ACCORDANCE WITH THE TERMS
OF THIS AGREEMENT.
ALL ISSUED AND OUTSTANDING DISQUALIFIED STOCK SHALL BE
TREATED AS INDEBTEDNESS FOR ALL PURPOSES OF THIS AGREEMENT (AND AS FUNDED
INDEBTEDNESS FOR PURPOSES OF SECTION 7.1(F)), AND THE AMOUNT OF SUCH DEEMED
INDEBTEDNESS SHALL BE THE AGGREGATE AMOUNT OF THE LIQUIDATION PREFERENCE OF SUCH
DISQUALIFIED STOCK.
7.4
FINANCIAL COVENANTS.
THE BORROWER SHALL
COMPLY WITH THE FOLLOWING:
(A)
MAXIMUM LEVERAGE RATIO.
THE BORROWER AND ITS
CONSOLIDATED SUBSIDIARIES SHALL NOT PERMIT THE RATIO (THE "LEVERAGE RATIO") OF
(I) TOTAL INDEBTEDNESS OF THE BORROWER AND ITS CONSOLIDATED SUBSIDIARIES TO (II)
EBITDA TO BE GREATER THAN 2.90 TO 1.00 FOR EACH OF THE FISCAL QUARTERS ENDING
JUNE 30, 2003, SEPTEMBER 30, 2003, DECEMBER 31, 2003, MARCH 31, 2004, AND
JUNE 30, 2004, AND 2.75 TO 1.00, FOR ALL FISCAL QUARTERS THEREAFTER.
The Leverage Ratio shall be calculated, in each case, determined as of the last
day of each fiscal quarter of the Borrower based upon (a) for Indebtedness,
Indebtedness as of the last day of each such fiscal quarter; and (b) for EBITDA,
the actual amount for the Last Twelve-Month Period, provided, that the Leverage
Ratio shall be calculated, with respect to Permitted Acquisitions, on a pro
forma basis using historical financial statements, broken down by fiscal quarter
in the Borrower's reasonable judgment.
For the fiscal quarters ending June 30,
2003, September 30, 2003, December 31, 2003 and March 31, 2004 (the "Initial
Quarters"), Borrower, in connection with the U.S. Traffic Acquisition, shall
calculate EBITDA of U.S. Traffic for covenant purposes on a pro forma basis as
equal to $4,056,000, and, for each period thereafter, EBITDA shall be calculated
as reported.
For the Initial Quarters, Borrower's EBITDA shall be calculated
using $4,056,000 as the U.S. Traffic pro forma EBITDA in lieu of the U.S.
Traffic pro forma EBITDA, and for all periods thereafter, Borrower's EBITDA will
be as reported.
(B)
MINIMUM CONSOLIDATED NET WORTH.
THE BORROWER
SHALL NOT PERMIT ITS CONSOLIDATED NET WORTH AT ANY TIME TO BE LESS THAN THE SUM
OF 85% OF ITS BASE NET WORTH ON THE CLOSING DATE.
"BASE NET WORTH" SHALL MEAN
QUIXOTE CORPORATION'S BOOK NET WORTH AS OF APRIL 30, 2003 AND EQUITY
TRANSACTIONS OCCURRING AS A RESULT OF THE U.S. TRAFFIC ACQUISITION AS OF THE
CLOSING DATE, PLUS 50% OF QUIXOTE'S POSITIVE CONSOLIDATED NET INCOME
THEREAFTER.
THE
68
BORROWER'S COMPLIANCE WITH THIS COVENANT SHALL BE CALCULATED AND TESTED AS OF
THE END OF EACH FISCAL QUARTER.
(C)
MINIMUM EBITDA RATIO.
THE BORROWER AND ITS
CONSOLIDATED SUBSIDIARIES SHALL MAINTAIN MINIMUM EBITDA, MEASURED AS OF THE END
OF EACH FISCAL QUARTER PERIOD OF THE BORROWER, AS MEASURED ON A ROLLING FOUR
QUARTER BASIS, OF $15,000,000.
FOR THE FISCAL QUARTERS ENDING JUNE 30, 2003,
SEPTEMBER 30, 2003, DECEMBER 31, 2003 AND MARCH 31, 2004 (THE "INITIAL
QUARTERS"), BORROWER, IN CONNECTION WITH THE U.S. TRAFFIC ACQUISITION, SHALL
CALCULATE EBITDA OF U.S. TRAFFIC FOR COVENANT PURPOSES ON A PRO FORMA BASIS AS
EQUAL TO $4,056,000, AND, FOR EACH PERIOD THEREAFTER, EBITDA SHALL BE