Prepared by MERRILL CORPORATION

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A8VWN7Qoa2P6JidDjmU4KgyYp+OZdxz47T859XqQ0gStBfOQvYALAQuGSBKmRg3a 6xKfRTsnXJeAITSrC2wzYw== 0000912057-02-004955.txt : 20020414 0000912057-02-004955.hdr.sgml : 20020414 ACCESSION NUMBER: 0000912057-02-004955 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUIXOTE CORP CENTRAL INDEX KEY: 0000032870 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 362675371 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08123 FILM NUMBER: 02534643 BUSINESS ADDRESS: STREET 1: ONE E WACKER DR STREET 2: STE 3000 CITY: CHICAGO STATE: IL ZIP: 60601 BUSINESS PHONE: 3124676755 MAIL ADDRESS: STREET 1: ONE EAST WACKER DRIVE CITY: CHICAGO STATE: IL ZIP: 60601 FORMER COMPANY: FORMER CONFORMED NAME: ENERGY ABSORPTION SYSTEMS INC DATE OF NAME CHANGE: 19800815 10-Q 1 a2069513z10-q.htm 10-Q Prepared by MERRILL CORPORATION
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

/x/	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the period ended December 31, 2001

/ /	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from to

Commission file number 0-7903

I.R.S. Employer Identification Number 36-2675371

QUIXOTE CORPORATION
(a Delaware Corporation)
One East Wacker Drive
Chicago, Illinois 60601
Telephone: (312) 467-6755

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /x/ No / /

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 7,704,584 shares of the Company's Common Stock ($.01-2/3 par value) were outstanding as of December 31, 2001.

PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

QUIXOTE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)

		Six Months Ended December 31,
		2001			2000
Net sales		$	40,772,000		$	41,600,000
Cost of sales			24,825,000			23,170,000

Gross profit			15,947,000			18,430,000

Operating expenses:
	Selling & administrative		12,567,000			11,489,000
	Research & development		894,000			598,000

			13,461,000			12,087,000
Operating profit			2,486,000			6,343,000

Other income (expense):
	Interest income		25,000			51,000
	Interest expense		(709,000	)		(664,000	)
	Other		830,000

			146,000			(613,000	)

Earnings before income taxes			2,632,000			5,730,000
Provision for income taxes			948,000			2,177,000

Earnings from continuing operations			1,684,000			3,553,000
Earnings from discontinued operations, net of income taxes			192,000

Net earnings		$	1,876,000		$	3,553,000

Per share data - basic:
	Earnings from continuing operations	$	.22		$	.48
	Net earnings	$	.25		$	.48
	Average common shares outstanding		7,604,330			7,331,837
Per share data - diluted:
	Earnings from continuing operations	$	.21		$	.46
	Net earnings	$	.23		$	.46
	Average diluted common shares outstanding.		8,163,268			7,728,904

See Notes to Consolidated Financial Statements.

QUIXOTE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)

		Three Months Ended December 31,
		2001			2000
Net sales		$	19,958,000		$	20,279,000
Cost of sales			11,875,000			11,914,000

Gross profit			8,083,000			8,365,000
Operating expenses:
	Selling & administrative		6,704,000			5,671,000
	Research & development		482,000			273,000

			7,186,000			5,944,000
Operating profit			897,000			2,421,000

Other income (expense):
	Interest income		18,000			41,000
	Interest expense		(342,000	)		(335,000	)
	Other		81,000

			(243,000	)		(294,000	)

Earnings before income taxes			654,000			2,127,000
Provision for income taxes			236,000			808,000

Net earnings		$	418,000		$	1,319,000

Per share data - basic:
	Net earnings	$	.05		$	.18
	Average common shares outstanding		7,682,991			7,304,769
Per share data - diluted:
	Net earnings	$	.05		$	.17
	Average diluted common shares outstanding		8,133,230			7,752,475

See Notes to Consolidated Financial Statements.

QUIXOTE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets

			December 31, 2001			June 30, 2001
			(Unaudited)
Assets
Current assets:
	Cash and cash equivalents		$	3,869,000		$	4,118,000
	Accounts receivable, net of allowances for doubtful accounts of $1,270,000 at December 31 and $777,000 at June 30			18,343,000			21,207,000
	Inventories:
		Raw materials		2,067,000			3,279,000
		Work in process		2,014,000			2,230,000
		Finished goods		10,447,000			11,362,000

				14,528,000			16,871,000

	Deferred income tax assets			2,759,000			2,099,000
	Other current assets			1,374,000			283,000

Total current assets				40,873,000			44,578,000

Property, plant and equipment, at cost				36,578,000			32,093,000
Less accumulated depreciation				(14,872,000	)		(14,750,000	)

				21,706,000			17,343,000

Goodwill				29,388,000			24,889,000
Intangible assets, net				4,482,000			453,000
Other assets				825,000			766,000

			$	97,274,000		$	88,029,000

See Notes to Consolidated Financial Statements.

QUIXOTE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets

		December 31, 2001			June 30, 2001
		(Unaudited)
Liabilities and Shareholders' Equity
Current liabilities:
	Current portion of long-term debt	$	1,246,000		$	1,179,000
	Accounts payable		1,822,000			3,622,000
	Dividends payable		1,228,000			1,123,000
	Accrued expenses		5,326,000			4,820,000
	Income tax payable		1,497,000			1,869,000
	Liabilities of discontinued operations		912,000			929,000

Total current liabilities			12,031,000			13,542,000

Long-term debt, net of current portion			30,206,000			21,526,000
Deferred income tax liabilities			1,223,000			1,874,000
Liabilities of discontinued operations and other			569,000			481,000

Shareholders' equity:
	Preferred stock, no par value; authorized 100,000 shares; none issued
	Common stock, par value $.01-2/3; authorized 15,000,000 shares; issued 9,672,547 shares at December 31 and 9,485,585 shares at June 30		161,000			158,000
	Capital in excess of par value of common stock		37,715,000			35,738,000
	Retained earnings		36,840,000			36,192,000
	Currency translation adjustment		(379,000	)		(390,000	)
	Treasury stock, at cost, 1,967,963 shares at December 31 and June 30		(21,092,000	)		(21,092,000	)

Total shareholders' equity			53,245,000			50,606,000

		$	97,274,000		$	88,029,000

See Notes to Consolidated Financial Statements.

QUIXOTE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)

				Six Months Ended December 31,
				2001			2000
Operating activities:
	Earnings from continuing operations			$	1,684,000		$	3,553,000
	Discontinued operations:
		Gain on disposal, net of income taxes			192,000

	Net earnings				1,876,000			3,553,000
	Adjustments to reconcile net earnings to net cash provided by operating activities of continuing operations:
		Discontinued operations			(192,000	)
		Gain on sale of assets			(830,000	)
		Depreciation			1,141,000			969,000
		Amortization			165,000			860,000
		Provisions for losses on accounts receivable			75,000			7,000
		Equity loss on investment in TMT joint venture						604,000
		Changes in operating assets and liabilities:
			Accounts receivable		4,923,000			3,578,000
			Refundable income taxes					(441,000	)
			Inventories and other assets		3,424,000			(3,711,000	)
			Accounts payable and accrued expenses		(4,790,000	)		(1,301,000	)
			Income taxes payable		(46,000	)		(727,000	)

Net cash provided by operating activities of continuing operations					5,746,000			3,391,000
Net cash provided by (used in) discontinued operations					81,000			(217,000	)

Net cash provided by operating activities					5,827,000			3,174,000

Investing activities:
	Capital expenditures				(4,752,000	)		(949,000	)
	Cash paid for acquired businesses, net of cash acquired				(11,300,000	)
	Proceeds from sale of assets				581,000
	Patent and license expenditures				(154,000	)		(269,000	)
	Investment in TMT joint venture							(615,000	)

Net cash used in investing activities					(15,625,000	)		(1,833,000	)

Financing activities:
	Borrowing on revolving line of credit				21,600,000			12,300,000
	Payments on revolving line of credit				(12,600,000	)		(10,300,000	)
	Payments on notes payable				(319,000	)		(314,000	)
	Payment of semi-annual cash dividend				(1,123,000	)		(1,117,000	)
	Proceeds from exercise of common stock options				1,980,000			566,000
	Repurchase of common stock for treasury							(2,660,000	)

Net cash provided by (used in) financing activities					9,538,000			(1,525,000	)

Effect of exchange rate changes on cash					11,000

Decrease in cash and cash equivalents					(249,000	)		(184,000	)
Cash and cash equivalents at beginning of period					4,118,000			1,524,000

Cash and cash equivalents at end of period				$	3,869,000		$	1,340,000

See Notes to Consolidated Financial Statements.

QUIXOTE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)

1. The accompanying unaudited consolidated financial statements present information in accordance with generally accepted accounting principles for interim financial information and applicable rules of Regulation S-X. Accordingly, they do not include all information or footnotes required by generally accepted accounting principles for complete financial statements. The June 30, 2001 consolidated balance sheet as presented was derived from audited financial statements. The interim financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended June 30, 2001. Management believes the financial statements include all normal recurring adjustments necessary for a fair presentation of the results for the interim periods presented.

2. The provision for income taxes is based upon the estimated effective income tax rate for the year.

3. Operating results for the first six months of fiscal 2002 are not necessarily indicative of the performance for the entire year. The Company's business is historically seasonal with a higher level of sales in the Company's fourth fiscal quarter.

4. The computation of basic and diluted earnings per share is as follows:

		Six Months Ended December 31,				Three Months Ended December 31,
		2001		2000		2001		2000
Numerator:
Earnings from continuing operations available to common shareholders		$	1,684,000	$	3,553,000	$	418,000	$	1,319,000

Denominator:
Weighted average shares outstanding-basic			7,604,330		7,331,837		7,682,991		7,304,769
Add: Effect of dilutive stock options			558,938		397,067		450,239		447,706

Weighted average shares outstanding-diluted			8,163,268		7,728,904		8,133,230		7,752,475

Earnings per share of common stock:
	Basic	$	.22	$	.48	$	.05	$	.18
	Diluted	$	.21	$	.46	$	.05	$	.17

There were outstanding options to purchase common stock at prices that exceeded the average market price for the income statement period. These options have been excluded from the computation of diluted earnings per share for both the six-month and three-month periods ended December 31, 2001 and 2000 and are as follows:

		2001			2000
Average exercise price per share		$	24.84		$	21.00
Number of shares			189,300			60,000

5. The assets and liabilities of substantially all subsidiaries outside the United States are translated to the United States dollar at period-end rates of exchange, and earnings and cash flow statements are translated at weighted-average rates of exchange. Translation adjustments are accumulated with other comprehensive earnings (losses) as a separate component of shareholders' equity. The Company has no other components of other comprehensive earnings and had no comprehensive income items prior to fiscal 2001. The Company's total comprehensive earnings consists of the following:

	Six Months Ended December 31, 2001		Three Months Ended December 31, 2001
Net earnings	$	1,876,000	$	418,000
Currency translation adjustment		11,000		41,000

Total comprehensive earnings	$	1,887,000	$	459,000

6. The Company's operations are classified as two principal reportable segments within the highway and transportation safety industry. The segment financial data for last year presented herein has been restated to present the Company's two reportable segments: the manufacture and sale of highway and transportation safety products which Protect and Direct, and the manufacture and sale of products which Inform and are often referred to as Intelligent Transportation Systems (ITS) products.

The following table presents financial information about reported segments for the six-month and three-month periods ended December 31, 2001 and 2000 along with the items necessary to reconcile the segment information to the totals reported in the consolidated financial statements.

	Protect and Direct		Inform			Unallocated Corporate			Total
2002
Six Months
Net sales from external customers	$	30,142,000	$	10,630,000					$	40,772,000
Operating profit (loss)		4,585,000		598,000		$	(2,697,000	)		2,486,000
Three Months
Net sales from external customers	$	14,665,000	$	5,293,000					$	19,958,000
Operating profit (loss)		2,499,000		(108,000	)	$	(1,494,000	)		897,000
2001
Six Months
Net sales from external customers	$	35,299,000	$	6,301,000					$	41,600,000
Operating profit (loss)		8,132,000		1,521,000		$	(3,310,000	)		6,343,000
Three Months
Net sales from external customers	$	17,206,000	$	3,073,000					$	20,279,000
Operating profit (loss)		3,642,000		534,000		$	(1,755,000	)		2,421,000

Identifiable assets of the Inform segment increased to $40,026,000 as of December 31, 2001 from $26,061,000 as of June 30, 2001 primarily due to the acquisition of Surface Systems, Inc. (see footnote 8).

7. In July 2001, the Company sold certain assets of its non-highway plastic-molded product line for $500,000 in cash and $700,000 in a three-year promissory note with interest imputed at 8%. In addition, the Company is to receive $250,000 during fiscal year 2002 for consulting services related to the sale. Other income of $749,000 was recorded in the first quarter of fiscal 2002 from the gain on the sale.

During the second quarter of fiscal 2002, the Company recorded other income of $81,000 representing the gain on the sale of one of the Company's buildings and related property no longer needed for inventory storage.

8. Effective August 31, 2001, the Company acquired all of the outstanding stock of Surface Systems, Inc. (SSI). The acquisition has been accounted for under the purchase method, and the operating results have been included in the consolidated results since the date of acquisition. SSI has been included in the Company's Inform segment.

SSI is a manufacturer and seller of patented pavement sensing equipment and specialized weather forecasting stations and also provides weather forecasting services. SSI is a domestic leader in manufacturing and developing road and runway weather information systems. The Company believes that SSI will play an important part in the Inform segment by providing weather information to improve safety on the roads. SSI had revenues in its fiscal year ended June 30, 2001 of approximately $9,000,000. The Company paid a purchase price of approximately $11,300,000 in cash, net of cash acquired. No SSI bank debt was assumed. The Company's source of funds for this acquisition was from its existing bank credit facility.

The following unaudited pro forma summary presents the Company's consolidated results of operations for each of the six-month and three-month periods ended December 31 as if the acquisition had occurred at the beginning of fiscal year 2001.

	Six Months Ended December 31				Three Months Ended December 31
	2001		2000		2001		2000
Net sales	$	41,559,000	$	45,953,000	$	19,958,000	$	22,695,000
Net earnings		818,000		2,499,000		418,000		925,000
Net earnings per diluted share		.10		.32		.05		.12

The unaudited consolidated pro forma information is not necessarily indicative of the combined results that would have occurred had the acquisition occurred on that date, nor is it indicative of the results that may occur in the future.

9. Effective July 1, 2001, the Company adopted Statement of Financial Accounting Standard (FAS) No. 141, Business Combinations, and FAS No. 142, Goodwill and Other Intangible Assets. FAS No. 141 requires, among other things, that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. FAS No. 142 addresses the accounting for goodwill and other intangible assets subsequent to their acquisition. FAS No. 142 requires, among other things, that goodwill and other indefinite-lived intangible assets no longer be amortized and that such assets be tested for impairment at least annually.

Intangible assets consist of the following:

		December 31, 2001				June 30, 2001
		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
	Patents and licenses	$	1,616,000	$	1,089,000	$	1,462,000	$	1,009,000
	Technology and installed base		2,610,000		65,000
	Customer relationships		200,000		13,000
	Other		130,000		7,000

			4,556,000		1,174,000		1,462,000		1,009,000
Indefinite-lived intangible assets:
	Trade names		1,100,000

Total		$	5,656,000	$	1,174,000	$	1,462,000	$	1,009,000

Amortization expense was $165,000 and $860,000 for the six months ended December 31, 2001 and 2000, respectively. Amortization expense was $103,000 and $431,000 for the three months ended December 31, 2001 and 2000, respectively. The estimated amortization expense for this fiscal year ended June 30, 2002 and for the four fiscal years subsequent to 2002 is as follows: $339,000, $343,000, $307,000, $292,000 and $271,000.

The carrying amount of goodwill consists of the following:

December 31, 2001				June 30, 2001
Protect and Direct Segment		Inform Segment		Protect and Direct Segment		Inform Segment
$	8,139,000	$	21,249,000	$	8,139,000	$	16,750,000

During the six-month period ended December 31, 2001, goodwill in the amount of $4,549,000 was acquired in connection with the acquisition of SSI, and is included in the Inform segment. The initial goodwill impairment test has been completed, and as a result no impairment losses were recorded.

The reconciliation of net income, basic earnings per share and diluted earnings per share as reported, to that adjusted on a pro forma basis to exclude goodwill amortization, including related tax effects, as a result of adopting FAS No. 142 is as follows:

		Six Months Ended December 31				Three Months Ended December 31
		2001		2000		2001		2000
Reported net income		$	1,876,000	$	3,553,000	$	418,000	$	1,319,000
Add: Goodwill amortization					452,000				226,000

Adjusted net income		$	1,876,000	$	4,005,000	$	418,000	$	1,545,000

Basic earnings per share:
	Net income as reported	$	.25	$	.48	$	.05	$	.18
	Add: Goodwill amortization				.06				.03

		$	.25	$	.54	$	.05	$	.21

Diluted earnings per share:
	Net income as reported	$	.23	$	.46	$	.05	$	.17
	Add: Goodwill amortization				.06				.03

		$	.23	$	.52	$	.05	$	.20

PART I—FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Current Year-to-date Versus Prior Year-to-date

The Company's sales for the first six months of fiscal 2002 decreased 2% to $40,772,000 compared to $41,600,000 for the first six months last year primarily due to soft orders and shipments during the first six months of fiscal 2002. The Company believes the decline in sales is due to the delay of highway safety construction spending by many states as a result of their revenue collection shortfalls and budget deficits. Sales for the Protect and Direct segment decreased 15% for the first six months of fiscal 2002 to $30,142,000 from $35,299,000 as a result of fewer sales across most of its product lines, offset somewhat by increased sales of Triton Barrier®, FreezeFree™ anti-icing systems and parts. Sales of the water-filled Triton Barrier increased 72% to $987,000 as interest grew in the product's functionality as a portable security barrier. The Company continues to see interest in one of its newest products, the FreezeFree™ anti-icing system, with $682,000 in sales for the first six months of fiscal 2002. Sales for the Inform segment increased 69% for the first six months of fiscal 2002 to $10,630,000 from $6,301,000 as a result of the acquisitions of National Signal, Inc. (NSI) in January 2001 and Surface Systems, Inc. (SSI) in August 2001. These two acquisitions added $6,175,000 in sales for the current six months of fiscal 2002. Organic sales for this segment decreased 29% for the first six months as a result of decreased sales of advanced sensing products and highway advisory radios principally associated with the more discretionary demand for these products.

The gross profit margin in the first six months of the current year decreased to 39.1% from 44.3% last year due principally to volume inefficiencies associated with the lower level of organic sales for both the Protect and Direct and the Inform segments. The gross profit margin for the Protect and Direct segment declined to a lesser extent as a result of a modest change in product sales mix. Contributing to the decline in gross profit margin for the Inform segment was the impact of the acquisition of NSI as its gross profit margin is lower than the segment's historical gross profit margin. This effect was offset somewhat by the acquisition of SSI with higher gross profit margins.

Selling and administrative expenses in the first six months of fiscal 2002 increased 9% to $12,567,000 compared to $11,489,000 in the first six months of fiscal 2001. The increase in selling and administrative expenses was primarily due to the acquisitions of NSI and SSI which added $2,969,000 in selling and administrative expenses in the first six months of fiscal 2002. Organic selling and administrative expenses decreased $1,891,000 as a result of the lower level of sales and cost containment initiatives.

Research and development expenses in the first six months of the current year increased 50% to $894,000 compared to $598,000 in the first six months last year. During the first six months of fiscal 2002, the Company worked on extending its crash cushion product line with the development of the QuadGuard® HS, an advanced crash cushion with the ability to withstand impacts up to 70 miles per hour. The Company also worked on developing new products including wider models of the REACT® 350 crash cushion and on advanced pavement sensors and software to provide an integrated system solution for collecting and providing traffic information.

Operating profit decreased to $2,486,000 in the first six months of the current year from $6,343,000 in the first six months of the prior year.

Interest expense in the first six months of the current year was $709,000 compared to $664,000 in the first six months last year. The increase in interest expense was due to the higher level of outstanding debt during the current six-month period primarily related to the acquisition of SSI, offset partially by lower average interest rates. Other income was $830,000 in the first six months of fiscal

2002 principally as a result of the gain on the sale of the Company's non-highway plastic-molded product line.

The Company's effective income tax rate for the first six months of fiscal 2002 was 36% compared to an effective income tax rate of 38% for the same period last year. The decrease in the effective rate was due in part to the expected utilization of certain tax planning strategies. The Company believes its effective income tax rate for fiscal year 2002 will be approximately 36%.

Earnings from continuing operations for the current six-month period were $1,684,000 compared to $3,553,000 for the first six months of the prior year. Net earnings were $1,876,000, or $.23 per diluted share, for the current six-month period compared to $3,553,000, or $.46 per diluted share, for the six months of the prior year. Net earnings for the first six months of fiscal 2002 included a gain from discontinued operations of $192,000, net of income taxes, due to the favorable settlement of a lawsuit.

Current Year Quarter Versus Prior Year Quarter

The Company's sales for the second quarter of fiscal 2002 decreased 2% to $19,958,000 from $20,279,000 in the second quarter last year due to soft orders and shipments which we believe is due to a slowdown in highway safety construction spending as states face revenue shortfalls resulting in budgetary deficits. Sales for the Protect and Direct segment decreased 15% for the current second quarter to $14,665,000 from $17,206,000 as a result of lower sales in the permanent crash cushion line, which were partially offset by increased sales of truck-mounted attenuators, barrels, delineators, Triton Barrier® and FreezeFree™ anti-icing systems. Sales of the water-filled Triton Barrier increased 23% to $407,000 due to demand for its security characteristics. Sales of the new FreezeFree™ anti-icing system were $395,000 for the second quarter of fiscal 2002. Sales for the Inform segment increased 72% for the current second quarter to $5,293,000 from $3,073,000 as a result of the acquisitions of NSI in January 2001 and SSI in August 2001. These two acquisitions added $3,763,000 in sales for the current second quarter. Organic sales for this segment decreased 50% for the second quarter as a result of decreased sales of advanced sensing products and highway advisory radios principally associated with the more discretionary demand for these products.

The gross profit margin in the second quarter of the current year decreased to 40.5% from 41.2% last year due principally to volume inefficiencies associated with the lower level of organic sales for both the Protect and Direct and the Inform segments. This decrease was partially offset by lower manufacturing costs in the current second quarter as a result of workforce reductions. The gross profit margin for the Protect and Direct segment declined to a lesser extent as a result of a modest change in product sales mix. Also contributing to the decline in gross profit margin for the Inform segment was the lower gross margins at NSI, offset somewhat by higher gross margins at SSI.

Selling and administrative expenses in the second quarter of the current year increased 18% to $6,704,000 in the second quarter of fiscal 2002 compared with $5,671,000 in the second quarter of fiscal 2001. The increase in selling and administrative expenses was primarily due to the inclusion of NSI and SSI which added $2,186,000 in selling and administrative expenses in the current second quarter. Organic selling and administrative expenses decreased $1,153,000 as a result of the lower level of sales and cost containment initiatives.

Research and development expenses in the second quarter of the current year increased 77% to $482,000 from $273,000 in the second quarter last year. During the current quarter, the Company continued with its work on new products including enhancements to its existing line of crash cushions and the development of advanced pavement sensors and software to provide an integrated system solution for collecting and providing traffic information.

Operating profit decreased to $897,000 in the second quarter of the current year from $2,421,000 in the second quarter of the prior year.

Interest expense in the second quarter of the current year was $342,000 compared to $335,000 in the second quarter last year. The increase in interest expense was due to the higher level of outstanding debt during the current quarter primarily related to the acquisition of SSI, offset partially by lower average interest rates. Other income was $81,000 in the second quarter of fiscal 2002 representing the gain on the sale of a building and related property no longer needed for inventory storage.

The Company's effective income tax rate for the current second quarter was 36% compared to an effective income tax rate of 38% in the same quarter last year. The decrease in the effective rate was due in part to the expected utilization of certain tax planning strategies.

Net earnings were $418,000, or $.05 per diluted share, for the current second quarter compared to $1,319,000, or $.17 per diluted share, for the second quarter of last year.

Liquidity and Capital Resources

The Company had cash and cash equivalents of $3,869,000 and access to additional funds of $13,000,000 under its bank arrangements as of December 31, 2001. Cash provided from operating activities was a source of cash for the Company for the first six months of fiscal 2002 providing $5,827,000.

Investing activities used cash of $15,625,000 during the first six months of fiscal 2002 including $4,752,000 for capital expenditures and $11,300,000 for the acquisition of SSI in August 2001. Capital expenditures during the current six-month period related principally to the expansion of the Company's primary manufacturing facility. Offsetting these expenditures somewhat, the Company received $581,000 in cash proceeds from the sale of the Company's non-highway plastic-molded product line and the sale of a building and related property no longer used for inventory storage.

Financing activities provided cash of $9,538,000 during the first six months of the current year. The Company borrowed a net $9,000,000 against its outstanding revolving credit facility primarily as a result of borrowing for the acquisition of SSI. The payment of the Company's semi-annual cash dividend used cash of $1,123,000. In addition, the Company used cash of $319,000 for the payment of notes payable due in connection with the acquisitions of Roadway Safety Service, Inc. and Nu-Metrics, Inc. The Company also received cash of $1,980,000 for the exercise of common stock options.

For fiscal 2002, the Company anticipates needing approximately $7,000,000 in cash for capital expenditures, which includes $4,500,000 in connection with the expansion of the Company's primary manufacturing facility in Pell City, Alabama doubling its size to 300,000 square feet and $1,000,000 to upgrade the Company's information technology systems. The Company may also need additional cash as it considers acquiring businesses that complement its existing operations. Also, the Company will require additional investments in working capital to maintain growth. The Company may also need additional funds to repurchase its own common stock from time to time. These expenditures will be financed either through the Company's invested cash, cash generated from its operations or from borrowings available under the Company's revolving credit facility. The Company believes its existing cash, cash generated from operations and funds available under its existing credit facility are sufficient for all planned operating and capital requirements.

Forward Looking Statements

Various statements made within the Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Quarterly Report on Form 10-Q constitute "forward looking statements" for purposes of the Securities and Exchange Commission's "safe harbor" provisions under the Private Securities Litigation Reform Act of 1995 and Rule 3b-6 under the Securities Exchange Act of 1934, as amended. Investors are cautioned that all forward looking statements involve risks and uncertainties, including those detailed in the Company's filings with the Securities and Exchange Commission. There can be no assurance that actual results will not differ from the Company's expectations. Factors which could cause materially different results include, among others, uncertainties related to the introduction of the Company's products and services; the successful completion and integration of acquisitions; continued federal and state funding for highways; an unfavorable change in product sales mix; seasonality along with the extent and timing of the award of large contracts; weather conditions; acts of war and terrorist activities; the possible impairment of intangible assets; and competitive and general economic conditions.

PART II—OTHER INFORMATION

There is no information required to be reported under any items except as indicated below:

Item 4. Submission of Matters to a Vote of Security Holders

The Company's Annual Meeting of Shareholders was held on November 14, 2001. The matters voted on at the Annual Meeting were as follows:

(i) The election of William G. Fowler, Robert D. van Roijen, Jr. and Daniel P. Gorey to serve as directors.

(ii) The approval of the Company's 2001 Employee Stock Incentive Plan.

(iii) The approval of the Company's 2001 Non-Employee Directors Stock Option Plan.

(iv) The approval of PricewaterhouseCoopers LLP as independent auditors for the Company.

Messrs. Fowlers, van Roijen amd Gorey were elected and all other matters were approved as a result of the following shareholder votes:

		For	Against	Abstain or Withheld	No Vote
Election of Directors
	William G. Fowler	6,469,174		405,716
	Robert van Roijen, Jr.	6,475,027		399,863
	Daniel P. Gorey	6,471,732		403,158
Approval of 2001 Employee Stock Incentive Plan		5,267,263	703,901	30,997	845,729
Approval of 2001 Non-employee Directors Stock Option Plan		5,102,791	888,007	38,363	845,729
Approval of PricewaterhouseCoopers LLP		6,807,867	47,383	19,640

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

4(a) Amendment to Rights Agreement dated as of October 15, 2001 between Quixote Corporation and BankBoston, N.A.

10(a) Fifth Amendment to Amended and Restated Loan Agreement and Amended and Restated Revolving Credit Notes dated as of December 31, 2001 by and among Quixote Corporation and certain subsidiaries and The Northern Trust Company, LaSalle Bank National Association and American National Bank and Trust Company of Chicago.

*(b) 2001 Non-Employee Directors Stock Option Plan.

* Management contract or compensatory plan or agreement.

(b) Reports on Form 8-K.

None

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q for the quarter ended December 31, 2001 to be signed on its behalf by the undersigned thereunto duly authorized.

				QUIXOTE CORPORATION
DATED: February 11, 2002				/s/ DANIEL P. GOREY Daniel P. Gorey Chief Financial Officer, Vice President and Treasurer (Chief Financial & Accounting Officer)

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PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
QUIXOTE CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)
QUIXOTE CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)
QUIXOTE CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets
QUIXOTE CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets
QUIXOTE CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited)
QUIXOTE CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited)
PART I—FINANCIAL INFORMATION
PART II—OTHER INFORMATION
SIGNATURE
EX-4.(A) 3 a2069513zex-4_a.txt RIGHTS AGREEMENT AMENDMENT EXHIBIT 4(a) AMENDMENT TO RIGHTS AGREEMENT 1. GENERAL BACKGROUND. In accordance with Section 21 of the Rights Agreement between BankBoston, N.A., as Rights Agent (now known as "Fleet National Bank" (the "Rights Agent") and Quixote Corporation (the "Company") dated July 24, 1998, (the "Agreement"), the Rights Agent and the Company desire to amend the Agreement to appoint EquiServe Trust Company, N.A. 2. EFFECTIVENESS. This Amendment shall be effective as of October 15, 2001 (the "Amendment") and all defined terms and definitions in the Agreement shall be the same in the Amendment except as specifically revised by the Amendment. 3. REVISION. The section in the Agreement entitled "Change of Rights Agent" is hereby deleted in its entirety and replaced with the following: CHANGE OF RIGHTS AGENT. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon 30 days' notice in writing mailed to the Company and to each transfer agent of the Common Stock or Preferred Stock, by registered or certified mail and to the holders of the Right Certificates by first-class mail. The Company may remove the Rights Agent or any successor Rights Agent upon 30 days' notice in writing mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock or Preferred Stock, by registered or certified mail, and to the holders of the Right Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of 30 days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Rights Certificate (who shall, with such notice, submit such holder's Rights Certificate for inspection by the Company), then any registered holder of any Rights Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be a corporation or trust company organized and doing business under the laws of the United States, in good standing, which is authorized under such laws to exercise corporate trust or stock transfer powers and is subject to supervision or examination by federal or state authority and which has individually or combined with an affiliate at the time of its appointment as Rights Agent a combined capital and surplus of at least $100 million dollars. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock or Preferred Stock, and mail a notice thereof in writing to the registered holders of the Right Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. 4. Except as amended hereby, the Agreement and all schedules or exhibits thereto shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed in their names and on their behalf by and through their duly authorized officers, as of this 15th day of October, 2001. QUIXOTE CORPORATION BANKBOSTON, N.A. /s/ Joan R. Riley /s/ Katherine Anderson - ----------------- ---------------------- By: Joan R. Riley By: Katherine Anderson Title: Vice President & General Counsel Title: Managing Director EX-10.(A) 4 a2069513zex-10_a.txt (800) 688 - 1933 EXHIBIT 10(a) EXECUTION COPY FIFTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT THIS FIFTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (this "FIFTH AMENDMENT"), dated as of December 31, 2001, is among QUIXOTE CORPORATION, a Delaware corporation ("QUIXOTE"), ENERGY ABSORPTION SYSTEMS, INC., a Delaware corporation (f/k/a Quixote Laser Corporation and successor by merger to Energy Absorption Systems, Inc., a Delaware corporation and Roadway Safety Service, Inc., a Delaware corporation) ("EAS"), QUIXOTE TRANSPORTATION SAFETY, INC., a Delaware corporation (f/k/a TranSafe Corporation) ("TRANSPORTATION"), SPIN-CAST PLASTICS, INC., an Indiana corporation ("SPIN-CAST"), E-TECH TESTING SERVICES, INC., a Delaware corporation ("E-TECH"), SAFE-HIT CORPORATION, a Nevada corporation ("SAFE-HIT"), HIGHWAY INFORMATION SYSTEMS, INC., a Delaware corporation ("HIS"), NU-METRICS, INC., a Pennsylvania corporation ("NU-METRICS"), QUIXOTE TRANSPORTATION SAFETY (ASIA PACIFIC) PTY LIMITED (f/k/a Energy Absorption Systems PTY Limited), an Australian corporation ("QTS AUSTRALIA"), QUIXOTE TRANSPORTATION SAFETY (EUROPE), INC., a Delaware corporation ("QTS EUROPE"), NATIONAL SIGNAL, INC., a California corporation ("NATIONAL SIGNAL"), ENERGY ABSORPTION SYSTEMS (EUROPE), INC., a Delaware corporation ("EAS EUROPE"), TRANSAFE CORPORATION, a Delaware corporation ("TRANSAFE"), SURFACE SYSTEMS, INC., a Missouri corporation ("SSI"), certain lenders signatory hereto ("LENDERS"), and THE NORTHERN TRUST COMPANY, an Illinois banking corporation, as agent for the Lenders hereunder ("AGENT"). Quixote, EAS, Transportation, Spin-Cast, E-Tech, Safe-Hit, HIS, Nu-Metrics, QTS Australia, QTS Europe, National Signal, EAS Europe, TranSafe and SSI are individually and collectively referred to herein as "BORROWER." This Fifth Amendment shall amend that certain Amended and Restated Loan Agreement dated as of June 30, 1997 among the Borrower, the Lenders and the Agent, as previously amended by that certain First Amendment to Revolving Credit Agreement dated as of May 31, 1998, that certain Second Amendment and Waiver to Amended and Restated Loan Agreement dated as of March 15, 1999, that certain Third Amendment and Waiver to Amended and Restated Loan Agreement dated as of May 17, 2000 and that certain Fourth Amendment and Waiver to Amended and Restated Loan Agreement dated as of January 31, 2001 (as amended, restated, modified or supplemented, the "LOAN AGREEMENT"). WITNESSETH: WHEREAS, the Borrower, the Lenders and the Agent are parties to the Loan Agreement; WHEREAS, on August 31, 2001, Transportation acquired all of the outstanding capital stock of SSI and SSI became and remains a wholly-owned Subsidiary of Transportation; WHEREAS, each Borrower desires to make SSI a Borrower under the Loan Agreement; WHEREAS, the Borrower has, among other amendments, requested an extension of one year on the maturity dates for the Revolving Credit Loans, the Conversion Date, and the Term Loans, and the Lenders and the Agent have agreed to amend the Loan Agreement in this and other respects as set forth herein; NOW, THEREFORE, the parties hereto hereby agree as follows: 1. AMENDMENTS TO THE LOAN AGREEMENT. 1.1 TERMS USED. Terms used but not otherwise defined herein are used with the same meanings as provided therefor in the Loan Agreement. 1.2 SECTION 1. SECTION 1 of the Loan Agreement is hereby amended as of the date hereof by: (a) deleting the references to the dates "October 31, 2003" and "October 31, 2007" in the definition of "Commitment Termination Date" and replacing them with the dates "October 31, 2004" and "October 31, 2008" respectively; and (b) deleting the reference to the date "November 1, 2003" in the definition of "Conversion Date" and replacing it with the date "November 1, 2004". 1.3 SECTION 6.3. SECTION 6.3(d) of the Loan Agreement is hereby deleted in its entirety and replaced with the following: "(d) at the end of each of the following periods, a Net Consolidated Funded Debt to EBITDA Ratio (which shall be certified by Quixote at the end of such period):

1.4 EXHIBITS. EXHIBITS A, B, C and E to the Loan Agreement are deleted in their entirety and EXHIBITS A, B, C and E attached hereto are substituted in lieu thereof. 1.5 DEFINITION OF "BORROWER". The parties hereto hereby agree that SSI will henceforth be a "Borrower" under the Loan Agreement and, together with Quixote, EAS, Transportation, Spin-Cast, E-Tech, Safe-Hit, HIS, Nu-Metrics, QTS Australia, QTS Europe, National Signal, EAS Europe and TranSafe, shall collectively henceforth be the "Borrower" under the terms of the Loan Agreement. The definition of "Borrower" set forth in the preamble to the Loan Agreement is hereby amended to mean the entities, individually and collectively, set forth in this SECTION 1.5. 2 1.6 SCHEDULE 1. SCHEDULE 1 is attached hereto and made a part hereof and a part of the Loan Agreement. The Borrower has included the information set forth in SCHEDULE 1 in order to amend and supplement the information provided by the Borrower on the Closing Date in the various schedules to the Loan Agreement and in order to make the information contained therein accurate and complete as of the date hereof. 2. REPRESENTATIONS AND WARRANTIES. The Borrower hereby remakes, as at the date of execution hereof, all of the representations and warranties set forth in SECTION 4 of the Loan Agreement as amended hereby and as amended and supplemented by SCHEDULE 1 hereto, and additionally represents and warrants that: (a) the borrowings under the Loan Agreement as amended hereby, the execution and delivery by the Borrower of this Fifth Amendment and the performance by the Borrower of its obligations under this Fifth Amendment and the Loan Agreement as amended hereby are within the Borrower's corporate powers, have been authorized by all necessary corporate action, have received all necessary governmental approval (if any shall be required) and do not and will not contravene or conflict with any provision of law or of the charter or by-laws of the Borrower or any subsidiary or of any agreement binding upon the Borrower or any subsidiary; (b) no Default or Event of Default under the Loan Agreement as amended hereby has occurred and is continuing on the date of execution hereof; and (c) the information provided herein and in SCHEDULE 1 hereto with respect to SSI and with respect to all other matters contained herein and therein, is true and complete in all respects and fully and completely amends and supplements all of the schedules provided by the Borrower pursuant to the Loan Agreement as necessary to make the information contained in such schedules accurate and complete as of the date hereof. 3. CONDITIONS OF EFFECTIVENESS. The effectiveness of this Fifth Amendment is subject to the conditions precedent that the Agent shall have received all of the following, in form and substance satisfactory to the Agent and its counsel, at the expense of the Borrower, and, as appropriate, dated as of the date hereof and in such number of signed counterparts as the Agent may request: (a) FIFTH AMENDMENT. This Fifth Amendment; (b) RESOLUTIONS/INCUMBENCY. A certificate from the Secretary or Assistant Secretary of each Borrower certifying (i) the name(s) of the officer or officers of the Borrower authorized to sign this Fifth Amendment and the other documents provided for in this Fifth Amendment, together with a sample of the true signature of each such officer (the Agent may conclusively rely on each such certificate until formally advised by a like certificate of any changes therein), (ii) true and correct copies of any resolutions of the Board of Directors of each Borrower authorizing or ratifying the execution, delivery and performance of this Fifth Amendment, the Loan Agreement as amended hereby, the Amended and Restated Revolving Credit Notes and other documents provided for in this Fifth Amendment, (iii) for each of the certificates of each Borrower other than SSI, there has been no change in the Certificate of Incorporation or 3 Bylaws for such Borrower since January 31, 2001 and such Certificate of Incorporation and Bylaws are in full force and effect as of the date hereof and no steps have been taken by the directors or stockholders of such Borrower to effect or authorize any amendment or modification thereto; and (iv) for the certificate of SSI, true and correct copies of (A) the Certificate of Incorporation of such corporation and all amendments thereto, as certified by the secretary of state of its jurisdiction of incorporation and (B) the Bylaws of such corporation. (c) NO DEFAULT - REPRESENTATIONS ACCURATE. A certificate of each Borrower, dated the date hereof, that (i) no Default or Event of Default has occurred and is continuing and (ii) all representations and warranties contained in the Loan Agreement as further amended hereby and as amended and supplemented by the information set forth in SCHEDULE 1 attached hereto, are true and complete as of the date hereof; (d) AMENDED AND RESTATED REVOLVING CREDIT NOTES. An original Amended and Restated Revolving Credit Note dated as of the date hereof in the form of EXHIBIT B attached hereto in favor of each Lender and executed by each Borrower as replacements for the Amended and Restated Revolving Credit Notes executed and delivered on January 31, 2001 pursuant to SECTION 2.1(b) of the Loan Agreement; (e) GOOD STANDING CERTIFICATE. A Good Standing Certificate for SSI from the secretary of state of its jurisdiction of incorporation; (f) LEGAL OPINION. The opinion of Joan R. Riley, General Counsel of Borrower, addressed to the Lenders and the Agent in the form of EXHIBIT D attached hereto and made a part hereof; (g) ACCOUNTANT'S LETTER. A letter to PricewaterhouseCoopers, LLP, the independent accountants for Borrower, in form and substance satisfactory to Agent, executed by the Borrower; and (h) MISCELLANEOUS. Such other documents as the Agent may request. 4. MISCELLANEOUS. 4.1 COUNTERPARTS. This Fifth Amendment may be executed by the parties on any number of separate counterparts and by each party on separate counterparts; each counterpart shall be deemed an original instrument; and all of the counterparts taken together shall be deemed to constitute one and the same instrument. 4.2 EXHIBITS AND SCHEDULES. All exhibits and schedules attached hereto are made a part hereof and incorporated herein as though fully set forth herein. 4 4.3 SUCCESSORS AND ASSIGNS. This Fifth Amendment and the Loan Agreement as amended hereby shall be binding upon and inure to the benefit of the Borrower, the Lenders, the Agent and their respective successors and assigns. 4.4 CAPTIONS. Captions in this Fifth Amendment are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. 4.5 FEES. The Borrower agrees to pay or reimburse the Agent for all reasonable costs and expenses of preparing and seeking advice in regard to this Fifth Amendment and any document or instrument executed in connection herewith and therewith (including legal fees and reasonable time charges of attorneys who may be employees of the Agent, whether in or out of court, in original or appellate proceedings or in bankruptcy). 4.6 CONSTRUCTION. THIS FIFTH AMENDMENT, THE LOAN AGREEMENT AS AMENDED HEREBY AND ANY DOCUMENT OR INSTRUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. AGENT, EACH LENDER AND BORROWER AGREE TO SUBMIT TO PERSONAL JURISDICTION AND TO WAIVE ANY OBJECTION AS TO VENUE IN THE COUNTY OF COOK, STATE OF ILLINOIS. BORROWER AGREES NOTHING HEREIN SHALL PRECLUDE AGENT, ANY LENDER OR BORROWER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION. 4.7 MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTON, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS FIFTH AMENDMENT, ANY OF THE OTHER LOAN DOCUMENTS OR ANY OF THE OTHER AGREEMENTS. 4.8 AMENDMENT TO LOAN AGREEMENT. This Fifth Amendment shall be deemed to be an amendment to the Loan Agreement. All references to the Loan Agreement in any other document or instrument shall be deemed to refer to the Loan Agreement as amended hereby. As hereby amended, the Loan Agreement is hereby ratified and confirmed in each and every respect. [signature page to follow] 5 IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to be executed by their duly authorized officers as of the day and year first written above. THE NORTHERN TRUST COMPANY, as Agent and as Lender By: /s/ Greta Satek --------------------------- Name: Greta Satek Title: Vice President LASALLE BANK NATIONAL ASSOCIATION, as Lender By: /s/ Stephanie Kline --------------------------- Name: Stephanie Kline Title: Assistant Vice President AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as Lender By: /s/ Stacey J. Huels --------------------------- Name: Stacey J. Huels Title: First Vice President QUIXOTE CORPORATION ENERGY ABSORPTION SYSTEMS, INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer HIGHWAY INFORMATION SYSTEMS, INC. NU-METRICS, INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer E-TECH TESTING SERVICES, INC. SPIN-CAST PLASTICS, INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer ENERGY ABSORPTION SYSTEMS (EUROPE), INC. SAFE-HIT CORPORATION By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer QUIXOTE TRANSPORTATION SAFETY, INC. QUIXOTE TRANSPORTATION SAFETY (ASIA PACIFIC) PTY LIMITED By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer TRANSAFE CORPORATION QUIXOTE TRANSPORTATION SAFETY (EUROPE), INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer NATIONAL SIGNAL, INC. SURFACE SYSTEMS, INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer

EXHIBIT 10(a) AMENDED AND RESTATED REVOLVING CREDIT NOTE $13,334,000 Chicago, Illinois December 31, 2001 FOR VALUE RECEIVED, the undersigned, QUIXOTE CORPORATION, ENERGY ABSORPTION SYSTEMS, INC. (f/k/a Quixote Laser Corporation and successor by merger to Energy Absorption Systems, Inc. and Roadway Safety Service, Inc.), TRANSAFE CORPORATION, SPIN-CAST PLASTICS, INC., E-TECH TESTING SERVICES, INC., SAFE-HIT CORPORATION, HIGHWAY INFORMATION SYSTEMS, INC., NU-METRICS, INC., QUIXOTE TRANSPORTATION SAFETY (ASIA PACIFIC) PTY LIMITED (f/k/a Energy Absorption Systems Pty Limited), ENERGY ABSORPTION SYSTEMS (EUROPE), INC., QUIXOTE TRANSPORTATION SAFETY, INC. (f/k/a TranSafe Corporation), QUIXOTE TRANSPORTATION SAFETY (EUROPE), INC., NATIONAL SIGNAL, INC. AND SURFACE SYSTEMS, INC. (each individually a "Borrower" and collectively, the "Borrowers") hereby JOINTLY AND SEVERALLY PROMISE TO PAY to the order of THE NORTHERN TRUST COMPANY ("Lender"), or its registered assigns, at 50 South LaSalle Street, Chicago, Illinois 60675, or at such other place as the holder of this Note may designate from time to time in writing, in lawful money of the United States of America and in immediately available funds, the principal amount of THIRTEEN MILLION THREE HUNDRED AND THIRTY-FOUR THOUSAND DOLLARS ($13,334,000), or such lesser principal amount as may be outstanding pursuant to the Loan Agreement (as hereinafter defined) with respect to the Revolving Credit Loan, together with interest on the unpaid principal amount of this note outstanding from time to time. This Note is the Revolving Credit Note referred to in, and evidences certain indebtedness incurred under, the Amended and Restated Loan Agreement dated as of June 30, 1997 (herein as it may be amended, modified or supplemented from time to time, the "Loan Agreement"), among each Borrower, "Lenders" (as defined therein) and The Northern Trust Company, as agent for such Lenders, and is entitled to the benefit and security of the "Loan Documents" (as defined in the Loan Agreement) provided for therein, to which reference is hereby made for a statement of all of the terms and conditions under which the loan evidenced hereby is made. All capitalized terms herein, unless otherwise defined, shall have the meanings ascribed to them in the Loan Agreement. The principal amount of the indebtedness evidenced hereby shall be payable in the amounts and on the dates specified in the Loan Agreement. Interest thereon, less any taxes payable by withholding, shall be paid until such principal amount is paid in full at such interest rates and at such times as are specified in the Loan Agreement. If any payment on this Note becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. Upon and after the occurrence of an Event of Default, this Note shall or may, as provided in the Loan Agreement, and without demand, notice or legal process of any kind, become or be declared immediately due and payable. The right to receive principal of, and stated interest on, this Note may only be transferred through Borrower's book entry system. Demand, presentment, protest and notice of nonpayment and protest are hereby waived by Borrower. This Note shall be interpreted, governed by, and construed in accordance with the internal laws of the State of Illinois. THIS NOTE, ISSUED AND DELIVERED ON THE DATE HEREOF TO THE AGENT, ON BEHALF OF THE LENDERS, IS ISSUED IN REPLACEMENT AND SUBSTITUTION FOR, AND NOT IN PAYMENT OF THAT CERTAIN AMENDED AND RESTATED REVOLVING CREDIT NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF $13,334,000 DATED JANUARY 31, 2001 (WHICH IN TURN WAS ISSUED IN SUBSTITUTION AND REPLACEMENT OF THAT CERTAIN AMENDED AND RESTATED REVOLVING CREDIT NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF $13,334,000 DATED MAY 17, 2000 WHICH IN TURN WAS ISSUED IN SUBSTITUTION AND REPLACEMENT OF THAT CERTAIN AMENDED AND RESTATED REVOLVING CREDIT NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF $13,334,000 DATED MARCH 15, 1999 WHICH IN TURN WAS ISSUED IN SUBSTITUTION AND REPLACEMENT OF THAT CERTAIN AMENDED AND RESTATED REVOLVING CREDIT NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF $13,334,000 DATED JUNE 30, 1997 WHICH IN TURN WAS ISSUED IN SUBSTITUTION AND REPLACEMENT OF THAT CERTAIN REVOLVING CREDIT NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF $21,666,668 DATED MARCH 31, 1996 WHICH IN TURN WAS ISSUED IN SUBSTITUTION AND REPLACEMENT OF THAT CERTAIN REVOLVING CREDIT NOTE IN THE PRINCIPAL AMOUNT OF $23,333,334 DATED NOVEMBER 10, 1995) AND NOTHING CONTAINED HEREIN SHALL BE CONSTRUED TO DEEM PAID OR FORGIVEN THE UNPAID PRINCIPAL AMOUNT OF, OR UNPAID ACCRUED INTEREST ON, SAID NOTE AT THE TIME OF ITS REPLACEMENT BY THIS NOTE. * * * IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Revolving Credit Note to be executed by their duly authorized officers as of the day and year first written above. QUIXOTE CORPORATION ENERGY ABSORPTION SYSTEMS, INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer HIGHWAY INFORMATION SYSTEMS, INC. NU-METRICS, INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer E-TECH TESTING SERVICES, INC. SPIN-CAST PLASTICS, INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer ENERGY ABSORPTION SYSTEMS (EUROPE), INC. SAFE-HIT CORPORATION By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer QUIXOTE TRANSPORTATION SAFETY, INC. QUIXOTE TRANSPORTATION SAFETY (ASIA PACIFIC) PTY LIMITED By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer TRANSAFE CORPORATION QUIXOTE TRANSPORTATION SAFETY (EUROPE), INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer NATIONAL SIGNAL, INC. SURFACE SYSTEMS, INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer

AMENDED AND RESTATED REVOLVING CREDIT NOTE $13,333,000 Chicago, Illinois December 31, 2001 FOR VALUE RECEIVED, the undersigned, QUIXOTE CORPORATION, ENERGY ABSORPTION SYSTEMS, INC. (f/k/a Quixote Laser Corporation and successor by merger to Energy Absorption Systems, Inc. and Roadway Safety Service, Inc.), TRANSAFE CORPORATION, SPIN-CAST PLASTICS, INC., E-TECH TESTING SERVICES, INC., SAFE-HIT CORPORATION, HIGHWAY INFORMATION SYSTEMS, INC., NU-METRICS, INC., QUIXOTE TRANSPORTATION SAFETY (ASIA PACIFIC) PTY LIMITED (f/k/a Energy Absorption Systems Pty Limited), ENERGY ABSORPTION SYSTEMS (EUROPE), INC., QUIXOTE TRANSPORTATION SAFETY, INC. (f/k/a TranSafe Corporation), QUIXOTE TRANSPORTATION SAFETY (EUROPE), INC., NATIONAL SIGNAL, INC. AND SURFACE SYSTEMS, INC. (each individually a "Borrower" and collectively, the "Borrowers") hereby JOINTLY AND SEVERALLY PROMISE TO PAY to the order of AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO ("Lender"), or its registered assigns, at 30 South Wacker Drive, Chicago, Illinois 60606, or at such other place as the holder of this Note may designate from time to time in writing, in lawful money of the United States of America and in immediately available funds, the principal amount of THIRTEEN MILLION THREE HUNDRED AND THIRTY-THREE THOUSAND DOLLARS ($13,333,000), or such lesser principal amount as may be outstanding pursuant to the Loan Agreement (as hereinafter defined) with respect to the Revolving Credit Loan, together with interest on the unpaid principal amount of this note outstanding from time to time. This Note is the Revolving Credit Note referred to in, and evidences certain indebtedness incurred under, the Amended and Restated Loan Agreement dated as of June 30, 1997 (herein as it may be amended, modified or supplemented from time to time, the "Loan Agreement"), among each Borrower, "Lenders" (as defined therein) and The Northern Trust Company, as agent for such Lenders, and is entitled to the benefit and security of the "Loan Documents" (as defined in the Loan Agreement) provided for therein, to which reference is hereby made for a statement of all of the terms and conditions under which the loan evidenced hereby is made. All capitalized terms herein, unless otherwise defined, shall have the meanings ascribed to them in the Loan Agreement. The principal amount of the indebtedness evidenced hereby shall be payable in the amounts and on the dates specified in the Loan Agreement. Interest thereon, less any taxes payable by withholding, shall be paid until such principal amount is paid in full at such interest rates and at such times as are specified in the Loan Agreement. If any payment on this Note becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. Upon and after the occurrence of an Event of Default, this Note shall or may, as provided in the Loan Agreement, and without demand, notice or legal process of any kind, become or be declared immediately due and payable. The right to receive principal of, and stated interest on, this Note may only be transferred through Borrower's book entry system. Demand, presentment, protest and notice of nonpayment and protest are hereby waived by Borrower. This Note shall be interpreted, governed by, and construed in accordance with the internal laws of the State of Illinois. THIS NOTE, ISSUED AND DELIVERED ON THE DATE HEREOF TO THE AGENT, ON BEHALF OF THE LENDERS, IS ISSUED IN REPLACEMENT AND SUBSTITUTION FOR, AND NOT IN PAYMENT OF THAT CERTAIN AMENDED AND RESTATED REVOLVING CREDIT NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF $13,333,000 DATED JANUARY 31, 2001 (WHICH IN TURN WAS ISSUED IN SUBSTITUTION AND REPLACEMENT OF THAT CERTAIN AMENDED AND RESTATED REVOLVING CREDIT NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF $13,333,000 DATED MAY 17, 2000 WHICH IN TURN WAS ISSUED IN SUBSTITUTION AND REPLACEMENT OF THAT CERTAIN AMENDED AND RESTATED REVOLVING CREDIT NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF $13,333,000 DATED MARCH 15, 1999 WHICH IN TURN WAS ISSUED IN SUBSTITUTION AND REPLACEMENT OF THAT CERTAIN AMENDED AND RESTATED REVOLVING CREDIT NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF $13,333,000 DATED JUNE 30, 1997 WHICH IN TURN WAS ISSUED IN SUBSTITUTION AND REPLACEMENT OF THAT CERTAIN REVOLVING CREDIT NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF $21,666,666 DATED MARCH 31, 1996 WHICH IN TURN WAS ISSUED IN SUBSTITUTION AND REPLACEMENT OF THAT CERTAIN REVOLVING CREDIT NOTE IN THE PRINCIPAL AMOUNT OF $23,333,333 DATED NOVEMBER 10, 1995) AND NOTHING CONTAINED HEREIN SHALL BE CONSTRUED TO DEEM PAID OR FORGIVEN THE UNPAID PRINCIPAL AMOUNT OF, OR UNPAID ACCRUED INTEREST ON, SAID NOTE AT THE TIME OF ITS REPLACEMENT BY THIS NOTE. * * * IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Revolving Credit Note to be executed by their duly authorized officers as of the day and year first written above. QUIXOTE CORPORATION ENERGY ABSORPTION SYSTEMS, INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer HIGHWAY INFORMATION SYSTEMS, INC. NU-METRICS, INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer E-TECH TESTING SERVICES, INC. SPIN-CAST PLASTICS, INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer ENERGY ABSORPTION SYSTEMS (EUROPE), INC. SAFE-HIT CORPORATION By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer QUIXOTE TRANSPORTATION SAFETY, INC. QUIXOTE TRANSPORTATION SAFETY (ASIA PACIFIC) PTY LIMITED By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer TRANSAFE CORPORATION QUIXOTE TRANSPORTATION SAFETY (EUROPE), INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer NATIONAL SIGNAL, INC. SURFACE SYSTEMS, INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer

AMENDED AND RESTATED REVOLVING CREDIT NOTE $13,333,000 Chicago, Illinois December 31, 2001 FOR VALUE RECEIVED, the undersigned, QUIXOTE CORPORATION, ENERGY ABSORPTION SYSTEMS, INC. (f/k/a Quixote Laser Corporation and successor by merger to Energy Absorption Systems, Inc. and Roadway Safety Service, Inc.), TRANSAFE CORPORATION, SPIN-CAST PLASTICS, INC., E-TECH TESTING SERVICES, INC., SAFE-HIT CORPORATION, HIGHWAY INFORMATION SYSTEMS, INC., NU-METRICS, INC., QUIXOTE TRANSPORTATION SAFETY (ASIA PACIFIC) PTY LIMITED (f/k/a Energy Absorption Systems Pty Limited), ENERGY ABSORPTION SYSTEMS (EUROPE), INC., QUIXOTE TRANSPORTATION SAFETY, INC. (f/k/a TranSafe Corporation), QUIXOTE TRANSPORTATION SAFETY (EUROPE), INC., NATIONAL SIGNAL, INC. AND SURFACE SYSTEMS, INC. (each individually a "Borrower" and collectively, the "Borrowers") hereby JOINTLY AND SEVERALLY PROMISE TO PAY to the order of LASALLE BANK NATIONAL ASSOCIATION ("Lender"), or its registered assigns, at 135 South LaSalle Street, Chicago, Illinois 60603, or at such other place as the holder of this Note may designate from time to time in writing, in lawful money of the United States of America and in immediately available funds, the principal amount of THIRTEEN MILLION THREE HUNDRED AND THIRTY-THREE THOUSAND DOLLARS ($13,333,000), or such lesser principal amount as may be outstanding pursuant to the Loan Agreement (as hereinafter defined) with respect to the Revolving Credit Loan, together with interest on the unpaid principal amount of this note outstanding from time to time. This Note is the Revolving Credit Note referred to in, and evidences certain indebtedness incurred under, the Amended and Restated Loan Agreement dated as of June 30, 1997 (herein as it may be amended, modified or supplemented from time to time, the "Loan Agreement"), among each Borrower, "Lenders" (as defined therein) and The Northern Trust Company, as agent for such Lenders, and is entitled to the benefit and security of the "Loan Documents" (as defined in the Loan Agreement) provided for therein, to which reference is hereby made for a statement of all of the terms and conditions under which the loan evidenced hereby is made. All capitalized terms herein, unless otherwise defined, shall have the meanings ascribed to them in the Loan Agreement. The principal amount of the indebtedness evidenced hereby shall be payable in the amounts and on the dates specified in the Loan Agreement. Interest thereon, less any taxes payable by withholding, shall be paid until such principal amount is paid in full at such interest rates and at such times as are specified in the Loan Agreement. If any payment on this Note becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. Upon and after the occurrence of an Event of Default, this Note shall or may, as provided in the Loan Agreement, and without demand, notice or legal process of any kind, become or be declared immediately due and payable. The right to receive principal of, and stated interest on, this Note may only be transferred through Borrower's book entry system. Demand, presentment, protest and notice of nonpayment and protest are hereby waived by Borrower. This Note shall be interpreted, governed by, and construed in accordance with the internal laws of the State of Illinois. THIS NOTE, ISSUED AND DELIVERED ON THE DATE HEREOF TO THE AGENT, ON BEHALF OF THE LENDERS, IS ISSUED IN REPLACEMENT AND SUBSTITUTION FOR, AND NOT IN PAYMENT OF THAT CERTAIN AMENDED AND RESTATED REVOLVING CREDIT NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF $13,333,000 DATED JANUARY 31, 2001 (WHICH IN TURN WAS ISSUED IN SUBSTITUTION AND REPLACEMENT OF THAT CERTAIN AMENDED AND RESTATED REVOLVING CREDIT NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF $13,333,000 DATED MAY 17, 2000 WHICH IN TURN WAS ISSUED IN SUBSTITUTION AND REPLACEMENT OF THAT CERTAIN AMENDED AND RESTATED REVOLVING CREDIT NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF $13,333,000 DATED MARCH 15, 1999 WHICH IN TURN WAS ISSUED IN SUBSTITUTION AND REPLACEMENT OF THAT CERTAIN AMENDED AND RESTATED REVOLVING CREDIT NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF $13,333,000 DATED JUNE 30, 1997 WHICH IN TURN WAS ISSUED IN SUBSTITUTION AND REPLACEMENT OF THAT CERTAIN REVOLVING CREDIT NOTE IN THE ORIGINAL PRINCIPAL AMOUNT OF $21,666,666 DATED MARCH 31, 1996 WHICH IN TURN WAS ISSUED IN SUBSTITUTION AND REPLACEMENT OF THAT CERTAIN REVOLVING CREDIT NOTE IN THE PRINCIPAL AMOUNT OF $23,333,333 DATED NOVEMBER 10, 1995) AND NOTHING CONTAINED HEREIN SHALL BE CONSTRUED TO DEEM PAID OR FORGIVEN THE UNPAID PRINCIPAL AMOUNT OF, OR UNPAID ACCRUED INTEREST ON, SAID NOTE AT THE TIME OF ITS REPLACEMENT BY THIS NOTE. * * * IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Revolving Credit Note to be executed by their duly authorized officers as of the day and year first written above. QUIXOTE CORPORATION ENERGY ABSORPTION SYSTEMS, INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer HIGHWAY INFORMATION SYSTEMS, INC. NU-METRICS, INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer E-TECH TESTING SERVICES, INC. SPIN-CAST PLASTICS, INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer ENERGY ABSORPTION SYSTEMS (EUROPE), INC. SAFE-HIT CORPORATION By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer QUIXOTE TRANSPORTATION SAFETY, INC. QUIXOTE TRANSPORTATION SAFETY (ASIA PACIFIC) PTY LIMITED By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer TRANSAFE CORPORATION QUIXOTE TRANSPORTATION SAFETY (EUROPE), INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer NATIONAL SIGNAL, INC. SURFACE SYSTEMS, INC. By: /s/ Daniel P. Gorey By: /s/ Daniel P. Gorey -------------------------------------- -------------------------------------- Name: Daniel P. Gorey Name: Daniel P. Gorey Title(s): Vice President and Treasurer Title(s): Vice President and Treasurer

EX-10.(B) 5 a2069513zex-10_b.txt 2001 DIRECTORS STOCK OPTION PLAN EXHIBIT 10(b) QUIXOTE CORPORATION 2001 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN 1. PURPOSE. The purposes of this plan (the "Plan") are to encourage non-employee Directors of Quixote Corporation, a Delaware corporation (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 to attract and retain qualified Directors upon whom the sustained progress, growth, and profitability of the Company depend. 2. DEFINITIONS. As used in this 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) "Award" means options granted under the Plan. (b) "Board" means the Board of Directors of the Company. (c) "Effective Date" means the date upon which this Plan is approved by the stockholders of the Company. (d) "Director" means an individual who is a member of the Board and who is not an employee of the Company or any of its subsidiaries. (e) "Fair Market Value" of the Stock of the Company means, as of any applicable date, (i) if the Stock is listed on The New York Stock Exchange, the closing sale price of the Stock on the immediately preceding date as reported on The New York Stock Exchange Composite Tape, or if no such reported sale of the Stock shall have occurred on such date, on the next preceding date on which there was such a reported sale, or (ii) if the Stock is traded on the Nasdaq National Market, the average of the highest reported bid and the lowest reported asked price per share of the Stock on the immediately preceding date on the Nasdaq National Market. If the Stock ceases to be listed on The New York Stock Exchange or traded on the Nasdaq National Market, the Board shall designate an alternative method of determining the Fair Market Value of the Stock. (f) "Grant Date" means the date on which an Award shall be duly granted. (g) "Grantee" means an individual who has been granted an Award. (h) "Immediate Family" has the meaning specified in Section 8. (i) "Including" or "includes" means "including, without limitation," or "includes, without limitation." (j) "Option Price" means the per share purchase price of Stock subject to an option. (k) "Permissible Transferee" has the meaning specified in Section 8. (l) "Plan" has the meaning specified in the introductory paragraph. (m) "SEC" means the Securities and Exchange Commission. (n) "Stock" means the Company's common stock, authorized by the Company's Certificate of Incorporation. 3. SCOPE OF THE PLAN. (a) Subject to the provisions of Section 11, from and after the Effective Date, sixty thousand (60,000) shares of Stock, shall remain available and reserved for delivery on account of the exercise of Awards. 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. (b) To the extent an Award shall expire or terminate for any reason without having been exercised in whole by the Grantee, the shares of Stock associated with such Award shall become available for other Awards. 4. PARTICIPATION IN THE PLAN. On the first Friday after the Effective Date and on the first Friday following the Company's annual meeting of stockholders each year thereafter, each Director elected, re-elected or continuing as a Director shall automatically receive an Award of an option to acquire four thousand (4,000) shares of Stock. 5. OPTION TERMS. (a) OPTION PRICE. The Option Price per share of Stock for each option granted under this Plan shall be equal to the Fair Market Value of the Stock on its Grant Date. (b) TIME FOR EXERCISING OPTIONS. The options shall not become exercisable until six (6) months after the Grant Date. Unless terminated earlier as set forth in Section 6, any option granted must be exercised within not more than seven (7) years from the date on which granted ("Option Period"). (c) EXERCISE OF OPTIONS. 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. 2 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) cash; or (ii) Stock held by the Grantee for at least 6 months prior to exercise of the option, valued at its Fair Market Value on the date of exercise; or (iii) by delivery of a properly executed exercise notice to the Company, together with a copy of irrevocable instructions to a broker or lending institution, accepted in writing, authorizing them to sell the Stock (or a sufficient portion thereof) acquired upon exercise of an option, and assigning the delivery to the Company of an amount of the sale proceeds to pay for all the Stock acquired through such exercise and the minimum statutory tax withholding obligations resulting from such exercise, all in such form and with such security as the Company may require. In the event the Grantee elects to make payments as provided in (ii) above, delivery may be accomplished by means of an attestation by the Grantee, at the time of exercise, as to the Grantee's ownership of the number of shares of stock required to cover the total required-option-price of the option being exercised and the Company may deliver the net amount of shares covered by the option exercise after deducting the number of shares required to cover the total option price. 6. TERMINATION OF DIRECTORSHIP. (a) CESSATION OF SERVICE. Upon the cessation of the Grantee's service as a Director for a reason other than death, the options immediately exercisable at the date of cessation of service shall be exercisable by the Grantee until the close of business on the day before the same day of the third month after the Grantee's cessation of service; provided that if the Grantee shall have served as a Director for a period of six (6) years or longer, his/her outstanding options shall continue to be exercisable until the close of business on the last business day of the 24th month following the such cessation of service. If the Grantee dies within such 24-month period, then the Grantee's options may be exercised within the 12 month period after his or her death by the person specified in Section 6(b), below. Notwithstanding the foregoing, however, in no event may an option be exercised after the expiration of the Option Period. All options not exercisable at the date of cessation of service shall expire on that date. (b) DEATH. Upon the cessation of the Grantee's service as a Director by reason of death, all unvested options shall become exercisable immediately and may be exercised, together with those options which were exercisable on the date of death, not later than the close of business on the last business day of the 12th month following the date of the Grantee's death, but in no event after the expiration of the Option Period, by (i) his/her personal representative, executor, administrator, or by the person to whom the option is transferred by will or the applicable laws of descent and distribution, (ii) the Grantee's beneficiary designated in 3 accordance with Section 8 of the Plan, or (iii) the then-acting trustee of a trust described in Section 8 of the Plan to which the option has been transferred in accordance with that section. 7. CHANGE IN CONTROL. (a) Notwithstanding any other provision of this Plan to the contrary, if, while any Awards remain outstanding under this Plan, a "Change in Control" (as defined below) should occur, then all options that are outstanding at the time of such Change in Control shall become immediately vested and exercisable in full. (b) A Change in Control means a change in control of the Company of a nature that would be required to be reported in response to item 6(e) of Schedule 14A of Regulation14A promulgated under the 1934 Act; PROVIDED THAT, without limitation, such change in control shall be deemed to have occurred if the conditions set forth in any one of the following paragraphs shall have been satisfied: (i) any person (as defined in Section 3(a)(9) of the 1934 Act, as such term is modified in Sections 13(d) and 14(d) of the 1934 Act), other than (1) any employee plan established by the Company or any Subsidiary, (2) the Company or Subsidiary, (3) an underwriter temporarily holding securities pursuant to an offering of such securities, or (4) a corporation owned, directly or indirectly, by stockholders of the Company in substantially the same proportions as their ownership of the Company), alone or with its Affiliates, is or becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the 1934 Act), directly or indirectly, of Stock of the Company representing 15% or more of either the then outstanding shares of Stock or the combined voting power of the Company's then outstanding voting securities; (ii) a majority of the members of the Board shall cease to be Continuing Members. For this purpose, "Continuing Member" means a member of the Board who either (i) was a member of the Board on the Effective Date hereof and has been such continuously thereafter or (ii) became a member of such Board after the Effective Date and whose election or nomination for election was approved by a vote of at least two-thirds of the Continuing Members then members of the Company's Board (other than a nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the members of the Board, as such terms are used in Rule 14a-11 of Regulation 14A under the 1934 Act); (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (1) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Affiliate or Subsidiary, at least 50% of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or 4 consolidation, or (2) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person (determined pursuant to clause (i) above) is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company, its Subsidiaries or its Affiliates) representing 15% or more of either the then outstanding shares of Stock or the combined voting power of the Company's then outstanding voting securities; or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or of the Company's assets or earning power aggregating more than 50% of the assets or the earning power of the Company and its Subsidiaries, taken as a whole. Notwithstanding the foregoing, no Change in Control shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of Stock immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns substantially all of the assets of the Company immediately prior to such transaction or series of transactions. 8. TRANSFERABILITY RESTRICTIONS. Each Award granted hereunder shall not be assignable or transferable other than by will or the laws of descent and distribution; PROVIDED, HOWEVER, that a Grantee may (a) designate in writing a beneficiary to exercise his/her Award after the Grantee's death, (b) transfer an Award to a revocable, inter vivos trust as to which the Grantee is both the settlor and trustee and (c) transfer an Award for no consideration to any of the following permissible transferees (each a "Permissible Transferee"): (w) any member of the Immediate Family of the Grantee to whom such Award was granted, (x) any trust solely for the benefit of the Grantee and members of the Grantee's Immediate Family, (y) any partnership or limited liability company whose only partners or members are the Grantee and members of the Grantee's Immediate Family, or (z) any other transferee approved by the Board in advance of the transfer; and further provided that: (i) the transfer of any Award shall not be effective on a date earlier than the date on which the Award is first exercisable as set forth in this Plan; (ii) any Permitted Transferee to whom an Award is transferred by a Grantee shall not be entitled to transfer the Award, other than to the Grantee or by will or the laws of descent and distribution; and (iii) the Permitted Transferee shall remain subject to all of the terms and conditions applicable to such Award prior to such transfer. For purposes of this Section 8, "Immediate Family" means, with respect to a particular Grantee, such Grantee's spouse, children, stepchildren, grandchildren, parents, stepparents, grandparents, siblings, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, and sister-in-law, and shall include relationships arising from legal adoption. 9. SECURITIES LAW MATTERS. Each Director electing to purchase shares pursuant to an option shall be required, as a condition to such purchase, to represent to the Company that the Director has access by reason of such Director's service with the Company to sufficient information concerning the Company to enable the Director to evaluate the merits and 5 risks of the prospective investment and has such knowledge and experience in financial and business matters so that the Director is capable of evaluating such investment, and that the Director is acquiring the shares solely for such Director's account and will not sell the securities without registration under the Securities Act of 1933 (which the Company is under no obligation to provide) or exemption therefrom. Share certificates shall bear such legend as the Company may deem necessary. 10. 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 issuable upon exercise until such shares have been issued to him or her. 11. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION. If prior to actual delivery of certificates for the present Stock of the Company pursuant to any option outstanding hereunder; the said Stock shall be increased through stock dividends or stock splits, or decreased by reverse stock splits or otherwise reclassified, or the Company shall be reorganized, consolidated or merged with one or more corporations, or if all or substantially all of the assets of the Company shall be sold or exchanged, the Director, at the time he or she shall be entitled to the delivery of a certificate pursuant to such option, shall receive in place of the certificate or certificates for the present Stock of the Company the same number and kind of shares or the same amount of other property, cash or securities as the Director would have been entitled to receive upon such increase, decrease, reclassification, reorganization, consolidation, merger, sale or exchange, if the Director had been immediately prior to such event the holder of the number of shares of the present Stock of the Company (not previously delivered to the Director hereunder) which such Director would otherwise have been entitled to receive pursuant hereto but for such increase, decrease, reclassification, reorganization, consolidation, merger, sale or exchange. 12. EFFECTIVE DATE, TERMINATION AND AMENDMENT; ADMINISTRATION. (a) This Plan shall became effective on the Effective Date. This Plan shall terminate on, and no grants of options shall be made after, the close of business (5 P.M. Chicago, Illinois) on November 1, 2011, unless terminated at an earlier date by action of the Board, except that any options then outstanding shall remain in effect until they have been exercised, forfeited or expired. (b) The Board may amend, suspend, or terminate the Plan. (c) This Plan shall be administered by the Board. The Board may delegate to any person or group of persons who may further so delegate the Board's powers and obligations hereunder as they relate to day-to-day administration of the exercise process. This Plan may be terminated or amended by the Board of Directors as it deems advisable, PROVIDED HOWEVER, unless approved by the Company's stockholders, no adjustments or reduction of the Option Price of any outstanding options shall be made directly or by cancellation of outstanding options and a subsequent re-granting of options at a lower price to the same individual. No amendment may revoke or alter in any manner unfavorable to the Grantees any options then outstanding. Nor 6 may the Board amend this Plan without stockholder approval where the absence of such approval would cause the Plan to fail to comply with Rule 16(b)(3) under the Securities Exchange Act of 1934 or any other requirement of applicable law or regulation. 13. NO TRUST OR FUND CREATED. Neither this 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 and a Grantee or any other person. 14. 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 this Plan. 15. SEVERABILITY. If all or any part of this 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 this 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 to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid. 16. TITLES AND HEADINGS. The titles and headings of the Sections in this 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. Approved by the Stockholders of Quixote Corporation as of November 14, 2001. 7 EX-10.(C) 6 a2069513zex-10_c.txt 2001 EMPLOYEE STOCK INCENTIVE PLAN EXHIBIT 10(c) QUIXOTE CORPORATION 2001 EMPLOYEE STOCK INCENTIVE PLAN 1. PURPOSE. The purposes of this plan (the "Plan") are to encourage selected employees of Quixote Corporation (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. 2. DEFINITIONS. As used in this 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" has the meaning specified in Rule 12b-2 promulgated under the 1934 Act. (b) "Award" means options or shares of Restricted Stock granted under the Plan. (c) "Award Agreement" has the meaning specified in Section 4(c)(v). (d) "Board" means the Board of Directors of the Company. (e) "Cause" includes termination based on the commission of any act or acts involving dishonesty, breach of fiduciary duty, fraud, illegality or moral turpitude. (f) "Change in Control" has the meaning specified in Section 14. (g) "Code" means the Internal Revenue Code of 1986, as amended. References to a particular section of the Code shall include references to successor provisions. (h) "Committee" means the committee of the Board appointed pursuant to Section 4. (i) "Continuing Members" has the meaning specified in Section 14b(ii). (j) "Disability" means 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. (k) "Effective Date" means the date upon which this Plan is approved by the stockholders of the Company. (l) "Fair Market Value" of the Stock of the Company means, as of any applicable date, except as otherwise determined by the Committee, (i) if the Stock is listed on The New York Stock Exchange, the closing sale price of the Stock on the immediately preceding date as reported on The New York Stock Exchange Composite Tape, or if no such reported sale of the security shall have occurred on such date, on the next preceding date on which there was such a reported sale or (ii) if such Stock is traded on the Nasdaq National Market, the average of the highest reported bid and the lowest reported asked price per share of the Stock on the immediately preceding date on the Nasdaq National Market. If the Stock ceases to be listed on The New York Stock Exchange or traded on the Nasdaq National Market, as applicable, the Board shall designate an alternative method of determining the Fair Market Value of the security. (m) "Grant Date" means the date on which an Award shall be duly granted, as determined in accordance with Section 6(a)(i). (n) "Grantee" means an individual who has been granted an Award. (o) "Immediate Family" has the meaning specified in Section 7. (p) "Including" or "includes" means "including, without limitation," or "includes, without limitation." (q) "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. (r) "Option Price" means the per share purchase price of Stock subject to an option. (s) "Permissible Transferee" has the meaning specified in Section 7. (t) "Plan" has the meaning specified in the introductory paragraph. (u) "Restricted Period" means the period, beginning with the first day of the month in which Restricted Stock is granted, during which restrictions on the transferability of the Restricted Stock are in effect. (v) "Restricted Stock" means shares of Stock granted pursuant to Section 6(d). (w) "Retirement" means a termination of employment with the Company and its Subsidiaries by a Grantee, other than for Cause or death, any time after attaining age 55, provided that the sum of the Grantee's age and years of service on the date of termination equals or exceeds sixty-five (65). 2 (x) "SEC" means the U.S. Securities and Exchange Commission. (y) "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. (z) "Share Withholding" has the meaning specified in Section 12(a). (aa) "Stock" means the Company's common stock authorized by the Company's Certificate of Incorporation. (bb) "Subsidiary" means 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. (cc) "Tax Date" has the meaning specified in Section 12(b)(ii). (dd) "Taxable Event" has the meaning specified in Section 12(a). (ee) "Tendered Restricted Stock" has the meaning specified in Section 8. 3. SCOPE OF THE PLAN. (a) Subject to the provisions of Section 3(d) and Section 21, the maximum number of shares of Stock that are available and reserved for delivery on account of the exercise of Awards under this Plan as of the Effective Date is a total of five hundred twenty-five thousand (525,000) shares of Stock (of which Two Hundred Thousand (200,000) shares of Stock shall be reserved for the grant of incentive stock options), and fifty thousand (50,000) shall be reserved for the grant of Restricted Stock. (b) 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. (c) Subject to adjustment as provided in Section 21, following the Effective Date the maximum number of shares of Stock for which Awards may be granted to any Grantee in any calendar year shall not exceed one hundred thousand (100,000) shares. (d) To the extent an Award shall expire or terminate for any reason without having been exercised in full 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 Restricted Stock) associated with such Award shall become available for other Awards. 3 (e) For purposes of this Section 3, (i) if an Award is denominated in shares of Stock, the number of shares covered by such Award, or to which such Award relates, shall be counted on the date of grant of such Award against the aggregate number of shares of Stock available for granting Awards under this Plan; (ii) all outstanding shares of Stock issued under this Plan, even if the Stock is subject to restrictions, shall be counted on the date of grant of any Award against the aggregate number of shares of Stock available for granting Awards under this Plan; (iii) the shares of Stock underlying outstanding options and similar Awards shall be counted while the Award is outstanding against the aggregate number of shares of Stock available for granting Awards under this Plan; and (iv) 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 this Plan. 4. ADMINISTRATION. (a) Subject to Section 4(b), this Plan shall be administered by a committee of the Board ("Committee") which shall consist of not less than two persons who are Directors of the Company. Membership on the Committee may be subject to such limitations as the Board deems appropriate to permit transactions in Stock pursuant to the Plan to (i) be exempt from liability under Section 16(b) of the 1934 Act pursuant to Rule 16b-3 thereunder and (ii) satisfy the performance-based compensation exception to the $1 million limit under Section 162(m) of the Code. (b) The Board may, in its discretion, reserve to itself or delegate to the Chief Executive Officer of the Company or 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 the Chief Executive Officer or such other committee the authority and responsibility of the Committee, all references to the Committee in the Plan shall be to the Board, the Chief Executive Officer or such other committee. (c) The Committee shall have full and final authority, in its discretion, but subject to the express provisions of this Plan, as follows: (i) to grant Awards of Stock; 4 (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 this Plan and to make all determinations necessary or advisable for the administration of this Plan; (iv) to prescribe, amend, and rescind rules and regulations relating to this 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, which 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. (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 this Plan; (vii) to delegate its duties and responsibilities under this Plan, except its duties and responsibilities with respect to Section 16 Grantees, and (A) the acts of such delegates shall be treated hereunder as acts of the Committee, and (B) such delegates shall report to the Committee regarding the delegated duties and responsibilities; (viii) subject to Section 6(a)(ii), to extend the time during which any Award or group of Awards may be exercised; (ix) 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; and (x) to certify attainment of any performance criteria to which Awards are subject, if any. The determination of the Committee on all matters relating to this Plan or any Award Agreement shall be conclusive and final. No member of the Committee shall be liable for any action or determination made in good faith with respect to this Plan or any Award. 5. ELIGIBILITY. Awards may be granted to any officer or full-time employee of the Company or any of its Subsidiaries. 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 5 conditions applicable to, each Award, the Committee shall take into consideration such factors as it deems relevant in promoting the purposes of this Plan. 6. CONDITIONS TO GRANTS. (a) GENERAL CONDITIONS: (i) The Grant Date of an Award shall be the date on which the Committee grants the Award or such later date as specified by the Committee at the time of granting the Award. (ii) The term of each Award shall be a period of not more than ten years from the Grant Date, and shall be subject to earlier termination as herein established. (iii) A Grantee may, if otherwise eligible, be granted additional Awards in any combination. (b) GRANT OF INCENTIVE STOCK OPTIONS. (i) Options granted under this Section 6(b) shall be "incentive stock options," that satisfy the requirements applicable to "incentive stock options" described in section 422(b) of the Code. No incentive stock option shall be issued to a Grantee who holds 10% or more of the outstanding voting securities of the Company on the Grant Date. (ii) No later than the Grant Date of any option, the Committee shall determine the Option Price of such option. The Option Price of an option shall not be less than 100% of the Fair Market Value of the Stock on the Grant Date. Such price shall be subject to adjustment as provided in Section 21. (iii) The Award Agreement may provide that the option may be exercisable with Restricted Stock. (iv) The Fair Market Value (determined at the time the option is granted) of the Stock with respect to which incentive stock options are exercisable for the first time by a Grantee during any calendar year (under the Plan and under any other incentive stock options of the Company) shall not exceed $100,000. (v) The grant of any incentive stock option shall be conditioned upon the Grantee agreeing to advise the Company when the Grantee sells or transfers any shares of Stock acquired pursuant to the exercise of an incentive stock option, and such agreement shall be incorporated in the applicable Award Agreement. The Company may legend any certificate representing Stock acquired pursuant to exercise of an incentive stock option to reflect such restriction. (c) GRANT OF NON-QUALIFIED STOCK OPTIONS. 6 (i) Options granted under this Section 6(c) shall be "non-qualified stock options," and are not intended to be "incentive stock options" as that term is described in section 422(b) of the Code. (ii) No later than the Grant Date of any option, the Committee shall determine the Option Price of such option. The Option Price of an option shall not be less than 100% of the Fair Market Value of the Stock on the Grant Date. (iii) The Award Agreement may provide that the option may be exercisable with Restricted Stock. (d) GRANT OF SHARES OF RESTRICTED STOCK. (i) The Committee may in its discretion grant shares of Restricted Stock to any individual eligible under Section 5 to receive Awards, and shall establish the terms and conditions, including such performance criteria, as shall be applicable to such Restricted Stock; provided, however, that the restriction period for any Restricted Stock Award shall be no less than three years or at least one year if the Restricted Stock Award is performance based. (ii) The Committee shall, in its discretion, determine the amount, if any, that a Grantee shall pay for shares of Restricted 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 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 9. (iii) The Committee may, but need not, provide that all or any portion of a Grantee's Award of Restricted Stock, or Restricted Stock acquired upon exercise of an option shall be forfeited: (A) except as otherwise specified in the Award Agreement, upon the Grantee's termination of employment for any reason specified in the Award Agreement within a specified time period after the Grant Date, or (B) if the Company or the Grantee does not achieve specified performance objectives (if any) within a specified time period after the Grant Date and before the Grantee's termination of employment, or (C) upon failure to satisfy such other restrictions as the Committee may specify in the Award Agreement; provided that, subject to Sections 13 and 14, in no case shall such Award become nonforfeitable before the first anniversary of the Grant Date. (iv) If a share of Restricted Stock is forfeited, then: 7 (A) if the Grantee was required to pay for such share or acquired such Restricted Stock upon the exercise of an option, the Grantee shall be deemed to have resold such share of Restricted Stock to the Company at the lesser of (1) the amount paid or, if the Restricted Stock was acquired on exercise of an option, the Option Price paid by the Grantee for such share of Restricted Stock, or (2) the Fair Market Value of a share of Stock on the date of such forfeiture; (B) the Company shall pay to the Grantee the amount determined under clause (A) of this sentence as soon as is administratively practical; and (C) such share of Restricted Stock shall cease to be outstanding, and shall no longer confer on the Grantee thereof any rights as a stockholder of the Company, from and after the later of the date the event causing the forfeiture occurred or the date of the Company's tender of the payment specified in clause (B) of this sentence, whether or not such tender is accepted by the Grantee. (v) The Committee may provide that any share of Restricted Stock shall be held (together with a stock power executed in blank by the Grantee) in escrow by the Secretary of the Company until the expiration of the Restricted Period and/or such shares become nonforfeitable or are forfeited. Any share of Restricted Stock shall bear an appropriate legend specifying that such share is non-transferable and subject to the restrictions set forth in the Plan and the Award Agreement. If any shares of Restricted Stock become nonforfeitable, and any applicable Restricted Period has ended, the Company shall cause certificates for such shares to be issued or reissued without such legend. (vi) The Committee may provide one or more Restricted Periods applicable to Restricted Stock, at its discretion. Such Restricted Period shall be measured from the first day of the month in which Restricted Stock is granted with respect to such Restricted Period. (vii) Each grant of Restricted Stock shall be evidenced by a written instrument stating the number of shares of Restricted Stock granted, the Restriction Period, the restrictions applicable to such Restricted Stock, the nature and terms of payment of consideration, if any, the consequences of forfeiture that will apply to such Restricted Stock, and any other terms, conditions and rights with respect to such grant. (viii) Any other provision of this Plan to the contrary notwithstanding, the Committee may at any time shorten any Restricted Period, if it determines that conditions, including but not limited to, changes in the economy, changes in competitive conditions, changes in laws or government or regulations, changes in generally accepted accounting principles, changes in the Company's accounting policies, acquisitions or dispositions, or the occurrence of other unusual, unforeseen, or extraordinary events, so warrant. 7. NON-TRANSFERABILITY. Except for those assignments and transfers that are approved by the Committee, each Award (other than Restricted Stock) granted hereunder 8 shall not be assignable or transferable other than by will or the laws of descent and distribution; PROVIDED HOWEVER, that, with respect to Restricted Stock and non-qualified stock options, a Grantee may (a) designate in writing a beneficiary to exercise his/her Award after the Grantee's death, (b) transfer an option (other than an incentive stock option) to a revocable, inter vivos trust as to which the Grantee is both the settlor and trustee, and (c) transfer an Award for no consideration to any of the following permissible transferees (each a "Permissible Transferee"): (w) any member of the Immediate Family of the Grantee to whom such Award was granted, (x) any trust solely for the benefit of the Grantee and members of the Grantee's Immediate Family, (y) any partnership or limited liability company whose only partners or members are the Grantee and members of the Grantee's Immediate Family, or (z) any other transferee approved by the Committee in advance of the transfer; and FURTHER PROVIDED THAT: (i) the transfer of any Award shall not be effective on a date earlier than the date on which the Award is first exercisable as set forth in this Plan; (ii) any Permissible Transferee to whom an Award is transferred by a Grantee shall not be entitled to transfer the Award, other than to the Grantee or by will or the laws of descent and distribution; and (iii) the Permissible Transferee shall remain subject to all of the terms and conditions applicable to such Award prior to such transfer. For purposes of this Section 7, "Immediate Family" means, with respect to a particular Grantee, such Grantee's spouse, children, stepchildren, grandchildren, parents, stepparents, grandparents, siblings, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, and sister-in-law, and shall include relationships arising from legal adoption. Each share of Restricted Stock shall be nontransferable until such share becomes nonforfeitable and the Restricted Period, if any, lapses. 8. EXERCISE. Subject to Sections 4(c)(ix) and 13 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 or shares of Restricted 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) cash; (ii) Stock held by the Grantee for at least 6 months prior to exercise of the option, valued at its Fair Market Value on the date of exercise; (iii) by delivery of a properly executed exercise notice to the Company, together with a copy of irrevocable instructions to a broker or lending institution, accepted in writing, and authorizing them to sell the Stock (or a sufficient portion thereof) acquired upon exercise of an option, and assigning the delivery to the Company of a sufficient amount of the sale proceeds to pay for all the Stock acquired through such exercise and any tax withholding obligations resulting from such exercise, all in such form and with such security as the Company may require; or (iv) in the discretion of the Committee and to the extent permitted by law, payment may also be made in accordance with Section 9. 9 In the event the Grantee elects to make payment as provided in Section 8(a)(ii) above, delivery may be accomplished by means of an attestation by the Grantee, at the time of exercise, as to the Grantee's ownership of the number of shares of Stock required to cover the total required Option Price of the option being exercised and the Company may deliver the net amount of shares covered by the option after deducting the number of shares required to cover the total Option Price; any attestation to be in form and substance, satisfactory to the Committee. 9. LOANS AND GUARANTEES. The Committee may, in its discretion allow a Grantee to defer payment to the Company of all or any portion of (i) the Option Price of an option, (ii) the purchase price of a share of Restricted Stock, or (iii) any taxes associated with a benefit hereunder which is not a cash benefit at the time such benefit is so taxable. Any such payment or deferral by the Company pursuant to this Section 9 shall be on such terms and conditions as the Committee may determine; provided that the interest rate applicable to any such payment deferral shall not be more favorable to the Grantee than the terms applicable to funds borrowed from an unrelated party in an arms-length transacation. Notwithstanding the foregoing, a Grantee shall not be entitled to defer the payment of such Option Price, purchase price or any related taxes unless the Grantee enters into a full recourse, binding obligation, secured against the assets of the Grantee excluding the Grantee's shares of Stock purchased pursuant to this deferral, to pay the deferred amount and the related interest. If the Committee has permitted a payment deferral pursuant to this Section 9, then the Committee may, in its discretion, require the immediate payment of such deferred amount upon the Grantee's termination of employment or if the Grantee sells or otherwise transfers the Grantee's shares of Stock purchased pursuant to such deferral. 10. 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 below. If the Committee has not prohibited such Grantee from making such election, and the Grantee shall, in connection with the exercise of any option or the grant of any share of Restricted Stock, make 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 ten (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. 11. MANDATORY WITHHOLDING OF TAXES. Whenever under this Plan, cash or shares of Stock are to be delivered upon exercise or payment of an Award or upon a share of Restricted Stock becoming nonforfeitable, 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 (i) that the Grantee remit an amount sufficient to satisfy the minimum 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 this Plan, or (iii) any combination of the foregoing. 12. ELECTIVE SHARE WITHHOLDING. 10 (a) In addition to the specific provisions of Section 8 and subject to Section 12(b), a Grantee may elect the withholding ("Share Withholding") by the Company of a portion of the shares of Stock otherwise deliverable to such Grantee upon the exercise or payment of an Award or upon a share of Restricted Stock becoming nonforfeitable (each a "Taxable Event") having a Fair Market Value equal to the minimum statutory amount necessary to satisfy required federal, state, or local withholding tax liability attributable to the Taxable Event. (b) Each Share Withholding election by a Grantee shall be subject to the following restrictions: (i) any Grantee's election shall be subject to the Committee's right to revoke such election of Share Withholding by such Grantee at any time before the Grantee's election if the Committee has reserved the right to do so in the Award Agreement; (ii) the Grantee's election must be made before the date (the "Tax Date") on which the amount of tax to be withheld is determined; (iii) the Grantee's election shall be irrevocable; and (iv) no election to have shares of Stock withheld from any Award shall be effective with respect to an Award which was transferred by the Grantee in accordance with this Plan. 13. TERMINATION OF EMPLOYMENT. Except as may otherwise be provided in the Award Agreement, the following provisions shall govern in the event of a termination of employment for any reason: (a) FOR CAUSE. If a Grantee has a termination of employment for Cause, (i) The Grantee's shares of Restricted Stock that are forfeitable shall thereupon be forfeited, subject to the provisions of Section 6(d)(iv) regarding repayment of certain amounts to the Grantee. (ii) Any unexercised option shall thereupon terminate. (b) ON ACCOUNT OF DEATH. If the Grantee has a termination of employment by reason of death: (i) All grants of Restricted Stock awarded to such Grantee shall become nonforfeitable. (ii) Any unexercised option may be exercised, to the extent exercisable on the date of death, in whole or in part, at any time within one year after such termination of employment and prior to the stated expiration date of the option, by (A) his/her personal representative, executor, administrator, or by the person to whom the option is transferred by 11 will or the applicable laws of descent and distribution, (B) the Grantee's beneficiary designated in accordance with Section 7, or (C) the then-acting trustee of the trust described in clause (b) of the first sentence of Section 7 (but only if the condition set forth in such clause (b) has been satisfied). (c) ON ACCOUNT OF DISABILITY. If a Grantee has a termination of active employment by reason of disability: (i) Such termination shall not constitute a termination of employment for purposes of Restricted Stock and such Grantee shall not forfeit any Restricted Stock held by him/her, provided that during the balance of the period in which the Restricted Stock would otherwise remain forfeitable such Grantee does not engage in or assist any business that the Company, in its sole discretion, determines to be in competition with business engaged in by it. A Grantee who does engage in or assist any business that the Company, in its sole discretion, determines to be in competition with any business engaged in by it, shall be deemed to have terminated employment. (ii) Any unexercised option may be exercised, to the extent exercisable on the date of termination of active employment, in whole or in part, at any time within a one year period after such termination of employment and prior to the stated expiration date of the option, by the Grantor or by the Grantee's guardian or legal representative provided that during such period the Grantee does not engage in or assist any business that the Company, in its sole discretion, determines to be in competition with a business engaged in by it. If the Grantee dies within such one year period, then the Grantee's options may be exercised within the one year period after his or her death by the person specified in Section 13(b)(ii). Notwithstanding the foregoing, however, in no event may an option be exercised after the expiration of the Option Period. (d) ON ACCOUNT OF RETIREMENT. If a Grantee has a termination of employment on account of Retirement: (i) Such termination shall not constitute a termination of employment for purposes of Restricted Stock and the provisions of Section 13(c)(i) shall apply as though the Grantee had terminated active employment for reasons of disability. (ii) Any unexercised option which is then exercisable, may be exercised, in whole or in part, not later than the close of business on the last business day of the 24th month following the Grantee's Retirement; PROVIDED THAT, following Retirement, such Grantee does not engage in or assist in any business that the Company, in its sole discretion, determines to be in competition with the business engaged in by it during such period and as is defined in the Award Agreement. If the Grantee dies within the 24 month period after Retirement, then the Grantee's options may be exercised within the one year period after his or her death by the person specified in Section 13(b)(ii). Notwithstanding the foregoing, however, in no event may an option be exercised after the expiration of its stated term. 12 (e) ANY OTHER REASON. If a Grantee has a termination of employment for a reason other than for Cause, death of the Grantee, the Grantee's Disability, and the Grantee's Retirement: (i) The Grantee's shares of Restricted Stock, to the extent forfeitable on the date of the Grantee's termination of employment, shall be forfeited on such date. If the termination of employment occurs after the Restricted Stock becomes nonforfeitable but prior to the end of a Restricted Period, such termination shall not have any effect on any Restricted Period, unless the Committee, in its sole discretion, finds that the circumstances so warrant and determines that the Restricted Period shall end on an earlier date as determined by the Committee, and that shares held by the Company shall be paid as soon as practicable following such earlier date. (ii) Any unexercised option to the extent exercisable on the date of the Grantee's termination of employment, may be exercised in whole or in part, not later than the three month anniversary of the Grantee's termination of employment. If the Grantee dies within the three month period, then the exercisability of the Grantee's options shall be determined under Section 13(b) or the balance remaining of the period specified in this Section 13(d)(ii), whichever is longer. (f) EXTENSION OF TERM. In the event of a termination of employment other than for Cause, the Committee, in its sole discretion, may extend the term, including vesting and the exercisability, of any Award; provided, however, that in no event may the term of any Award expire or be exercisable more than ten years after the Grant Date of such Award. 14. CHANGE IN CONTROL. (a) Notwithstanding any other provision of this Plan to the contrary, if, while any Awards remain outstanding under this Plan, a "Change in Control" (as defined below) should occur, then (1) all options that are outstanding at the time of such Change in Control shall become immediately vested and exercisable in full; and (2) all restrictions with respect to shares of Restricted Stock shall lapse, and such shares shall be fully vested and nonforfeitable. (b) A Change in Control means a change in control of the Company of a nature that would be required to be reported in response to item 6(e) of Schedule 14A of Regulation14A promulgated under the 1934 Act; PROVIDED THAT, without limitation, such change in control shall be deemed to have occurred if the conditions set forth in any one of the following paragraphs shall have been satisfied: (i) any person (as defined in Section 3(a)(9) of the 1934 Act, as such term is modified in Sections 13(d) and 14(d) of the 1934 Act), other than (1) any employee plan established by the Company or any Subsidiary, (2) the Company or Subsidiary, (3) an underwriter temporarily holding securities pursuant to an offering of such securities, or (4) a corporation owned, directly or indirectly, by stockholders of the Company in substantially the same proportions as their ownership of the Company), alone or with its Affiliates, is or becomes the beneficial owner (within the meaning of Rule 13d-3 13 promulgated under the 1934 Act), directly or indirectly, of Stock of the Company representing 15% or more of either the then outstanding shares of Stock or the combined voting power of the Company's then outstanding voting securities; (ii) a majority of the members of the Board shall cease to be Continuing Members. For this purpose, "Continuing Member" means a member of the Board who either (i) was a member of the Board on the Effective Date hereof and has been such continuously thereafter or (ii) became a member of such Board after the Effective Date and whose election or nomination for election was approved by a vote of at least two-thirds of the Continuing Members then members of the Company's Board (other than a nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the members of the Board, as such terms are used in Rule 14a-11 of Regulation 14A under the 1934 Act); (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (1) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Affiliate or Subsidiary, at least 50% of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (2) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person (determined pursuant to clause (i) above) is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company, its Subsidiaries or its Affiliates) representing 15% or more of either the then outstanding shares of Stock or the combined voting power of the Company's then outstanding voting securities; or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or of the Company's assets or earning power aggregating more than 50% of the assets or the earning power of the Company and its Subsidiaries, taken as a whole. Notwithstanding the foregoing, no Change in Control shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of Stock immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns substantially all of the assets of the Company immediately prior to such transaction or series of transactions. The Committee may also determine, in its discretion, that a sale of a substantial portion of the Company's assets or one of its businesses constitutes a "Change of Control" with respect to Awards held by Grantees employed in the affected operation. 14 15. SECURITIES LAW MATTERS. (a) If the Committee deems necessary to comply with the Securities Act of 1933, the 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. 16. FUNDING. 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 benefits under this Plan. 17. NO EMPLOYMENT RIGHTS. Neither the establishment of the Plan, nor the granting of any Award 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 (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 this Plan or in any Award Agreement. 18. RIGHTS AS A STOCKHOLDER. A Grantee shall not, by reason of any Award (other than Restricted Stock) have any right as a stockholder of the Company with respect to the shares of Stock which may be deliverable upon exercise or payment of such Award until such shares have been issuable to him. Shares of Restricted Stock held by a Grantee or held in escrow by the Secretary of the Company shall confer on the Grantee all rights of a stockholder of the Company, except as otherwise provided in the Plan. The Committee, in its discretion, at the time of grant of Restricted Stock, may permit or require the payment of cash dividends thereon to be deferred and, if the Committee so determines, reinvested in additional Restricted Stock to the extent shares are available under Section 3 or otherwise reinvested. Stock dividends and deferred cash dividends issued with respect to Restricted Stock shall be treated as additional shares of Restricted Stock that are subject to the same restrictions and other terms as apply to the shares with respect to which such dividends are issued. The Committee may, in its discretion, provide for crediting to and payment of interest on deferred cash dividends. 19. 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 15 hand, and the Grantee, on the other hand, except as such plan or agreement shall otherwise expressly provide. 20. NON-UNIFORM DETERMINATIONS. Neither the Committee's nor the Board's determinations under the Plan need 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. 21. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION. The Committee shall make such adjustment, as it shall deem equitable, to any or all of: (a) the aggregate numbers of shares of Stock and shares of Restricted Stock; (b) the number of shares of Stock and shares of Restricted Stock covered by an outstanding Award; (c) the Option Price; and (d) any other terms or provisions of any outstanding grants of stock options or Restricted Stock: to reflect a stock dividend, stock split, reverse stock split, share combination, re-capitalization, merger, consolidation, acquisition of property or shares, separation, 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, in each case, that the number of shares subject to any Award denominated in shares of Stock shall always be a whole number. Notwithstanding any part of the foregoing to the contrary, upon the approval by the stockholders of the Company of a plan of liquidation for the Company, any unexercised options previously granted shall become exercisable, and any shares of Restricted Stock that have not become nonforfeitable shall become nonforfeitable. 22. AMENDMENT OR TERMINATION OF THE PLAN. This Plan shall become effective on the Effective Date and shall terminate on, and no Awards shall be made after, November 1, 2011, unless terminated at an earlier date by action of the Board. Any Awards then outstanding shall remain in effect until they have been exercised, forfeited or expired. The Board may amend or terminate this Plan at any time; 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; or materially increase the benefits accruing to participants under the Plan. Subject to Section 21, no amendment or termination may, in the absence of written consent to the change by the affected Grantee (or, if the Grantee is not then living, the affected beneficiary), adversely affect the rights of any Grantee 16 or beneficiary under any Award granted under this Plan prior to the date such amendment is adopted by the Board. Unless approved by the Company's stockholders, no adjustments or reduction of the Option Price of any outstanding options shall be made directly or by cancellation of outstanding options and a subsequent regranting of options at a lower price to the same individual. Furthermore, the Plan will not be amended without approval of the stockholders in any way which would cause options to fail to qualify as incentive stock options. 23. OTHER COMPENSATION PLANS. Nothing contained in this 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. 24. NO ILLEGAL TRANSACTIONS. This 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 this 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. 25. NO TRUST OR FUND CREATED. Neither this 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 Subsidiary and a Grantee or any other person. To the extent that any person acquires a right to receive payments from the Company or Subsidiary pursuant to an Award, such right shall be no greater than the right of an unsecured general creditor of the Company or Subsidiary. 26. 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 this Plan. 27. TAX LITIGATION. The Company shall have the right to contest, at its expense, any tax ruling or decision, administrative or judicial, on any issue that is related to this 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. 28. SEVERABILITY. If all or any part of this 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 this 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 to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid. 29. INDEMNIFICATION. Each person who is or at any time serves as a member of the Board or the Committee or otherwise acts with respect to this Plan pursuant to authority delegated to him/her in accordance with this Plan shall be indemnified and held harmless by the 17 Company against and from: (i) any loss, cost, liability or expense 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 this Plan; and (ii) any and all amounts paid by such person in satisfaction of judgment in any such action, suit or proceeding relating to this Plan. Each person covered by this indemnification 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 this 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. 30. 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, this 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 omission 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 in good faith. 31. EXPENSES. The Company shall bear all expenses of administering this Plan. 32. TITLES AND HEADINGS. The titles and headings of the Sections in this 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. 33. 1993 LONG-TERM STOCK OWNERSHIP PLAN. Upon approval by the Company's stockholders of this Plan, the Company's 1993 Long-Term Stock Ownership Plan shall terminate and, except with respect to shares reserved for options and Retirement Awards granted thereunder which are by their contractual terms outstanding, all shares of Stock reserved for such plan shall no longer be reserved, and no other options or Retirement Awards shall be granted thereunder. Option agreements and retirement agreements currently outstanding under the 1993 Long-Term Stock Ownership Plan shall remain in effect in accordance with their terms notwithstanding termination of that Plan. Approved by the Stockholders of Quixote Corporation as of November 14, 2001 18 ~~-----END PRIVACY-ENHANCED MESSAGE-----~~