SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement /X/ Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 QUIXOTE CORPORATION - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2). / / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------ 2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------ 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and how it is determined): ------------------------------------------------------------------------ 4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------ 5) Total fee paid: ------------------------------------------------------------------------ / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: ------------------------------------------------------------------------ 2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------ 3) Filing Party: ------------------------------------------------------------------------ 4) Date Filed: ------------------------------------------------------------------------ [LOGO] ------------------------ NOTICE AND AGENDA OF THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD THURSDAY, NOVEMBER 14, 1996 -------------------- TO THE STOCKHOLDERS OF QUIXOTE CORPORATION: Notice is hereby given that the Annual Meeting of Stockholders of Quixote Corporation (the "Company") will be held on Thursday, November 14, 1996, in the Assembly Room at The Northern Trust Company, 50 South LaSalle Street, Chicago, Illinois 60675. The meeting, which will commence at 10:00 a.m. Central Standard Time, will consider: 1. The election of two (2) directors to serve for a three-year term expiring at the Annual Meeting of Stockholders to be held in 1999; and 2. The approval of Coopers & Lybrand L.L.P. as independent auditors for the Company. The Annual Meeting will also transact such other business as may properly come before it. Only stockholders of record at the close of business on September 18, 1996, will be entitled to notice of, and to vote at, the meeting. Stockholders are encouraged to attend the meeting in person. To ensure that your shares will be represented, we urge you to vote, date, sign and mail the enclosed Proxy Card in the envelope which is provided, whether or not you expect to be present at the meeting. The prompt return of your Proxy Card will be appreciated. It will also save the Company the expense of a reminder mailing. IT IS IMPORTANT TO YOU AND TO YOUR COMPANY THAT YOU VOTE YOUR SHARES BY COMPLETING AND RETURNING THE ENCLOSED PROXY CARD. WE APPRECIATE YOUR COOPERATION AND WE THANK YOU. By order of the Board of Directors, JAMES H. DEVRIES SECRETARY Chicago, Illinois October 2, 1996 I M P O R T A N T A PROXY STATEMENT AND PROXY CARD ARE SUBMITTED WITH THIS NOTICE. ALL STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND TO COMPLETE AND MAIL THE PROXY CARD PROMPTLY. THE ENCLOSED ENVELOPE FOR THE RETURN OF THE PROXY CARD REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. A LIST OF STOCKHOLDERS ENTITLED TO VOTE AT THE ANNUAL MEETING WILL BE AVAILABLE FOR INSPECTION BY ANY STOCKHOLDER FOR ANY PURPOSE GERMANE TO THE MEETING DURING ORDINARY BUSINESS HOURS FOR A PERIOD OF TEN DAYS PRIOR TO THE MEETING AT THE PRINCIPAL OFFICES OF THE COMPANY, ONE EAST WACKER DRIVE, 30TH FLOOR, CHICAGO, ILLINOIS. [Quixote Logo] OCTOBER 2, 1996 ------------------------ PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD THURSDAY, NOVEMBER 14, 1996 -------------------- PROXY SOLICITATION This Proxy Statement is furnished to stockholders of Quixote Corporation (the "Company"), on or about October 2, 1996, in connection with the solicitation of proxies on behalf of the Board of Directors to be voted at the Annual Meeting of Stockholders on Thursday, November 14, 1996, at 10:00 a.m., Central Standard Time, in the Assembly Room at The Northern Trust Company, 50 South LaSalle Street, Chicago, Illinois 60675, and at any adjournment thereof. The person voting the enclosed proxy may revoke it at any time before it is exercised by writing to the Secretary of the Company at its principal office, One East Wacker Drive, Chicago, Illinois 60601, or by attending the Annual Meeting and voting in person, in which case any prior proxy given will be automatically revoked. Properly executed proxies received prior to the meeting will be voted at the meeting. If a stockholder designates how the proxy is to be voted on any business to come before the meeting, the signed proxy will be voted in accordance with such designation. If a stockholder fails to designate how his proxy should be voted, the signed proxy will be voted for the election of the nominees named below as Directors and for the approval of Coopers & Lybrand L.L.P. as the Company's independent auditors. The Company will bear the cost of this proxy solicitation, including the charges and expenses of brokerage firms and others which forward material to beneficial owners. Proxies may be solicited in person or by mail, telephone or telegraph. Proxies may also be solicited by certain Directors, Officers and regular Company employees. VOTING AT THE ANNUAL MEETING Stockholders of record owning the Company's common stock, $.01-2/3 par value ("Common Stock"), at the close of business on September 18, 1996, will be entitled to vote at the Annual Meeting. On that date, 7,961,680 shares of Common Stock were outstanding. Each outstanding share of Common Stock entitles the holder to one vote upon each matter presented at the Annual Meeting. Shares voted as abstentions on any matter (or a "withhold vote for" as to directors) will be counted as shares that are present and entitled to vote for purposes of determining a quorum at 1 the meeting and as unvoted, although present and entitled to vote, for purposes of determining the approval of each matter as to which the shareholder has abstained. Abstentions and withheld votes have the effect of votes against a matter. If a broker submits a proxy that indicates the broker does not have discretionary authority as to certain shares to vote on one or more matters, those shares will be counted as shares that are present and entitled to vote for purposes of determining a quorum at the meeting, but will not be considered as present and entitled to vote with respect to such matters. Accordingly, broker non-votes will have no effect on such matters. While the Notice of Annual Meeting calls for the transaction of such other business as may properly come before the meeting, management has no knowledge of any matters to be presented for action by the stockholders except as already set forth. The enclosed proxy gives discretionary authority to the persons holding those proxies to vote in accordance with their best judgment as to any other business. ELECTION OF DIRECTORS At the Annual Meeting, two (2) Directors are to be elected to serve three year terms until the Annual Meeting to be held in 1999 and until their successors are elected and qualified. The Company is soliciting proxies to vote for its nominees, Philip E. Rollhaus, Jr. and David S. Ruder, as Directors of the Company. All proxies will be voted in accordance with the stated instructions. If any nominee ceases to be a candidate for election for any reason, the proxy will be voted for a substitute nominee designated by the Board. The Board of Directors currently has no reason to believe that any nominee will be either unwilling or unable to serve as a Director if elected. Proxies given by stockholders cannot be voted for more than two (2) persons. The nominees for Director will be elected if they receive the affirmative vote of at least sixty percent (60%) of all votes entitled to be cast at this meeting. INFORMATION CONCERNING NOMINEES FOR DIRECTOR AND DIRECTORS CONTINUING IN OFFICE. The information appearing in this section in regard to age and principal occupation or employment has been furnished to the Company by the respective nominees for Director and by the respective Directors continuing in office. Information relating to the beneficial ownership of the Company's Common Stock by Directors and nominees for Director is set forth in the table on page 13. NOMINEES FOR DIRECTOR FOR A THREE-YEAR TERM EXPIRING IN 1999 PHILIP E. ROLLHAUS, JR. Mr. Rollhaus, 62, is Chairman of the Board and the Chief Executive Officer of the Company. Mr. Rollhaus has served in these capacities and as a Director of the Company since the Company was founded in July 1969. Mr. Rollhaus also served as President of the Company from July 1969 until Mr. Leslie J. Jezuit's appointment to that office in January 1996. Mr. Rollhaus is Chairman and Chief Executive Officer of Energy Absorption Systems, Inc. and Disc Manufacturing, Inc., both wholly-owned subsidiaries of the Company. DAVID S. RUDER Mr. Ruder, 67, is a professor of law at Northwestern University School of Law in Chicago and a senior counsel with the law firm of Baker & McKenzie. Mr. Ruder also serves as a director of Rodman and Renshaw Capital Group, Inc. From 1987 through 1989, he served as Chairman of the U.S. Securities and Exchange Commission. Mr. Ruder has served as a Director of the Company since May 1990 and is a member of the Audit/Compensation Committee. THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE ELECTION OF MR. ROLLHAUS AND MR. RUDER AS DIRECTORS OF THE COMPANY. 2 DIRECTORS CONTINUING IN OFFICE JAMES H. DEVRIES Mr. DeVries, 64, is Executive Vice President and Secretary of the Company. Mr. DeVries has served as a Director of the Company since July 1969. Mr. DeVries serves as Vice Chairman and Secretary of Disc Manufacturing, Inc. and as Secretary of Energy Absorption Systems, Inc. His current term as Director expires at the Annual Meeting to be held in 1997. LAWRENCE C. MCQUADE Mr. McQuade, 69, is Chairman of Qualitas International (since 1994). Mr. McQuade also is a Director of Applied Bioscience International, Inc. (since 1995), of Bunzl P.L.C. (since 1991) and of Country Baskets Index Fund (since February 1996). Mr. McQuade is the former Vice Chairman of Prudential Mutual Fund Management, Inc. and Managing Director of Investment Banking for Prudential Securities Incorporated, positions which he held from 1988 through April 1995. In 1987, he was Chairman and Chief Executive Officer of Universal Money Centers, Inc. Mr. McQuade formerly served as Executive Vice President and Director of W.R. Grace & Co. from 1975 to 1987. He was formerly a Director of KaiserTech Limited, and Kaiser Aluminum and Chemical Corp. (March 1987-November 1988) and Crazy Eddie, Inc. (1987-1990). Mr. McQuade served as Chairman of the Czech & Slovak American Enterprise Fund from August 1995 to March 1996. Mr. McQuade has served as a Director of the Company since February 1992 and is a member of the Audit/Compensation Committee. His current term as Director expires at the Annual Meeting to be held in 1997. WILLIAM G. FOWLER Mr. Fowler, 68, is an attorney at, and a shareholder of, the law firm of Van Cott, Bagley, Cornwall & McCarthy of Salt Lake City, Utah. He joined the Board in January 1973. Mr. Fowler is the Chairman of the Audit/Compensation Committee. His current term as Director expires at the Annual Meeting to be held in 1998. ROBERT D. VAN ROIJEN, JR. Mr. van Roijen, 57, has been the President of Tox Financial Company, a private investment firm, since 1988. He was formerly associated with Control Laser Corporation, serving in various capacities from 1977 to 1987, including as Chairman of the Board and as President and Chief Executive Officer. Mr. van Roijen is also a director of Sonex Research, Inc.; Commonwealth Scientific; Applied Digital Technology; St. Leonard's Corporation; and Security Storage Company, and is a former director of AMBAR Corp.; Proclosure, Inc.; Clinical Diagnostics Systems; Cynthia Gibson, Inc.; KuwAm Corporation, and Secor Investments. Mr. van Roijen has served as a Director of the Company since May 1993 and is a member of the Audit/Compensation Committee. His current term as Director expires at the Annual Meeting to be held in 1998. AUDIT/COMPENSATION COMMITTEE The Audit/Compensation Committee recommends the accounting firm to be employed as the Company's independent auditors to the Board; consults with the auditors regarding the audit; reviews the auditors' report or proposed report and resulting letter of comments to management; consults with the auditors and management regarding the adequacy of internal controls; determines adjustments to salaries, bonuses and other forms of compensation (including stock option grants) afforded the principal Officers of the Company and its subsidiaries; and considers any other matter relating to the Company's affairs that the Committee, in its discretion, deems appropriate. The Audit/Compensation Committee had four meetings during fiscal 1996. The Board of Directors does not have a nominating committee. The Board of Directors as a whole performs the functions normally performed by nominating committees. 3 REMUNERATION OF DIRECTORS AND EXECUTIVE OFFICERS COMPENSATION OF DIRECTORS In fiscal 1996, Directors who were also employees of the Company were paid a fee of $1,000 for each day of scheduled meetings of the Board, plus expenses. Non-employee Directors were paid a fee of $2,000 for each day of scheduled meetings of the Board and the Audit/Compensation Committee, plus traveling and related expenses, and $500 for each telephone conference meeting. There were nine scheduled meetings (ten meeting days) and five telephone conference meetings of the Board in fiscal 1996. There was one scheduled meeting and three telephone conference meetings in fiscal 1996 of the Audit/Compensation Committee. Present and future Directors are eligible to receive stock options as granted from time to time by the Board of Directors pursuant to the Company's 1991 Director Stock Option Plan (the "Director Plan"), subject to certain annual and lifetime limits on the number of shares any individual Director may receive. Options are granted under the Director Plan at 100% of fair market value on the grant date and require continued service as a Director for at least a year from the grant date as a condition of exercise. On April 30, 1996, the Company granted each of the Directors options to purchase 2,000 shares of Common Stock at $6.875 per share. The Company maintains accidental death and disability insurance coverage in the amount of $500,000 on behalf of each of the non-employee Directors, payable to the designated beneficiary of each Director. The Company paid premiums of $341.00 for each Director to provide such insurance in fiscal 1996. SUMMARY COMPENSATION TABLE The following table summarizes the total compensation earned or paid for services rendered in all capacities during each of the years ended June 30, 1996, 1995 and 1994, by the named Executive Officers. 4 SUMMARY COMPENSATION TABLE LONG TERM COMPENSATION AWARDS ANNUAL COMPENSATION ------------------------- ------------------------------------------------- RESTRICTED OTHER ANNUAL STOCK OPTIONS/ SALARY BONUS COMPENSATION(1) AWARD(S)(2) SARS NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) - --------------------------------------- --------- --------- --------- ---------------- ------------ ----------- Philip E. Rollhaus, Jr................. 1996 $ 425,000 $ 130,000 $ 101,706 $ 0 42,000 Chairman and Chief Executive 1995 425,000 135,000 180,825 0 27,060 Officer, Quixote Corporation, 1994 405,000 270,000 285,513 0 0 Energy Absorption Systems, Inc. and Disc Manufacturing, Inc. Leslie J. Jezuit....................... 1996 137,500 70,000 35,411 0 55,000 President and Chief Operating Officer, Quixote Corporation; Vice Chairman, Disc Manufacturing, Inc. (3) James H. DeVries....................... 1996 270,000 35,000 74,821 0 2,000 Executive Vice President and 1995 270,000 30,000 71,134 0 22,210 Secretary, Quixote Corporation; 1994 257,000 145,000 105,619 0 0 Vice Chairman and Secretary, Disc Manufacturing, Inc.; Secretary, Energy Absorption Systems, Inc. Myron R. Shain......................... 1996 225,000 35,000 60,369 0 10,000 Executive Vice President -- Finance 1995 225,000 80,000 42,674 0 7,765 and Treasurer, Quixote Corporation; 1994 212,800 175,000 69,986 0 0 President, Chief Operating Officer and Treasurer, Disc Manufacturing, Inc.; Vice President and Treasurer, Energy Absorption Systems, Inc. George D. Ebersole..................... 1996 215,000 100,000 26,506 0 15,000 President and Chief Operating 1995 210,000 125,000 49,085 0 9,710 Officer, Energy Absorption 1994 199,500 145,000 80,499 0 0 Systems, Inc. ALL OTHER COMPENSATION(4) NAME AND PRINCIPAL POSITION ($) - --------------------------------------- ----------------- Philip E. Rollhaus, Jr................. $ 3,000 Chairman and Chief Executive 3,000 Officer, Quixote Corporation, 34,987 Energy Absorption Systems, Inc. and Disc Manufacturing, Inc. Leslie J. Jezuit....................... 0 President and Chief Operating Officer, Quixote Corporation; Vice Chairman, Disc Manufacturing, Inc. (3) James H. DeVries....................... 3,083 Executive Vice President and 3,008 Secretary, Quixote Corporation; 30,050 Vice Chairman and Secretary, Disc Manufacturing, Inc.; Secretary, Energy Absorption Systems, Inc. Myron R. Shain......................... 3,000 Executive Vice President -- Finance 3,126 and Treasurer, Quixote Corporation; 26,370 President, Chief Operating Officer and Treasurer, Disc Manufacturing, Inc.; Vice President and Treasurer, Energy Absorption Systems, Inc. George D. Ebersole..................... 3,000 President and Chief Operating 3,105 Officer, Energy Absorption 16,422 Systems, Inc. - ------------------------------ (1) The amounts disclosed for Messrs. Rollhaus, DeVries, Shain and Ebersole include cash paid under the Quixote Corporation Long-Term Stock Ownership Incentive Plan (the "Long-Term Plan") to cover the federal and state taxes arising from the restricted stock issued in a fiscal year to such persons pursuant to the Long-Term Plan. The amounts disclosed for Mr. Rollhaus and Mr. DeVries also include compensation of $10,000 paid to each of them for their services as Directors of the Company. Perquisites and other personal benefits for Mr. Jezuit are disclosed, including $29,163 for certain relocation expenses in moving from Richmond, Virginia to Chicago, Illinois. In addition to the amount disclosed, Mr. Jezuit received a loan of $145,000 from the Company, also for relocation reasons. The loan, all of which is outstanding, is due and payable, without interest, on the earlier of Mr. Jezuit's sale of his former Virginia residence or June 27, 1997. Perquisites and other personal benefits are disclosed for Mr. DeVries and Mr. Shain, including an automobile allowance of $20,615 for Mr. DeVries and an automobile allowance of $15,540 and Exec-U-Care reimbursement of $14,385 for Mr. Shain. The aggregate amount of perquisites and other personal benefits for Messrs. Rollhaus and Ebersole did not exceed the lesser of $50,000 or ten percent (10%) of the total annual salary and bonus reported for each of them and is therefore not included. (2) Restricted stock awards were granted to Messrs. Rollhaus, DeVries, Shain and Ebersole in 1993. The number of shares covered by the restricted stock awards and the number of shares vested, respectively, are as follows: Mr. Rollhaus-91,530/73,224; Mr. DeVries-32,410/25,928; Mr. Shain-46,000/18,400; and Mr. Ebersole-37,037/21,164. The number and value of the restricted stock holdings, respectively, as of June 30, 1996 were as follows: Mr. Rollhaus-73,224 shares/$494,262; Mr. DeVries-25,928 shares/ $175,014; Mr. Shain-18,400 shares/$124,200; and Mr. Ebersole-21,164 shares/$142,857. Pursuant to the terms of the Long-Term Plan, the remaining restricted stock covered by the awards granted to Mr. Rollhaus and Mr. DeVries will be issued on June 30, 1997, subject to the continuation of employment and transferability restrictions described below. The remaining restricted stock covered by the awards granted to Mr. Ebersole will be issued in three equal annual installments and to Mr. Shain in six equal annual installments on June 30 of the next three and six fiscal years, respectively, subject to the continuation of employment and transferability restrictions described below, and subject further to the Company's right to terminate the agreement at any time after June 30, 1998. In order to receive an annual issuance of restricted stock, the executive must be employed by the Company or its subsidiaries on the last day of the fiscal year in which such stock issued (except in the case of the executive's death, disability or termination of employment other than for cause). The executive may not sell or transfer any restricted stock received under the Long-Term Plan until the earlier of the date his employment is terminated or the date he reaches retirement age (whether he actually retires at that time or not). Pursuant to the terms of the Long-Term Plan, dividends are paid only on shares of restricted stock issued and delivered to the named Executive. (3) Mr. Jezuit began his employment with the Company on December 29, 1995. Mr. Jezuit's annual salary is $275,000. (4) Amounts shown for fiscal 1996 are matching contributions by the Company under the Company's 401(k) Plan. 5 STOCK OPTION GRANTS IN FISCAL YEAR 1996 The following table shows the options granted to the named Executive Officers during fiscal 1996 and the potential realizable value of those grants (on a pre-tax basis) determined in accordance with SEC rules. The information in this table shows how much the named Executive Officers may eventually realize in future dollars under three hypothetical situations: if the price of the Company's Common Stock does not increase, and if the stock gains 5% or 10% in value per year, compounded over the life of the options. These amounts represent assumed rates of appreciation, and are not intended to forecast future appreciation of the Company's Common Stock. The options described in this table have exercise prices equal to the fair market value of a share of Common Stock on the date they were granted. Unless the Company's stock price appreciates and the recipient continues to be employed until the options vest, the options will have no value. OPTION GRANTS IN LAST FISCAL YEAR POTENTIAL REALIZABLE VALUE AT ASSUMED INDIVIDUAL GRANTS ANNUAL RATES OF STOCK --------------------------- PRICE APPRECIATION FOR % OF TOTAL OPTION TERM(2) OPTIONS ------------------------------------------------ OPTIONS GRANTED TO EXERCISE OR GRANTED EMPLOYEES IN BASE PRICE EXPIRATION 0% NAME (#)(1) FISCAL YEAR ($/SH) DATE -- 5%($) - -------------------------------------------- ----------- -------------- ----------- ----------- --------- Philip E. Rollhaus, Jr...................... 40,000 20.7% 6.88 04/30/01 0 75,977 2,000 1.0% 6.88 04/30/06 0 8,654 Leslie J. Jezuit............................ 40,000(3) 20.7% 8.13 12/29/00 0 89,792 15,000 7.8% 6.88 04/30/01 0 28,512 James H. DeVries............................ 2,000 1.0% 6.88 04/30/06 0 8,654 Myron R. Shain.............................. 10,000 5.2% 6.88 04/30/01 0 19,008 George D. Ebersole.......................... 15,000 7.8% 6.88 04/30/01 0 28,512 NAME 10%($) - -------------------------------------------- ----------- Philip E. Rollhaus, Jr...................... 167,890 21,930 Leslie J. Jezuit............................ 198,416 63,005 James H. DeVries............................ 21,930 Myron R. Shain.............................. 42,003 George D. Ebersole.......................... 63,005 - ------------------------------ (1) The options which expire on April 30, 2001 were granted on April 30, 1996 under the Long-Term Plan and the options which expire April 30, 2006 were granted on the same date under the Director Plan. All options were granted at the Current Market Price (as defined in the Plans) on such date. The options become exercisable on the first anniversary of the date of grant in one-third increments on each anniversary date until fully exercisable. All option rights under the Long-Term Plan lapse upon termination of employment except for limited exercise periods. In the event of a change in control of the Company (as defined in the Long-Term Plan and Director Plan), the Plans give each optionee the right, within 30 days of such change in control, to exercise his options, notwithstanding the other provisions of the Plans. (2) The potential realizable value to all stockholders at the appreciation rates of 0%, 5% and 10% would be $0, $14,830,025 and $32,770,477 (based on shares outstanding at June 30, 1996 and assuming such shares were purchased for $6.75 on June 30, 1996 and held until June 30, 2001). (3) These options were granted on December 29, 1995 under the Long-Term Plan. Their terms are the same as those described in footnote (1). AGGREGATED OPTION EXERCISES AND OPTION VALUES TABLE The following table shows information concerning the exercise of stock options by each of the named Executive Officers during fiscal 1996, and the value of all remaining exercisable and unexercisable options at June 30, 1996, on a pre-tax basis. 6 AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES VALUE OF UNEXERCISED NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS/SARS OPTIONS/SARS AT 6/30/96(#) AT 6/30/96($)(1) SHARES ACQUIRED ON VALUE REALIZED ---------------------------- -------------------------- NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ---------------------------------- ------------------- --------------- ----------- --------------- ----------- ------------- Philip E. Rollhaus, Jr............ 35,000 $ 78,750 172,226 50,334 $ 5,220 $ 0 Leslie J. Jezuit.................. 0 0 0 55,000 0 0 George D. Ebersole................ 0 0 18,444 15,000 0 0 James H. DeVries.................. 0 0 108,043 11,167 67,720 0 Myron R. Shain.................... 1,000 8,750 34,265 10,000 0 0 - ------------------------------ (1) Based on the closing price of the Company's Common Stock as reported on the NASDAQ-NMS on June 30, 1996 ($6.75). EMPLOYMENT AGREEMENTS AND TERMINATION BENEFITS The Company has employment agreements with Philip E. Rollhaus, Jr., James H. DeVries and Myron R. Shain (the "Employment Agreements") that were entered into in February 1989. The Company also has separation agreements with George D. Ebersole and with Leslie J. Jezuit, (the "Severance Agreements") that were entered into in February 1989 and April 1996, respectively. The Employment Agreements and Severance Agreements are collectively referred to as the "Agreements". Each Severance Agreement provides for an initial two-year term and for automatic one-year extensions of such term on each Agreement's anniversary unless the Board of Directors gives the executive a required notice of the Company's intent not to extend his Severance Agreement. Mr. Ebersole's Severance Agreement was automatically extended in February 1996 for one year. The Employment Agreements, amended in June 1991, provide for an initial three-year term with an automatic one-year extension of such term each year on the Agreements' anniversary date unless the Board of Directors should previously determine not to extend the term. The Employment Agreements were automatically extended in June 1996 for one year. The Board of Directors believes that the Agreements assure fair treatment of the Executive Officers in relation to their careers with the Company by assuring them of some financial security. The Agreements also protect the stockholders by encouraging the Executive Officers to continue their attention to their duties without distraction in a potentially disturbing circumstance and neutralizing any bias they might have in evaluating proposals for the acquisition of the Company. In addition to providing for the payment of base annual salaries included in the above summary compensation table and other employee fringe benefits, the Employment Agreements provide for special separation pay and benefits in the event of termination of an executive's employment under certain circumstances. The Employment Agreements provide that upon termination, the executive will receive his base salary through the termination date determined in accordance with such Agreement. If the executive's employment is terminated due to disability, the Employment Agreements provide for a separation payment equal to two times the sum of the executive's annual base salary and the average of his yearly bonus payments over the preceding two years. If, after a change in control of the Company, the Company terminates the employment of the executive, other than for cause or disability, or if the executive terminates his employment for good reason, the Company will pay the executive a separation payment equal to 300% of the sum of his then current base salary and average yearly bonus payment for the last two years. Such payments will be made on a semi-monthly basis over a period of 36 months following termination of employment. If the Company fails to make an installment payment when due, the executive has the right to accelerate all remaining compensation owned him. If such termination occurs prior to a change in control of the Company, the Employment Agreements provide that the Company will pay the executive a separation payment equal to twice his base salary. Whether or not a change in control has occurred, upon such termination the executive must be offered continued participation in (or comparable replacement of) retirement and group insurance benefits through the later of 7 the expiration of the term of the Employment Agreements or the date of termination. The Employment Agreements further provide that if any excise tax is imposed pursuant to Section 4999 of the Internal Revenue Code on any payments to be received by the executives in connection with a change in control of the Company or termination of the executive's employment pursuant to the Employment Agreements or otherwise (the "Total Payments"), any severance payments will be reduced to the extent necessary so that no portion of the Total Payments is subject to the excise tax. The Severance Agreements provide if, after a change of control of the Company, the employment of the executive is terminated other than (i) by death or disability, (ii) by the Company or employing subsidiary for cause, or (iii) by the executive for other than good reason, the Company will pay the executive a separation payment equal to 200% of the sum of his base salary and average yearly bonus payment for the last two years, with such payment being reduced by the present value of any other payments made to, or on behalf of, the executive which would constitute a "parachute payment" within the meaning of that term as defined in Section 280G of the Internal Revenue Code of 1986, as amended. The Agreements define a "change in control" as a change in the stock ownership of a magnitude which requires the filing of reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). For the purposes of the Agreements, a "change in control" shall be deemed to have occurred if any of the following occur: (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities; (ii) if during any period of two consecutive years, there is a change in the composition of the Board of Directors of the Company such that 50% of the non-employee Board members have not been slated by the Board; (iii) a consolidation or merger occurs and the Company is not the surviving company or the Company sells all or substantially all of its assets; or (iv) the Company is liquidated or dissolved. The term "good reason" is generally defined by the Agreements to mean any unfavorable change in the executive's or employee's position, duties, compensation or benefits and "cause" is generally defined as willful conduct of an executive or employee demonstrably injurious to the Company or employing subsidiary. The Agreements also contain provisions for the payment of legal expenses incurred by the executives and the employees as a result of any termination of employment after a change in control. REPORT OF THE AUDIT/COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION The Audit/Compensation Committee (the "Compensation Committee" or "Committee") of the Board of Directors of the Company, which is composed of all independent, non-employee Directors (see page 12), is responsible for reviewing the recommendations of the Chief Executive Officer and determining the compensation and other remuneration afforded the Officers of the Company, including the persons who are listed in the Summary Compensation Table on page 5 (hereinafter collectively referred to as the "Executive Officers"). Compensation Committee determinations relating to compensation are reviewed by the entire Board. Action regarding awards under the 1993 Long-Term Stock Ownership Incentive Plan (the "Plan") are made solely by the Compensation Committee in compliance with Securities Exchange Act Rule 16b-3. COMPENSATION PRINCIPLES AND POLICIES OF THE COMPANY The Board has delegated to the Compensation Committee the responsibility to be certain that the Officers of the Company are compensated fairly and effectively in a manner consistent with the compensation philosophy and policies of the Company. The compensation philosophy and its attributes are anchored in solid concepts of responsible and productive growth. Philip E. Rollhaus, Jr., founder, Chairman of the Board and Chief Executive Officer, has been at the helm and guided the management team through the 27 years of the Company's existence. Fiscal 1996 has been a dramatic year of consolidation around Quixote's core businesses, and although the Company 8 suffered losses attributable to discontinued operations in fiscal 1996, the Company, nonetheless, has made substantial progress by divesting its unprofitable operations, while at the same time dramatically reducing debt. Five-year compounded annual growth in revenues still remains in excess of 11%. Furthermore, the Company has been able to continue to adhere to its basic policy of investing in the technologies closely relating to its remaining core businesses, each of which is a leader in its industry. Fiscal 1996 presented the challenges of a difficult business environment and redirection of the Company's near and long-term strategies. During the year, the Company discontinued the operations of its Legal Technologies businesses, reflecting management's decision to concentrate its energies and resources on the Company's two subsidiaries offering the greatest potential for growth and profit, Disc Manufacturing, Inc. and Energy Absorption Systems, Inc. Using proceeds generated from the sale of Legal Technologies and other funds, management reduced long-term debt by $25 million from its peak level in December 1995, ending the year with a stronger balance sheet to support future growth to enhance shareholder value. In addition to considering the Company's profitability for the year, the Compensation Committee critically evaluates management's performance in dealing with competitive and economic issues and business adversities as well as performance in implementing the Company's long-term strategies. Each of these areas of performance weigh heavily upon share values. The Company's progress in the implementation of new ideas and strategies consistent with solid long-term growth and expansion may result in periodic discontinuation of certain business components causing temporary declines in earnings. Thus, the attainment of strategic objectives and enhanced long-term financial results will be as significant in the Committee's evaluation process as will short-term changes in profitability. The Committee procedures in fixing compensation include engaging the services of an independent compensation consultant to evaluate compensation levels and to advise it regarding competitive influences upon compensation policies. Because the Company now operates two diverse businesses, each senior executive is required to perform multiple tasks with major responsibilities. For example, Mr. Rollhaus serves as Chairman and Chief Executive Officer of both subsidiaries as well as Chairman and Chief Executive Officer of Quixote. Mr. DeVries serves as Executive Vice President, Secretary and General Counsel for the Company, Vice Chairman and Secretary of DMI, and Secretary of Energy Absorption Systems, Inc. Mr. Shain is the Company's Chief Financial Officer and also serves as President and Chief Operating Officer of DMI. The need to free Mr. Rollhaus to concentrate on long-term growth and strategy dictated this past year the employment of Leslie J. Jezuit as Chief Operating Officer and President of Quixote Corporation and Vice Chairman of DMI. Quixote is fortunate to have acquired an executive officer with extensive experience and skills, substantial technical training and a personality well suited to his new office. Mr. Shain and Mr. DeVries report directly to Mr. Jezuit. The Company's compensation program includes base salary and the consideration of annual bonus and stock option awards. The Compensation Committee believes that the program provides incentives compatible with current and long-term management goals of the Company and is competitive in the marketplace while recognizing individual performance. The ultimate objective of the program is the enhancement of shareholder value. An effective compensation policy requires that a significant portion of each officer's compensation be at risk in the form of bonuses and stock options. The Executive Officer group owned approximately 511,680 shares of Company Common Stock on September 4, 1996, or an average of about 102,336 common shares per Executive Officer. In particular, the Committee believes that granting stock options and encouraging executive stock ownership relates compensation to the enhancement of share value. BASE SALARY The annual review of each officer's base salary, which is subject to annual adjustment, takes into account the officer's performance as well as such enhancement or material modification as 9 may have affected the officer's responsibilities. The decline in overall earnings and the decline in earnings from continuing operations in fiscal 1996 oblige the Committee to resolve that no salary increases will be made for fiscal 1997 for the Executive or Operating Officers, excepting Mr. Ebersole, who is entitled by his continuing and profitable leadership of Energy Absorption to a modest increase. Based upon a review of published survey data in each of the Company's lines of business and historical modifications of responsibilities, the Committee believes that, even in the absence of increases, base salary levels remain competitive. ANNUAL BONUS The Company historically has provided annual bonuses to its Officers to encourage sustained high performance. The use of such bonuses places a significant portion of total annual compensation at risk. In fiscal 1996, as well as in fiscal 1995, reductions were made in the bonuses payable to each of the Executive Officers for those years. The Compensation Committee believes that the responsibility for a decline in earnings rests, in part, upon the management team, and an overall reduction in bonuses is consistent with the obligation of the Committee to the shareholders. However, a portion of the decline from the record levels of 1994 was attributable to factors beyond the control of management, including the Company's determination to discontinue certain operations. The profit performance of each individual operating unit, however, remains significant in determining the annual bonuses of those Officers who were responsible for each unit. STOCK OPTIONS Quixote Corporation utilizes stock options, granted pursuant to the Plan, as one of the three components of the Company's management compensation package. Historically, the Company has used stock options as an incentive to increase the Company's value. Substantial stock ownership by its executives has been a hallmark of the Company, and stock options are an important component of total compensation. Options generally vest over a three-year period and are exercisable over a specified period of time following the date of grant, which is typically five years. Option recipients must be employed by the Company at the time of vesting and at the time the options are exercised in order for them to be able to exercise their options. The Committee believes that without meaningful stock options the Company would find it difficult to attract and retain highly talented and qualified management employees. For the last three fiscal years, the Company has granted options to employees to purchase an annual average of 183,136 shares at the market price on the date of grant. STOCK BASED RETIREMENT PLAN The Company maintains a stock-based retirement plan (the "Retirement Plan"), which is a component of its 1993 Long-Term Stock Ownership Plan, to provide its executives with a competitive retirement program. Under the Retirement Plan, which is in lieu of any supplemental executive retirement program, the Compensation Committee makes annual awards of Company stock to selected key executives who have completed at least ten years of service with the Company. The share awards, together with a cash award intended to cover the concomitant income tax burden, are calculated under accepted actuarial principles as the number required to provide a targeted competitive retirement benefit. The targeted benefit, however, will be achieved at retirement only if the value of the Company's stock grows at a sustained compounded level established by the Board. Furthermore, in order to receive each year's award, the executive must remain in the employ of the Company through the end of the fiscal year in which it is awarded (except in the case of the Officer's death, disability or termination of employment other than for cause), and he or she must have retained all shares previously awarded under the Retirement Plan. The Compensation Committee believes that the Retirement Plan mutually benefits the Company, its stockholders and its most senior executives. 10 OTHER COMPENSATION The Company has an Incentive Savings Plan (the "Plan") which offers all employees (subject to certain eligibility requirements), including the named Executive Officers, tax advantages pursuant to Section 401(k) of the Internal Revenue Code. During fiscal year 1996, the Company made a matching contribution to the Plan of $.40 on each dollar of the first 5% of compensation contributed by the participant, subject to legal maximums imposed by the Internal Revenue Code. Contributions are made by participants by means of a payroll deduction program. The total aggregate amount of the Company's matching contribution for the named Executive Officers is included in the Summary Compensation Table on page 5. The Company maintains an Exec-U-Care Medical Reimbursement Plan which provides additional health and life insurance protection for certain Officers of the Company and its subsidiaries, in addition to the group health and life insurance policies provided to all employees. The participants in the Exec-U-Care Plan include Messrs. Rollhaus, Jezuit, DeVries, Shain and Ebersole. The total aggregate cost to the Company during fiscal year 1996 under the Plan for those Executive Officers was less than $33,000. LIMITATION ON DEDUCTIBILITY OF COMPENSATION In 1993, the tax laws were amended by the addition of Section 162(m) of the Internal Revenue Code. Effective for fiscal years beginning after 1993, that Section limits the deductibility of compensation paid by a publicly-held company to its chief executive officer and to the four other Officers who are most highly compensated. Generally, amounts paid in excess of $1 million to a covered executive, other than performance-based compensation, cannot be deducted. No Executive Officer was affected by this limitation in fiscal 1996. AUDIT/COMPENSATION COMMITTEE William G. Fowler, Chairman Lawrence C. McQuade David S. Ruder Robert D. van Roijen, Jr. 11 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The current members of the Compensation Committee are William G. Fowler, who serves as Chairman, Lawrence C. McQuade, David S. Ruder and Robert D. van Roijen, Jr. COMMON STOCK PERFORMANCE GRAPH COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG QUIXOTE CORPORATION, THE RUSSELL 2000 INDEX AND THE S&P MANUFACTURING (DIVERSIFIED INDUSTRY) INDEX. The following graph compares the five year cumulative total return of the Company's Common Stock with the Russell 2000 Index and the Standard & Poor's Manufacturing (Diversified Industry) Index assuming the investment of $100 on June 30, 1991 and the reinvestment of dividends. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC QUIXOTE CORPORATION RUSSELL 2000 S&P MANUFACTURING (DIVERSIFIED INDUSTRIALS) 6/91 100 100 100 6/92 281 115 99 6/93 296 145 117 6/94 455 151 131 6/95 282 181 173 6/96 157 224 221 CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS See "Employment Agreements and Termination Benefits" and the "Summary Compensation Table" above for a description of certain transactions and business relationships involving management of the Company. STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The chart below sets forth, as of September 6, 1996, information to the best of the Company's knowledge with respect to the persons who beneficially owned in excess of five percent of the 12 Company's Common Stock; the total number of shares of the Company's Common Stock beneficially owned by each Director and named Executive Officer; and the total number of shares of the Company's Common Stock beneficially owned by the Directors and Executive Officers of the Company, as a group. AMOUNT BENEFICIALLY APPROXIMATE PERCENTAGE NAME OF BENEFICIAL OWNER OWNED (1) OF CLASS (1) - -------------------------------------------------- -------------------- ----------------------- Heartland Advisors, Inc.(2)....................... 674,000 8.5% Brinson Partners, Inc.(3)......................... 609,600 7.7% Ryback Management Corp.(4)........................ 600,000 7.5% Wisconsin State Investment Board(5)............... 506,100 6.4% Dimensional Fund Advisors(6)...................... 469,700 5.9% Philip E. Rollhaus, Jr.(7)(8)..................... 452,890 5.6% Leslie J. Jezuit.................................. 0 * James H. DeVries(8)............................... 222,600 2.8% Myron R. Shain.................................... 83,730 1.0% George D. Ebersole................................ 76,200 * William G. Fowler(9).............................. 150,233 1.9% David S. Ruder.................................... 67,499 * Lawrence C. McQuade............................... 34,499 * Robert D. van Roijen, Jr.......................... 25,499 * Directors and Executive Officers as a group (9 persons including those individuals named above)(8)(9)..................................... 1,113,150 14.0% - ------------------------ * Less than one percent (1%). (1) The shares reported in the above table include shares of Common Stock which can be acquired within 60 days of September 6, 1996, through the exercise of options ("Option Shares") as follows: Mr. Rollhaus - 175,559 shares; Mr. Ruder - 52,499 shares; Mr. DeVries - 86,376 shares; Mr. Shain - 34,265 shares; Mr. Ebersole - 18,444 shares; Mr. Fowler - 64,499 shares; Mr. McQuade - 32,499 shares; Mr. van Roijen - 17,499 shares; Mr. Jezuit - 0 shares; and Directors and Executive Officers as a group - 481,640 shares. Each individual's Option Shares are also included in the number of shares of the Company issued and outstanding for purposes of calculating the percentage ownership of each individual in accordance with the rules and regulations of the Exchange Act. These persons also have options not exercisable within 60 days of September 6, 1996, by which they can acquire the following additional shares of Common Stock: Mr. Rollhaus - 47,001 shares; Mr. Ruder - 7,001 shares; Mr. DeVries - 7,834 shares; Mr. Fowler - 7,001 shares; Mr. McQuade - 7,001 shares; Mr. Shain - 10,000; Mr. Ebersole - 15,000; Mr. van Roijen - 7,001 shares; Mr. Jezuit - 55,000 shares; and Directors and Executive Officers as a group - 162,839 shares. These shares are not included in the above table or in the percentage ownership calculations. (2) Based upon information set forth in a Schedule 13F filing for the period ending June 30, 1996. Shares held in Heartland Value Fund, an investment advisory account of Heartland Advisors, Inc., are included in the figures set forth for Heartland Advisors, Inc. The address of Heartland Advisors, Inc. is 790 North Milwaukee Street, Milwaukee, Wisconsin 53202. (3) Based upon information set forth in a Schedule 13G filing dated February 9, 1996. Shares owned by Brinson Trust Company, Brinson Holdings, Inc., SBC Holding (USA), Inc. and Swiss Bank Corporation are included in the figures set forth for Brinson Partners, Inc. The address for Brinson Partners, Inc. is 209 South LaSalle, Chicago, Illinois 60604-1295. 13 (4) Based upon information set forth in a Schedule 13G filing dated January 25, 1996. Shares held by Lindner Growth Fund, a registered investment company, comprise the figure set forth for Ryback Management Corporation. The address for Ryback Management Corporation is 7711 Carondelet Avenue, Box 16900, St. Louis, Missouri 63105. (5) Based on information set forth in a Schedule 13F filing for the period ending June 30, 1996. The address for the Wisconsin State Investment Board is P.O. Box 7842, Madison, Wisconsin 53707. (6) Based upon information set forth in a Schedule 13F filing for the period ending June 30, 1996. The address for Dimensional Fund Advisors is 1299 Ocean Avenue, Santa Monica, California 90401. (7) Mr. Rollhaus owns $166,000 in principal amount of the Company's 8% convertible subordinated debentures due April 15, 2011 (the "Debentures"). The Debentures are convertible into an aggregate of approximately 8,736 shares of the Company's Common Stock. The shares of Common Stock into which the Debentures are convertible are included in the above table and are included in the number of shares of the Company issued and outstanding for purposes of calculating percentage ownership. (8) Messrs. Rollhaus and DeVries may be deemed to be the beneficial owner of 1,000 and 5,492 shares of Common Stock, respectively, owned by their family members. These shares are not included in the above table. Messrs. Rollhaus and DeVries disclaim beneficial ownership of these shares. (9) Mr. Fowler has a beneficial interest in 890 shares of Common Stock held by his retirement plan. These shares are not included in the above table. APPROVAL OF AUDITORS The Directors have recommended that the stockholders approve Coopers & Lybrand L.L.P., a certified public accounting firm, as independent auditors for the Company. A representative of Coopers & Lybrand L.L.P. is expected to be present at the Annual Meeting and will have an opportunity to make an independent statement if he or she desires to do so. The representative is expected to be available to respond to appropriate questions. The affirmative vote of the holders of a majority of the outstanding shares of the Company's Common Stock represented at the meeting and entitled to vote is necessary to approve Coopers & Lybrand L.L.P. as the Company's auditors. THE BOARD OF DIRECTORS RECOMMENDS A VOTE APPROVING COOPERS & LYBRAND L.L.P. AS THE COMPANY'S AUDITORS. MISCELLANEOUS STOCKHOLDER PROPOSALS FOR THE ANNUAL MEETING TO BE HELD IN 1997 Under the rules and regulations of the Securities and Exchange Commission, proposals of stockholders intended to be presented at the Annual Meeting to be held in 1997 must be received by the Company on or before May 5, 1997, to be considered for inclusion in the Company's proxy statement relative to that meeting. Such proposals should be in writing and sent to Mr. James H. DeVries, Executive Vice President - Quixote Corporation, One East Wacker Drive, Chicago, IL 60601. COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the Securities Exchange Act of 1934 requires the Company's Directors and Executive Officers, and persons who own more than ten percent of a registered class of the Company's equity securities, to file with the Securities and Exchange Commission initial reports of 14 ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Executive Officers, Directors and greater than ten percent shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on review of the copies of such reports furnished to the Company and written representations that no other reports were required during fiscal year 1996, the Company believes that all Section 16(a) filing requirements applicable to the Company's Officers and Directors and ten percent shareholders were complied with by such persons. AVAILABILITY OF ANNUAL REPORT ON FORM 10-K The Company will be pleased to make its Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, available without charge to interested parties. Written requests for the report should be directed to Mr. James H. DeVries, Executive Vice President - Quixote Corporation, One East Wacker Drive, Chicago, IL 60601. 15 DETACH HERE PROXY QUIXOTE CORPORATION ANNUAL MEETING OF STOCKHOLDERS This Proxy is Solicited on Behalf of the Board of Directors The undersigned hereby appoint(s) Philip E. Rollhaus, Jr. and James H. DeVries as proxies with full power of substitution and hereby directs them to vote the stock of the undersigned at the Annual Meeting of Stockholders of Quixote Corporation to be held in the Assembly Room at the Northern Trust Company, 50 South LaSalle Street, Chicago, Illinois, Thursday, November 14, 1996, at 10:00 a.m. Central Standard Time, and at any adjournments thereof, as indicated on the proposals set forth on the reverse side of this Proxy. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, IT WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS AND "FOR" PROPOSAL 2. Discretionary authority is conferred by the Proxy to vote on all matters, other than those specified on the reverse side, which may properly come before the meeting or any adjournment thereof. PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. CONTINUED AND TO BE SIGNED ON REVERSE SIDE ------------- SEE REVERSE SIDE ------------- [LOGO] THIS IS YOUR PROXY. YOUR VOTE IS IMPORTANT. It is important to you and to your Company that you vote your shares by returning your proxy in the enclosed envelope. QUIXOTE CORPORATION FISCAL 1996 HIGHLIGHTS - - The Company increased its regular semiannual dividend to $0.12 per share, marking the third consecutive year in which dividends have increased. - - The Company focused its managerial and financial resources on Disc Manufacturing, Inc. and Energy Absorption Systems, Inc., the two companies Quixote founded and developed into industry leaders, after selling all the businesses of its third subsidiary, Legal Technologies, Inc. - - The Company reduced its long-term debt by $25 million from its peak level in December 1995. - - The Company completed its $50 million expansion program at Disc Manufacturing, Inc. DMI's two state-of-the-art east and west coast plants are among the largest, most efficient facilities of their kind in North America. DETACH HERE PLEASE MARK /X/ VOTES AS IN THIS EXAMPLE. 1. Election of Directors Nominees: Philip E. Rollhaus, Jr. and David S. Ruder FOR WITHHELD / / / / / / - --------------------------------------- For both nominees except as noted above 2. Approving the selection of Coopers & Lybrand L.L.P. as Independent Auditors of the Company. FOR AGAINST ABSTAIN / / / / / / 3. Transaction of such other business as may properly come before the meeting and any adjournments thereof. MARK HERE MARK HERE FOR ADDRESS / / IF YOU PLAN / / CHANGE AND TO ATTEND NOTE AT LEFT THE MEETING Please date and sign as name is imprinted hereon, including designation as executor, trustee, etc. if applicable. A corporation must sign in its name by the president or other authorized officers. All co-owners must sign. - -------------------------------------------------------------------------------- SIGNATURE(S) DATE SIGNATURE(S) DATE