any benefits to a Grantee if
such exercise, delivery, receipt or payment of benefits would constitute a
violation by the Grantee or the Company of any provision of any such law or
regulation.
22. CONTROLLING LAW
The law of the State of Illinois, except its law with respect to choice
of law and except as to matters relating to corporate law (in which case the
corporate law of the State of Delaware shall control), shall be controlling in
all matters relating to the Plan.
23. TAX LITIGATION
The Company shall have the right, but not the obligation, to contest,
at its expense, any tax ruling or decision, administrative or judicial, on any
issue that is related to the Plan and that the Company believes to be important
to Grantees and to conduct any such contest or any litigation arising therefrom
to a final decision.
24. SEVERABILITY
If all or any part of the Plan is declared by any court or governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall not
serve to invalidate any portion of the Plan not declared to be unlawful or
invalid. Any Section or part of a Section so declared to be unlawful or invalid
shall, if possible, be construed in a manner in which will give effect
15
<PAGE>
to the terms of such Section or part of a Section to the fullest extent possible
while remaining lawful and valid.
25. INDEMNIFICATION
Each person who is or at any time serves as a member of the Board or
the Committee shall be indemnified and held harmless by the Company against and
from: (i) any loss, cost, liability or expense, including attorneys' fees
actually and necessarily incurred in connection with the defense of any action,
suit or proceeding, or in connection with any appeal therein, that may be
imposed upon or reasonably incurred by such person in connection with or
resulting from any claim, action, suit, or proceeding to which such person may
be a party or in which such person may be involved by reason of any action or
failure to act under the Plan; and (ii) any and all amounts paid by such person
in satisfaction of judgment in any such action, suit or proceeding relating to
the Plan. Each person covered by this indemnification provision shall give the
Company an opportunity, at its own expense, to handle and defend the same before
such person undertakes to handle and defend it on such person's own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the By-Laws of the
Company, as a matter of law, or otherwise, or any power that the Company may
have to indemnify such person or hold such person harmless.
26. RELIANCE ON REPORTS
Each member of the Board and the Committee shall be fully justified in
relying or acting in good faith upon any report made by the independent public
accountants of, or counsel for, the Company and upon any other information
furnished in connection with the Plan. In no event shall any person who is or
shall have been a member of the Board or the Committee be liable for any
determination made or other action taken or any failure to act in reliance upon
any such report or information or for any action taken, including the furnishing
of information, or failure to act, if done in good faith.
27. EXPENSES
The Company shall bear all expenses of administering the Plan.
28. TITLES AND HEADINGS
The titles and headings of the sections in the Plan are for convenience
of reference only, and in the event of any conflict, the text of the Plan,
rather than such titles or headings, shall control.
29. APPLICATION OF FUNDS
The proceeds received by the Company from the sale of Stock pursuant to
any Awards will be used for general corporate purposes.
Date Plan was adopted by Board of Directors: June 30, 1993
Date Plan was approved by Stockholders: November 16, 1993
16
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Date Plan was amended by Board of Directors: June 25, 1997
Date Plan was amended by Board of Directors: August 28, 1997
Date amended Plan was approved by Stockholders: November 19, 1997
Date Plan was amended by Board of Directors: August 21, 1998
Date amended Plan was approved by stockholders: November 18, 1998
Date Plan was amended by Board of Directors: September 10, 1999
Date amended Plan was approved by stockholders: November 23, 1999.
Date Plan was amended by Board of Directors: August 16, 2000
Date amended Plan was approved by stockholders:
17
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<TABLE>
<CAPTION>
----------------- ----------------
VOTE BY TELEPHONE VOTE BY INTERNET
----------------- ----------------
<S> <C>
It's fast, convenient, and immediate! It's fast, convenient, and your vote is immediately
Call Toll-Free on a Touch-Tone Phone confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683).
---------------------------------------------- ----------------------------------------------------
FOLLOW THESE FOUR EASY STEPS: FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY 1. READ THE ACCOMPANYING PROXY
STATEMENT/PROSPECTUS AND PROXY CARD. STATEMENT/PROSPECTUS AND PROXY CARD.
2. CALL THE TOLL-FREE NUMBER 2. GO TO THE WEBSITE
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/quix
3. ENTER YOUR 14-DIGIT VOTER CONTROL NUMBER 3. ENTER YOUR 14-DIGIT VOTER CONTROL NUMBER
LOCATED ON YOUR PROXY CARD ABOVE YOUR NAME. LOCATED ON YOUR PROXY CARD ABOVE YOUR NAME.
4. FOLLOW THE RECORDED INSTRUCTIONS. 4. FOLLOW THE INSTRUCTIONS PROVIDED.
---------------------------------------------- ----------------------------------------------------
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/quix anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
----- PLEASE MARK
X VOTES AS IN
----- THIS EXAMPLE.
1. Election of Directors FOR AGAINST ABSTAIN
NOMINEES: (01) James H. DeVries and (02) Lawrence C. McQuade 2. Approving the amendment of the / / / / / /
FOR WITHHELD 1993 Long-Term Stock Ownership
/ / / / Incentive Plan.
FOR AGAINST ABSTAIN
/ / ______________________________________ 3. Approving the selection of / / / / / /
For both nominees except as noted above PricewaterhouseCoopers LLP as
independent auditors of the
Company.
4. Transaction of such other business as may properly come
before the meeting and any adjournments thereof.
MARK HERE FOR MARK HERE IF YOU
ADDRESS CHANGE / / PLAN TO ATTEND / /
AND NOTE AT LEFT THE MEETING
Please date and sign as name is imprinted hereon, including
designation as executor, trustee, etc. if applicable. A
corporation must sign in its name by the president or other
authorized officers. All co-owners must sign.
Signature: ___________________________ Date: __________ Signature: __________________________________ Date: __________
</TABLE>
<PAGE>
PROXY
QUIXOTE CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Philip E. Rollhaus, Jr. and Joan R. Riley
as proxies with full power of substitution and hereby directs them to vote
the stock of the undersigned at the Annual Meeting of Stockholders of Quixote
Corporation to be held in the Assembly Room at The Northern Trust Company, 50
South LaSalle Street, Chicago, Illinois, Wednesday, November 15, 2000, at
10:00 a.m. Central Standard Time, and at any adjournments thereof, as
indicated on the proposals set forth on the reverse side of this Proxy.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED, OR IF NO
DIRECTION IS INDICATED, IT WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS AND
"FOR" PROPOSALS 2 AND 3. Discretionary authority is conferred by the Proxy to
vote on all matters, other than those specified on the reverse side, which
may properly come before the meeting or any adjournment thereof.
PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
--------------- ---------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
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