Document:

AMENDMENT
  NO. 3 TO EMPLOYMENT AGREEMENT

      THIS
  AMENDMENT TO EMPLOYMENT AGREEMENT (the “Amendment”), dated as of August
  9,2004, by and between MIM Corporation, a Delaware corporation (the “Company”)
  and Richard H. Friedman (“Executive”). 

 RECITALS:
  

      A.
       Executive and the Company are parties to that
  certain Employment Agreement dated December 1,1998, as amended on October 11,
  1999 and December 31,2001 (the “Employment Agreement”), pursuant to
  which Executive is serving the Company as its Chairman and Chief Executive Officer.
  

      B.
       Pursuant to an Agreement and Plan of Merger, dated
  contemporaneously herewith (the “Merger Agreement”), a wholly owned
  subsidiary of the Company will merge with and into Chronimed Inc. (“Chronimed”),
  as a result of which transaction (the “Transaction”) Chronimed will
  become a wholly owned subsidiary of the Company. 

      NOW,
  THEREFORE, the parties hereby agree as follows: 

      1.
       New Position. Effective upon closing of
  the Transaction, Executive shall serve as the Chairman of the Board of the Company
  (the “New Position”), but will not be the Chief Executive Officer
  of the Company. 

      2.
       Executive’s Agreement. Effective
  upon closing of the Transaction, Executive agrees (i) to serve in the New Position
  with Parent and (ii) that his serving in the New Position, terminating his position
  as Chief Executive Officer of the Company will not give Executive a right to
  terminate for Good Reason under the Employment Agreement. Except for Executive’s
  agreement to serve in the New Position, the Employment Agreement will remain
  in full force and effect, subject to the terms of the Amendment. 

      3.
       Effectiveness. The Amendment is entered
  into by the parties hereto in contemplation of the closing of the Transaction.
  If, for whatsoever reason, the Transaction does not close, then the Amendment
  shall terminate and be of no further force and effect, and Executive shall continue
  to serve the Company under the provisions of the Employment Agreement without
  any modification by the Amendment. 

      IN
  WITNESS WHEREOF, the parties have entered into the Amendment as of the date
  fist above written.

	 	MIM CORPORATION:
	 	 
	 	By: /s/ Barry A.
      Posner
	 	Its: EVP &
      General Counsel
	 	 
	 	EXECUTIVE:
	 	 
	 	By: /s/ Richard
      H. Friedman

 

 

 

2Exhibit
10(a)

 

THIRD AMENDMENT TO CREDIT AGREEMENT

AND REAFFIRMATION OF SUBSIDIARY GUARANTY

 

This
THIRD AMENDMENT TO CREDIT AGREEMENT AND REAFFIRMATION OF SUBSIDIARY GUARANTY,
dated as of September 10, 2004, (the “Third Amendment”), entered into by
and among QUIXOTE CORPORATION, a Delaware corporation (the “Borrower”), each of
the LENDER INSTITUTIONS named as Lender on the signature pages hereof,
(individually each a “Lender” and collectively the “Lenders”), those
SIGNIFICANT DOMESTIC INCORPORATED SUBSIDIARIES, as Subsidiary Guarantors named
on the signature pages hereof (each being referred to herein as a “Guarantor”
and collectively referred to herein as the “Guarantors”), and THE NORTHERN
TRUST COMPANY, as Administrative Agent for itself and the other Lenders, (in
such capacity, together with its successors in such capacity, the
“Administrative Agent”) whose address is 50 South LaSalle Street, Chicago,
Illinois 60675.

 

R E C I T A L S:

 

A.                                   The Borrower and the Lenders entered into
that certain Credit Agreement, dated as of May 16, 2003, as amended by a First
Amendment, dated as of December 9, 2003 (the “First Amendment”) and by a
Second Amendment, dated as of June 30, 2004 (the “Second Amendment”)
(collectively, the “Credit Agreement”), pursuant to which Credit Agreement the
Lenders have made, (i) Revolving Loans to the Borrower evidenced by certain
Revolving Notes, dated as of May 16, 2003, in the maximum aggregate principal
amount of Fifty Million Dollars and 00/100 ($50,000,000), executed by the
Borrower and made payable pro rata to the order of the Lenders (the “Revolving
Notes”) and (ii) Term Loans to the Borrower evidenced by certain Term Notes,
dated as of May 16, 2003, in the aggregate principal amount of Twenty Million
Dollars and 00/100 ($20,000,000), executed by the Borrower and made payable pro
rata to the order of the Lenders (the “Term Notes”).

 

B.                                     In connection with the Credit Agreement, the
Guarantors executed and delivered to the Administrative Agent, as a condition
to the Credit Agreement, that certain Subsidiary Guaranty, dated as of May 16,
2003, as reaffirmed by the First Amendment, in favor of the Administrative
Agent for the ratable benefit of the Lenders (the “Subsidiary Guaranty”).

 

C.                                     In connection with the Credit Agreement, as
amended by the Second Amendment, Borrower, to secure its Obligations, executed
and delivered a Pledge Agreement, a Collateral Assignment of Rights under
Parent Guaranty and, together with each Subsidiary Guarantor, a Security
Agreement, each dated as of June 30, 2004 and in favor of the
Administrative Agent.

 

D.                                    In connection with the Credit Agreement, as
amended by the Second Amendment, Energy Absorption Systems (AL) LLC (“Energy
Absorption LLC”) executed and delivered a Leasehold Mortgage against its
leasehold interest in the Alabama Property, as defined in the Credit Agreement.

 

 

E.                                      The Borrower has informed the Administrative
Agent and Lenders that as of September 30, 2004 and for some period
thereafter, Borrower may not be in compliance with certain financial covenants,
as currently in effect, including, without limitation, the “Maximum Leverage
Ratio,” and “Minimum EBITDA Ratio” covenants under Sections 7.4(A) and 7.4(C)
respectively of the Credit Agreement.

 

F.                                      The Borrower has informed the Administrative Agent
and Lenders that as of September 13, 2004, Energy Absorption LLC will
prepay certain amounts under the Lease and direct that the Bond Trustee redeem
the Bond held by Borrower, and Borrower has requested, and the Administrative
Agent and Lenders have agreed to consent to the prepayment of the Lease and
redemption of the Bond, and upon satisfaction of same, to terminate the Pledge
Agreement and remove the Bond as Collateral under the Credit Agreement,
provided the Leasehold Mortgage shall remain in full force and effect.

 

G.                                     The Borrower has informed the Administrative
Agent and Lenders that (i) Energy Absorption Systems, Inc. wishes to sell
certain undeveloped property in Rocklin, California that is not a part of the
California Property, and (ii) Energy Absorption LLC wishes to enter into a
lease and financing arrangement with respect to the acquisition, installation
and lease of paint line equipment in Pell City, Alabama, and in each case the
Administrative Agent and Lenders have agreed to consent to such transactions
under the Credit Agreement.

 

H.                                    At the present time, the Administrative
Agent, on behalf of the Lenders, has requested, and Borrower and each Guarantor
have agreed to (i) the reduction of the Revolving Loan Commitment, (ii) the
modification of the financial covenants in the Credit Agreement; and to secure
the Obligations by Borrower under the Credit Agreement and each Guarantor’s
obligations under its Subsidiary Guaranty, (iii) the grant by Borrower and each
Subsidiary, as applicable, to Administrative Agent of a security interest and
lien in the Intellectual Property Collateral, as defined herein, (iv) the grant
by Energy Absorption Systems Inc. to Administrative Agent of a Mortgage against
the California Property, as defined herein, (v) the grant by Nu-Metrics, Inc.
to the Administrative Agent of a mortgage against the Pennsylvania Property, as
defined herein, and (vi) the pledge by Borrower of a security interest and lien
in all of the common stock of each Significant Domestic Incorporated Subsidiary.

 

NOW
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Borrower, the Guarantors, and the Lenders hereby agree as follows:

 

A G R E E M E N T S:

 

1.                                       RECITALS.  The foregoing Recitals are
hereby made a part of this Third Amendment.

 

2.                                       DEFINITIONS.  Capitalized words and phrases
used herein without definition shall have the respective meanings ascribed to
such words and phrases in the Credit Agreement.

 

2

 

3.                                       AMENDMENTS TO THE CREDIT AGREEMENT.

 

3.1.                              Section 1.1 of the Credit Agreement. 
Section 1.1 of the Credit Agreement is hereby amended (i) by
deleting the definition of “Leverage/Fixed Charge Requirement;” (ii) by
inserting new definitions of “Bond Redemption,” “California Mortgage,”
“California Property,” “Energy Absorption Paint Line Lease,” “Intellectual
Property Collateral,” “Patent Expenditures,” “Patent Security Agreement,”
“Pennsylvania Mortgage,” “Pennsylvania Property,” “Protect and Direct EBIT,”
“Protect and Direct Segment,” “Sale of the Undeveloped Rocklin, California
Property,” “Subsidiary Stock Pledge Agreement,” “Third Amendment Period” and
“Trademark Security Agreement” and (iii) by amending and restating the
definition of “Collateral,” “EBITDA” and “Aggregate Revolving Loan Commitment”
to read as follows:

 

“Aggregate
Revolving Loan Commitment,” shall mean the aggregate of the Revolving Loan
Commitments of all the Lenders, as may be increased or reduced from time to
time pursuant to the terms hereof.  From
and after September 10, 2004, the Aggregate Revolving Loan Commitment is
Thirty-Eight Million Dollars and 00/100 ($38,000,000.00).

 

“Bond
Redemption” shall mean (i) the prepayment of the Lease by Energy LLC in an
amount equal to $3,800,000, the outstanding principal and interest on the Bond
(“Redemption Price”), (ii) the direction of Energy Absorption LLC to the Bond
Trustee to redeem the Bond for the Redemption Price, (iii) the Borrower’s
delivery of the Bond to the Trustee for the Redemption Price and (iv) the
Trustee’s payment to Borrower, as bondholder, of an amount equal to the
Redemption Price.

 

“California
Mortgage” shall mean the mortgage secured by the California Property, in the
form of Exhibit E attached hereto.

 

“California Property” shall mean that property as
described in and as collateral pursuant to the California Mortgage.

 

“Collateral” shall mean (i) the Collateral, as
defined in the Security Agreement, (ii) the Mortgaged Property in which Energy
Absorption LLC granted a mortgage, security interest and lien under the
Leasehold Mortgage, (iii) the subrogation rights of Borrower under the Bond
Guaranty as collaterally assigned to Administrative Agent pursuant to the Collateral
Assignment, (iv) the California Property on which Energy Absorption Systems
Inc. granted a mortgage pursuant to the California Mortgage, (v) the
Pennsylvania Property on which Nu-Metrics, Inc. granted a mortgage pursuant to
the Pennsylvania Mortgage, (vi) the Intellectual Property Collateral and (vii)
the stock of each Subsidiary Guarantor pledged by Borrower pursuant to the
Subsidiary Stock Pledge Agreement.

 

“EBITDA”
means, for any period, on a consolidated basis for the Borrower and its
Subsidiaries, the sum of the amounts for such period, without duplication, of
(i) Net Income, plus (ii) Interest Expense to the extent deducted in computing
Net Income, plus (iii) charges against income for foreign, federal, state and

 

3

 

local taxes to the extent
deducted in computing Net Income, plus (iv) depreciation expense to
the extent deducted in computing Net Income, plus (v) amortization
expense, including, without limitation, amortization of goodwill and other
intangible assets to the extent deducted in computing Net Income, plus
(vi) any unusual non-cash charges to the extent deducted in computing Net
Income, plus (vii) the aggregate amount of the Third Amendment Fee and
legal fees relating to the Third Amendment paid by Borrower to its counsel and
the Administrative Agent’s counsel, minus (viii) any unusual non-cash
gains to the extent added in computing Net Income, minus (ix) all gains,
plus losses, from Asset Sales and, minus (x) benefits to income
for foreign, federal, state and local taxes to the extent added in computing
Net Income.

 

“Energy Absorption Paint Line Lease” shall mean that
lease and financing arrangement between Energy Absorption LLC and LaSalle
National Leasing Corporation (“LNLC”) in an aggregate amount not to exceed
$1,800,000 relating to the acquisition, installation and lease of paint line
equipment in Pell City, Alabama, including the guaranty by the Borrower of
Energy Absorption LLC’s obligations to LNLC.

 

“Intellectual Property Collateral” shall mean (i)
the Collateral, as defined in the Patent Security Agreement and (ii) the
Collateral as defined in the Trademark Security Agreement.

 

“Patent
Expenditures” shall mean expenditures of a Person relating to its obtaining,
acquiring, maintaining and defending patents.

 

“Patent
Security Agreement” shall mean the Patent Security Agreement in the form of Exhibit
B attached hereto.”

 

“Pennsylvania Mortgage” shall mean that mortgage
secured by the Pennsylvania Property, in the form of Exhibit F attached
hereto.

 

“Pennsylvania Property” shall mean that property as
described in and as collateral pursuant to the Pennsylvania Mortgage.

 

“Protect and Direct EBIT”
shall mean for any period, on a consolidated basis, for the Protect and Direct
Segment of the Borrower and its Subsidiaries, the sum of the amounts for such
period, without duplication of (i) Net Income, plus (ii) Interest
expense to the extent deducted in computing Net Income, plus (iii)
charges against income for foreign, federal, state and local taxes to the
extent deducted in computing Net Income, minus (iv) benefits to income
for foreign, federal, state and local taxes to the extent added in computing
Net Income(before application of unallocated corporate expenses),  calculated on a basis consistent with SEC
financial reporting requirements.

 

“Protect and Direct Segment” shall mean that segment
of the business of the Borrower and its Subsidiaries (as distinct from its
“Inform” business segment) as reported as its Protect and Direct Segment in its
financial reports filed with the SEC.

 

4

 

“Sale
of the Undeveloped Rocklin, California Property” shall mean the sale, for a
purchase price in the amount of [$1,500,000], by Energy Absorption Systems, Inc.
of certain undeveloped real estate in Rocklin, California that is adjacent to,
but not a part of, the California Property.

 

“Subsidiary
Stock Pledge Agreement” shall mean the Subsidiary Stock Pledge Agreement, in
the form of Exhibit D attached hereto.

 

“Third
Amendment Period” shall mean that period commencing as of the closing date of
the Third Amendment through and including September 30, 2005.”

 

“Trademark
Security Agreement” shall mean the Trademark Security Agreement in the form of Exhibit
C attached hereto.”

 

3.2                                 Section 2.4 of the Credit Agreement. 
Section 2.4(A) of the Credit Agreement is hereby amended by
deleting each reference to “$1,000,000” and “$500,000” and substituting
respectively “$250,000” and “$100,000.”

 

3.3.                              Section 2 of the Credit Agreement. 
Section 2.22 of the Credit Agreement is amended and restated in its
entirety to read as follows:

 

“Security of Obligations.  As security for the payment of the
Obligations, and each Guarantor’s Obligation under its Subsidiary Guaranty, the
Borrower and each Guarantor, pursuant to the terms of the Security Agreement,
Collateral Assignment, Leasehold Mortgage, Subsidiary Stock Pledge Agreement,
Trademark Security Agreement, Patent Security Agreement, Pennsylvania Mortgage
and California Mortgage, as applicable, do hereby pledge, assign, transfer and
deliver to the Administrative Agent for benefit of Lenders and does hereby
grant to the Administrative Agent for benefit of Lenders a continuing and
unconditional security interest in and to the Collateral as defined herein.”

 

3.4.                              Section 2.4
of the Credit Agreement. 
Section 2.4(B)(ii) is hereby amended and restated to read as
follows:

 

“(ii)                            In
addition to any other mandatory repayments pursuant to this Section 2.4,
on each date after the date of this Agreement on which Borrower or any
Subsidiary receives proceeds from the following transactions, Borrower shall
make the following mandatory prepayments, except as otherwise provided below;
(i) first, to repay the outstanding principal amount of Term Loans
against the remaining installments in the inverse order of their maturities,
(ii) second, to the extent in excess of the amounts required to be
applied pursuant to the preceding clause (i), repay the outstanding principal
amount of Revolving Loans (with no required reduction to the Total Revolving
Loan Commitment in the case of the preceding clause (ii));

 

(w)                               an
amount equal to 80% of the Net Sale Proceeds of any Asset Sale shall be applied
to repayment of the outstanding principal amount of the Term Loans and an
amount equal to the remaining 20% of the Net Sale

 

5

 

Proceeds of any Asset
Sale shall be applied to repayment of the outstanding principal amount of the
Revolving Loans, subject to an allowance for like-kind exchanges in an
aggregate amount not to exceed $1,000,000 in any fiscal year, provided 100% of
the net proceeds received from the Energy Absorption Paint Line Lease shall be
applied to repayment of the Revolving Loans;

 

(x)                                   an
amount equal to 100% of Net Recovery Event Proceeds received from any Recovery
Event, provided that so long as no Event of Default then exists, such
Net Recovery Event Proceeds shall not be required to be so applied on such date
to the extent that Borrower has delivered a certificate to the Administrative
Agent on or prior to such date stating that such proceeds shall be used (or
contractually committed to be used) within 180 days following the date of
receipt of such Net Recovery Event Proceeds from such Recovery Event to replace
or restore any properties or assets in respect of which such Net Recovery Event
Proceeds were paid (which certificate shall set forth the estimates of the
proceeds to be so expended), and provided further, that if all or any
portion of such Net Recovery Event Proceeds are not so used (or contractually
committed to be used) within such 180-day period, such remaining portion shall
be applied as a mandatory repayment as provided above (without giving effect to
the immediately preceding proviso);

 

(y)                                 an
amount equal to 100% of the net proceeds received from any issuance of capital
stock or any equity interests by Borrower;

 

(z)                                   an
amount equal to 100% of the net proceeds received from the incurrence of
Indebtedness (other than Indebtedness permitted to be incurred pursuant to Section 7.3(A)
of this Agreement);

 

(zz)                              an
amount equal to 100% of the proceeds received from any tax refund of Borrower
or its Subsidiaries shall be applied to repayment of the Revolving Loans.”

 

3.5.                              Section 2.14 of the Credit Agreement.  (a)
Section 2.14(D) of the Credit Agreement is hereby amended by (i) inserting
the following as the first sentence in Sections 2.14(D)(ii) and (iii) and (b)
inserting a new subsection (iv) at the end of Section 2.14(D) each to
read as follows:

 

“(ii)                            During the Third Amendment Period, this Section 2.14(D)(ii) is
hereby suspended and of no further force and effect and pricing hereunder shall
be determined in accordance with Section 2.14(D)(iv).  At all times after termination of the Third
Amendment Period, this Section 2.14(D)(ii), as in effect immediately prior
to the effectiveness of the Third Amendment, shall be reinstated and in full
force and effect.

 

(iii)                               During the Third Amendment Period, this Section 2.14(D)(iii) is
hereby suspended and of no further force and effect and pricing hereunder shall
be determined in accordance with Section 2.14(D)(iv).  At all times after termination of the

 

6

 

Third
Amendment Period, this Section 2.14(D)(iii), as in effect immediately
prior to the effectiveness of the Third Amendment, shall be reinstated and in
full force and effect.

 

(iv)                              During the Third Amendment Period, the Applicable Eurodollar Margin,
Applicable ABR Margin, Applicable Commitment Fee Percentage and Applicable L/C
Fee Percentage shall be determined as follows:

 

	
  Eurodollar
  Margin

  and L/C Fee

  Percentage

  	
   

  	
  Applicable

  ABR Margin

  	
   

  	
  Commitment Fee

  Percentage

  
	
  3.50%

  	
   

  	
  1.00 %

  	
   

  	
  .375 %”

  

 

 

3.6.                              Section 2.21 of the Credit Agreement. 
Section 2.21 of the Credit Agreement is hereby amended to delete
Section 2.21 in its entirety and insert “Intentionally Deleted” in lieu
thereof.

 

3.7.                              Section 7 of the Credit Agreement. 
Section 7 is hereby amended to delete Section 7.1(J) in its
entirety.

 

3.8.                              Section 7.1 of the Credit Agreement. 
Section 7.1 is hereby amended by inserting new subsections
7.1(A)(v), (vi) and (vii) and a new Sections 7.1(J) and (K) to read as follows:

 

“(v)                           Monthly Reports.  As soon as practicable, and in any event, no
later than the 20 calendar days after the end of each month, the consolidated
and consolidating financial statement of Borrower and its Subsidiaries at the
end of such period, including balance sheet, statement of income and retained
earnings, and management commentary of the financial results for the month then
ended, and such other information (including non-financial information) as the
Administrative Agent or any Lender may request, in reasonable detail, prepared
and certified as accurate by the Borrower.

 

(vi)                              Conference Calls.  Within 20 calendar days after the end of each
month, Borrower, at Administrative Agent’s request, shall make itself available
for a conference call with the Lenders to report on its financial results.

 

(vii)                           Cash Flow Projections.  Commencing on November 30, 2004, on a
weekly basis, not later than the second Business Day of each week, cash flow
projections measured on a rolling thirteen (13) week basis, in form and
substance acceptable to Administrative Agent and Required Lenders.

 

(J)                                   Field Audits.  The
Borrower and its Subsidiaries shall allow the Administrative Agent, at
Borrower’s sole expense, to conduct a field examination and to engage
appraisers to conduct an appraisal of the Collateral, including, without
limitation, Collateral consisting of real property and Borrower’s and its
Subsidiaries’ business

 

7

 

operations
at such locations as the Required Lenders deem appropriate, the result of which
must be satisfactory to the Required Lenders in their sole and absolute
discretion.

 

(K)                               Financial Consultant.  On or before October 31, 2004, the
Borrower shall retain and maintain at its own cost and expense a recognized
third party financial consultant selected by it and reasonably acceptable to
the Administrative Agent and the Required Lenders to serve as a financial
consultant to the Borrower to evaluate the Borrower’s financial condition,
operating performance and business prospects, including reviewing the
Borrower’s restructuring initiatives regarding its US Traffic business segment,
and to assist the Borrower in the timely preparation and delivery of financial
reports and cash flow forecasts, and to perform such other services as the
Borrower may require or the Administrative Agent or the Required Lenders may
reasonably request (and the Borrower shall provide the Administrative Agent and
the Lenders with a copy of the written engagement letter with such financial
consultant, which shall be in form and substance acceptable to the
Administrative Agent and the Required Lenders, on or
before October 31, 2004). The Borrower shall take reasonable
steps to assure that such consultant is available for discussion with the
Administrative Agent and the Lenders from time to time as any of the Lenders may
request regarding the Borrower and its Subsidiaries.”

 

3.9.                              Section 7.3 of the Credit Agreement. 
Section 7.3 of the Credit Agreement is hereby amended as follows:

 

“(1)                            Section 7.3(A)(v) is hereby amended by deleting “$3,000,000” and
substituting “$1,500,000” in lieu thereof;

 

(2)                                  Section 7.3(B)(iv) is hereby amended by
deleting “10% of the aggregate book value of Consolidated Assets as of the end
of the immediately preceding fiscal year” and substituting “$500,000 per annum”
in lieu thereof;

 

(3)                                  Section 7.3(C)(vii) is hereby deleted in
its entirety and “Intentionally Deleted” is substituted in lieu thereof;

 

(4)                                  Section 7.3(D)(ix) is hereby deleted in
its entirety and “Intentionally Deleted” is substituted in lieu thereof;

 

(5)                                  Section 7.3(E)(viii) is hereby deleted
in its entirety and “Intentionally Deleted” is substituted in lieu thereof;

 

(6)                                  Section 7.3(F) of the Credit Agreement
entitled “Restricted Payments” is hereby amended and restated to read as
follows:

 

“During the Third Amendment Period, provided, after
the Third Amendment Period has expired, Section 7.3(F) of the Credit
Agreement, as in effect immediately prior to the effectiveness of the Third
Amendment, shall be reinstated hereunder. 
Borrower shall not declare or make any Restricted

 

8

 

Payments
greater than the amount in the aggregate and for the period set forth below:

 

	
  Six
  Month Period Ending

  	
   

  	
  Restricted Payment

  	
   

  
	
  January 31,
  2005

  	
   

  	
  $

  	
  1,700,000

  	
   

  
	
  July 31,
  2005

  	
   

  	
  $

  	
  1,800,000

  	
   

  

 

provided,
in no event, shall any such Restricted Payment be declared or made, if either,
(i) at least $5,000,000 in credit availability under the Revolving Credit
Commitment in excess of the amount of such Restricted Payment does not exist
for a minimum of thirty (30) consecutive days prior to the date for making such
Restricted Payment and for a period of fifteen (15) consecutive days after the
date such Restricted Payment was made, or (ii) a Default or Unmatured Event of
Default shall have occurred and be continuing at the date of declaration or
payment thereof or would result therefrom;”

 

(7)                                  Section 7.3(G) is hereby amended by
inserting the following prior to the sentence, “The Borrower shall not make any
Acquisitions” which shall read as follows:

 

“During the Third Amendment Period, (i) the Borrower
shall not make any Acquisitions without the consent of the Administrative Agent
and all Lenders and (ii) the remainder of this Section 7.3(G) shall be
suspended and of no force and effect, except after the Third Amendment Period has
expired, the remainder of this Section 7.3(G) shall be reinstated
hereunder.”

 

(8)                                  A new Section 7.3(O) entitled “Capital
Expenditures” is hereby inserted in the Credit Agreement to read as follows:

 

“Capital Expenditures and Patent Expenditures.  The Borrower and its Subsidiaries shall not
incur Capital Expenditures and Patent Expenditures in an aggregate amount
greater than the amounts and for the period of months as set forth below:

 

	
  Periods
  Ending

  	
   

  	
  Capital and Patent

  Expenditures

  	
   

  
	
  09/30/04
  (3 months)

  	
   

  	
  $

  	
  900,000.00

  	
   

  
	
  12/31/04
  (6 months)

  	
   

  	
  $

  	
  2,200,000.00

  	
   

  
	
  03/31/05
  (9 months)

  	
   

  	
  $

  	
  3,000,000.00

  	
   

  
	
  06/30/05
  (12 months)

  	
   

  	
  $

  	
  3,500,000.00

  	
   

  
	
  09/30/05
  (3 months)

  	
   

  	
  $

  	
  1,600,000.00

  	
   

  

 

9

 

provided,
in no event shall Borrower offset any cash proceeds received from the Energy
Absorption Lease or similar type transaction against future or historic capital
expenditures.”

 

(9)                                  A new Section 7.3(P) entitled “Banking
Relationships” is hereby inserted in the Credit Agreement to read as follows:

 

“Banking Relationship.  Borrower covenants and agrees at all times
during the term of this Agreement, to utilize one or more of the Lenders as its
primary banks of account and depository for all financial services, including
all receipts, disbursements, cash management and related services except
Borrower may maintain deposit accounts with financial institutions other than
the Lenders with aggregate balances not to exceed $2,000,000.”

 

3.10.                        Section 7.4 of the Credit Agreement. 
Section 7.4 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

 

“7.4.                        Financial Covenants.  During the Third Amendment Period, the
Borrower shall comply with the following (provided, after the Third Amendment
Period has expired, Section 7.4(A) “Maximum Leverage Ratio,”
Section 7.4(C) “Minimum EBITDA” and Section 7.4(E) “Fixed Charge
Coverage Ratio” as in effect
immediately prior to the effectiveness of the Third Amendment, shall be
reinstated hereunder and Section 7.4(B) “Minimum Consolidated Net Worth
shall remain in effect as stated herein”):

 

A.                                   Maximum Leverage
Ratio.  The Maximum Leverage Ratio
will be waived, inapplicable, and of no force and effect during the Third
Amendment Period.  The “Leverage Ratio”
shall mean: (i) total Indebtedness of the Borrower and its consolidated
Subsidiaries to (ii) EBITDA.

 

B.                                     Minimum
Consolidated Net Worth.  The Borrower
shall not permit its Consolidated Net Worth at any time to be less than
$57,000,000.

 

C.                                     Minimum EBITDA.  The Borrower and its Consolidated
Subsidiaries shall maintain minimum EBITDA, measured as of the end of each
fiscal month on a rolling cumulative number of months basis, in an amount for
such fiscal period set forth below:

 

	
  Fiscal
  Month Ending:

  	
   

  	
  Minimum EBITDA

  	
   

  
	
  For
  the three months ended September 30, 2004

  	
   

  	
  $

  	
  530,000.00

  	
   

  
	
  For
  the four-months ended October 31, 2004

  	
   

  	
  $

  	
  300,000.00

  	
   

  
	
  For
  the five-months ended November 30, 2004

  	
   

  	
  $

  	
  515,000.00

  	
   

  
	
  For
  the six-months ended December 31, 2004

  	
   

  	
  $

  	
  1,500,000.00

  	
   

  
	
  For
  the seven-months ended January 31, 2005

  	
   

  	
  $

  	
  1,400,000.00

  	
   

  
	
  For
  the eight-months ended February 28, 2005

  	
   

  	
  $

  	
  1,500,000.00

  	
   

  
	
  For
  the nine-months ended March 31, 2005

  	
   

  	
  $

  	
  3,500,000.00

  	
   

  
	
  For
  the ten-months ended April 30, 2005

  	
   

  	
  $

  	
  4,400,000.00

  	
   

  
	
  For
  the eleven-months ended May 31, 2005

  	
   

  	
  $

  	
  5,800,000.00

  	
   

  
	
  For
  the twelve-months ended June 30, 2005

  	
   

  	
  $

  	
  9,700,000.00

  	
   

  
	
  For
  the month ended July 31, 2005

  	
   

  	
  $

  	
  1,000,000.00

  	
   

  
	
  For
  the two-months ended August 31, 2005

  	
   

  	
  $

  	
  2,100,000.00

  	
   

  
	
  For
  the three-months ended September 30, 2005

  	
   

  	
  $

  	
  3,900,000.00

  	
   

  

 

10

 

D.                                    Minimum Protect
and Direct EBIT.  The Borrower and
its Consolidated Subsidiaries shall maintain minimum Protect and Direct EBIT,
measured as of the end of each fiscal month on a rolling cumulative number of
months basis, in an amount for such fiscal month set forth below:

 

	
  Fiscal
  Month Ending:

  	
   

  	
  Minimum Protect

  and Direct EBIT

  	
   

  
	
  For
  the three months ended September 30, 2004

  	
   

  	
  $

  	
  2,300,000.00

  	
   

  
	
  For
  the four-months ended October 31, 2004

  	
   

  	
  $

  	
  2,900,000.00

  	
   

  
	
  For
  the five-months ended November 30, 2004

  	
   

  	
  $

  	
  3,500,000.00

  	
   

  
	
  For
  the six-months ended December 31, 2004

  	
   

  	
  $

  	
  4,400,000.00

  	
   

  
	
  For
  the seven-months ended January 31, 2005

  	
   

  	
  $

  	
  4,800,000.00

  	
   

  
	
  For
  the eight-months ended February 28, 2005

  	
   

  	
  $

  	
  5,200,000.00

  	
   

  
	
  For
  the nine-months ended March 31, 2005

  	
   

  	
  $

  	
  6,700,000.00

  	
   

  
	
  For
  the ten-months ended April 30, 2005

  	
   

  	
  $

  	
  7,600,000.00

  	
   

  
	
  For
  the eleven-months ended May 31, 2005

  	
   

  	
  $

  	
  8,700,000.00

  	
   

  
	
  For
  the twelve-months ended June 30, 2005

  	
   

  	
  $

  	
  11,000,000.00

  	
   

  
	
  For
  the month ended July 31, 2005

  	
   

  	
  $

  	
  840,000.00

  	
   

  
	
  For
  the two-months ended August 31, 2005

  	
   

  	
  $

  	
  1,800,000.00

  	
   

  
	
  For
  the three-months ended September 30, 2005

  	
   

  	
  $

  	
  3,300,000.00

  	
   

  

 

E.                                      Fixed Charge
Coverage Ratio.  The Fixed Charge
Coverage Ratio covenant will be waived, inapplicable, and of no force and
effect during the Third Amendment Period. 
Fixed Charge Coverage Ratio shall mean, for any period, of (i) EBITDA,
minus Capital Expenditures and Patent Expenditures to (ii) the sum of cash
Interest Expense, plus scheduled payments of the principal of the Term Loans
for such period, plus scheduled payments of the principal portion of all other
Indebtedness for borrowed money for such period (excluding payments on the
Revolving Loans), plus dividends and distributions paid for such period, and
taxes paid for such period, as measured on a rolling four quarter basis.”

 

3.11.                        Section 8.1
of the Credit Agreement. 
Section 8.1(A) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:

 

“The Borrower shall fail to pay when due any
of the Obligations consisting of principal or interest with respect to the
Loans or Reimbursement Obligations.”

 

11

 

3.12.                        Section 12
of the Credit Agreement.  Section 12.1
of the Credit Agreement is hereby amended by inserting at the end thereof the
following:

 

“Notwithstanding the foregoing, at any time that
any Obligations are secured by real property located in California, no Lender
shall exercise a right of setoff, banker’s lien or counterclaim or take any
court or administrative action or institute any proceeding to enforce any
provision of this Agreement or any Obligation that is not taken by the
Administrative Agent or the Required Lenders or approved in writing by the
Administrative Agent and the Required Lenders if such setoff or action or
proceeding would or might (pursuant to Sections 580a, 580b, 580d and 726
of the California Code of Civil Procedure or Section 2924 of the
California Civil Code, if applicable, or otherwise) affect or impair the
validity, priority or enforceability of the liens granted to the Administrative
Agent pursuant to the Collateral Documents or the enforceability of the
Obligations, and any attempted exercise by any Lender of any such right without
obtaining such consent of the Administrative Agent shall be null and
void. This Section shall be solely for the benefit of each of the
Lenders hereunder.”

 

3.13.                        Revolving
Loan Notes.  Revolving Loan Notes, in
the form of Exhibit A attached hereto is hereby incorporated in the
Credit Agreement as Exhibit I replacing the form of Revolving Loan Note
set forth therein.

 

3.14.                        Patent
Security Agreement.  The Patent
Security Agreement attached hereto as Exhibit B is hereby
incorporated in the Credit Agreement as Exhibit P.

 

3.15.                        Trademark
Security Agreement.  The Trademark
Security Agreement attached hereto as Exhibit C is hereby incorporated
in the Credit Agreement as Exhibit Q attached thereto.

 

3.16.                        Subsidiary
Stock Pledge Agreement.  The Subsidiary
Stock Pledge Agreement attached hereto as Exhibit D is hereby
incorporated in the Credit Agreement as Exhibit R attached hereto.

 

3.17.                        California
Mortgage.  The California Mortgage
attached hereto as Exhibit E is hereby incorporated in the Credit
Agreement as Exhibit S attached thereto.

 

3.18.                        Pennsylvania
Mortgage.  The Pennsylvania Mortgage,
attached hereto as Exhibit F is hereby incorporated in the Credit
Agreement as Exhibit T.

 

3.19                           Lenders’ Consent to Bond Redemption, Sale of
the Undeveloped Rocklin, California Property and Energy Absorption Paint Line
Lease.  The Administrative Agent and the Lenders
hereby consent to the Bond Redemption, the Sale of the Undeveloped Rocklin,
California Property and Energy Absorption Paint Line Lease as described herein.
The Lenders agree that the amounts received by Borrower or its Subsidiaries
from the Bond Redemption, the Sale of the Undeveloped Rocklin, California
Property and Energy Absorption Paint Line Lease shall not be included in
determining whether the $500,000 threshold of Section 7.3(B)(iv) of the
Credit Agreement has been exceeded.

 

12

 

4.                                       REAFFIRMATION OF SUBSIDIARY GUARANTY.  Each
of the Guarantors hereby expressly (a) consents to the execution by the Borrower
and the Lenders of this Third Amendment, (b) acknowledges that the “Guaranteed
Obligations” (as defined in the Subsidiary Guaranty) includes all of the
obligations and liabilities owing from the Borrower to the Administrative Agent
and Lenders under and pursuant to the Credit Agreement, as amended from time to
time, including, but not limited to, the obligations of the Borrower to the
Administrative Agent and the Lenders as evidenced by the Revolving Loan Notes,
as modified, extended and/or replaced from time to time, and the Term Loan
Notes, as modified, extended and/or replaced from time to time, (c) reaffirms,
assumes and binds itself in all respects to all of the obligations,
liabilities, duties, covenants, terms and conditions that are contained in the
Subsidiary Guaranty, (d) agrees that all such obligations and liabilities under
the Subsidiary Guaranty shall continue in full force and effect and shall not
be discharged, limited, impaired or affected in any manner whatsoever, except
as expressly provided in the Subsidiary Guaranty, (e) represents and warrants
that each of the representations and warranties made by such Guarantor in any
of the documents executed in connection with the Loans remain true and correct
as of the date hereof, in each case as amended by the information provided in
any report or notice delivered by the Borrower to the Administrative Agent
pursuant to Section 7.1 of the Credit Agreement, and (f) represents and
warrants that the organization documents, borrowing resolutions and incumbency
certificates of such Guarantor have not been changed or amended since the most
recent date that certified copies thereof were delivered to the Lender.

 

5.                                       REPRESENTATIONS AND WARRANTIES.  To
induce the Lenders to enter into this Third Amendment, the Borrower hereby
certifies, represents and warrants to the Lenders that:

 

5.1.                              Organization.  The
Borrower is a corporation duly organized, existing and in good standing under
the laws of the State of Delaware, with all requisite power to conduct its
business as presently conducted.  The
Borrower is duly qualified to do business as a foreign entity under the laws of
each jurisdiction in which the failure to be so qualified would reasonably be
expected to have a Material Adverse Effect in all foreign jurisdictions wherein
the nature of its activities require such qualification or licensing. The
Articles of Incorporation and Bylaws, borrowing resolutions and incumbency
certificate of the Borrower have not been changed or amended since the most
recent date that certified copies thereof were delivered to the Lenders.  The exact legal name of the Borrower is as
set forth in the preamble of this Third Amendment, and the Borrower currently
does not conduct, nor has it during the last five (5) years conducted, business
under any other name or trade name.  The
Borrower will not change its name, its organizational identification number, if
it has one, its type of organization, its jurisdiction of organization or other
legal structure other than in accordance with the Credit Agreement.

 

5.2.                              Authorization.  The
Borrower is duly authorized to execute and deliver this Third Amendment and is
and will continue to be duly authorized to borrow monies under the Credit
Agreement, as amended hereby, and to perform its obligations under the Credit
Agreement, as amended hereby.

 

5.3.                              No Conflicts.  The
execution and delivery of this Third Amendment and the performance by the
Borrower of its obligations under the Credit Agreement, as amended

 

13

 

hereby,
do not and will not conflict with the articles of incorporation or bylaws of
the Borrower or conflict with, result in a breach of or constitute (with or
without notice or lapse of time or both) a default under any Requirement of Law
or Contractual Obligation of the Borrower, or require termination of any
Contractual Obligation, except such breach or default which individually or in
the aggregate could not reasonably be expected to have a Material Adverse
Effect.

 

5.4.                              Validity and Binding Effect.  The
Credit Agreement, as amended hereby, is a legal, valid and binding obligation
of the Borrower, enforceable against the Borrower in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency or other similar
laws of general application affecting the enforcement of creditors’ rights or
by general principles of equity.

 

5.5.                              Compliance with Credit Agreement.  The
representation and warranties set forth in Section 6 of the Credit
Agreement, as amended hereby, are true and correct in all material aspects with
the same effect as if such representations and warranties had been made on the
date hereof, with the exception that all references to the financial statements
or filings of the Borrower with the Securities and Exchange Commission shall
mean the financial statements or filings of the Borrower with the Securities
and Exchange Commission most recently delivered to the Lenders, in each case as
amended by the information provided in any report or notice delivered by the
Borrower to the Administrative Agent pursuant to Section 7.1 of the Credit
Agreement, and except for such changes as are specifically permitted under the
Credit Agreement.  In addition, the
Borrower has complied with and is in compliance with all of the covenants set
forth in the Credit Agreement, as amended hereby, including, but not limited
to, those set forth in Section 7 thereof.

 

5.6.                              No Default.  As of the date hereof, no
Default or Unmatured Default under the Credit Agreement, as amended hereby, has
occurred or is continuing.

 

5.7.                              No Subordinated Debt Default.  As
of the date hereof, no default under the Subordinated Note or any of the
documents securing the Subordinated Note, or event or condition which, with the
giving of notice or the passage of time, or both, would constitute a default
under the Subordinated Note or any of the documents securing the Subordinated
Note, has occurred or is continuing.

 

5.8.                              No Material Adverse Change. 
There has been no material adverse change in the business condition
(financial or otherwise), operations, performance, properties or prospects of
the Borrower and its Subsidiaries, considered as a whole, from that reflected
in the financial statements most recently delivered to the Lenders.

 

5.9.                              Sarbanes-Oxley Compliance.  The
Borrower, the Borrower’s Chief Executive Officer, and the Borrower’s Chief
Financial Officer are in compliance with all requirements of Section 302
and Section 906 of the Sarbanes-Oxley Act of 2002 and all rules and
regulations related thereto.

 

14

 

6.                                       CONDITIONS PRECEDENT AND CONDITIONS
SUBSEQUENT.

 

(A)                              CONDITIONS PRECEDENT.  This
Third Amendment shall become effective as of the date above first written after
receipt by the Administrative Agent of the following documents:

 

6.1.                              Third Amendment.  This
Third Amendment executed by the Borrower, the Guarantors, the Administrative
Agent and the Lenders.

 

6.2.                              Revolving Loan Note(s). 
Revolving Loan Notes, in the form of Exhibit A attached hereto, dated
as of the date of the Third Amendment, for each Lender, payable to the order of
each Lender in the amount of each Lender’s Pro Rata Share of the Revolving Loan
Commitment.

 

6.3.                              Patent Security Agreement.  A
Patent Security Agreement in the form of Exhibit B attached hereto,
executed and delivered by Borrower and each Subsidiary, if any,  granting a security interest in Patents.

 

6.4.                              Trademark Security Agreement.  A
Trademark Security Agreement, in the form of Exhibit C attached hereto
executed and delivered by Borrower and each Subsidiary, if any,  granting a security interest in Trademarks.

 

6.5.                              Subsidiary Stock Pledge Agreements.  A
Subsidiary Stock Pledge Agreement in the forms of Exhibit D-1, D-2, D-3 and
D-4 attached hereto, executed and delivered by Borrower, Quixote
Transportation Systems, Inc., TranSafe Corporation and Energy Absorption
Systems, Inc., respectively.

 

6.6.                              California Mortgage.  A
California Mortgage, in the form of Exhibit E attached hereto, executed
and delivered by Energy Absorption Systems Inc.

 

6.7.                              Pennsylvania Mortgage.  A
Pennsylvania Mortgage, in the form of Exhibit F attached hereto,
executed and delivered by Nu-Metrics, Inc.

 

6.8.                              Certificate of the Secretary/Member/Manager. 
Secretary’s/Managing Member’s Certificate of Borrower and each
Subsidiary that is a party to any of the Patent Security Agreement, Trademark
Security Agreement, California Mortgage or Pennsylvania Mortgage, in form and
substance acceptable to the Administrative Agent, with such attachments as required
therein, as to applicable, resolutions, incumbency and signatures of signing
Authorized Officers or Managing Member with an attached certificate of good
standing issued by the Secretary of State of the state of organization of
Borrower and each such Subsidiary.

 

6.9.                              Legal Opinion. 
Legal opinion of Joan Riley, Borrower’s General Counsel, and as counsel
to each Subsidiary Guarantor, in form and substance acceptable to the
Administrative Agent.

 

15

 

6.10.                        Evidence of Insurance. 
Evidence that the Borrower has insurance as required by Section 1.3
of the California Mortgage and Section 1.6 of the Pennsylvania Mortgage,
including property, casualty and liability insurance satisfactory to the
Administrative Agent, together with:  (i)
loss payable endorsements naming the Administrative Agent as loss payee with
respect to property and casualty insurance covering the California Property and
the Pennsylvania Property; and (ii) certificate(s) of insurance(s) and binder(s)
naming the Administrative Agent as additional insured with respect to liability
insurance covering the California Property and the Pennsylvania Property.

 

6.11.                        Flood Zone Determinations. 
Flood Zone determinations for each of the California Property and
Pennsylvania Property, in form and substance acceptable to the Administrative
Agent.

 

6.12.                        Stock Certificate. 
Original stock certificates of each Subsidiary Guarantor pledged
pursuant to the applicable Subsidiary Stock Pledge Agreement, with duly
executed stock powers.

 

6.13.                        Amendment Fee. 
Borrower agrees to pay, on the date of this Amendment, to the
Administrative Agent, for the account of the Lenders, an Amendment Fee based
upon each Lender’s committed share level set forth below:

 

	
  Bank

  	
   

  	
  Committed Level

  	
   

  	
  Amendment Fee

  	
   

  
	
  Northern
  Trust

  	
   

  	
  $

  	
  15,714,285.71

  	
   

  	
  $

  	
  58,928.50

  	
   

  
	
  LaSalle
  Bank

  	
   

  	
  $

  	
  15,714,285.71

  	
   

  	
  $

  	
  58,928.50

  	
   

  
	
  Harris

  	
   

  	
  $

  	
  11,785,714.29

  	
   

  	
  $

  	
  44,196.43

  	
   

  
	
  National
  City

  	
   

  	
  $

  	
  11,785,714.29

  	
   

  	
  $

  	
  44,196.43

  	
   

  

 

(B)                                CONDITIONS SUBSEQUENT. 
Except as otherwise set forth below, within thirty (30) days of the
closing date of this Third Amendment, Borrower shall deliver the following to
the Administrative Agent:

 

6.14.                        Title
Insurance.  With respect to each of
the California Property and Pennsylvania Property, a mortgagee title insurance
policy, current ALTA loan policy form, without survey exception, mechanics’
lien exception or exception for parties in possession, issued by a title
insurance company satisfactory to the Administrative Agent (the “Title Insurance
Company”), in amounts with respect to each Property acceptable to the
Administrative Agent and naming the Administrative Agent as the insured and
insuring the California Mortgage and Pennsylvania Mortgage, as applicable to be
a valid first, prior and paramount lien upon the California Property and
Pennsylvania Property respectively subject only to the permitted exceptions
described therein and to customary exceptions for pending disbursements and
completion of improvements (“Title Insurance Policy”).  The Title Insurance Policy must specifically
ensure for claims and questions related to such matters as Administrative Agent
may require to the extent available in the State.

 

16

 

6.15.                        Searches.  A report from the Title Insurance Company or
the appropriate filing officers of the state and county in which the
Pennsylvania Property and California Property is located, indicating that no
judgments, tax or other liens, security interests, leases of personalty, financing
statements or other encumbrances (other than permitted exceptions and liens and
security interests in favor of Administrative Agent) are of record or on file
encumbering any portion of the Property, and that there are no judgments, tax
liens, pending litigation or bankruptcy actions outstanding with respect to
Borrower or any Subsidiary Guarantor.

 

6.16.                        Appraisals.  With respect to each of the California
Property and Pennsylvania Property, appraisals of such Property, satisfactory
to the Administrative Agent as to methodology and as to results.

 

6.17.                        Engagement
Letter.  On or before
October 31, 2004, an executed copy of the engagement letter between
Borrower and the financial consultant retained in accordance with
Section 7.1(K) hereof.

 

6.18.  Patent, Trademark and Other Search Results.  Satisfactory Patent and Trademark financing
statement, judgment and tax lien search results of the Borrower and any
Subsidiary Guarantors from such offices or governmental agencies or bodies as
the Administrative Agent, in its sole discretion, may request from time to
time, indicating that any security agreement to be filed by the Administrative
Agent or described above, after being duly and properly filed and recorded,
will give the Administrative Agent first priority perfected liens and security
interests on and in the Collateral of the Borrower and each Guarantor, except
by reason of Permitted Existing Liens or Customary Permitted Liens, and that
there are no other lienors or creditors claiming any interest in the Collateral
of the Borrower or any Guarantor, except holders of Permitted Existing Liens or
Customary Permitted Liens.

 

7.                                       GENERAL.

 

7.1.                              Governing Law; Severability.  This
Third Amendment shall be construed in accordance with and governed by the laws
of Illinois.  Wherever possible each
provision of the Credit Agreement and this Third Amendment shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of the Credit Agreement and this Third Amendment shall be prohibited
by or invalid under such law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of the Credit Agreement and this Third
Amendment.

 

7.2.                              Successors and Assigns.  This
Third Amendment shall be binding upon the Borrower, the Guarantors, the
Administrative Agent and the Lenders and their respective successors and
assigns, and shall inure to the benefit of the Borrower, the Guarantors, the
Administrative Agent and the Lenders and the successors and assigns of the
Lenders.

 

7.3.                              Continuing Force and Effect of Loan Documents
and Subsidiary Guaranty.  Except as specifically modified or amended by
the terms of this Third Amendment, all other terms and provisions of the Credit
Agreement and the other Loan Documents are incorporated by reference herein,
and in all respects, shall continue in full force and effect.  The

 

17

 

Borrower,
by execution of this Third Amendment, hereby reaffirms, assumes and binds
itself to all of the obligations, duties, rights, covenants, terms and
conditions that are contained in the Credit Agreement and the other Loan
Documents. Each of the Guarantors, by execution of this Third Amendment, hereby
reaffirms, assumes and binds itself to all of the obligations, duties, rights,
covenants, terms and conditions that are contained in the Subsidiary Guaranty.

 

7.4.                              References to Credit Agreement.  Each
reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”,
or words of like import, and each reference to the Credit Agreement in any and
all instruments or documents delivered in connection therewith, shall be deemed
to refer to the Credit Agreement, as amended hereby.

 

7.5.                              Expenses.  The Borrower shall pay all
costs and expenses in connection with the preparation of this Third Amendment
and other related Loan Documents, including, without limitation, reasonable
attorneys’ fees and time charges of attorneys who may be employees of the
Lenders or any affiliate or parent of the Lenders.  The Borrower shall pay any and all stamp and
other taxes, UCC, trademark or patent search fees, title report or insurance
fees, filing fees and other costs and expenses in connection with the execution
and delivery of this Third Amendment and the other instruments and documents to
be delivered hereunder, and agrees to save the Lenders harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such costs and expenses.

 

7.6.                              Counterparts.                       This Third Amendment may be executed in any
number of counterparts, all of which shall constitute one and the same
agreement.

 

18

 

IN
WITNESS WHEREOF, the parties hereto have executed this Third Amendment to
Credit Agreement and Reaffirmation of Subsidiary Guaranty as of the date first
above written.

 

 

	
   

  	
  QUIXOTE
  CORPORATION

  
	
   

  	
  A
  Delaware corporation, as Borrower

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/Daniel
  P. Gorey

  	
   

  
	
   

  	
  Name:

  	
  Daniel
  P. Gorey

  
	
   

  	
  Title:

  	
  Vice
  President, Chief Financial Officer & Treasurer

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o
  Quixote Corporation

  
	
   

  	
   

  	
  35
  East Wacker Drive

  
	
   

  	
   

  	
  Chicago,
  Illinois  60601

  
	
   

  	
  Attention:

  	
  Daniel
  P. Gorey

  
	
   

  	
   

  
	
   

  	
  Telephone
  No.:

  	
  (312)
  467-6755

  
	
   

  	
  Facsimile
  No.:

  	
  9312)
  467-1356

  
	
   

  	
   

  
	
   

  	
  QUIXOTE
  TRANSPORTATION SAFETY, INC.

  
	
   

  	
  TRANSAFE
  CORPORATION

  
	
   

  	
  ENERGY
  ABSORPTION SYSTEMS, INC.

  
	
   

  	
  ENERGY
  ABSORPTION SYSTEMS (AL) LLC

  
	
   

  	
  SURFACE
  SYSTEMS, INC.

  
	
   

  	
  NU-METRICS,
  INC.

  
	
   

  	
  HIGHWAY
  INFORMATION SYSTEMS, INC.

  
	
   

  	
  U.
  S.  TRAFFIC CORPORATION

  
	
   

  	
  (formerly
  known as Green Light Acquisition Corporation)

  
	
   

  	
  PEEK
  TRAFFIC CORPORATION,

  
	
   

  	
  (formerly
  known as Vision Acquisition Corporation),

  
	
   

  	
  as
  Guarantors

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/Daniel
  P. Gorey

  	
   

  
	
   

  	
  Name:

  	
  Daniel
  P. Gorey

  
	
   

  	
  Title:

  	
  Vice
  President and Treasurer

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o
  Quixote Corporation

  
	
   

  	
   

  	
  35
  East Wacker Drive

  
	
   

  	
   

  	
  Chicago,
  Illinois  60601

  
	
   

  	
  Attention:

  	
  Daniel
  P. Gorey

  
	
   

  	
   

  
	
   

  	
  Telephone
  No.:

  	
  (312)
  467-6755

  
	
   

  	
  Facsimile
  No.:

  	
  (312)
  467-0197

  
						

 

19

 

	
   

  	
  THE
  NORTHERN TRUST COMPANY, for Itself and,

  
	
   

  	
  as
  Administrative Agent for the Lenders

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/Jon
  W. Kreidler

  	
   

  
	
   

  	
  Name:

  	
  Jon
  W. Kreidler

  
	
   

  	
  Title:

  	
  Officer

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  The
  Northern Trust Company

  
	
   

  	
   

  	
  50
  South LaSalle Street

  
	
   

  	
   

  	
  Chicago,
  Illinois 60675

  
	
   

  	
  Attention:

  	
  Jon
  W. Kreidler

  
	
   

  	
   

  
	
   

  	
  Telephone
  No.:

  	
  (312)
  557-1903

  
	
   

  	
  Facsimile
  No.:

  	
  (312)
  444-7028

  
	
   

  	
   

  
	
   

  	
  LASALLE
  BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/Siamak
  Saidi

  	
   

  
	
   

  	
  Name:

  	
  Siamak
  Saidi

  
	
   

  	
  Title:

  	
  Commercial
  Banking Officer

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  LaSalle
  National Association

  
	
   

  	
   

  	
  135
  South LaSalle Street

  
	
   

  	
   

  	
  Chicago,
  Illinois 60603

  
	
   

  	
  Attention:

  	
  Siamak
  Saidi

  
	
   

  	
   

  
	
   

  	
  Telephone
  No.:

  	
  (312)
  904-7734

  
	
   

  	
  Facsimile
  No.:

  	
  (312)
  904-6546

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HARRIS
  TRUST AND SAVINGS BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/Derek
  R. Cook

  	
   

  
	
   

  	
  Name:

  	
  Derek
  R. Cook

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  Harris
  Trust and Savings Bank

  
	
   

  	
   

  	
  111
  West Monroe Street

  
	
   

  	
   

  	
  Tenth
  Floor West

  
	
   

  	
   

  	
  Chicago,
  Illinois  60603

  
	
   

  	
  Attention:

  	
  Derek R. Cook

  
	
   

  	
   

  
	
   

  	
  Telephone
  No.:

  	
  (312) 461-3593

  
	
   

  	
  Facsimile
  No.:

  	
  (312) 461-2591

  
						

 

20

 

	
   

  	
  NATIONAL CITY BANK OF
  THE MIDWEST

  
	
   

  	
  (f/k/a National City
  Bank of Michigan/Illinois)

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/Richard
  Michalik

  	
   

  
	
   

  	
  Name:

  	
  Richard Michalik

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
  Address:

  	
  National City Bank of
  the Midwest

  
	
   

  	
   

  	
  (f/k/a National City
  Bank of Michigan/Illinois)

  
	
   

  	
   

  	
  One North Franklin

  
	
   

  	
   

  	
  36th Floor

  
	
   

  	
   

  	
  Chicago, Illinois  60606

  
	
   

  	
  Attention:

  	
   

  	
   

  
	
   

  	
  Telephone
  No.:

  	
  (312) 384-4650

  
	
   

  	
  Facsimile
  No.:

  	
  (312) 240-0301

  
							

 

21

 

FORM OF REVOLVING LOAN
NOTE

 

	
  $10,857,142.86

  	
   

  	
  Chicago,
  Illinois

  
	
   

  	
   

  	
  September 10,
  2004

  

 

FOR VALUE RECEIVED, the
undersigned, QUIXOTE CORPORATION, a Delaware corporation (the “Borrower”),
promises to pay to the order of LASALLE BANK NATIONAL ASSOCIATION and its
registered assigns (the “Lender”), on May 16, 2006, the principal sum of Ten
Million Eight Hundred Fifty Seven Thousand One Hundred and Forty Two Dollars
and 86/100 ($10,857,142.86), or, if less, the aggregate unpaid principal amount
of all Loans made by the Lender to the Borrower from time to time pursuant to
that certain Credit Agreement, dated as of May 16, 2003, as amended by a First
Amendment, dated as of December 9, 2003, a Second Amendment, dated as of
June 30, 2004 and a Third Amendment, dated as of the date hereof (together
with all amendments, if any, from time to time made thereto, the “Credit
Agreement”), among the Borrower, various lenders (including the Lender), and
The Northern Trust Company, as Administrative Agent (the “Administrative
Agent”).

 

The Borrower agrees to
pay interest on the principal hereof remaining from time to time unpaid in
accordance with Section 2.14 of the Credit Agreement.

 

All payments of principal
of and interest on this Note shall be payable in lawful currency of the United
States of America at the Administrative Agent’s office at 50 South LaSalle
Street, Chicago, Illinois 60675, in immediately available funds.

 

This Note evidences
indebtedness incurred under, and is subject to the terms and provisions of, the
Credit Agreement, to which reference is made for a statement of those terms and
provisions.  Should the indebtedness
represented by this Note or any part hereof be collected at law or in equity or
in bankruptcy, receivership, or other court proceedings, or this Note be placed
in the hands of attorneys for collection after maturity (by declaration or
otherwise), the undersigned agrees to pay, in addition to principal and
interest due and payable hereon, reasonable attorneys’ and collection fees.

 

This
Revolving Loan Note constitutes a restatement of, and replacement and
substitution for, that certain Revolving Note dated as of May 21, 2003 in the
maximum principal amount of Fourteen Million Two Hundred Eighty Five Thousand
Seven Hundred and Fourteen Dollars and 29/100 ($14,285,714.29), executed by the
Borrower and made payable to the order of the Lender (the “Prior Note”).  The indebtedness evidenced by the Prior Note
is continuing indebtedness evidenced hereby, and nothing herein shall be deemed
to constitute a payment, settlement or novation of the Prior Note, or to
release or otherwise adversely affect any lien, mortgage or security interest
securing such indebtedness or any rights of the Lender against any guarantor,
surety or other party primarily or secondarily liable for such indebtedness.

 

 

	
   

  	
  QUIXOTE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	 
	
   

  	
  By:

  	
    /s/Daniel
  P. Gorey

  	
   

  
	 
	
   

  	
  Name:

  	
  Daniel P. Gorey

  
	 
	
   

  	
  Title:

  	
  Vice
  President, Chief Financial

  Officer and Treasurer

  
						

 

 

Loans made by LASALLE
BANK NATIONAL ASSOCIATION (the “Lender”) to QUIXOTE CORPORATION (the
“Borrower”) under the Credit Agreement, dated as of May 16, 2003, as amended,
among the Borrower, various lenders (including the Lender), and THE NORTHERN
TRUST COMPANY, as Administrative Agent, and payments of principal received on
the Note to which this Grid is attached:

 

	
  Date

  	
   

  	
  Amount

  of Loan

  	
   

  	
  Amount of

  Principal

  Paid

  	
   

  	
  Unpaid

  Principal

  Balance

  	
   

  	
  Notation

  By

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

2

 

FORM OF REVOLVING LOAN
NOTE

 

	
  $8,142,857.14

  	
   

  	
  Chicago,
  Illinois

  
	
   

  	
   

  	
  September 10,
  2004

  

 

FOR VALUE RECEIVED, the
undersigned, QUIXOTE CORPORATION, a Delaware corporation (the “Borrower”),
promises to pay to the order of NATIONAL CITY BANK OF THE MIDWEST and its
registered assigns (the “Lender”), on May 16, 2006, the principal sum of Eight
Million One Hundred Forty Two Thousand Eight Hundred and Fifty Seven Dollars
and 14/100 ($8,142,857.14), or, if less, the aggregate unpaid principal amount
of all Loans made by the Lender to the Borrower from time to time pursuant to
that certain Credit Agreement, dated as of May 16, 2003, as amended by a First
Amendment, dated as of December 9, 2003, a Second Amendment, dated as of
June 30, 2004 and a Third Amendment, dated as of the date hereof (together
with all amendments, if any, from time to time made thereto, the “Credit
Agreement”), among the Borrower, various lenders (including the Lender), and
The Northern Trust Company, as Administrative Agent (the “Administrative
Agent”).

 

The Borrower agrees to
pay interest on the principal hereof remaining from time to time unpaid in
accordance with Section 2.14 of the Credit Agreement.

 

All payments of principal
of and interest on this Note shall be payable in lawful currency of the United
States of America at the Administrative Agent’s office at 50 South LaSalle
Street, Chicago, Illinois 60675, in immediately available funds.

 

This Note evidences
indebtedness incurred under, and is subject to the terms and provisions of, the
Credit Agreement, to which reference is made for a statement of those terms and
provisions.  Should the indebtedness
represented by this Note or any part hereof be collected at law or in equity or
in bankruptcy, receivership, or other court proceedings, or this Note be placed
in the hands of attorneys for collection after maturity (by declaration or
otherwise), the undersigned agrees to pay, in addition to principal and
interest due and payable hereon, reasonable attorneys’ and collection fees.

 

This
Revolving Loan Note constitutes a restatement of, and replacement and
substitution for, that certain Revolving Note dated as of May 21, 2003 in the
maximum principal amount of Ten Million Seven Hundred Fourteen Thousand Two
Hundred and Eighty Five Dollars and 71/100 ($10,714,285.71), executed by the
Borrower and made payable to the order of the Lender (the “Prior Note”).  The indebtedness evidenced by the Prior Note
is continuing indebtedness evidenced hereby, and nothing herein shall be deemed
to constitute a payment, settlement or novation of the Prior Note, or to
release or otherwise adversely affect any lien, mortgage or security interest
securing such indebtedness or any rights of the Lender against any guarantor,
surety or other party primarily or secondarily liable for such indebtedness.

 

 

	
   

  	
  QUIXOTE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	 
	
   

  	
  By:

  	
    /s/Daniel
  P. Gorey

  	
   

  
	 
	
   

  	
  Name:

  	
  Daniel P. Gorey

  
	 
	
   

  	
  Title:

  	
  Vice
  President, Chief Financial

  Officer and Treasurer

  
						

 

 

Loans made by NATIONAL
CITY BANK OF THE MIDWEST (the “Lender”) to QUIXOTE CORPORATION (the “Borrower”)
under the Credit Agreement, dated as of May 16, 2003, as amended, among the
Borrower, various lenders (including the Lender), and THE NORTHERN TRUST
COMPANY, as Administrative Agent, and payments of principal received on the
Note to which this Grid is attached:

 

	
  Date

  	
   

  	
  Amount

  of Loan

  	
   

  	
  Amount of

  Principal

  Paid

  	
   

  	
  Unpaid

  Principal

  Balance

  	
   

  	
  Notation

  By

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

2

 

FORM OF REVOLVING LOAN
NOTE

 

	
  $10,857,142.86

  	
   

  	
  Chicago,
  Illinois

  
	
   

  	
   

  	
  September 10,
  2004

  

 

FOR VALUE RECEIVED, the
undersigned, QUIXOTE CORPORATION, a Delaware corporation (the “Borrower”),
promises to pay to the order of THE NORTHERN TRUST COMPANY and its registered
assigns (the “Lender”), on May 16, 2006, the principal sum of Ten Million Eight
Hundred Fifty Seven Thousand One Hundred and Forty Two Dollars and 86/100
($10,857,142.86), or, if less, the aggregate unpaid principal amount of all
Loans made by the Lender to the Borrower from time to time pursuant to that
certain Credit Agreement, dated as of May 16, 2003, as amended by a First
Amendment, dated as of December 9, 2003, a Second Amendment, dated as of
June 30, 2004 and a Third Amendment, dated as of the date hereof (together
with all amendments, if any, from time to time made thereto, the “Credit
Agreement”), among the Borrower, various lenders (including the Lender), and
The Northern Trust Company, as Administrative Agent (the “Administrative
Agent”).

 

The Borrower agrees to
pay interest on the principal hereof remaining from time to time unpaid in
accordance with Section 2.14 of the Credit Agreement.

 

All payments of principal
of and interest on this Note shall be payable in lawful currency of the United
States of America at the Administrative Agent’s office at 50 South LaSalle
Street, Chicago, Illinois 60675, in immediately available funds.

 

This Note evidences
indebtedness incurred under, and is subject to the terms and provisions of, the
Credit Agreement, to which reference is made for a statement of those terms and
provisions.  Should the indebtedness
represented by this Note or any part hereof be collected at law or in equity or
in bankruptcy, receivership, or other court proceedings, or this Note be placed
in the hands of attorneys for collection after maturity (by declaration or
otherwise), the undersigned agrees to pay, in addition to principal and
interest due and payable hereon, reasonable attorneys’ and collection fees.

 

This
Revolving Loan Note constitutes a restatement of, and replacement and
substitution for, that certain Revolving Note dated as of May 21, 2003 in the
maximum principal amount of Fourteen Million Two Hundred Eighty Five Thousand
Seven Hundred and Fourteen Dollars and 29/100 ($14,285,714.29), executed by the
Borrower and made payable to the order of the Lender (the “Prior Note”).  The indebtedness evidenced by the Prior Note
is continuing indebtedness evidenced hereby, and nothing herein shall be deemed
to constitute a payment, settlement or novation of the Prior Note, or to
release or otherwise adversely affect any lien, mortgage or security interest
securing such indebtedness or any rights of the Lender against any guarantor,
surety or other party primarily or secondarily liable for such indebtedness.

 

 

	
   

  	
  QUIXOTE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	 
	
   

  	
  By:

  	
    /s/Daniel
  P. Gorey

  	
   

  
	 
	
   

  	
  Name:

  	
  Daniel P. Gorey

  
	 
	
   

  	
  Title:

  	
  Vice
  President, Chief Financial

  Officer and Treasurer

  
						

 

 

Loans made by THE
NORTHERN TRUST COMPANY (the “Lender”) to QUIXOTE CORPORATION (the “Borrower”)
under the Credit Agreement, dated as of May 16, 2003, as amended, among the
Borrower, various lenders (including the Lender), and THE NORTHERN TRUST
COMPANY, as Administrative Agent, and payments of principal received on the
Note to which this Grid is attached:

 

	
  Date

  	
   

  	
  Amount

  of Loan

  	
   

  	
  Amount of

  Principal

  Paid

  	
   

  	
  Unpaid

  Principal

  Balance

  	
   

  	
  Notation

  By

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

2

 

FORM OF REVOLVING LOAN NOTE

 

	
  $8,142,857.14

  	
   

  	
  Chicago, Illinois

  
	
   

  	
   

  	
  September 10, 2004

  

 

FOR VALUE RECEIVED, the undersigned, QUIXOTE
CORPORATION, a Delaware corporation (the “Borrower”), promises to pay to the
order of HARRIS TRUST AND SAVINGS BANK and its registered assigns (the
“Lender”), on May 16, 2006, the principal sum of Eight Million One Hundred
Forty Two Thousand Eight Hundred and Fifty Seven Dollars and 14/100
($8,142,857.14), or, if less, the aggregate unpaid principal amount of all
Loans made by the Lender to the Borrower from time to time pursuant to that
certain Credit Agreement, dated as of May 16, 2003, as amended by a First
Amendment, dated as of December 9, 2003, a Second Amendment, dated as of June
30, 2004 and a Third Amendment, dated as of the date hereof (together with all
amendments, if any, from time to time made thereto, the “Credit Agreement”),
among the Borrower, various lenders (including the Lender), and The Northern
Trust Company, as Administrative Agent (the “Administrative Agent”).

 

The Borrower agrees to pay interest on the principal
hereof remaining from time to time unpaid in accordance with Section 2.14 of
the Credit Agreement.

 

All payments of principal of and interest on this Note
shall be payable in lawful currency of the United States of America at the
Administrative Agent’s office at 50 South LaSalle Street, Chicago, Illinois
60675, in immediately available funds.

 

This Note evidences indebtedness incurred under, and
is subject to the terms and provisions of, the Credit Agreement, to which
reference is made for a statement of those terms and provisions.  Should the indebtedness represented by this
Note or any part hereof be collected at law or in equity or in bankruptcy,
receivership, or other court proceedings, or this Note be placed in the hands
of attorneys for collection after maturity (by declaration or otherwise), the
undersigned agrees to pay, in addition to principal and interest due and
payable hereon, reasonable attorneys’ and collection fees.

 

This Revolving Loan Note constitutes a restatement of, and replacement
and substitution for, that certain Revolving Note dated as of May 21, 2003 in
the maximum principal amount of Ten Million Seven Hundred Fourteen Thousand Two
Hundred and Eighty Five Dollars and 71/100 ($10,714,285.71), executed by the
Borrower and made payable to the order of the Lender (the “Prior Note”).  The indebtedness evidenced by the Prior Note
is continuing indebtedness evidenced hereby, and nothing herein shall be deemed
to constitute a payment, settlement or novation of the Prior Note, or to release
or otherwise adversely affect any lien, mortgage or security interest securing
such indebtedness or any rights of the Lender against any guarantor, surety or
other party primarily or secondarily liable for such indebtedness.

 

 

	
   

  	
  QUIXOTE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
       /s/Daniel P. Gorey

  	
   

  
	
   

  	
  Name:

  	
  Daniel P. Gorey

  
	
   

  	
  Title:

  	
  Vice President, Chief Financial

  
	
   

  	
   

  	
  Officer and
  Treasurer

  
					

 

Loans made by HARRIS TRUST AND SAVINGS BANK (the “Lender”) to QUIXOTE
CORPORATION (the “Borrower”) under the Credit Agreement, dated as of May 16,
2003, as amended, among the Borrower, various lenders (including the Lender),
and THE NORTHERN TRUST COMPANY, as Administrative Agent, and payments of
principal received on the Note to which this Grid is attached:

 

	
  Date

  	
   

  	
  Amount

  of Loan

  	
   

  	
  Amount of

  Principal

  Paid

  	
   

  	
  Unpaid

  Principal

  Balance

  	
   

  	
  Notation

  By

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

2

 

PATENT SECURITY
AGREEMENT

 

THIS PATENT SECURITY
AGREEMENT (the “Security Agreement”) made as of this 10th day of September,
2004, by ENERGY ABSORPTION SYSTEMS, INC., a Delaware corporation (“Pledgor”) in
favor of THE NORTHERN TRUST COMPANY, an Illinois banking association, as
secured party and as Agent for itself and other Lenders party to that Credit
Agreement, as defined herein, with an office at 50 South LaSalle Street,
Chicago, Illinois 60675 (“Pledgee”):

 

RECITALS

 

I.                                         The
Pledgee and the Lenders, as herein defined, have made or may make loans to
Borrower and may extend other financial accommodations to Quixote Corporation
(the “Borrower”) in an aggregate principal amount of $58,000,000.00
(collectively, the “Loans”).  The Loans
consist of (i) revolving loans (the “Revolving Loans”), the outstanding
principal balance of which may increase or decrease from time to time, but at
no time shall the outstanding principal balance of such Revolving Loan exceed
$38,000,000.00 and (ii) term loans (the “Term Loans”) in the original
principal sum of $20,000,000.00.  Certain
repayment obligations of Borrower with respect to the Revolving Loans are
evidenced by Borrower’s Revolving Notes, dated September 10, 2004, payable
pro rata to the Lenders in the aggregate principal amount of $38,000,000.00
(said notes, with all allonges, amendments, supplements, modifications and
replacements thereof, being sometimes referred to in this Security Agreement as
the “Revolving Notes”).  Certain
repayment obligations of Borrower with respect to the Term Loans are evidenced
by the Borrower’s Term Notes dated May 16, 2003, payable pro rata to the
Lenders in the aggregate principal amount of $20,000,000.00 (said notes, with
all allonges, amendments, supplements, modifications and replacements thereof,
being sometimes referred to in this Security Agreement as the “Term
Notes”.  The Revolving Notes and the Term
Notes are sometimes referred to herein collectively as the “Notes.”  The terms of the Loans are governed by a certain
Credit Agreement, dated as of May 16, 2003, as amended by a First Amendment,
dated as of December 9, 2003 (the “First Amendment”) and by a Second
Amendment, dated as of June 30, 2004 (the “Second Amendment”) and a Third
Amendment, dated as of the date hereof (“Third Amendment”) (said Credit
Agreement, together with all amendments, supplements, modifications and
replacements thereof, being referred to in this Security Agreement as the
“Credit Agreement”), by and among the Borrower, the Lenders party thereto
(“Lenders”) and The Northern Trust Company as Administrative Agent for itself
and the Lenders.  In connection with the
Credit Agreement, the Borrower executed and delivered to the Administrative
Agent, as a condition to the Credit Agreement, that certain Subsidiary
Guaranty, dated as of May 16, 2003, as reaffirmed by the First Amendment,
Second Amendment and Third Amendment, in favor of the Administrative Agent for
the ratable benefit of the Lenders (the “Subsidiary Guaranty”) (the Credit
Agreement, Subsidiary Guaranty and other related loan and security documents as
each may be amended or modified from time to time (the “Loan Documents”).  The terms and provisions of the Notes and the
Credit Agreement are hereby incorporated by reference in this Security
Agreement.

 

 

Capitalized terms not
otherwise defined in this Security Agreement shall have the meaning ascribed to
them in the Credit Agreement.

 

II.                                     This
Security Agreement is given to secure Pledgor’s obligations under the
Subsidiary Guaranty and this Security Agreement, and Borrower’s obligations
under the Credit Agreement and on one or more Term Loans, Revolving Loans and
Reimbursement Obligations and secures not only present indebtedness but also
future advances, whether such future advances are obligatory or are to be made
at the option of the Lenders, or otherwise as are to be made within twenty (20)
years of the date hereof.  The amount of
indebtedness secured hereby may increase or decrease from time to time;
provided, however the principal amount of such indebtedness shall not at one
time exceed the amount of $38,000,000 plus interest thereon, and other costs,
amounts and disbursements as provided herein and in the other Loan Documents
(hereinafter defined).

 

W I T N E S S E T
H

 

WHEREAS, the Pledgor is
the owner of the Patents (defined below), all of which have been or are used by
Pledgor in the conduct of its business;

 

WHEREAS, the extension
and/or continued extension of credit, as aforesaid, by Pledgee is necessary and
desirable to the conduct and operation of the business of Pledgor and Borrower
and will inure to the personal and financial benefit of the Pledgor;

 

NOW, THEREFORE, in
consideration of the premises set forth herein and for other good and valuable
consideration, receipt and sufficiency of which are hereby acknowledged,
Pledgor agrees as follows:

 

1.                                       Defined
Terms.  All terms capitalized but not
otherwise defined herein shall have the same meanings herein as in the Credit
Agreement.  For purposes of this
Agreement, the term “Event of Default” shall have the meaning assigned to such
term under the Credit Agreement, and shall also include Pledgor’s breach of any
material term under this Security Agreement.

 

2.                                       Grant
of Security Interests.  To secure the
complete and timely payment and satisfaction of the Borrower’s Obligations, as
defined in the Credit Agreement, to the Pledgee, whether for principal,
interest, fees, expenses or otherwise, and all obligations of the Pledgor now
or hereafter existing under the Subsidiary Guaranty and this Agreement (the
Liabilities under the Credit Agreement and all such obligations of the Pledgor
now or hereafter existing under the Subsidiary Guaranty and this Agreement
being referred to herein as the “Liabilities”), Pledgor hereby grants to
Pledgee a continuing security interest in Pledgor’s entire right, title and
interest in and to all of its now owned or existing and hereafter acquired or
arising patents and patent applications used or useable by Borrower, including,
without limitation, the inventions and improvements described and claimed
therein, all patentable inventions and those patents and patent applications
listed on Schedule A attached hereto and made a part hereof and all
patents and the reissues, divisions, continuations, renewals, extensions and
continuations-in-part of any of the foregoing, and all income, royalties,
damages and payments now or hereafter

 

2

 

due and/or payable under
or with respect to any of the foregoing, including, without limitation, damages
and payments for past, present and future infringements of any of the foregoing
and the right to sue for past, present and future infringements of any of the
foregoing (all of the foregoing are sometimes hereinafter individually and/or
collectively referred to as the “Patents”).

 

3.                                       Warranties
and Representations.  Pledgor
warrants and represents to Pledgee that:

 

(i)                                     no
Patent has been adjudged invalid or unenforceable by a court of competent
jurisdiction nor has any such Patent been cancelled, in whole or in part and
each such Patent is presently subsisting;

 

(ii)                                  Pledgor
is the sole and exclusive owner of the entire and unencumbered right, title and
interest in and to each Patent, free and clear of any liens, charges and
encumbrances, including without limitation, shop rights and covenants by
Pledgor not to sue third persons;

 

(iii)                               Pledgor
has no notice of any suits or actions commenced or threatened with reference to
any Patent; and

 

(iv)                              Pledgor
has the unqualified right to execute and deliver this Security Agreement and
perform its terms.

 

4.                                       Restrictions
on Future Agreements.  Pledgor agrees
that until the Liabilities shall have been satisfied in full and the Loan
Documents shall have been terminated, Pledgor shall not, without the prior
written consent of Pledgee, sell or assign its interest in any Patent or enter
into any other agreement with respect to any Patent which would affect the
validity or enforcement of the rights transferred to Pledgee under this
Security Agreement.

 

5.                                       New
Patents.  Pledgor represents and
warrants that, based on a diligent investigation by Pledgor, the Patents listed
on Schedule A constitute Patents and Patent applications now owned by
Pledgor.  If, before the Liabilities
shall have been satisfied in full or before the Loan Documents have been
terminated, Pledgor shall (i) become aware of any existing Patents of which
Pledgor has not previously informed Pledgee, (ii) obtain rights to any new
patentable inventions or Patents, or (iii) become entitled to the benefit of
any Patents, which benefit is not in existence on the date hereof.  Pledgor shall give to Pledgee prompt written
notice thereof.  Pledgor hereby
authorizes Pledgee to modify this Security Agreement by amending
Schedule A to include any such Patents.

 

6.                                       Royalties;
Terms.  The term of this Security
Agreement shall extend until the earlier of (i) the expiration of each of the
Patents and (ii) the payment in full of Borrower’s Liabilities and the
termination of the Loan Documents. 
Pledgor agrees that upon the occurrence of an Event of Default, the use
by Pledgee of all Patents shall be without any liability for royalties or other
related charges from Pledgee to Pledgor.

 

3

 

7.                                       Release
of Security Interest.  This Security
Agreement is made for collateral purposes only. 
Upon payment in full of the Liabilities and termination of the Loan
Documents, Pledgee shall take such actions as may be necessary or proper to
terminate the security interests created hereby.

 

8.                                       Expenses.  All expenses incurred in connection with the
performance of any of the agreements set forth herein shall be borne by
Pledgor.  All fees, costs and expenses,
of whatever kind or nature, including reasonable attorneys’ fees and legal
expenses, incurred by Pledgee in connection with lien searches, the filing or
recording of any documents (including all taxes in connection therewith) in
public offices, the payment or discharge of any taxes, reasonable counsel fees,
maintenance fees, encumbrances or otherwise in protecting, maintaining or
preserving the Patents or in defending or prosecuting any actions or
proceedings arising out of or related to the Patents shall be borne by and paid
by Pledgor and until paid shall constitute Liabilities.

 

9.                                       Duties
of Pledgor.  Pledgor shall have the
duty (i) to file and prosecute diligently any patent applications pending as of
the date hereof or hereafter until the Liabilities shall have been paid in full
and the Loan Documents have been terminated, (ii) to make application on
unpatented but patentable inventions, as commercially reasonable, (iii) to
preserve and maintain all rights in the Patents, as commercially reasonable and
(iv) to ensure that the Patents are and remain enforceable, as commercially
reasonable. Any expenses incurred in connection with Pledgor’s obligations
under this Section 9 shall be borne by Pledgor.

 

10.                                 Pledgee’s
Right to Sue.  After an Event of
Default, Pledgee shall have the right, but shall in no way be obligated, to
bring suit in its own name to enforce the Patents and, if Pledgee shall commence
any such suit, Pledgor shall, at the request of Pledgee, do any and all lawful
acts and execute any and all proper documents required by Pledgee in aid of
such enforcement and Pledgor shall promptly, upon demand, reimburse and
indemnify Pledgee for all costs and expenses incurred by Pledgee in the
exercise of its rights under this Section 10.

 

11.                                 Waivers.  No course of dealing between Borrower and
Pledgee or Pledgor and Pledgee, nor any failure to exercise, nor any delay in
exercising, on the part of Pledgee, any right, power or privilege hereunder or
under the Loan Documents shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder or
thereunder preclude any other or further exercise thereof or the exercise of
any other right, power or privilege.  The
Pledgor waives presentment and demand for payment of any of the Liabilities,
protest and notice of dishonor or default with respect to any of the
Liabilities, and all other notices to which the Pledgor might otherwise be
entitled, except as otherwise expressly provided herein.

 

12.                                 Severability.  The provisions of this Security Agreement are
severable, and if any clause or provision shall be held invalid and
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof,
in such jurisdiction, and shall not in any manner affect such clause or
provision in

 

4

 

any other jurisdiction,
or any other clause or provision of this Security Agreement in any
jurisdiction.

 

13.                                 Modification.  This Security Agreement cannot be altered,
amended or modified in any way, except as specifically provided in
Section 5 hereof or by a writing signed by the parties hereto.

 

14.                                 Cumulative
Remedies; Power of Attorney; Effect on Loan Documents.  All of Pledgee’s rights and remedies with
respect to the Patents, whether established hereby or by the Loan Documents, or
by any other agreements or by law shall be cumulative and may be exercised
singularly or concurrently.  Pledgor
hereby authorizes Pledgee upon the occurrence of an Event of Default, to make,
constitute and appoint any officer or agent of Pledgee as Pledgee may select,
in its sole discretion, as Pledgor’s true and lawful attorney-in-fact, with
power to (i) endorse Pledgor’s name on all applications, documents, papers and
instruments necessary or desirable for Pledgee in the use of the Patents or
(ii) take any other actions with respect to the Patents as Pledgee deems to be
in the best interest of Pledgee, or (iii) grant or issue any exclusive or
non-exclusive license under the Patents to anyone, or (iv) assign, pledge,
convey or otherwise transfer title in or dispose of the Patents to anyone.  Pledgor hereby ratifies all that such
attorney shall lawfully do or cause to be done by virtue hereof.  This power of attorney shall be irrevocable
until Borrower’s Liabilities shall have been paid in full and the Loan
Documents have been terminated. Pledgor acknowledges and agrees that this
Security Agreement is not intended to limit or restrict in any way the rights
and remedies of Pledgee under the Loan Documents but rather is intended to
facilitate the exercise of such rights and remedies.  Pledgee shall have, in addition to all other
rights and remedies given it by the terms of this Security Agreement and the
Loan Documents, all rights and remedies allowed by law and the rights and
remedies of a secured party under the Uniform Commercial Code as enacted in
Illinois.

 

15.                                 Binding
Effect; Benefits.  This Security
Agreement shall be binding upon Pledgor and its respective successors and
assigns, and shall inure to the benefit of Pledgee, its successors, nominees
and assigns.

 

16.                                 Governing
Law.  This Security Agreement shall
be governed by and construed in accordance with the laws of the State of
Illinois and applicable federal law.

 

17.                                 Headings.  Paragraph headings used herein are for
convenience only and shall not modify the provisions which they precede.

 

18.                                 Further
Assurances.  Pledgor agrees to
execute and deliver such further agreements, instruments and documents, and to
perform such further acts, as Pledgee shall reasonably request from time to
time in order to carry out the purpose of this Security Agreement and
agreements set forth herein.

 

19.                                 Survival
of Representations.  All
representations and warranties of Pledgor contained in this Security Agreement
shall survive the execution and delivery of this Security Agreement and shall
be remade on the date of each borrowing under the Loan Documents.

 

5

 

20.                                 Security
Interest Absolute.  All rights of the
Pledgee and security interests hereunder, and all obligations of the Pledgor
hereunder, shall be absolute and unconditional irrespective of:

 

(i)                                     any
lack of validity or enforceability of the Credit Agreement or an other
agreement or instrument relating thereto;

 

(ii)                                  any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Liabilities, or any other amendment or waiver of or any consent
to any departure from the Credit Agreement;

 

(iii)                               any
exchange, surrender, release or non-perfection of any other collateral, or any
release or amendment or waiver of or consent to departure from any guaranty,
for all or any of the Liabilities; or

 

(iv)                              any
other circumstance which might otherwise constitute a defense available to, or
a discharge of, the Pledgor in respect of the Liabilities or of this Agreement.

 

6

 

IN WITNESS WHEREOF,
Pledgor has duly executed this Security Agreement as of the date first written
above.

 

	
   

  	
  ENERGY ABSORPTION
  SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/Daniel
  P. Gorey

  	
   

  
	
   

  	
  Name:

  	
  Daniel P. Gorey

  
	
   

  	
  Title:

  	
  Vice
  President and Treasurer

  
	
   

  
	
   

  
	
  Agreed
  and Accepted

  
	
  As
  of the Date First Written Above

  
	
   

  
	
  THE
  NORTHERN TRUST COMPANY,

  
	
  as
  Agent for itself and the Lenders

  
	
   

  
	
   

  
	
  By:

  	
    /s/Jon W.
  Kreidler

  	
   

  
	
  Name:

  	
  Jon W. Kreidler

  
	
  Title:

  	
  Officer

  
						

 

7

 

SCHEDULE A

 

PATENTS

 

	
  Patent
  Title

  	
   

  	
  Patent No.

  	
   

  	
  Issue Date

  	
   

  	
  Country

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

PATENT
APPLICATIONS

 

	
  Patent
  Application Title

  	
   

  	
  Patent Application Serial No.

  	
   

  	
  Application Filing Date

  	
   

  	
  Country

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

TRADEMARK
SECURITY AGREEMENT

 

THIS TRADEMARK SECURITY
AGREEMENT (the “Security Agreement”) made as of this 10th day of September,
2004, by ENERGY ABSORPTION SYSTEMS, INC., a Delaware corporation (“Pledgor”) in
favor of THE NORTHERN TRUST COMPANY, an Illinois banking association, as
secured party and as Agent for itself and other Lenders party to that Credit
Agreement, as defined herein, with an office at 50 South LaSalle Street,
Chicago, Illinois 60675 (“Pledgee”):

 

RECITALS

 

I.                                         The
Pledgee and the Lenders, as herein defined, have made or may make loans to
Borrower and may extend other financial accommodations to Quixote Corporation
(the “Borrower”) in an aggregate principal amount of $58,000,000.00
(collectively, the “Loans”).  The Loans
consist of (i) revolving loans (the “Revolving Loans”), the outstanding
principal balance of which may increase or decrease from time to time, but at
no time shall the outstanding principal balance of such Revolving Loan exceed
$38,000,000.00 and (ii) term loans (the “Term Loans”) in the original
principal sum of $20,000,000.00.  Certain
repayment obligations of Pledgor with respect to the Revolving Loans are
evidenced by Pledgor’s Revolving Notes, dated September 10, 2004, payable
pro rata to the Lenders in the aggregate principal amount of $38,000,000.00
(said notes, with all allonges, amendments, supplements, modifications and
replacements thereof, being sometimes referred to in this Security Agreement as
the “Revolving Notes”).  Certain repayment
obligations of Pledgor with respect to the Term Loans are evidenced by the
Pledgor’s Term Notes dated May 16, 2003, payable pro rata to the Lenders in the
aggregate principal amount of $20,000,000.00 (said notes, with all allonges,
amendments, supplements, modifications and replacements thereof, being
sometimes referred to in this Security Agreement as the “Term Notes”.  The Revolving Notes and the Term Notes are
sometimes referred to herein collectively as the “Notes.”  The terms of the Loans are governed by a
certain Credit Agreement, dated as of May 16, 2003, as amended by a First
Amendment, dated as of December 9, 2003 (the “First Amendment”) and by a
Second Amendment, dated as of June 30, 2004 (the “Second Amendment”) and a
Third Amendment, dated as of the date hereof (“Third Amendment”) (said Credit
Agreement, together with all amendments, supplements, modifications and
replacements thereof, being referred to in this Security Agreement as the
“Credit Agreement”), by and among the Pledgor, the Lenders party thereto
(“Lenders”) and The Northern Trust Company as Administrative Agent for itself
and the Lenders.  In connection with the
Credit Agreement, the Pledgor executed and delivered to the Administrative Agent,
as a condition to the Credit Agreement, that certain Subsidiary Guaranty, dated
as of May 16, 2003, as reaffirmed by the First Amendment, Second Amendment and
Third Amendment, in favor of the Administrative Agent for the ratable benefit
of the Lenders (the “Subsidiary Guaranty”) (the Credit Agreement, Subsidiary
Guaranty and other related loan and security documents as each may be amended
or modified from time to time (the “Loan Documents”).  The terms and provisions of the Notes and the
Credit Agreement are hereby incorporated by reference in this Security
Agreement.  Capitalized terms not
otherwise defined in this Security Agreement shall have the meaning ascribed to
them in the Credit Agreement.

 

 

II.                                     This
Security Agreement is given to secure Pledgor’s obligations under the
Subsidiary Guaranty and this Security Agreement, and Pledgor’s obligations
under the Credit Agreement and on one or more Term Loans, Revolving Loans and
Reimbursement Obligations and secures not only present indebtedness but also
future advances, whether such future advances are obligatory or are to be made
at the option of the Lenders, or otherwise as are to be made within twenty (20)
years of the date hereof.  The amount of
indebtedness secured hereby may increase or decrease from time to time;
provided, however the principal amount of such indebtedness shall not at one
time exceed the amount of $38,000,000 plus interest thereon, and other costs,
amounts and disbursements as provided herein and in the other Loan Documents
(herein defined).

 

W I T N E S S E T H

 

WHEREAS, Pledgor is the
owner of all the trademarks and trademark applications listed on
Schedule A attached hereto, all of which are used by Pledgor in the
conduct of its business;

 

WHEREAS, the extension
and/or continued extension of credit, as aforesaid, by Pledgee is necessary and
desirable to the conduct and operation of the business of Pledgor and Pledgor
and will inure to the personal and financial benefit of the Pledgor;

 

NOW, THEREFORE, in
consideration of the premises set forth herein and for other good and valuable
consideration, receipt and sufficiency of which are hereby acknowledged,
Pledgor agrees as follows:

 

1.                                                                                                                                                        Incorporation
of Loan Documents.  The Loan
Documents and the terms and provisions thereof are hereby incorporated herein
in their entirety by this reference thereto. All terms capitalized but not
otherwise defined herein shall have the same meanings herein as in the Credit
Agreement.  For purposes of this
Agreement, “Event of Default” shall have the meaning assigned to such term in
the Credit Agreement and shall include Pledgor’s breach of any material term
under this Security Agreement.

 

2.                                                                                                                                                       Grant
and Reaffirmation of Grant of Security Interests.  To secure the complete and timely payment and
satisfaction of the Pledgor’s Obligations, as defined in the Credit Agreement,
to the Pledgee, and all obligations of the Pledgor now or hereafter existing
under the Subsidiary Guaranty and this Agreement, Pledgor hereby grants to
Pledgee a continuing security interest in Pledgor’s entire right, title and
interest in and to all of its now owned or existing and hereafter acquired or
arising trademarks, trade names, corporate names, company names, business
names, fictitious business names, trade styles, service marks, logos, other
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, all registrations and recordings thereof, and all
applications (other than “intent to use” applications until a verified
statement of use is filed with respect to such applications) in connection
therewith, including, without limitation, the trademarks and applications
listed on Schedule A attached hereto and made a part hereof and the
trademarks, and renewals thereof, and all income, royalties, damages and
payments now or hereafter due and/or payable under or with respect to any of
the foregoing, including, without limitation, damages and payments for past,
present and future infringements of any

 

2

 

of the foregoing and the right to sue for past, present and future
infringements of any of the foregoing (all of the foregoing are sometimes
hereinafter individually and/or collectively referred to as the “Trademarks”);
all rights corresponding to any of the foregoing throughout the world and the
goodwill of the Pledgor’s business connected with the use of and symbolized by
the Trademarks.

 

3.                                                                                                                                                        Warranties
and Representations.  Pledgor
warrants and represents to Pledgee that:

 

(i)                                     no Trademark has been adjudged invalid or
unenforceable by a court of competent jurisdiction nor has any such Trademark
been cancelled, in whole or in part and each such Trademark is presently
subsisting;

 

(ii)                                  Pledgor is the sole and exclusive owner
of the entire and unencumbered right, title and interest in and to each
Trademark, free and clear of any liens, charges and encumbrances, including
without limitation, shop rights and covenants by Pledgor not to sue third
persons;

 

(iii)                               Pledgor has no notice of any suits or
actions commenced or threatened with reference to any Trademark; and

 

(iv)                              Pledgor has the unqualified right to
execute and deliver this Security Agreement and perform its terms.

 

4.                                                                                                                                                        Restrictions
on Future Agreements.  Pledgor agrees
that until Pledgor’s Liabilities shall have been satisfied in full and the Loan
Documents shall have been terminated, Pledgor shall not, without the prior
written consent of Pledgee, sell or assign its interest in any Trademark or
enter into any other agreement with respect to any Trademark which would affect
the validity or enforcement of the rights transferred to Pledgee under this
Security Agreement.

 

5.                                                                                                                                                        New
Trademarks.  Pledgor represents and
warrants that, based on a diligent investigation by Pledgor, the Trademarks
listed on Schedule A constitute federally registered Trademarks,
and federal applications for registration of Trademarks (other than “intent to
use” applications (which shall not be subject to the Security Agreement) until
a verified statement of use is filed with respect to such applications) now
owned by Pledgor.  If, before Pledgor’s
Liabilities shall have been satisfied in full or before the Loan Documents have
been terminated, Pledgor shall (i) become aware of any existing Trademarks of
which Pledgor has not previously informed Pledgee, or (ii) become entitled to
the benefit of any Trademarks, which benefit is not in existence on the date
hereof, Pledgor shall give to Pledgee prompt written notice thereof.  Pledgor hereby authorizes Pledgee to modify
this Security Agreement by amending Schedule A to include any such
Trademarks.

 

6.                                                                                                                                                        Term.  The term of this Security Agreement shall
extend until the payment in full of Pledgor’s Liabilities and the termination
of the Loan Documents.  Pledgor

 

3

 

agrees that upon the occurrence of an Event of Default, the use by
Pledgee of all Trademarks shall be without any liability for royalties or other
related charges from Pledgee to Pledgor.

 

7.                                                                                                                                                        Product
Quality.  Pledgor agrees to maintain
the quality of any and all products in connection with which the Trademarks are
used, consistent with commercially reasonable business practices.  Upon the occurrence of an Event of Default,
Pledgor agrees that Pledgee, or a conservator appointed by Pledgee, shall have
the right to establish such additional product quality controls as Pledgee, or
said conservator, in its reasonable judgment, may deem necessary to assure
maintenance of the quality of products sold by Pledgor under the Trademarks.

 

8.                                                                                                                                                        Release
of Security Agreement.  This Security
Agreement is made for collateral purposes only. 
Upon payment in full of Pledgor’s Liabilities and termination of the
Loan Documents, Pledgee shall take such actions as may be necessary or proper
to terminate the security interests created hereby and pursuant to the Loan
Documents.

 

9.                                                                                                                                                        Expenses.  All expenses incurred in connection with the
performance of any of the agreements set forth herein shall be borne by
Pledgor.  All fees, costs and expenses,
of whatever kind or nature, including reasonable attorneys’ fees and legal
expenses, incurred by Pledgee in connection with the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, reasonable counsel fees, maintenance fees, encumbrances
or otherwise in protecting, maintaining or preserving the Trademarks or in
defending or prosecuting any actions or proceedings arising out of or related
to the Trademarks shall be borne by and paid by Pledgor and until paid shall
constitute Liabilities.

 

10.                                                                                                                                                  Duties
of Pledgor.  Pledgor shall have the
duty (i) to file and prosecute diligently any trademark applications pending as
of the date hereof or hereafter until Pledgor’s Liabilities shall have been
paid in full and the Loan Documents have been terminated, (ii) to preserve and
maintain all rights in the Trademarks, as commercially reasonable and (iii) to
ensure that the Trademarks are and remain enforceable, as commercially
reasonable.  Any expenses incurred in
connection with Pledgor’s Liabilities under this Section 10 shall be borne
by Pledgor.

 

11.                                                                                                                                                  Pledgee’s
Right to Sue.  After an Event of
Default, Pledgee shall have the right, but shall in no way be obligated, to
bring suit in its own name to enforce the Trademarks and, if Pledgee shall commence
any such suit, Pledgor shall, at the request of Pledgee, do any and all lawful
acts and execute any and all proper documents required by Pledgee in aid of
such enforcement and Pledgor shall promptly, upon demand, reimburse and
indemnify Pledgee for all costs and expenses incurred by Pledgee in the
exercise of its rights under this Section 11.

 

12.                                                                                                                                                  Waivers.  No course of dealing between Pledgor and
Pledgee, nor any failure to exercise, nor any delay in exercising, on the part
of Pledgee, any right, power or privilege hereunder or under the Loan Documents
shall operate as a waiver thereof; nor shall

 

4

 

any single or partial exercise of any right, power or privilege
hereunder or thereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.

 

13.                                                                                                                                                  Severability.  The provisions of this Security Agreement are
severable, and if any clause or provision shall be held invalid and
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof,
in such jurisdiction, and shall not in any manner affect such clause or
provision in any other jurisdiction, or any other clause or provision of this
Security Agreement in any jurisdiction.

 

14.                                                                                                                                                  Modification.  This Security Agreement cannot be altered,
amended or modified in any way, except as specifically provided in
Section 5 hereof or by a writing signed by the parties hereto.

 

15.                                                                                                                                                  Cumulative
Remedies; Power of Attorney; Effect on Loan Documents.  All of Pledgee’s rights and remedies with
respect to the Trademarks, whether established hereby or by the Loan Documents,
or by any other agreements or by law shall be cumulative and may be exercised
singularly or concurrently.  Pledgor
hereby authorizes Pledgee upon the occurrence of an Event of Default, to make,
constitute and appoint any officer or agent of Pledgee as Pledgee may select,
in its sole discretion, as Pledgor’s true and lawful attorney-in-fact, with
power to (i) endorse Pledgor’s name on all applications, documents, papers and
instruments necessary or desirable for Pledgee in the use of the Trademarks or
(ii) take any other actions with respect to the Trademarks as Pledgee deems to
be in the best interest of Pledgee, or (iii) grant or issue any exclusive or
non-exclusive license under the Trademarks to anyone, or (iv) assign, pledge,
convey or otherwise transfer title in or dispose of the Trademarks to anyone.  Pledgor hereby ratifies all that such
attorney shall lawfully do or cause to be done by virtue hereof.  This power of attorney shall be irrevocable
until Pledgor’s Liabilities shall have been paid in full and the Loan Documents
have been terminated.  Pledgor
acknowledges and agrees that this Security Agreement is not intended to limit
or restrict in any way the rights and remedies of Pledgee under the Loan
Documents but rather is intended to facilitate the exercise of such rights and
remedies. Pledgee shall have, in addition to all other rights and remedies
given it by the terms of this Security Agreement and the Loan Documents, all
rights and remedies allowed by law and the rights and remedies of a secured
party under the Uniform Commercial Code as enacted in Illinois.

 

16.                                                                                                                                                  Binding
Effect; Benefits.  This Security
Agreement shall be binding upon Pledgor and its respective successors and
assigns, and shall inure to the benefit of Pledgee, its successors, nominees
and assigns.

 

17.                                                                                                                                                  Governing
Law.  This Security Agreement shall
be governed by and construed in accordance with the laws of the State of
Illinois and applicable federal law.

 

18.                                                                                                                                                  Headings.  Paragraph headings used herein are for
convenience only and shall not modify the provisions which they precede.

 

5

 

19.                                                                                                                                                  Further
Assurances.  Pledgor agrees to
execute and deliver such further agreements, instruments and documents, and to
perform such further acts, as Pledgee shall reasonably request from time to
time in order to carry out the purpose of this Security Agreement and
agreements set forth herein.

 

20.                                                                                                                                                  Survival
of Representations.  All
representations and warranties of Pledgor contained in this Security Agreement
shall survive the execution and delivery of this Security Agreement and shall
be remade on the date of each borrowing under the Loan Documents.

 

6

 

IN WITNESS
WHEREOF, Pledgor has duly executed this Security Agreement as of the date first
written above.

 

	
   

  	
  ENERGY ABSORPTION
  SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	 
	
   

  	
  By:

  	
    /s/Daniel
  P. Gorey

  	
   

  
	 
	
   

  	
  Name:

  	
  Daniel P. Gorey

  
	 
	
   

  	
  Title:

  	
  Vice
  President and Treasurer

  
	 
	
   

  
	 
	
   

  
	 
	
  Agreed
  and Accepted

  
	 
	
  As
  of the Date First Written Above

  
	 
	
   

  
	 
	
  THE
  NORTHERN TRUST COMPANY,

  
	 
	
  as
  Agent for itself and the Lenders

  
	 
	
   

  
	 
	
   

  
	 
	
  By:

  	
    /s/Jon W.
  Kreidler

  	
   

  
	 
	
  Name:

  	
  Jon W. Kreidler

  
	 
	
  Title:

  	
  Officer

  
								

 

7

 

SCHEDULE A

 

TRADEMARK
REGISTRATIONS

 

	
  Trademark

  	
   

  	
  U.S. Registration No.

  	
   

  	
  Date Registered

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

TRADEMARK
APPLICATIONS

 

	
  Trademark

  	
   

  	
  U.S. Application Serial No.

  	
   

  	
  Filing Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

8

 

SUBSIDIARY STOCK PLEDGE AGREEMENT

(QUIXOTE CORPORATION)

 

Dated as of September 10, 2004

 

This Pledge Agreement (as
modified from time to time, the “Agreement”) has been executed by QUIXOTE
CORPORATION, organized under the laws of the State of Delaware, on its own
behalf as debtor (“Debtor”), with an office at 35 East Wacker Drive, Chicago,
Illinois 60601, in favor of THE NORTHERN TRUST COMPANY, an Illinois banking
association, as secured party and as Agent for itself and the other Lenders
party to that Credit Agreement, as defined herein (together with any successor,
assign or subsequent holder, “Secured Party”), with a banking office at 50
South LaSalle Street, Chicago, Illinois 60675. 
Various capitalized terms used in this Agreement have the meanings set
forth in the Section of this Agreement entitled “DEFINITIONS.”

 

WHEREAS,
the Debtor and the Lenders entered into that certain Credit Agreement, dated as
of May 16, 2003, as amended by a First Amendment, dated as of December 9,
2003, by a Second Amendment as of June 30, 2004 and by a Third Amendment
as of the date hereof (the “Credit Agreement”), pursuant to which Credit
Agreement the Lenders have made, (i) Revolving Loans to the Debtor evidenced by
certain Revolving Notes, dated as of May 16, 2003, in the maximum aggregate
principal amount of Thirty Eight Million Dollars and 00/100 ($38,000,000),
executed by the Debtor and made payable pro rata to the order of the Lenders
(the “Revolving Notes”) and (ii) Term Loans to the Debtor evidenced by certain
Term Notes, dated as of May 16, 2003, in the aggregate principal amount of
Twenty Million Dollars and 00/100 ($20,000,000), executed by the Debtor and
made payable pro rata to the order of the Lenders (the “Term Notes”);

 

WHEREAS,
Debtor is the owner of all of the capital stock, as described in Exhibit A
attached hereto (the “Securities”), of Quixote Transportation Safety, Inc.
which is a Subsidiary Guarantor under the Credit Agreement;

 

WHEREAS,
the Secured Party has requested and the Debtor has agreed to pledge the
Securities as collateral for the Liabilities as defined herein.

 

In consideration of
Secured Party’s extension of the financial accommodations and continuation of
existing financial accommodations to Debtor, pursuant to the terms of the
Credit Agreement and other valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Debtor agrees as follows:

 

1.                                       DEFINITIONS.

 

(a)                                  As used in this Agreement the following terms
shall have the indicated meanings:

 

“Collateral”—see Section entitled “PLEDGE.”

 

 

“Constituent Documents”—means the articles or certificate of
incorporation, by-laws, partnership agreement, certificates of limited
partnership, limited liability company operating agreement, limited liability
company articles of organization, trust agreement, and all other documents and
instruments pertaining to the formation and ongoing existence of any person or
entity which is not an individual.

 

“Credit Agreement” means the Credit Agreement, dated as of May 16, 2003,
among the Debtor, the Secured Party and the Lenders party thereto, as amended
by a First Amendment, dated as of December 9, 2003, a Second Amendment,
dated as of June 30, 2004 and a Third Amendment, dated as of
September 10, 2004 and as hereafter amended from time to time.

 

“Event of Default”—see Section entitled “EVENTS OF DEFAULT.”

 

“Guarantor” means any Subsidiary Guarantor, as defined in the Credit
Agreement, any person, or any persons severally, who now or hereafter
guarantees payment or collection of all or any part of the Liabilities or
provides any collateral for the Liabilities.

 

“Intermediary”—see Section entitled “PLEDGE.”

 

“Lender” shall mean the Secured Party for itself and any Lender, a party
to and as defined in the Credit Agreement.

 

“Liabilities”—see Section entitled “LIABILITIES.”

 

“Listed,” as to a security, means traded domestically on any national
securities exchange or in the NASDAQ market.

 

The term “person” includes both individuals and organizations.

 

“Prime Rate” means
that floating rate of interest per year announced from time to time by Secured
Party called its prime rate, which at any time may not be the lowest rate
charged by Secured Party, computed for the actual number of days elapsed on the
basis of a calendar year of 365 or 366 days. 
Changes in the rate of interest resulting from a change in the Prime
Rate shall take effect on the date set forth in each announcement of a change
in the Prime Rate.

 

“Related Document(s)” means any note, agreement, guaranty, security
agreement or other document or instrument previously, now or hereafter
delivered to Secured Party or any Lender in connection with the Liabilities,
the Credit Agreement, any Subsidiary Guaranty or this Agreement. The term
“related document,” if not initial-capitalized, means a document related to
another referenced document.

 

“Related Party(ies)” means any Guarantor.

 

2

 

The term “Secured Party” means the above-indicated Secured Party acting
both for itself and as collateral agent for any Lender (see in particular the
section hereof entitled “Liabilities”).

 

“Unmatured Event of Default” means any event or condition that would
become an Event of Default with notice or the passage of time or both.

 

(b)                                 As used in this Agreement, unless otherwise
specified: the term “including” means “including without limitation”; the term
“days” means “calendar days”; and terms such as “herein,” “hereof” and words of
similar import refer to this Agreement as a whole.  References herein to partners of a partnership,
joint venturers of a joint venture, or members of a limited liability company,
mean, respectively, persons or entities owning or holding partnership
interests, joint venture interests, or membership interests in such
partnership, joint venture or limited liability company.  Terms not defined herein, shall have the
meaning assigned to that term in the Credit Agreement.  Unless otherwise defined herein, all terms
(including those not capitalized) that are defined in the Uniform Commercial
Code of Illinois shall have the same meanings herein as in such Code, as such
Code may be amended from time to time. 
Unless the context requires otherwise, wherever used herein the singular
shall include the plural and vice versa, and the use of one gender shall also
denote the others.  Captions herein are
for convenience of reference only and shall not define or limit any of the
terms or provisions hereof; references herein to sections or provisions without
reference to the document in which they are contained are references to this
Agreement.

 

2.                                       PLEDGE. 
Debtor hereby assigns, pledges, hypothecates, delivers, sets over and
transfers to Secured Party and grants to Secured Party a continuing security
interest in, for the benefit of Secured Party (as provided in the
Section entitled “Liabilities”), the following, in each case whether
certificated or uncertificated, whether now owned or hereafter acquired,
wherever located (any or all of such, the “Collateral”):

 

(a)                                  Certificated Securities in possession of Secured
Party and not in a Securities Account, which Securities are described in Exhibit
A attached hereto and incorporated herein by reference.

 

(b)                                 With respect to any Collateral referred to
herein:

 

(i)                                     all stock and bond powers, certificates and
instruments; and

 

(ii)                                  all additions, replacements, substitutions,
interest, cash and stock dividends, warrants, options, and other rights and
amounts paid, accrued, received, receivable, or distributed with respect
thereto from time to time, 

 

(c)                                  With respect to the foregoing, all products and
proceeds thereof, including insurance proceeds and payments under the
Securities Investor Protection Act of 1970, as amended.

 

3

 

3.                                       LIABILITIES.

 

The
Collateral shall secure the payment and performance of all obligations and
liabilities of Debtor:

 

(a)                                  to Secured Party, and to any Lender and its
affiliates, with respect to Hedging Obligations as defined in the Credit
Agreement, howsoever created, evidenced or arising, whether direct or indirect,
absolute or contingent, now due or to become due, or now existing or hereafter
arising, joint, several or joint and several, including obligations under or
with respect to future advances and letters of credit issued by Secured Party
or any Lender for the account of or at the request of Debtor and all
reimbursement obligations arising therefrom, including, without limitation,
under the Credit Agreement and the Related Documents;

 

(b)                                 to Secured Party under or in connection
with:  (i) any guaranty by Debtor of any
obligations of any other person to Secured Party; and (ii) any reasonable
expenses (including attorneys’ fees, legal costs and expenses, and time charges
of attorneys who may be employees of Secured Party, whether in or out of court,
in original or appellate proceedings or in bankruptcy) incurred or paid by
Secured Party in connection with the enforcement or preservation of its rights
hereunder or under any Related Document.

 

(any
or all obligations and liabilities described in the foregoing portion of this
Section, the “Liabilities”).  This
Agreement shall continue and remain in effect notwithstanding that at any
particular time there may be no Liabilities outstanding.

 

4.                                       REPRESENTATIONS AND WARRANTIES.

 

Debtor
hereby represents and warrants to Secured Party that:

 

(a)                                  Debtor’s exact legal name is as set forth in the
heading to this Agreement.  If Debtor is
an organization: Debtor’s type of organization and jurisdiction of organization
or formation, are as set forth in the preamble to this Agreement; and Debtor’s
place of business or, if Debtor has more than one place of business, Debtor’s
chief executive office is located at the address set forth above; and Debtor
has never been organized or formed in any jurisdiction other than the jurisdiction
set forth in the preamble to this Agreement. 
All Collateral currently is located in one of the fifty states of the
United States of America.  Further,
except as and if specifically disclosed by Debtor to Secured Party IN WRITING
prior to the execution of this Agreement, during the five (5) years and six
months prior to the date of this Agreement:

 

(A)                              Debtor has not been known by any legal name different from the one set
forth in the heading of this Agreement nor has Debtor been the subject of any
merger, consolidation, or other corporate or organizational reorganization.

 

4

 

(B)                                Debtor’s place of business or, if Debtor has more than one place of
business, Debtor’s chief executive office has been at Debtor’s address set
forth above, except that prior to February 9, 2004 Debtor’s chief
executive office was located at One East Wacker Drive, Chicago, Illinois 60601.

 

(b)                                 Debtor and any Guarantors are validly existing
and in good standing under the laws of their state of organization or
formation, and are duly qualified, in good standing and authorized to do
business in each jurisdiction where failure to do so might have a material
adverse impact on the assets, condition or prospects of Debtor.  The execution, delivery and performance of
this Agreement and all Related Documents are within Debtor’s powers and have
been authorized by all necessary action required by law and Debtor’s
Constituent Documents.

 

(c)                                  The execution, delivery and performance of this Agreement
and all Related Documents have received any and all necessary governmental
approval, and do not and will not contravene or conflict with any provision of
law, any Constituent Document or any agreement affecting Debtor or its
property.

 

(d)                                 There has been no material adverse change in the
business, condition, properties, assets, operations or prospects of Debtor or
any Related Party since the date of the latest financial statements provided by
or on behalf of Debtor or any Related Party to Secured Party.

 

(e)                                  No financing statement, mortgage, notice of
judgment, or any similar instrument (unless filed on behalf of Secured Party)
covering any of the Collateral is on file in any public office.

 

(f)                                    Debtor is the lawful owner of and has rights in
or power to transfer all Collateral, free and clear of all liens, pledges,
charges, mortgages, and claims other than any in favor of Secured Party, except
liens for current taxes not delinquent.

 

(g)                                 Debtor has filed or caused to be filed all
federal, state, and local tax returns that are required to be filed, and has
paid or has caused to be paid all of its taxes, including any taxes shown on
such returns or on any assessment received by it, to the extent that such taxes
have become due.

 

(h)                                 Except for federal and
state securities laws generally applicable to the sale, transfer or redemption
of securities, sale, transfer and redemption of the Collateral by Secured
Party: (A) are not prohibited or regulated by any federal or state law or
regulation or any agreement binding upon Debtor, including any Constituent
Document; and (B) require no registration or filing with, or consent or
approval of, any governmental body, regulatory authority or securities
exchange.

 

(i)                                     Debtor is not an executive officer, director
or other “affiliate” (as contemplated by Rules 144 and 145 of the Federal
Securities and Exchange Commission) of any issuer of any Collateral.

 

 

5

 

(j)                                     The Collateral is duly
and validly authorized and issued, non-assessable, fully paid and paid for, and outstanding.

 

(k)                                  (A)
The execution, delivery and performance of this Agreement and all Related
Documents are in Debtor’s best interest in its current and future business
operations and will materially benefit Debtor; and (B) Debtor has received
adequate, fair and valuable consideration, and at least reasonably equivalent
value, to enter into and perform this Agreement and all Related Documents.

 

(l)                                     The request or application for any Liabilities by
Debtor shall be a representation and warranty by Debtor as of the date of such
request or application that: (i) no Event of Default or Unmatured Event of
Default has occurred and is continuing as of such date; and (ii) Debtor’s
representations and warranties herein and in any Related Document are true and
correct as of such date as though made on such date.

 

5.                                       DEPOSITORIES; SUB-AGENTS AND NOMINEES.

 

(a)                                  Without limiting any other provision hereof,
Secured Party may at its option from time to time transfer, or cause any
Intermediary to transfer, the Collateral into a “pledge position” at any
depository now or hereafter holding the Collateral, and do or cause to be done,
execute (or cause to be executed) such other documents, and take (or cause to
be taken) such other actions as Secured Party may deem necessary or appropriate
in connection therewith.

 

(b)                                 Secured Party shall have the right to appoint one
or more sub-agents for the purpose of retaining physical possession of any
certificates or instruments representing or evidencing the Collateral, which
may be held (in the discretion of Secured Party) in the name of Secured Party
or any nominee or nominees of Secured Party or a sub-agent appointed by Secured
Party.  In addition, Secured Party shall
at all times have the right to exchange certificates or instruments
representing or evidencing Collateral for certificates or instruments of
smaller or larger denominations for any purpose consistent with its performance
of this Agreement.

 

(c)                                  For the better perfection of Secured Party’s
rights in and to the Collateral and to facilitate implementation of such
rights, following an Event of Default, Debtor shall, upon written request of
Secured Party, cause all the certificates, notes, documents and other
instruments evidencing, representing or otherwise comprising the Collateral to
be registered or otherwise put into the name of Secured Party or a nominee or
nominees of Secured Party.

 

(d)                                 Debtor hereby consents and agrees that the
issuers of, or any depository, registrar, transfer agent or similar party for
any of, the Collateral shall be entitled to accept the provisions hereof as
conclusive evidence of the right of Secured Party to effect any transfer
pursuant hereto, notwithstanding any notice or direction to the contrary heretofore
or hereafter given by Debtor or any other person to any such issuer or any such
depository, registrar, transfer agent or similar party.

 

6

 

6.                                       VOTING & MISCELLANEOUS RIGHTS.  Unless an Event of Default has occurred and
is continuing, Debtor may exercise any and all rights (including voting rights)
with respect to the Collateral, subject to the terms of this Agreement.  If an Event of Default has occurred and is
continuing, Secured Party (and only Secured Party) may exercise any and all
such rights.

 

7.                                       GENERAL COVENANTS.  Debtor agrees that so long as this Agreement
remains in effect, it will:

 

(a)                                  NOTIFY SECURED PARTY IN WRITING AT LEAST SIXTY
(60) DAYS IN ADVANCE OF:

 

(i)                                     ANY CHANGE WHATSOEVER IN THE NAME OF DEBTOR;

 

(ii)                                  THE STATE OR JURISDICTION IN WHICH DEBTOR IS
ORGANIZED OR FORMED OR, IF DEBTOR IS AN INDIVIDUAL, IN WHICH DEBTOR’S PRINCIPAL
RESIDENCE IS LOCATED;

 

(iii)                               ANY NEW NAMES UNDER WHICH DEBTOR INTENDS TO DO BUSINESS; OR

 

(iv)                              ANY NEW ADDRESSES AT OR FROM WHICH DEBTOR INTENDS TO DO BUSINESS OR TO
KEEP COLLATERAL OF ANY KIND.

 

Debtor
shall in any event keep all Collateral within one or more states of the United
States of America.

 

(b)                                 Promptly deliver any cash, securities or other
property received with respect to the Collateral, whether as proceeds of the
disposition thereof, dividends with respect thereto, or otherwise, to be held
by Secured Party as Collateral. 
NOTWITHSTANDING THE FOREGOING, UNLESS AN EVENT OF DEFAULT HAS OCCURRED
AND IS CONTINUING, DEBTOR MAY CONTINUE TO RECEIVE AND RETAIN INTEREST AND
REGULAR CASH DIVIDENDS ON THE COLLATERAL.

 

(c)                                  Defend the Collateral against the claims and
demands of all persons other than Secured Party and promptly pay all taxes,
assessments, and charges upon the Collateral. 
Debtor agrees not to sign, file, or authenticate, or authorize or permit
the signing, filing or authentication of, any financing statements or other
documents creating or perfecting a lien upon or security interest in any of the
Collateral except in favor of Secured Party, or otherwise create, suffer, or
permit to exist any liens or security interests upon any Collateral other than
in favor of Secured Party, except tax liens, provided that such liens are
removed before related taxes become delinquent.

 

(d)                                 Sign, file, authenticate, and authorize the
signing, filing and authenticating of, such financing statements and other
documents (and pay the cost of filing and recording the same in all public
offices deemed necessary by Secured Party), and do such other acts, as

 

7

 

Secured
Party may request to establish and maintain a valid and perfected security
interest in the Collateral free and clear of all other liens and claims, except
tax liens, provided that such liens are removed before related taxes become
delinquent.

 

(e)                                  Keep at its address for notices set forth above
its records concerning the Collateral, which records shall be of such character
as will enable Secured Party to determine at any time the status of the
Collateral; and permit Secured Party from time to time to inspect, audit, and
make copies of, and extracts from, all records and all other papers in the
possession or control of Debtor pertaining to the Collateral.

 

(f)                                    Subject to the terms of the Credit Agreement,
provide to Secured Party from time to time such financial statements of and
other information concerning the Collateral, Debtor, and any Related Party as
Secured Party shall reasonably request.

 

(g)                                 Except if and to the extent specifically
permitted by this Agreement, not sell, transfer, lease, grant a license or
option or similar right with respect to, or otherwise dispose of, or agree to
dispose of, any Collateral.

 

8.                                       EVENTS OF DEFAULT.  The occurrence or continuance of any of the
following shall constitute an “Event of Default”:

 

(a)                                  (i) failure to pay, when and as due, any
principal payable hereunder or in connection with any of the Liabilities in
each case after giving effect to any applicable notice, grace or cure period;
(ii) failure to pay, when and as due, any interest or other amounts payable
hereunder or in connection with any of the Liabilities in each case after
giving effect to any applicable notice; or (iii) failure to comply with or
perform any agreement or covenant of Debtor contained herein; or

 

(b)                                 any default, event of default, or similar event
shall occur or continue under the Credit Agreement or any Related Document, and
shall continue beyond any applicable notice, grace or cure period set forth in
such Related Document; or

 

(c)                                  the Debtor or any
Related Party shall fail to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) with respect
to any Indebtedness (as defined in the Credit Agreement) beyond any period of
grace provided with respect thereto, which individually or together with other
such Indebtedness as to which any such failure exists has an aggregate
outstanding principal amount in excess of $2,000,000; or any breach, default or
event of default shall occur, or any other condition shall exist under any
instrument, agreement or indenture pertaining to any such Indebtedness having
such aggregate outstanding principal amount, beyond any period of grace, if
any, provided with respect thereto, if the effect thereof is to cause an
acceleration, mandatory redemption, a requirement that the Debtor offer to
purchase such Indebtedness or other required repurchase of such Indebtedness;
or

 

(d)                                 any representation, warranty, schedule,
certificate, financial statement, report, notice, or other writing furnished by
or on behalf of Debtor or any

 

8

 

Related
Party to Secured Party is false or misleading in any material respect on the
date as of which the facts therein set forth are stated or certified, in each
case as amended by the information provided in any request or notice delivered
by Debtor to Secured Party pursuant to Section 7.1 of the Credit
Agreement; or

 

(e)                                  this Agreement or any Related Document, including
any guaranty of or pledge of collateral security for the Liabilities, shall be
repudiated or shall become unenforceable or incapable of performance in accord
with its terms; or

 

(f)                                    Debtor or any Related Party shall fail to
maintain their existence in good standing in their state of organization or
formation or shall fail to be duly qualified, in good standing and authorized
to do business in each jurisdiction where failure to do so might have a
material adverse impact on the assets, condition or prospects of Debtor or any
Related Party; or

 

(g)                                 Debtor or any Related Party shall dissolve,
liquidate, merge, consolidate, or cease to be in existence for any reason, or
there shall be any change in any Constituent Document of Debtor from that in force
on the date hereof which may have a material adverse impact on the ability of
Debtor to repay the Liabilities; or

 

(h)                                 any person or entity presently not in control of
a Debtor or Related Party which is not a natural person shall obtain control
directly or indirectly of such a Debtor or Related Party, whether by purchase
or gift of stock or assets, by contract, or otherwise; or

 

(i)                                     Debtor shall grant or any person (other than
Secured Party) shall obtain a security interest in any of the Collateral, or
shall file any financing statement purportedly covering any Collateral; Debtor
or any other person shall perfect (or attempt to perfect) such a security
interest; a court shall determine that Secured Party does not have a
first-priority security interest in any of the Collateral or in any other
assets constituting security for the Liabilities, enforceable in accord with
this Agreement (as to the Collateral) or the related collateral documents (as
to such other assets); or any notice of a federal tax lien against Debtor or
any Related Party shall be filed with any public recorder; or

 

(j)                                     (without limiting any other provision of this
Agreement or any Related Document) there shall be any material loss or
depreciation in the value of any of the Collateral for any reason, or Secured
Party shall otherwise reasonably deem itself insecure with respect to the
Collateral; or, unless expressly permitted by this Agreement or the Related
Documents, all or any part of any of the Collateral or any direct, indirect,
legal, equitable or beneficial interest therein is assigned, transferred or
sold without Secured Party’s prior written consent;

 

(k)                                  An
involuntary case shall be commenced against the Debtor or any Related Party and
the petition shall not be dismissed, stayed, bonded or discharged within sixty
(60) days after commencement of the case; or a court having jurisdiction in the

 

9

 

premises shall enter a
decree or order for relief in respect of the Debtor or any Related Party, under
any applicable bankruptcy, insolvency or other similar law now or hereinafter
in effect; or any other similar relief shall be granted under any applicable
federal, state, local or foreign law; or

 

(l)                                     A
decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over
the Debtor or any Related Party or over all or a substantial part of the
property of the Debtor or any Related Party shall be entered; or an interim
receiver, trustee or other custodian of the Debtor or any Related Party or of
all or a substantial part of the property of the Debtor or any Related Party
shall be appointed or a warrant of attachment, execution or similar process
against any substantial part of the property of the Debtor or any Related
Party, shall be issued and any such event shall not be stayed, dismissed,
bonded or discharged within sixty (60) days after entry, appointment or
issuance; or

 

(m)                               Debtor
or any Related Party shall (i) commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, (ii)
consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, (iii) consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property, (iv) make any assignment for the benefit of
creditors or (v) take any corporate action to authorize any of the foregoing.

 

9.                                       DEFAULT REMEDIES.

 

(a)                                  Notwithstanding any provision of any document or
instrument evidencing or relating to any Liability: (i) upon the occurrence and
during the continuance of any Event of Default specified in subsections (a)-(j)
of the Section entitled “EVENTS OF DEFAULT,” Secured Party at its option
may declare the Liabilities immediately due and payable without notice or
demand of any kind; and (ii) upon the occurrence of any Event of Default
specified in subsections (k)-(m) of the Section entitled “EVENTS OF
DEFAULT,” the Liabilities shall be immediately and automatically due and
payable without action of any kind on the part of Secured Party.  Upon the occurrence and during the continuance
of any Event of Default, Secured Party may exercise any rights and remedies
under this Agreement, any Related Document or other document or instrument
(including any Related Document evidencing Liabilities or pertaining to
Collateral), and at law or in equity.

 

(b)                                 If any Event of Default shall have occurred and
be continuing, then, in addition to having the right to exercise any rights and
remedies of a secured party upon default under the Uniform Commercial Code in
effect in Illinois and any State in which any Collateral is located, Secured
Party may, in its sole discretion:

 

(i)                                     without being required to give any prior notice
to Debtor apply the cash (if any) then held by it hereunder toward the
Liabilities in such order as Secured Party shall determine in its sole
discretion; and

 

10

 

(ii)                                  if there shall be no such cash or the cash so
applied shall be insufficient to pay all obligations in full, sell the
Collateral, or any part thereof, at any public or private sale, for cash, upon
credit or for future delivery, as Secured Party shall deem appropriate,
provided, however, that Debtor shall be credited with proceeds thereof only
when the proceeds are actually received in cash by Secured Party, and such sale
shall be deemed commercially reasonable. 
Secured Party shall be authorized at any such sale (to the extent it
deems it advisable to do so, in its sole discretion) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral then being sold for their own account for
investment and not with a view to the distribution or resale thereof, and upon
consummation of any such sale Secured Party shall have the right to assign,
transfer and deliver to the purchasers thereof the Collateral so sold.  Each such purchaser at any such sale shall
hold the property sold absolutely free from any claim or right on the part of
Debtor.  Debtor hereby waives (to the
extent permitted by law) all rights of redemption, stay and/or appraisal which
it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. 
Secured Party has no obligation to marshal Collateral or to clean up or
otherwise prepare Collateral for sale, and may specifically disclaim any
warranties as to the Collateral, including those of title, merchantability, and
fitness for a particular purpose. 
Secured Party may comply with any applicable local, state or federal law
requirements in connection with a disposition of Collateral, and compliance
will not be considered adversely to affect the commercial reasonableness of any
sale of Collateral.  Debtor grants to
Secured Party the right to enter into or on any premises where Collateral may
be located for the purposes of exercising any remedies upon the occurrence of
an Event of Default.  Secured Party shall
be deemed to have exercised reasonable care in the custody and preservation of
Collateral if it takes such action for that purpose as Debtor requests in
writing, but failure to do so shall not be deemed a failure to exercise
ordinary care; no failure of Secured Party to preserve or protect any right
with respect to Collateral against prior parties, or to do any act with respect
to preservation of Collateral not so requested by Debtor, shall be deemed of
itself a failure to exercise reasonable care in the custody or preservation of
Collateral.  To the extent that notice of
sale shall be required to be given by law, Secured Party shall give Debtor at
least ten days’ written notice of any such public sale or the date after which
any such private sale or sales will be held. 
Secured Party shall not be obligated to make any sale of Collateral if
it shall determine not to do so, regardless of the fact that notice of sale of
Collateral may have been given.  Secured
Party may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time
and place fixed for sale, and such sale may, without further notice, be made at
the time and place to which the same was so adjourned.  In case sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by Secured Party until the sale price is paid by the purchaser
thereof, but Secured Party shall not incur any liability in case any such
purchaser shall fail to take up and pay for

 

11

 

the
Collateral so sold; in the case of any such failure, such Collateral may be
sold again upon like notice.  As an
alternative to exercising the power of sale herein conferred upon it, Secured
Party may proceed by a suit at law or in equity to foreclose this Agreement and
to sell the Collateral, or any portion thereof, pursuant to a judgment or
decree of a court of competent jurisdiction. 
Except as and if otherwise required by law, any proceeds of the
Collateral sold or disposed of pursuant hereto shall be applied toward the
Liabilities in such order as Secured Party shall determine in its sole
discretion.  Any balance remaining shall
be returned to Debtor.

 

(c)                                  Secured Party may, by written notice to Debtor,
at any time and from time to time, waive any Event of Default or Unmatured
Event of Default, which shall be for such period and subject to such conditions
as shall be specified in any such notice. 
In the case of any such waiver, Secured Party and Debtor shall be
restored to their former position and rights hereunder, and any Event of
Default or Unmatured Event of Default so waived shall be deemed to be cured and
not continuing; but no such waiver shall extend to or impair any subsequent or
other Event of Default or Unmatured Event of Default.  No failure to exercise, and no delay in
exercising, on the part of Secured Party of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. 
The rights and remedies of Secured Party herein provided are cumulative
and not exclusive of any rights or remedies provided by law.

 

(d)                                 As to any Liabilities owed to any Lender, Secured
Party shall act as collateral agent for such Lender and shall take or refrain
from taking action, and shall distribute proceeds of Collateral and other
amounts recovered hereunder or under any Related Document, between such Lender
and Secured Party as they shall from time to time agree.  Except as and if required by law Debtor shall
have no obligation or right whatsoever to inquire into any agreements or
arrangements between Secured Party and any Lender as to Secured Party’s acting
as collateral agent for any Lender.

 

10.                                 RIGHTS OF SECURED PARTY.  Without limiting any other rights Secured
Party has under the law, Secured Party may, from time to time, at its option
(but shall have no duty to):

 

(a)                                  perform any agreement of Debtor hereunder that
Debtor shall have failed to perform;

 

(b)                                 take any other action which Secured Party deems
necessary or desirable for the preservation of the Collateral or Secured
Party’s interest therein and the carrying out of this Agreement, including: (i)
any action to collect or realize upon the Collateral; (ii) the discharge of
taxes, liens, security interests or other encumbrances at any time levied or
placed on the Collateral; (iii) the discharge or keeping current of any
obligation of Debtor having effect on the Collateral; (iv) receiving, endorsing
and collecting all checks and other orders for the payment of money made
payable to Debtor representing any dividend, interest payment or other
distribution payable or distributable in respect of the Collateral or any part
thereof, and giving full discharge for the same; and

 

12

 

 (v) causing any person or entity having possession
of any Collateral to acknowledge that such person or entity holds such
Collateral for the benefit of Secured Party; and

 

(c)                                  sign, file, authenticate, and authorize the
signing, filing and authentication of, such financing statements and other
documents respecting any right of Secured Party in the Collateral, in any and
all jurisdictions as Secured Party shall determine in its discretion.

 

Debtor
hereby appoints Secured Party as Debtor’s attorney in fact, which appointment
is and shall be deemed to be irrevocable and coupled with an interest, for
purposes of performing acts and signing and delivering any agreement, document,
or instrument, on behalf of Debtor in accordance with this Section.  Debtor will reimburse Secured Party for all
reasonable expenses so incurred by Secured Party within 10 business days of
receipt of a written request for reimbursement. 
Amounts unpaid by Debtor after such 10 business day period shall bear
interest thereon at a rate per year equal to two percent (2%) in addition to
the Prime Rate until paid.

 

11.                                 WAIVER OF DEFENSES.  Debtor irrevocably waives presentment,
protest, notice of intent to accelerate, demand, notice of dishonor or default,
notice of acceptance of this Agreement, notice of any loans made, extensions
granted or other action taken in reliance hereon, and all other demands and
notices of any kind in connection with this Agreement or the Liabilities.

 

12.                                 SECURED PARTY MAY ALSO BE INTERMEDIARY OR
TRUSTEE.  Debtor hereby irrevocably
waives, releases and forever relinquishes any claim or right of any nature
whatsoever based upon the fact that Intermediary or a trustee of any Debtor or
Guarantor which is a trust is or may be Secured Party itself or a Secured Party
Affiliate, and hereby irrevocably consents to any such circumstance.  The rights and powers of Secured Party shall
not in any way be restricted by reason of any such present or future
circumstance.

 

13.                                 FURTHER ASSURANCES.  Debtor agrees to do (or cause to be done)
such further acts and things, and to execute and deliver (or cause to be
executed and delivered) such additional conveyances, assignments, agreements,
and instruments, as Secured Party may at any time request in connection with
the administration or enforcement of this Agreement or related to the
Collateral or any part thereof or in order better to assure and confirm unto
Secured Party its rights, powers and remedies hereunder.

 

14.                                 INVESTMENT DECISIONS.  Debtor agrees that, except for a duty of good
faith, Secured Party shall have no duty to Debtor with regard to decisions
which Secured Party may make with regard to purchasing, holding or selling
Collateral while the same shall be under Secured Party’s control.

 

15.                                 NOTICES. 
All notices, requests and demands to or upon the respective parties hereto
shall be deemed to have been given or made five business days after a record
has been deposited in the mail, postage prepaid, or one business day after a
record has been deposited with a recognized overnight courier, charges prepaid
or to be billed to the sender, or on the day of delivery if delivered manually
with receipt acknowledged, in each case addressed or

 

13

 

delivered
if to Secured Party to its banking office indicated above (Attention: Banking)
and if to Debtor to its address set forth above, or to such other address as
may be hereafter designated in writing by the respective parties hereto by a
notice in accord with this Section.

 

16.                                 MISCELLANEOUS. 
This Agreement, the Related Documents, and any document or instrument
executed in connection herewith or therewith, unless in each case otherwise
specifically provided therein: (i) shall be governed by and construed in
accordance with the internal law of the State of Illinois, except to the extent
if any that the Uniform Commercial Code of the State of Illinois provides for
the application of the law of a different State; and (ii) shall be deemed to
have been executed in the State of Illinois. 
This Agreement shall bind Debtor, its(his)(her) heirs, trustees
(including successor and replacement trustees), executors, personal
representatives, successors and assigns, as well as all persons and entities
who become bound as a debtor to this Agreement, and shall inure to the benefit
of Secured Party, its successors and assigns, except that neither Debtor nor
any person or entity who or which becomes bound as a debtor hereto may transfer
or assign any rights or obligations hereunder without the prior written consent
of Secured Party.  Debtor agrees to pay
upon written demand all reasonable expenses (including attorneys’ fees, legal
costs and expenses, and time charges of attorneys who may be employees of
Secured Party, in each case whether in or out of court, in original or
appellate proceedings or in bankruptcy) incurred or paid by Secured Party or
any holder hereof in connection with the enforcement or preservation of its
rights hereunder, under any Related Document, or under any document or
instrument executed in connection herewith or therewith.  If there shall be more
than one person or entity constituting Debtor, each of them shall be primarily,
jointly and severally liable for all obligations hereunder.  This Agreement may be executed in two or more
counterparts, and (if there is more than one party) by each party on separate
counterparts, each of which shall be deemed an original but which together
shall constitute one and the same instrument.

 

17.                                 WAIVER OF JURY TRIAL, ETC. DEBTOR AND (BY ITS
ACCEPTANCE HEREOF AS PROVIDED BELOW) SECURED PARTY HEREBY IRREVOCABLY AGREE
THAT ALL SUITS, ACTIONS OR OTHER PROCEEDINGS WITH RESPECT TO, ARISING OUT OF OR
IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED DOCUMENT SHALL BE SUBJECT TO
LITIGATION IN COURTS HAVING SITES WITHIN OR JURISDICTION OVER THE STATE OF
ILLINOIS AND THE COUNTY IN SUCH STATE WHERE THE ABOVE-INDICATED OFFICE OF
SECURED PARTY IS LOCATED.  DEBTOR AND (BY
ITS ACCEPTANCE HEREOF AS PROVIDED BELOW) SECURED PARTY HEREBY CONSENT AND
SUBMIT TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED IN OR
HAVING JURISDICTION OVER SUCH COUNTY AND STATE, AND HEREBY IRREVOCABLY WAIVE
ANY RIGHT THEY OR ANY OF THEM MAY HAVE TO REQUEST OR DEMAND TRIAL BY JURY,
TO TRANSFER OR CHANGE THE VENUE OF ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT
IN ACCORDANCE WITH THIS SECTION, OR TO CLAIM THAT ANY SUCH PROCEEDING HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.  NO
PARTY HERETO MAY SEEK OR RECOVER PUNITIVE OR CONSEQUENTIAL DAMAGES IN ANY
PROCEEDING BROUGHT UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED
DOCUMENT.

 

14

 

IN
WITNESS HEREOF, the parties hereto have executed this Pledge Agreement as of
the date first above written.

 

 

	
  QUIXOTE
  CORPORATION

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Daniel P. Gorey

  	
   

  
	
  Name:

  	
  Daniel
  P. Gorey

  
	
  Title:

  	
  Vice
  President, Chief Financial Officer & Treasurer

  
	
   

  
	
   

  
	
  ACCEPTED:

  
	
   

  
	
  THE
  NORTHERN TRUST COMPANY,

  
	
  for
  itself and as Agent on behalf of Lenders

  
	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jon W. Kreidler

  	
   

  
	
  Name:

  	
  Jon
  W. Kreidler

  
	
  Title:

  	
  Officer

  

 

15

 

EXHIBIT A TO

SUBSIDIARY STOCK
PLEDGE AGREEMENT EXECUTED

BY QUIXOTE
CORPORATION (“ Debtor”)

IN FAVOR OF THE
NORTHERN TRUST COMPANY,

AS AGENT FOR THE
LENDERS (“Secured Party”)

 

THIS EXHIBIT A CONSISTS
OF 1 PAGE

 

LISTING OF PLEDGED
SECURITIES

 

	
  OWNER

  	
   

  	
  ISSUER

  	
   

  	
  STOCK CERTIFICATE

  NO./SHARES OF

  COMMON STOCK

  	
   

  	
  AUTHORIZED

  SHARES/OUTSTANDING

  
	
  1.   Quixote Corporation

  	
   

  	
  Energy Absorption
  Systems, Inc.

  	
   

  	
  #1/1000

  	
   

  	
  1500 Common,
  $.01 PV, 100,000 Series A Preferred N.P.V./1000 Common Outstanding

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.   Quixote Corporation

  	
   

  	
  Quixote Transportation
  Systems, inc.

  	
   

  	
  #1/1000

  	
   

  	
  1000 Common,
  $1.00 PV /

  1000 Common Outstanding

  

 

16

 

SUBSIDIARY STOCK PLEDGE AGREEMENT

(QUIXOTE TRANSPORTATION SAFETY, INC.)

 

Dated as of September 10, 2004

 

This Pledge Agreement (as
modified from time to time, the “Agreement”) has been executed by QUIXOTE
TRANSPORTATION SAFETY, INC., organized under the laws of the State of Delaware,
on its own behalf as Pledgor (“Pledgor”), with an office at 35 East Wacker
Drive, Chicago, Illinois 60601, in favor of THE NORTHERN TRUST COMPANY, an
Illinois banking association, as secured party and as Agent for itself and the
other Lenders (“Lenders”) party to that Credit Agreement, as defined herein
(together with any successor, assign or subsequent holder, “Secured Party”),
with a banking office at 50 South LaSalle Street, Chicago, Illinois 60675.  Various capitalized terms used in this
Agreement have the meanings set forth in the Section of this Agreement entitled
“DEFINITIONS.”

 

WHEREAS,
Quixote Corporation (the “Borrower”) and the Lenders entered into that certain
Credit Agreement, dated as of May 16, 2003, as amended by a First Amendment,
dated as of December 9, 2003, by a Second Amendment as of June 30,
2004 and by a Third Amendment as of the date hereof (the “Credit Agreement”),
pursuant to which Credit Agreement the Lenders have made, (i) Revolving Loans
to the Borrower evidenced by certain Revolving Notes, dated as of
September 10, 2004, in the maximum aggregate principal amount of Thirty
Eight Million Dollars and 00/100 ($38,000,000), executed by the Borrower and
made payable pro rata to the order of the Lenders (the “Revolving Notes”) and
(ii) Term Loans to the Borrower evidenced by certain Term Notes, dated as of May
16, 2003, in the aggregate principal amount of Twenty Million Dollars and
00/100 ($20,000,000), executed by the Borrower and made payable pro rata to the
order of the Lenders (the “Term Notes”);

 

WHEREAS,
Pledgor is the owner of all of the capital stock, as described in Exhibit A
attached hereto (the “Securities”), of Energy Absorption Systems, Inc.,
Transafe Corporation, Surface Systems, Inc., U.S. Traffic Corporation and Peek
Traffic Corporation, each of which is a Subsidiary Guarantor under the Credit Agreement;

 

WHEREAS,
Pledgor has issued and is obligated under that Subsidiary Guaranty, dated
December 9, 2003, in favor of Secured Party, under which Subsidiary
Guaranty, Pledgor guaranties the Liabilities, as defined herein, including,
without limitation, the payment and performance of the obligations of Borrower
under the Credit Agreement.

 

WHEREAS,
the Secured Party has requested and the Pledgor has agreed to pledge the
Securities as collateral for the Liabilities, as defined herein.

 

In consideration of
Secured Party’s extension of the financial accommodations and continuation of
existing financial accommodations to Borrower, pursuant to the terms of the
Credit Agreement and other valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Pledgor agrees as follows:

 

 

1.                                       DEFINITIONS.

 

(a)                                  As used in this Agreement the following terms
shall have the indicated meanings:

 

“Collateral”—see Section entitled “PLEDGE.”

 

“Constituent Documents”—means the articles or certificate of incorporation,
by-laws, partnership agreement, certificates of limited partnership, limited
liability company operating agreement, limited liability company articles of
organization, trust agreement, and all other documents and instruments
pertaining to the formation and ongoing existence of any person or entity which
is not an individual.

 

“Credit Agreement” means the Credit Agreement, dated as of May 16, 2003,
among the Borrower, the Secured Party and the Lenders party thereto, as amended
by a First Amendment, dated as of December 9, 2003, a Second Amendment,
dated as of June 30, 2004 and a Third Amendment, dated as of
September 10, 2004 and as hereafter amended from time to time.

 

“Event of Default”—see Section entitled “EVENTS OF DEFAULT.”

 

“Guarantor” means any Subsidiary Guarantor, as defined in the Credit
Agreement, any person, or any persons severally, who now or hereafter
guarantees payment or collection of all or any part of the Liabilities or
provides any collateral for the Liabilities.

 

“Intermediary”—see Section entitled “PLEDGE.”

 

“Lender” shall mean the Secured Party for itself and any Lender, a party
to and as defined in the Credit Agreement.

 

“Liabilities”—see Section entitled “LIABILITIES.”

 

“Listed,” as to a security, means traded domestically on any national
securities exchange or in the NASDAQ market.

 

The term “person” includes both individuals and organizations.

 

“Prime Rate” means
that floating rate of interest per year announced from time to time by Secured
Party called its prime rate, which at any time may not be the lowest rate
charged by Secured Party, computed for the actual number of days elapsed on the
basis of a calendar year of 365 or 366 days. 
Changes in the rate of interest resulting from a change in the Prime
Rate shall take effect on the date set forth in each announcement of a change
in the Prime Rate.

 

“Related Document(s)” means any note, agreement, guaranty, security
agreement or other document or instrument previously, now or hereafter
delivered to Secured Party

 

2

 

or
any Lender in connection with the Liabilities, the Credit Agreement, any
Subsidiary Guaranty or this Agreement. The term “related document,” if not
initial-capitalized, means a document related to another referenced document.

 

“Related Party(ies)” means any Guarantor.

 

The term “Secured Party” means the above-indicated Secured Party acting
both for itself and as collateral agent for any Lender (see in particular the
section hereof entitled “Liabilities”).

 

“Unmatured Event of Default” means any event or condition that would
become an Event of Default with notice or the passage of time or both.

 

(b)                                 As used in this Agreement, unless otherwise
specified: the term “including” means “including without limitation”; the term
“days” means “calendar days”; and terms such as “herein,” “hereof” and words of
similar import refer to this Agreement as a whole.  References herein to partners of a
partnership, joint venturers of a joint venture, or members of a limited
liability company, mean, respectively, persons or entities owning or holding
partnership interests, joint venture interests, or membership interests in such
partnership, joint venture or limited liability company.  Terms not defined herein, shall have the
meaning assigned to that term in the Credit Agreement.  Unless otherwise defined herein, all terms
(including those not capitalized) that are defined in the Uniform Commercial
Code of Illinois shall have the same meanings herein as in such Code, as such
Code may be amended from time to time. 
Unless the context requires otherwise, wherever used herein the singular
shall include the plural and vice versa, and the use of one gender shall also
denote the others.  Captions herein are
for convenience of reference only and shall not define or limit any of the
terms or provisions hereof; references herein to sections or provisions without
reference to the document in which they are contained are references to this
Agreement.

 

2.                                       PLEDGE. 
Pledgor hereby assigns, pledges, hypothecates, delivers, sets over and
transfers to Secured Party and grants to Secured Party a continuing security
interest in, for the benefit of Secured Party (as provided in the
Section entitled “Liabilities”), the following, in each case whether certificated
or uncertificated, whether now owned or hereafter acquired, wherever located
(any or all of such, the “Collateral”):

 

(a)                                  Certificated Securities in possession of Secured
Party and not in a Securities Account, which Securities are described in Exhibit
A attached hereto and incorporated herein by reference.

 

(b)                                 With respect to any Collateral referred to
herein:

 

(i)                                     all stock and bond powers, certificates and
instruments; and

 

(ii)                                  all additions, replacements, substitutions,
interest, cash and stock dividends, warrants, options, and other rights and
amounts paid, accrued, received, receivable, or distributed with respect
thereto from time to time, 

 

3

 

(c)                                  With respect to the foregoing, all products and
proceeds thereof, including insurance proceeds and payments under the
Securities Investor Protection Act of 1970, as amended.

 

3.                                       LIABILITIES.

 

The
Collateral shall secure the payment and performance of all obligations and
liabilities of Pledgor:

 

(a)                                  to Secured Party, and to any Lender and its
affiliates, with respect to Hedging Obligations as defined in the Credit
Agreement, howsoever created, evidenced or arising, whether direct or indirect,
absolute or contingent, now due or to become due, or now existing or hereafter
arising, joint, several or joint and several, including obligations under or
with respect to future advances and letters of credit issued by Secured Party
or any Lender for the account of or at the request of Pledgor and all
reimbursement obligations arising therefrom, including, without limitation,
under the Credit Agreement and the Related Documents;

 

(b)                                 to Secured Party under or in connection
with:  (i) the Subsidiary Guaranty by
Pledgor guaranteeing any and all obligations of Borrower to Secured Party; and
(ii) any reasonable expenses (including attorneys’ fees, legal costs and
expenses, and time charges of attorneys who may be employees of Secured Party,
whether in or out of court, in original or appellate proceedings or in
bankruptcy) incurred or paid by Secured Party in connection with the
enforcement or preservation of its rights hereunder or under any Related
Document.

 

(any
or all obligations and liabilities described in the foregoing portion of this
Section, the “Liabilities”).  This
Agreement shall continue and remain in effect notwithstanding that at any
particular time there may be no Liabilities outstanding.

 

4.                                       REPRESENTATIONS AND WARRANTIES.

 

Pledgor
hereby represents and warrants to Secured Party that:

 

(a)                                  Pledgor’s exact legal name is as set forth in the
heading to this Agreement.  If Pledgor is
an organization: Pledgor’s type of organization and jurisdiction of
organization or formation, are as set forth in the preamble to this Agreement;
and Pledgor’s place of business or, if Pledgor has more than one place of
business, Pledgor’s chief executive office is located at the address set forth
above; and Pledgor has never been organized or formed in any jurisdiction other
than the jurisdiction set forth in the preamble to this Agreement.  All Collateral currently is located in one of
the fifty states of the United States of America.  Further, except as and if specifically
disclosed by Pledgor to Secured Party IN WRITING prior to the execution of this
Agreement, during the five (5) years and six months prior to the date of this
Agreement:

 

4

 

(A)                              Pledgor has not been known by any legal name different from the one set
forth in the heading of this Agreement nor has Pledgor been the subject of any
merger, consolidation, or other corporate or organizational reorganization.

 

(B)                                Pledgor’s place of business or, if Pledgor has more than one place of
business, Pledgor’s chief executive office has been at Pledgor’s address set
forth above, except that prior to February 9, 2004, 2004 Pledgor’s chief
executive office was located at One East Wacker Drive, Chicago, Illinois 60601.

 

(b)                                 Pledgor and Borrower are validly existing and in
good standing under the laws of their state of organization or formation, and
are duly qualified, in good standing and authorized to do business in each
jurisdiction where failure to do so might have a material adverse impact on the
assets, condition or prospects of Pledgor. 
The execution, delivery and performance of this Agreement and all
Related Documents are within Pledgor’s powers and have been authorized by all
necessary action required by law and Pledgor’s Constituent Documents.

 

(c)                                  The execution, delivery and performance of this
Agreement and all Related Documents have received any and all necessary
governmental approval, and do not and will not contravene or conflict with any
provision of law, any Constituent Document or any agreement affecting Pledgor
or its property.

 

(d)                                 There has been no material adverse change in the
business, condition, properties, assets, operations or prospects of Pledgor or
any Related Party since the date of the latest financial statements provided by
or on behalf of Pledgor or any Related Party to Secured Party.

 

(e)                                  No financing statement, mortgage, notice of
judgment, or any similar instrument (unless filed on behalf of Secured Party)
covering any of the Collateral is on file in any public office.

 

(f)                                    Pledgor is the lawful owner of and has rights in
or power to transfer all Collateral, free and clear of all liens, pledges,
charges, mortgages, and claims other than any in favor of Secured Party, except
liens for current taxes not delinquent.

 

(g)                                 Pledgor has filed or caused to be filed all
federal, state, and local tax returns that are required to be filed, and has
paid or has caused to be paid all of its taxes, including any taxes shown on
such returns or on any assessment received by it, to the extent that such taxes
have become due.

 

(h)                                 Except for federal and
state securities laws generally applicable to the sale, transfer or redemption
of securities, sale, transfer and redemption of the Collateral by Secured
Party: (A) are not prohibited or regulated by any federal or state law or
regulation or any agreement binding upon Pledgor, including any Constituent
Document; and (B) require no registration or
filing with, or consent or approval of, any governmental body, regulatory
authority or securities exchange.

 

5

 

(i)                                     Pledgor is not an executive officer, director
or other “affiliate” (as contemplated by Rules 144 and 145 of the Federal
Securities and Exchange Commission) of any issuer of any Collateral.

 

(j)                                     The Collateral is duly
and validly authorized and issued, non-assessable, fully paid and paid for, and outstanding.

 

(k)                                  (A)
The execution, delivery and performance of this Agreement and all Related
Documents are in Pledgor’s best interest in its current and future business
operations and will materially benefit Pledgor; and (B) Pledgor has received
adequate, fair and valuable consideration, and at least reasonably equivalent
value, to enter into and perform this Agreement and all Related Documents.

 

(l)                                     The request or application for any Liabilities by
Pledgor shall be a representation and warranty by Pledgor as of the date of
such request or application that: (i) no Event of Default or Unmatured Event of
Default has occurred and is continuing as of such date; and (ii) Pledgor’s
representations and warranties herein and in any Related Document are true and
correct as of such date as though made on such date.

 

5.                                       DEPOSITORIES; SUB-AGENTS AND NOMINEES.

 

(a)                                  Without limiting any other provision hereof,
Secured Party may at its option from time to time transfer, or cause any
Intermediary to transfer, the Collateral into a “pledge position” at any
depository now or hereafter holding the Collateral, and do or cause to be done,
execute (or cause to be executed) such other documents, and take (or cause to
be taken) such other actions as Secured Party may deem necessary or appropriate
in connection therewith.

 

(b)                                 Secured Party shall have the right to appoint one
or more sub-agents for the purpose of retaining physical possession of any
certificates or instruments representing or evidencing the Collateral, which
may be held (in the discretion of Secured Party) in the name of Secured Party
or any nominee or nominees of Secured Party or a sub-agent appointed by Secured
Party.  In addition, Secured Party shall
at all times have the right to exchange certificates or instruments
representing or evidencing Collateral for certificates or instruments of
smaller or larger denominations for any purpose consistent with its performance
of this Agreement.

 

(c)                                  For the better perfection of Secured Party’s
rights in and to the Collateral and to facilitate implementation of such
rights, following an Event of Default, Pledgor shall, upon written request of
Secured Party, cause all the certificates, notes, documents and other
instruments evidencing, representing or otherwise comprising the Collateral to
be registered or otherwise put into the name of Secured Party or a nominee or
nominees of Secured Party.

 

(d)                                 Pledgor hereby consents and agrees that the
issuers of, or any depository, registrar, transfer agent or similar party for
any of, the Collateral shall be entitled to accept the provisions hereof as
conclusive evidence of the right of Secured Party to effect any transfer
pursuant hereto, notwithstanding any notice or direction to the contrary
heretofore or hereafter

 

6

 

given
by Pledgor or any other person to any such issuer or any such depository,
registrar, transfer agent or similar party.

 

6.                                       VOTING & MISCELLANEOUS RIGHTS.  Unless an Event of Default has occurred and
is continuing, Pledgor may exercise any and all rights (including voting
rights) with respect to the Collateral, subject to the terms of this
Agreement.  If an Event of Default has
occurred and is continuing, Secured Party (and only Secured Party) may exercise
any and all such rights.

 

7.                                       GENERAL COVENANTS.  Pledgor agrees that so long as this Agreement
remains in effect, it will:

 

(a)                                  NOTIFY SECURED PARTY IN WRITING AT LEAST SIXTY
(60) DAYS IN ADVANCE OF:

 

(i)                                     ANY CHANGE WHATSOEVER IN THE NAME OF PLEDGOR;

 

(ii)                                  THE STATE OR JURISDICTION IN WHICH PLEDGOR IS
ORGANIZED OR FORMED OR, IF PLEDGOR IS AN INDIVIDUAL, IN WHICH PLEDGOR’S
PRINCIPAL RESIDENCE IS LOCATED;

 

(iii)                               ANY NEW NAMES UNDER WHICH PLEDGOR INTENDS TO DO BUSINESS; OR

 

(iv)                              ANY NEW ADDRESSES AT OR FROM WHICH PLEDGOR INTENDS TO DO BUSINESS OR TO
KEEP COLLATERAL OF ANY KIND.

 

Pledgor
shall in any event keep all Collateral within one or more states of the United
States of America.

 

(b)                                 Promptly deliver any cash, securities or other
property received with respect to the Collateral, whether as proceeds of the
disposition thereof, dividends with respect thereto, or otherwise, to be held
by Secured Party as Collateral. 
NOTWITHSTANDING THE FOREGOING, UNLESS AN EVENT OF DEFAULT HAS OCCURRED
AND IS CONTINUING, PLEDGOR MAY CONTINUE TO RECEIVE AND RETAIN INTEREST AND
REGULAR CASH DIVIDENDS ON THE COLLATERAL.

 

(c)                                  Defend the Collateral against the claims and
demands of all persons other than Secured Party and promptly pay all taxes,
assessments, and charges upon the Collateral. 
Pledgor agrees not to sign, file, or authenticate, or authorize or
permit the signing, filing or authentication of, any financing statements or
other documents creating or perfecting a lien upon or security interest in any
of the Collateral except in favor of Secured Party, or otherwise create,
suffer, or permit to exist any liens or security interests upon any Collateral
other than in favor of Secured Party, except tax liens, provided that such
liens are removed before related taxes become delinquent.

 

7

 

(d)                                 Sign, file, authenticate, and authorize the
signing, filing and authenticating of, such financing statements and other
documents (and pay the cost of filing and recording the same in all public
offices deemed necessary by Secured Party), and do such other acts, as Secured
Party may request to establish and maintain a valid and perfected security
interest in the Collateral free and clear of all other liens and claims, except
tax liens, provided that such liens are removed before related taxes become
delinquent.

 

(e)                                  Keep at its address for notices set forth above
its records concerning the Collateral, which records shall be of such character
as will enable Secured Party to determine at any time the status of the
Collateral; and permit Secured Party from time to time to inspect, audit, and
make copies of, and extracts from, all records and all other papers in the
possession or control of Pledgor pertaining to the Collateral.

 

(f)                                    Subject to the terms of the Credit Agreement,
provide to Secured Party from time to time such financial statements of and
other information concerning the Collateral, Pledgor, and any Related Party as
Secured Party shall reasonably request.

 

(g)                                 Except if and to the extent specifically
permitted by this Agreement, not sell, transfer, lease, grant a license or
option or similar right with respect to, or otherwise dispose of, or agree to
dispose of, any Collateral.

 

8.                                       EVENTS OF DEFAULT.  The occurrence or continuance of any of the
following shall constitute an “Event of Default”:

 

(a)                                  (i) failure to pay, when and as due, any
principal payable hereunder or in connection with any of the Liabilities in
each case after giving effect to any applicable notice, grace or cure period;
(ii) failure to pay, when and as due, any interest or other amounts payable
hereunder or in connection with any of the Liabilities in each case after
giving effect to any applicable notice; or (iii) failure to comply with or
perform any agreement or covenant of Pledgor contained herein; or

 

(b)                                 any default, event of default, or similar event
shall occur or continue under the Credit Agreement or any Related Document, and
shall continue beyond any applicable notice, grace or cure period set forth in
such Related Document; or

 

(c)                                  the Pledgor or any
Related Party shall fail to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) with respect
to any Indebtedness (as defined in the Credit Agreement) beyond any period of
grace provided with respect thereto, which individually or together with other
such Indebtedness as to which any such failure exists has an aggregate
outstanding principal amount in excess of $2,000,000; or any breach, default or
event of default shall occur, or any other condition shall exist under any
instrument, agreement or indenture pertaining to any such Indebtedness having
such aggregate outstanding principal amount, beyond any period of grace, if
any, provided with respect thereto, if the effect thereof is

 

8

 

to cause an acceleration,
mandatory redemption, a requirement that the Pledgor offer to purchase such
Indebtedness or other required repurchase of such Indebtedness; or

 

(d)                                 any representation, warranty, schedule,
certificate, financial statement, report, notice, or other writing furnished by
or on behalf of Pledgor or any Related Party to Secured Party is false or
misleading in any material respect on the date as of which the facts therein
set forth are stated or certified, in each case as amended by the information
provided in any request or notice delivered by Pledgor to Secured Party
pursuant to Section 7.1 of the Credit Agreement; or

 

(e)                                  this Agreement or any Related Document, including
any guaranty of or pledge of collateral security for the Liabilities, shall be
repudiated or shall become unenforceable or incapable of performance in accord
with its terms; or

 

(f)                                    Pledgor or any Related Party shall fail to
maintain their existence in good standing in their state of organization or
formation or shall fail to be duly qualified, in good standing and authorized
to do business in each jurisdiction where failure to do so might have a
material adverse impact on the assets, condition or prospects of Pledgor or any
Related Party; or

 

(g)                                 Pledgor or any Related Party shall dissolve,
liquidate, merge, consolidate, or cease to be in existence for any reason, or
there shall be any change in any Constituent Document of Pledgor from that in
force on the date hereof which may have a material adverse impact on the
ability of Pledgor to repay the Liabilities; or

 

(h)                                 any person or entity presently not in control of
a Pledgor or Related Party which is not a natural person shall obtain control
directly or indirectly of such a Pledgor or Related Party, whether by purchase
or gift of stock or assets, by contract, or otherwise; or

 

(i)                                     Pledgor shall grant or any person (other than
Secured Party) shall obtain a security interest in any of the Collateral, or
shall file any financing statement purportedly covering any Collateral; Pledgor
or any other person shall perfect (or attempt to perfect) such a security
interest; a court shall determine that Secured Party does not have a
first-priority security interest in any of the Collateral or in any other
assets constituting security for the Liabilities, enforceable in accord with
this Agreement (as to the Collateral) or the related collateral documents (as
to such other assets); or any notice of a federal tax lien against Pledgor or
any Related Party shall be filed with any public recorder; or

 

(j)                                     (without limiting any other provision of this
Agreement or any Related Document) there shall be any material loss or
depreciation in the value of any of the Collateral for any reason, or Secured
Party shall otherwise reasonably deem itself insecure with respect to the
Collateral; or, unless expressly permitted by this Agreement or the Related
Documents, all or any part of any of the Collateral or any direct, indirect,

 

9

 

legal,
equitable or beneficial interest therein is assigned, transferred or sold
without Secured Party’s prior written consent;

 

(k)                                  An
involuntary case shall be commenced against the Pledgor or any Related Party
and the petition shall not be dismissed, stayed, bonded or discharged within
sixty (60) days after commencement of the case; or a court having jurisdiction
in the premises shall enter a decree or order for relief in respect of the
Pledgor or any Related Party, under any applicable bankruptcy, insolvency or
other similar law now or hereinafter in effect; or any other similar relief
shall be granted under any applicable federal, state, local or foreign law; or

 

(l)                                     A
decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over the Pledgor or any Related Party or
over all or a substantial part of the property of the Pledgor or any Related
Party shall be entered; or an interim receiver, trustee or other custodian of
the Pledgor or any Related Party or of all or a substantial part of the
property of the Pledgor or any Related Party shall be appointed or a warrant of
attachment, execution or similar process against any substantial part of the
property of the Pledgor or any Related Party, shall be issued and any such
event shall not be stayed, dismissed, bonded or discharged within sixty (60)
days after entry, appointment or issuance; or

 

(m)                               Pledgor
or any Related Party shall (i) commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, (ii)
consent to the entry of an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such law,
(iii) consent to the appointment of or taking possession by a receiver, trustee
or other custodian for all or a substantial part of its property, (iv) make any
assignment for the benefit of creditors or (v) take any corporate action to
authorize any of the foregoing.

 

9.                                       DEFAULT REMEDIES.

 

(a)                                  Notwithstanding any provision of any document or
instrument evidencing or relating to any Liability: (i) upon the occurrence and
during the continuance of any Event of Default specified in subsections (a)-(j)
of the Section entitled “EVENTS OF DEFAULT,” Secured Party at its option
may declare the Liabilities immediately due and payable without notice or
demand of any kind; and (ii) upon the occurrence of any Event of Default
specified in subsections (k)-(m) of the Section entitled “EVENTS OF
DEFAULT,” the Liabilities shall be immediately and automatically due and
payable without action of any kind on the part of Secured Party.  Upon the occurrence and during the
continuance of any Event of Default, Secured Party may exercise any rights and
remedies under this Agreement, any Related Document or other document or
instrument (including any Related Document evidencing Liabilities or pertaining
to Collateral), and at law or in equity.

 

(b)                                 If any Event of Default shall have occurred and
be continuing, then, in addition to having the right to exercise any rights and
remedies of a secured party upon default

 

10

 

under
the Uniform Commercial Code in effect in Illinois and any State in which any
Collateral is located, Secured Party may, in its sole discretion:

 

(i)                                     without being required to give any prior notice
to Pledgor apply the cash (if any) then held by it hereunder toward the
Liabilities in such order as Secured Party shall determine in its sole
discretion; and

 

(ii)                                  if there shall be no such cash or the cash so
applied shall be insufficient to pay all obligations in full, sell the
Collateral, or any part thereof, at any public or private sale, for cash, upon
credit or for future delivery, as Secured Party shall deem appropriate,
provided, however, that Pledgor shall be credited with proceeds thereof only
when the proceeds are actually received in cash by Secured Party, and such sale
shall be deemed commercially reasonable. 
Secured Party shall be authorized at any such sale (to the extent it
deems it advisable to do so, in its sole discretion) to restrict the prospective
bidders or purchasers to persons who will represent and agree that they are
purchasing the Collateral then being sold for their own account for investment
and not with a view to the distribution or resale thereof, and upon
consummation of any such sale Secured Party shall have the right to assign,
transfer and deliver to the purchasers thereof the Collateral so sold.  Each such purchaser at any such sale shall
hold the property sold absolutely free from any claim or right on the part of
Pledgor.  Pledgor hereby waives (to the
extent permitted by law) all rights of redemption, stay and/or appraisal which
it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. 
Secured Party has no obligation to marshal Collateral or to clean up or
otherwise prepare Collateral for sale, and may specifically disclaim any
warranties as to the Collateral, including those of title, merchantability, and
fitness for a particular purpose. 
Secured Party may comply with any applicable local, state or federal law
requirements in connection with a disposition of Collateral, and compliance
will not be considered adversely to affect the commercial reasonableness of any
sale of Collateral.  Pledgor grants to
Secured Party the right to enter into or on any premises where Collateral may
be located for the purposes of exercising any remedies upon the occurrence of
an Event of Default.  Secured Party shall
be deemed to have exercised reasonable care in the custody and preservation of
Collateral if it takes such action for that purpose as Pledgor requests in
writing, but failure to do so shall not be deemed a failure to exercise
ordinary care; no failure of Secured Party to preserve or protect any right
with respect to Collateral against prior parties, or to do any act with respect
to preservation of Collateral not so requested by Pledgor, shall be deemed of
itself a failure to exercise reasonable care in the custody or preservation of
Collateral.  To the extent that notice of
sale shall be required to be given by law, Secured Party shall give Pledgor at
least ten days’ written notice of any such public sale or the date after which
any such private sale or sales will be held. 
Secured Party shall not be obligated to make any sale of Collateral if
it shall determine not to do so, regardless of the fact that notice of sale of
Collateral may have been given.  Secured
Party may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned

 

11

 

from
time to time by announcement at the time and place fixed for sale, and such
sale may, without further notice, be made at the time and place to which the
same was so adjourned.  In case sale of
all or any part of the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by Secured Party until the sale price is
paid by the purchaser thereof, but Secured Party shall not incur any liability
in case any such purchaser shall fail to take up and pay for the Collateral so
sold; in the case of any such failure, such Collateral may be sold again upon
like notice.  As an alternative to
exercising the power of sale herein conferred upon it, Secured Party may
proceed by a suit at law or in equity to foreclose this Agreement and to sell
the Collateral, or any portion thereof, pursuant to a judgment or decree of a
court of competent jurisdiction.  Except
as and if otherwise required by law, any proceeds of the Collateral sold or
disposed of pursuant hereto shall be applied toward the Liabilities in such
order as Secured Party shall determine in its sole discretion.  Any balance remaining shall be returned to
Pledgor.

 

(c)                                  Secured Party may, by written notice to Pledgor,
at any time and from time to time, waive any Event of Default or Unmatured
Event of Default, which shall be for such period and subject to such conditions
as shall be specified in any such notice. 
In the case of any such waiver, Secured Party and Pledgor shall be
restored to their former position and rights hereunder, and any Event of
Default or Unmatured Event of Default so waived shall be deemed to be cured and
not continuing; but no such waiver shall extend to or impair any subsequent or
other Event of Default or Unmatured Event of Default.  No failure to exercise, and no delay in
exercising, on the part of Secured Party of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. 
The rights and remedies of Secured Party herein provided are cumulative
and not exclusive of any rights or remedies provided by law.

 

(d)                                 As to any Liabilities owed to any Lender, Secured
Party shall act as collateral agent for such Lender and shall take or refrain
from taking action, and shall distribute proceeds of Collateral and other
amounts recovered hereunder or under any Related Document, between such Lender
and Secured Party as they shall from time to time agree.  Except as and if required by law Pledgor shall
have no obligation or right whatsoever to inquire into any agreements or
arrangements between Secured Party and any Lender as to Secured Party’s acting
as collateral agent for any Lender.

 

10.                                 RIGHTS OF SECURED PARTY.  Without limiting any other rights Secured
Party has under the law, Secured Party may, from time to time, at its option
(but shall have no duty to):

 

(a)                                  perform any agreement of Pledgor hereunder that
Pledgor shall have failed to perform;

 

(b)                                 take any other action which Secured Party deems
necessary or desirable for the preservation of the Collateral or Secured
Party’s interest therein and the carrying out of this Agreement, including: (i)
any action to collect or realize upon the

 

12

 

Collateral;
(ii) the discharge of taxes, liens, security interests or other encumbrances at
any time levied or placed on the Collateral; (iii) the discharge or keeping
current of any obligation of Pledgor having effect on the Collateral; (iv)
receiving, endorsing and collecting all checks and other orders for the payment
of money made payable to Pledgor representing any dividend, interest payment or
other distribution payable or distributable in respect of the Collateral or any
part thereof, and giving full discharge for the same; and (v) causing any
person or entity having possession of any Collateral to acknowledge that such
person or entity holds such Collateral for the benefit of Secured Party; and

 

(c)                                  sign, file, authenticate, and authorize the
signing, filing and authentication of, such financing statements and other
documents respecting any right of Secured Party in the Collateral, in any and
all jurisdictions as Secured Party shall determine in its discretion.

 

Pledgor
hereby appoints Secured Party as Pledgor’s attorney in fact, which appointment
is and shall be deemed to be irrevocable and coupled with an interest, for
purposes of performing acts and signing and delivering any agreement, document,
or instrument, on behalf of Pledgor in accordance with this Section.  Pledgor will reimburse Secured Party for all
reasonable expenses so incurred by Secured Party within 10 business days of
receipt of a written request for reimbursement. 
Amounts unpaid by Pledgor after such 10 business day period shall bear interest
thereon at a rate per year equal to two percent (2%) in addition to the Prime
Rate until paid.

 

11.                                 WAIVER OF DEFENSES.  Pledgor irrevocably waives presentment,
protest, notice of intent to accelerate, demand, notice of dishonor or default,
notice of acceptance of this Agreement, notice of any loans made, extensions
granted or other action taken in reliance hereon, and all other demands and
notices of any kind in connection with this Agreement or the Liabilities.

 

12.                                 SECURED PARTY MAY ALSO BE INTERMEDIARY OR
TRUSTEE.  Pledgor hereby irrevocably
waives, releases and forever relinquishes any claim or right of any nature
whatsoever based upon the fact that Intermediary or a trustee of any Pledgor or
Guarantor which is a trust is or may be Secured Party itself or a Secured Party
Affiliate, and hereby irrevocably consents to any such circumstance.  The rights and powers of Secured Party shall
not in any way be restricted by reason of any such present or future
circumstance.

 

13.                                 FURTHER ASSURANCES.  Pledgor agrees to do (or cause to be done) such
further acts and things, and to execute and deliver (or cause to be executed
and delivered) such additional conveyances, assignments, agreements, and
instruments, as Secured Party may at any time request in connection with the
administration or enforcement of this Agreement or related to the Collateral or
any part thereof or in order better to assure and confirm unto Secured Party
its rights, powers and remedies hereunder.

 

14.                                 INVESTMENT DECISIONS.  Pledgor agrees that, except for a duty of
good faith, Secured Party shall have no duty to Pledgor with regard to
decisions which Secured Party may make with regard to purchasing, holding or
selling Collateral while the same shall be under Secured Party’s control.

 

13

 

15.                                 NOTICES. 
All notices, requests and demands to or upon the respective parties
hereto shall be deemed to have been given or made five business days after a
record has been deposited in the mail, postage prepaid, or one business day
after a record has been deposited with a recognized overnight courier, charges
prepaid or to be billed to the sender, or on the day of delivery if delivered
manually with receipt acknowledged, in each case addressed or delivered if to
Secured Party to its banking office indicated above (Attention: Banking) and if
to Pledgor to its address set forth above, or to such other address as may be
hereafter designated in writing by the respective parties hereto by a notice in
accord with this Section.

 

16.                                 MISCELLANEOUS. 
This Agreement, the Related Documents, and any document or instrument
executed in connection herewith or therewith, unless in each case otherwise
specifically provided therein: (i) shall be governed by and construed in
accordance with the internal law of the State of Illinois, except to the extent
if any that the Uniform Commercial Code of the State of Illinois provides for
the application of the law of a different State; and (ii) shall be deemed to
have been executed in the State of Illinois. 
This Agreement shall bind Pledgor, its(his)(her) heirs, trustees
(including successor and replacement trustees), executors, personal
representatives, successors and assigns, as well as all persons and entities
who become bound as a Pledgor to this Agreement, and shall inure to the benefit
of Secured Party, its successors and assigns, except that neither Pledgor nor
any person or entity who or which becomes bound as a Pledgor hereto may
transfer or assign any rights or obligations hereunder without the prior
written consent of Secured Party. 
Pledgor agrees to pay upon written demand all reasonable expenses
(including attorneys’ fees, legal costs and expenses, and time charges of
attorneys who may be employees of Secured Party, in each case whether in or out
of court, in original or appellate proceedings or in bankruptcy) incurred or
paid by Secured Party or any holder hereof in connection with the enforcement
or preservation of its rights hereunder, under any Related Document, or under
any document or instrument executed in connection herewith or therewith.  If there shall be more
than one person or entity constituting Pledgor, each of them shall be
primarily, jointly and severally liable for all obligations hereunder.  This Agreement may be executed in two or more
counterparts, and (if there is more than one party) by each party on separate
counterparts, each of which shall be deemed an original but which together
shall constitute one and the same instrument.

 

17.                                 WAIVER OF JURY TRIAL, ETC. PLEDGOR AND (BY ITS
ACCEPTANCE HEREOF AS PROVIDED BELOW) SECURED PARTY HEREBY IRREVOCABLY AGREE
THAT ALL SUITS, ACTIONS OR OTHER PROCEEDINGS WITH RESPECT TO, ARISING OUT OF OR
IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED DOCUMENT SHALL BE SUBJECT TO
LITIGATION IN COURTS HAVING SITES WITHIN OR JURISDICTION OVER THE STATE OF
ILLINOIS AND THE COUNTY IN SUCH STATE WHERE THE ABOVE-INDICATED OFFICE OF
SECURED PARTY IS LOCATED.  PLEDGOR AND
(BY ITS ACCEPTANCE HEREOF AS PROVIDED BELOW) SECURED PARTY HEREBY CONSENT AND
SUBMIT TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED IN OR
HAVING JURISDICTION OVER SUCH COUNTY AND STATE, AND HEREBY IRREVOCABLY WAIVE
ANY RIGHT THEY OR ANY OF THEM MAY HAVE TO REQUEST OR DEMAND TRIAL BY JURY,
TO TRANSFER OR CHANGE THE VENUE OF ANY SUIT, ACTION OR

 

14

 

OTHER
PROCEEDING BROUGHT IN ACCORDANCE WITH THIS SECTION, OR TO CLAIM THAT ANY SUCH
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  NO PARTY HERETO MAY SEEK OR RECOVER PUNITIVE
OR CONSEQUENTIAL DAMAGES IN ANY PROCEEDING BROUGHT UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY RELATED DOCUMENT.

 

15

 

IN
WITNESS HEREOF, the parties hereto have executed this Pledge Agreement as of
the date first above written.

 

	
  QUIXOTE
  TRANSPORTATION SAFETY, INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Daniel P. Gorey

  	
   

  
	
  Name:

  	
  Daniel
  P. Gorey

  
	
  Title:

  	
  Vice
  President and Treasurer

  
	
   

  
	
   

  
	
  ACCEPTED:

  
	
   

  
	
  THE
  NORTHERN TRUST COMPANY,

  
	
  for
  itself and as Agent on behalf of Lenders

  
	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jon W. Kreidler

  	
   

  
	
  Name:

  	
  Jon
  W. Kreidler

  
	
  Title:

  	
  Officer

  

 

16

 

EXHIBIT A TO

SUBSIDIARY STOCK
PLEDGE AGREEMENT EXECUTED

BY QUIXOTE TRANSPORTATION SAFETY, INC. (“
Pledgor”)

IN FAVOR OF THE
NORTHERN TRUST COMPANY,

AS AGENT FOR THE
LENDERS (“Secured Party”)

 

THIS EXHIBIT A CONSISTS
OF 1 PAGE

 

LISTING OF PLEDGED
SECURITIES

 

	
  OWNER

  	
   

  	
  ISSUER

  	
   

  	
  STOCK CERTIFICATE

  NO./SHARES OF

  COMMON STOCK

  	
   

  	
  AUTHORIZED

  SHARES/OUTSTANDING

  
	
  1.   Quixote Transportation Safety, Inc.

  	
   

  	
  Peek Traffic Corporation
  (f/k/a Vision Acquisition Corporation)

  	
   

  	
  #1/1000

  	
   

  	
  1000 Common,
  $1.00 PV /

  1000 Common Outstanding

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.   Quixote Transportation Saftey, Inc.

  	
   

  	
  U.S. Traffic
  Corporation (f/k/a Green Light Acquisition Company)

  	
   

  	
  #1/1000

  	
   

  	
  1000 Common,
  $1.00 PV /

  1000 Common Outstanding

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.   Quixote Transportation Saftey, Inc.

  	
   

  	
  Surface Systems Inc.

  	
   

  	
  #1/456,900

  	
   

  	
  1,000,000 Common
  /

  $1.00 PV/456,900 Outstanding

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.   Quixote Transportation Saftey, Inc.

  	
   

  	
  Transafe Corporation

  	
   

  	
  #2/1000

  	
   

  	
  1000 Common,
  $1.00 PV /

  1000 Common Outstanding

  

 

17

 

SUBSIDIARY STOCK PLEDGE AGREEMENT

(TRANSAFE CORPORATION)

 

Dated as of September 10, 2004

 

This Pledge Agreement (as
modified from time to time, the “Agreement”) has been executed by TRANSAFE
CORPORATION, organized under the laws of the State of Delaware, on its own
behalf as Pledgor (“Pledgor”), with an office at 35 East Wacker Drive, Chicago,
Illinois 60601, in favor of THE NORTHERN TRUST COMPANY, an Illinois banking
association, as secured party and as Agent for itself and the other Lenders
(“Lenders”) party to that Credit Agreement, as defined herein (together with
any successor, assign or subsequent holder, “Secured Party”), with a banking
office at 50 South LaSalle Street, Chicago, Illinois 60675.  Various capitalized terms used in this
Agreement have the meanings set forth in the Section of this Agreement entitled
“DEFINITIONS.”

 

WHEREAS,
Quixote Corporation (the “Borrower”) and the Lenders entered into that certain
Credit Agreement, dated as of May 16, 2003, as amended by a First Amendment,
dated as of December 9, 2003, by a Second Amendment as of June 30,
2004 and by a Third Amendment as of the date hereof (the “Credit Agreement”),
pursuant to which Credit Agreement the Lenders have made, (i) Revolving Loans
to the Borrower evidenced by certain Revolving Notes, dated as of
September 10, 2004, in the maximum aggregate principal amount of Thirty
Eight Million Dollars and 00/100 ($38,000,000), executed by the Borrower and
made payable pro rata to the order of the Lenders (the “Revolving Notes”) and
(ii) Term Loans to the Borrower evidenced by certain Term Notes, dated as of
May 16, 2003, in the aggregate principal amount of Twenty Million Dollars and
00/100 ($20,000,000), executed by the Borrower and made payable pro rata to the
order of the Lenders (the “Term Notes”);

 

WHEREAS,
Pledgor is the owner of all of the capital stock, as described in Exhibit A
attached hereto (the “Securities”), of Nu-Metrics, Inc. and Highway Information
Systems, Inc., each of which is a Subsidiary Guarantor under the Credit
Agreement;

 

WHEREAS,
Pledgor has issued and is obligated under that Subsidiary Guaranty, dated
December 9, 2003, in favor of Secured Party, under which Subsidiary
Guaranty, Pledgor guaranties the Liabilities, as defined herein, including,
without limitation, the payment and performance of the obligations of Borrower
under the Credit Agreement.

 

WHEREAS,
the Secured Party has requested and the Pledgor has agreed to pledge the
Securities as collateral for the Liabilities, as defined herein.

 

In consideration of
Secured Party’s extension of the financial accommodations and continuation of
existing financial accommodations to Borrower, pursuant to the terms of the
Credit Agreement and other valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Pledgor agrees as follows:

 

 

1.                                       DEFINITIONS.

 

(a)                                  As used in this Agreement the following terms
shall have the indicated meanings:

 

“Collateral”—see Section entitled “PLEDGE.”

 

“Constituent Documents”—means the articles or certificate of
incorporation, by-laws, partnership agreement, certificates of limited
partnership, limited liability company operating agreement, limited liability
company articles of organization, trust agreement, and all other documents and
instruments pertaining to the formation and ongoing existence of any person or
entity which is not an individual.

 

“Credit Agreement” means the Credit Agreement, dated as of May 16, 2003,
among the Borrower, the Secured Party and the Lenders party thereto, as amended
by a First Amendment, dated as of December 9, 2003, a Second Amendment,
dated as of June 30, 2004 and a Third Amendment, dated as of
September 10, 2004 and as hereafter amended from time to time.

 

“Event of Default”—see Section entitled “EVENTS OF DEFAULT.”

 

“Guarantor” means any Subsidiary Guarantor, as defined in the Credit
Agreement, any person, or any persons severally, who now or hereafter
guarantees payment or collection of all or any part of the Liabilities or
provides any collateral for the Liabilities.

 

“Intermediary”—see Section entitled “PLEDGE.”

 

“Lender” shall mean the Secured Party for itself and any Lender, a party
to and as defined in the Credit Agreement.

 

“Liabilities”—see Section entitled “LIABILITIES.”

 

“Listed,” as to a security, means traded domestically on any national
securities exchange or in the NASDAQ market.

 

The term “person” includes both individuals and organizations.

 

“Prime Rate” means
that floating rate of interest per year announced from time to time by Secured
Party called its prime rate, which at any time may not be the lowest rate
charged by Secured Party, computed for the actual number of days elapsed on the
basis of a calendar year of 365 or 366 days. 
Changes in the rate of interest resulting from a change in the Prime
Rate shall take effect on the date set forth in each announcement of a change
in the Prime Rate.

 

“Related Document(s)” means any note, agreement, guaranty, security
agreement or other document or instrument previously, now or hereafter
delivered to Secured Party

 

2

 

or
any Lender in connection with the Liabilities, the Credit Agreement, any
Subsidiary Guaranty or this Agreement. The term “related document,” if not
initial-capitalized, means a document related to another referenced document.

 

“Related Party(ies)” means any Guarantor.

 

The term “Secured Party” means the above-indicated Secured Party acting
both for itself and as collateral agent for any Lender (see in particular the
section hereof entitled “Liabilities”).

 

“Unmatured Event of Default” means any event or condition that would
become an Event of Default with notice or the passage of time or both.

 

(b)                                 As used in this Agreement, unless otherwise specified:
the term “including” means “including without limitation”; the term “days”
means “calendar days”; and terms such as “herein,” “hereof” and words of
similar import refer to this Agreement as a whole.  References herein to partners of a
partnership, joint venturers of a joint venture, or members of a limited
liability company, mean, respectively, persons or entities owning or holding
partnership interests, joint venture interests, or membership interests in such
partnership, joint venture or limited liability company.  Terms not defined herein, shall have the
meaning assigned to that term in the Credit Agreement.  Unless otherwise defined herein, all terms
(including those not capitalized) that are defined in the Uniform Commercial
Code of Illinois shall have the same meanings herein as in such Code, as such
Code may be amended from time to time. 
Unless the context requires otherwise, wherever used herein the singular
shall include the plural and vice versa, and the use of one gender shall also
denote the others.  Captions herein are
for convenience of reference only and shall not define or limit any of the
terms or provisions hereof; references herein to sections or provisions without
reference to the document in which they are contained are references to this
Agreement.

 

2.                                       PLEDGE. 
Pledgor hereby assigns, pledges, hypothecates, delivers, sets over and
transfers to Secured Party and grants to Secured Party a continuing security
interest in, for the benefit of Secured Party (as provided in the
Section entitled “Liabilities”), the following, in each case whether
certificated or uncertificated, whether now owned or hereafter acquired,
wherever located (any or all of such, the “Collateral”):

 

(a)                                  Certificated Securities in possession of Secured
Party and not in a Securities Account, which Securities are described in Exhibit
A attached hereto and incorporated herein by reference.

 

(b)                                 With respect to any Collateral referred to
herein:

 

(i)                                     all stock and bond powers, certificates and
instruments; and

 

(ii)                                  all additions, replacements, substitutions,
interest, cash and stock dividends, warrants, options, and other rights and
amounts paid, accrued, received, receivable, or distributed with respect
thereto from time to time, 

 

3

 

(c)                                  With respect to the foregoing, all products and
proceeds thereof, including insurance proceeds and payments under the
Securities Investor Protection Act of 1970, as amended.

 

3.                                       LIABILITIES.

 

The
Collateral shall secure the payment and performance of all obligations and
liabilities of Pledgor:

 

(a)                                  to Secured Party, and to any Lender and its
affiliates, with respect to Hedging Obligations as defined in the Credit
Agreement, howsoever created, evidenced or arising, whether direct or indirect,
absolute or contingent, now due or to become due, or now existing or hereafter
arising, joint, several or joint and several, including obligations under or
with respect to future advances and letters of credit issued by Secured Party
or any Lender for the account of or at the request of Pledgor and all
reimbursement obligations arising therefrom, including, without limitation,
under the Credit Agreement and the Related Documents;

 

(b)                                 to Secured Party under or in connection
with:  (i) the Subsidiary Guaranty by
Pledgor guaranteeing any and all obligations of Borrower to Secured Party; and
(ii) any reasonable expenses (including attorneys’ fees, legal costs and
expenses, and time charges of attorneys who may be employees of Secured Party,
whether in or out of court, in original or appellate proceedings or in
bankruptcy) incurred or paid by Secured Party in connection with the
enforcement or preservation of its rights hereunder or under any Related
Document.

 

(any
or all obligations and liabilities described in the foregoing portion of this
Section, the “Liabilities”).  This
Agreement shall continue and remain in effect notwithstanding that at any
particular time there may be no Liabilities outstanding.

 

4.                                       REPRESENTATIONS AND WARRANTIES.

 

Pledgor
hereby represents and warrants to Secured Party that:

 

(a)                                  Pledgor’s exact legal name is as set forth in the
heading to this Agreement.  If Pledgor is
an organization: Pledgor’s type of organization and jurisdiction of
organization or formation, are as set forth in the preamble to this Agreement;
and Pledgor’s place of business or, if Pledgor has more than one place of
business, Pledgor’s chief executive office is located at the address set forth
above; and Pledgor has never been organized or formed in any jurisdiction other
than the jurisdiction set forth in the preamble to this Agreement.  All Collateral currently is located in one of
the fifty states of the United States of America.  Further, except as and if specifically
disclosed by Pledgor to Secured Party IN WRITING prior to the execution of this
Agreement, during the five (5) years and six months prior to the date of this
Agreement:

 

4

 

(A)                              Pledgor has not been known by any legal name different from the one set forth
in the heading of this Agreement nor has Pledgor been the subject of any
merger, consolidation, or other corporate or organizational reorganization.

 

(B)                                Pledgor’s place of business or, if Pledgor has more than one place of
business, Pledgor’s chief executive office has been at Pledgor’s address set
forth above, except that prior to February 9, 2004, 2004 Pledgor’s chief
executive office was located at One East Wacker Drive, Chicago, Illinois 60601.

 

(b)                                 Pledgor and Borrower are validly existing and in
good standing under the laws of their state of organization or formation, and
are duly qualified, in good standing and authorized to do business in each
jurisdiction where failure to do so might have a material adverse impact on the
assets, condition or prospects of Pledgor. 
The execution, delivery and performance of this Agreement and all
Related Documents are within Pledgor’s powers and have been authorized by all
necessary action required by law and Pledgor’s Constituent Documents.

 

(c)                                  The execution, delivery and performance of this
Agreement and all Related Documents have received any and all necessary
governmental approval, and do not and will not contravene or conflict with any
provision of law, any Constituent Document or any agreement affecting Pledgor
or its property.

 

(d)                                 There has been no material adverse change in the
business, condition, properties, assets, operations or prospects of Pledgor or
any Related Party since the date of the latest financial statements provided by
or on behalf of Pledgor or any Related Party to Secured Party.

 

(e)                                  No financing statement, mortgage, notice of
judgment, or any similar instrument (unless filed on behalf of Secured Party)
covering any of the Collateral is on file in any public office.

 

(f)                                    Pledgor is the lawful owner of and has rights in
or power to transfer all Collateral, free and clear of all liens, pledges,
charges, mortgages, and claims other than any in favor of Secured Party, except
liens for current taxes not delinquent.

 

(g)                                 Pledgor has filed or caused to be filed all
federal, state, and local tax returns that are required to be filed, and has
paid or has caused to be paid all of its taxes, including any taxes shown on
such returns or on any assessment received by it, to the extent that such taxes
have become due.

 

(h)                                 Except for federal and
state securities laws generally applicable to the sale, transfer or redemption
of securities, sale, transfer and redemption of the Collateral by Secured
Party: (A) are not prohibited or regulated by any federal or state law or
regulation or any agreement binding upon Pledgor, including any Constituent
Document; and (B) require no registration or filing with, or consent or
approval of, any governmental body, regulatory authority or securities
exchange.

 

5

 

(i)                                     Pledgor is not an executive officer, director
or other “affiliate” (as contemplated by Rules 144 and 145 of the Federal
Securities and Exchange Commission) of any issuer of any Collateral.

 

(j)                                     The Collateral is duly
and validly authorized and issued, non-assessable, fully paid and paid for, and outstanding.

 

(k)                                  (A)
The execution, delivery and performance of this Agreement and all Related
Documents are in Pledgor’s best interest in its current and future business
operations and will materially benefit Pledgor; and (B) Pledgor has received
adequate, fair and valuable consideration, and at least reasonably equivalent
value, to enter into and perform this Agreement and all Related Documents.

 

(l)                                     The request or application for any Liabilities by
Pledgor shall be a representation and warranty by Pledgor as of the date of
such request or application that: (i) no Event of Default or Unmatured Event of
Default has occurred and is continuing as of such date; and (ii) Pledgor’s
representations and warranties herein and in any Related Document are true and
correct as of such date as though made on such date.

 

5.                                       DEPOSITORIES; SUB-AGENTS AND NOMINEES.

 

(a)                                  Without limiting any other provision hereof,
Secured Party may at its option from time to time transfer, or cause any
Intermediary to transfer, the Collateral into a “pledge position” at any
depository now or hereafter holding the Collateral, and do or cause to be done,
execute (or cause to be executed) such other documents, and take (or cause to
be taken) such other actions as Secured Party may deem necessary or appropriate
in connection therewith.

 

(b)                                 Secured Party shall have the right to appoint one
or more sub-agents for the purpose of retaining physical possession of any
certificates or instruments representing or evidencing the Collateral, which
may be held (in the discretion of Secured Party) in the name of Secured Party
or any nominee or nominees of Secured Party or a sub-agent appointed by Secured
Party.  In addition, Secured Party shall
at all times have the right to exchange certificates or instruments
representing or evidencing Collateral for certificates or instruments of
smaller or larger denominations for any purpose consistent with its performance
of this Agreement.

 

(c)                                  For the better perfection of Secured Party’s
rights in and to the Collateral and to facilitate implementation of such
rights, following an Event of Default, Pledgor shall, upon written request of
Secured Party, cause all the certificates, notes, documents and other
instruments evidencing, representing or otherwise comprising the Collateral to
be registered or otherwise put into the name of Secured Party or a nominee or
nominees of Secured Party.

 

(d)                                 Pledgor hereby consents and agrees that the issuers
of, or any depository, registrar, transfer agent or similar party for any of,
the Collateral shall be entitled to accept the provisions hereof as conclusive
evidence of the right of Secured Party to effect any transfer pursuant hereto,
notwithstanding any notice or direction to the contrary heretofore or hereafter

 

6

 

given
by Pledgor or any other person to any such issuer or any such depository,
registrar, transfer agent or similar party.

 

6.                                       VOTING & MISCELLANEOUS RIGHTS.  Unless an Event of Default has occurred and
is continuing, Pledgor may exercise any and all rights (including voting
rights) with respect to the Collateral, subject to the terms of this Agreement.  If an Event of Default has occurred and is
continuing, Secured Party (and only Secured Party) may exercise any and all
such rights.

 

7.                                       GENERAL COVENANTS.  Pledgor agrees that so long as this Agreement
remains in effect, it will:

 

(a)                                  NOTIFY SECURED PARTY IN WRITING AT LEAST SIXTY
(60) DAYS IN ADVANCE OF:

 

(i)                                     ANY CHANGE WHATSOEVER IN THE NAME OF PLEDGOR;

 

(ii)                                  THE STATE OR JURISDICTION IN WHICH PLEDGOR IS
ORGANIZED OR FORMED OR, IF PLEDGOR IS AN INDIVIDUAL, IN WHICH PLEDGOR’S
PRINCIPAL RESIDENCE IS LOCATED;

 

(iii)                               ANY NEW NAMES UNDER WHICH PLEDGOR INTENDS TO DO BUSINESS; OR

 

(iv)                              ANY NEW ADDRESSES AT OR FROM WHICH PLEDGOR INTENDS TO DO BUSINESS OR TO
KEEP COLLATERAL OF ANY KIND.

 

Pledgor
shall in any event keep all Collateral within one or more states of the United
States of America.

 

(b)                                 Promptly deliver any cash, securities or other
property received with respect to the Collateral, whether as proceeds of the
disposition thereof, dividends with respect thereto, or otherwise, to be held
by Secured Party as Collateral. 
NOTWITHSTANDING THE FOREGOING, UNLESS AN EVENT OF DEFAULT HAS OCCURRED
AND IS CONTINUING, PLEDGOR MAY CONTINUE TO RECEIVE AND RETAIN INTEREST AND
REGULAR CASH DIVIDENDS ON THE COLLATERAL.

 

(c)                                  Defend the Collateral against the claims and
demands of all persons other than Secured Party and promptly pay all taxes,
assessments, and charges upon the Collateral. 
Pledgor agrees not to sign, file, or authenticate, or authorize or
permit the signing, filing or authentication of, any financing statements or
other documents creating or perfecting a lien upon or security interest in any
of the Collateral except in favor of Secured Party, or otherwise create,
suffer, or permit to exist any liens or security interests upon any Collateral
other than in favor of Secured Party, except tax liens, provided that such
liens are removed before related taxes become delinquent.

 

7

 

(d)                                 Sign, file, authenticate, and authorize the
signing, filing and authenticating of, such financing statements and other documents
(and pay the cost of filing and recording the same in all public offices deemed
necessary by Secured Party), and do such other acts, as Secured Party may
request to establish and maintain a valid and perfected security interest in
the Collateral free and clear of all other liens and claims, except tax liens,
provided that such liens are removed before related taxes become delinquent.

 

(e)                                  Keep at its address for notices set forth above
its records concerning the Collateral, which records shall be of such character
as will enable Secured Party to determine at any time the status of the
Collateral; and permit Secured Party from time to time to inspect, audit, and
make copies of, and extracts from, all records and all other papers in the
possession or control of Pledgor pertaining to the Collateral.

 

(f)                                    Subject to the terms of the Credit Agreement,
provide to Secured Party from time to time such financial statements of and
other information concerning the Collateral, Pledgor, and any Related Party as
Secured Party shall reasonably request.

 

(g)                                 Except if and to the extent specifically
permitted by this Agreement, not sell, transfer, lease, grant a license or
option or similar right with respect to, or otherwise dispose of, or agree to
dispose of, any Collateral.

 

8.                                       EVENTS OF DEFAULT.  The occurrence or continuance of any of the
following shall constitute an “Event of Default”:

 

(a)                                  (i) failure to pay, when and as due, any
principal payable hereunder or in connection with any of the Liabilities in
each case after giving effect to any applicable notice, grace or cure period;
(ii) failure to pay, when and as due, any interest or other amounts payable
hereunder or in connection with any of the Liabilities in each case after
giving effect to any applicable notice; or (iii) failure to comply with or
perform any agreement or covenant of Pledgor contained herein; or

 

(b)                                 any default, event of default, or similar event
shall occur or continue under the Credit Agreement or any Related Document, and
shall continue beyond any applicable notice, grace or cure period set forth in
such Related Document; or

 

(c)                                  the Pledgor or any
Related Party shall fail to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) with respect
to any Indebtedness (as defined in the Credit Agreement) beyond any period of
grace provided with respect thereto, which individually or together with other
such Indebtedness as to which any such failure exists has an aggregate
outstanding principal amount in excess of $2,000,000; or any breach, default or
event of default shall occur, or any other condition shall exist under any
instrument, agreement or indenture pertaining to any such Indebtedness having
such aggregate outstanding principal amount, beyond any period of grace, if
any, provided with respect thereto, if the effect thereof is

 

8

 

to cause an acceleration,
mandatory redemption, a requirement that the Pledgor offer to purchase such
Indebtedness or other required repurchase of such Indebtedness; or

 

(d)                                 any representation, warranty, schedule,
certificate, financial statement, report, notice, or other writing furnished by
or on behalf of Pledgor or any Related Party to Secured Party is false or
misleading in any material respect on the date as of which the facts therein
set forth are stated or certified, in each case as amended by the information
provided in any request or notice delivered by Pledgor to Secured Party
pursuant to Section 7.1 of the Credit Agreement; or

 

(e)                                  this Agreement or any Related Document, including
any guaranty of or pledge of collateral security for the Liabilities, shall be
repudiated or shall become unenforceable or incapable of performance in accord
with its terms; or

 

(f)                                    Pledgor or any Related Party shall fail to
maintain their existence in good standing in their state of organization or
formation or shall fail to be duly qualified, in good standing and authorized
to do business in each jurisdiction where failure to do so might have a
material adverse impact on the assets, condition or prospects of Pledgor or any
Related Party; or

 

(g)                                 Pledgor or any Related Party shall dissolve,
liquidate, merge, consolidate, or cease to be in existence for any reason, or
there shall be any change in any Constituent Document of Pledgor from that in
force on the date hereof which may have a material adverse impact on the
ability of Pledgor to repay the Liabilities; or

 

(h)                                 any person or entity presently not in control of
a Pledgor or Related Party which is not a natural person shall obtain control
directly or indirectly of such a Pledgor or Related Party, whether by purchase
or gift of stock or assets, by contract, or otherwise; or

 

(i)                                     Pledgor shall grant or any person (other than Secured
Party) shall obtain a security interest in any of the Collateral, or shall file
any financing statement purportedly covering any Collateral; Pledgor or any
other person shall perfect (or attempt to perfect) such a security interest; a
court shall determine that Secured Party does not have a first-priority
security interest in any of the Collateral or in any other assets constituting
security for the Liabilities, enforceable in accord with this Agreement (as to
the Collateral) or the related collateral documents (as to such other assets);
or any notice of a federal tax lien against Pledgor or any Related Party shall
be filed with any public recorder; or

 

(j)                                     (without limiting any other provision of this
Agreement or any Related Document) there shall be any material loss or
depreciation in the value of any of the Collateral for any reason, or Secured
Party shall otherwise reasonably deem itself insecure with respect to the
Collateral; or, unless expressly permitted by this Agreement or the Related
Documents, all or any part of any of the Collateral or any direct, indirect,

 

9

 

legal,
equitable or beneficial interest therein is assigned, transferred or sold
without Secured Party’s prior written consent;

 

(k)                                  An
involuntary case shall be commenced against the Pledgor or any Related Party
and the petition shall not be dismissed, stayed, bonded or discharged within
sixty (60) days after commencement of the case; or a court having jurisdiction
in the premises shall enter a decree or order for relief in respect of the
Pledgor or any Related Party, under any applicable bankruptcy, insolvency or
other similar law now or hereinafter in effect; or any other similar relief
shall be granted under any applicable federal, state, local or foreign law; or

 

(l)                                     A
decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over the Pledgor or any Related Party or
over all or a substantial part of the property of the Pledgor or any Related
Party shall be entered; or an interim receiver, trustee or other custodian of
the Pledgor or any Related Party or of all or a substantial part of the
property of the Pledgor or any Related Party shall be appointed or a warrant of
attachment, execution or similar process against any substantial part of the
property of the Pledgor or any Related Party, shall be issued and any such
event shall not be stayed, dismissed, bonded or discharged within sixty (60)
days after entry, appointment or issuance; or

 

(m)                               Pledgor
or any Related Party shall (i) commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, (ii)
consent to the entry of an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such law,
(iii) consent to the appointment of or taking possession by a receiver, trustee
or other custodian for all or a substantial part of its property, (iv) make any
assignment for the benefit of creditors or (v) take any corporate action to
authorize any of the foregoing.

 

9.                                       DEFAULT REMEDIES.

 

(a)                                  Notwithstanding any provision of any document or
instrument evidencing or relating to any Liability: (i) upon the occurrence and
during the continuance of any Event of Default specified in subsections (a)-(j)
of the Section entitled “EVENTS OF DEFAULT,” Secured Party at its option
may declare the Liabilities immediately due and payable without notice or
demand of any kind; and (ii) upon the occurrence of any Event of Default
specified in subsections (k)-(m) of the Section entitled “EVENTS OF
DEFAULT,” the Liabilities shall be immediately and automatically due and
payable without action of any kind on the part of Secured Party.  Upon the occurrence and during the
continuance of any Event of Default, Secured Party may exercise any rights and
remedies under this Agreement, any Related Document or other document or
instrument (including any Related Document evidencing Liabilities or pertaining
to Collateral), and at law or in equity.

 

(b)                                 If any Event of Default shall have occurred and
be continuing, then, in addition to having the right to exercise any rights and
remedies of a secured party upon default

 

10

 

under
the Uniform Commercial Code in effect in Illinois and any State in which any
Collateral is located, Secured Party may, in its sole discretion:

 

(i)                                     without being required to give any prior notice
to Pledgor apply the cash (if any) then held by it hereunder toward the
Liabilities in such order as Secured Party shall determine in its sole
discretion; and

 

(ii)                                  if there shall be no such cash or the cash so
applied shall be insufficient to pay all obligations in full, sell the
Collateral, or any part thereof, at any public or private sale, for cash, upon
credit or for future delivery, as Secured Party shall deem appropriate,
provided, however, that Pledgor shall be credited with proceeds thereof only
when the proceeds are actually received in cash by Secured Party, and such sale
shall be deemed commercially reasonable. 
Secured Party shall be authorized at any such sale (to the extent it
deems it advisable to do so, in its sole discretion) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral then being sold for their own account for
investment and not with a view to the distribution or resale thereof, and upon
consummation of any such sale Secured Party shall have the right to assign,
transfer and deliver to the purchasers thereof the Collateral so sold.  Each such purchaser at any such sale shall
hold the property sold absolutely free from any claim or right on the part of
Pledgor.  Pledgor hereby waives (to the
extent permitted by law) all rights of redemption, stay and/or appraisal which
it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. 
Secured Party has no obligation to marshal Collateral or to clean up or
otherwise prepare Collateral for sale, and may specifically disclaim any
warranties as to the Collateral, including those of title, merchantability, and
fitness for a particular purpose.  Secured
Party may comply with any applicable local, state or federal law requirements
in connection with a disposition of Collateral, and compliance will not be
considered adversely to affect the commercial reasonableness of any sale of
Collateral.  Pledgor grants to Secured
Party the right to enter into or on any premises where Collateral may be
located for the purposes of exercising any remedies upon the occurrence of an
Event of Default.  Secured Party shall be
deemed to have exercised reasonable care in the custody and preservation of
Collateral if it takes such action for that purpose as Pledgor requests in
writing, but failure to do so shall not be deemed a failure to exercise
ordinary care; no failure of Secured Party to preserve or protect any right with
respect to Collateral against prior parties, or to do any act with respect to
preservation of Collateral not so requested by Pledgor, shall be deemed of
itself a failure to exercise reasonable care in the custody or preservation of
Collateral.  To the extent that notice of
sale shall be required to be given by law, Secured Party shall give Pledgor at
least ten days’ written notice of any such public sale or the date after which
any such private sale or sales will be held. 
Secured Party shall not be obligated to make any sale of Collateral if
it shall determine not to do so, regardless of the fact that notice of sale of
Collateral may have been given.  Secured
Party may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned

 

11

 

from
time to time by announcement at the time and place fixed for sale, and such
sale may, without further notice, be made at the time and place to which the
same was so adjourned.  In case sale of
all or any part of the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by Secured Party until the sale price is
paid by the purchaser thereof, but Secured Party shall not incur any liability
in case any such purchaser shall fail to take up and pay for the Collateral so
sold; in the case of any such failure, such Collateral may be sold again upon
like notice.  As an alternative to
exercising the power of sale herein conferred upon it, Secured Party may proceed
by a suit at law or in equity to foreclose this Agreement and to sell the
Collateral, or any portion thereof, pursuant to a judgment or decree of a court
of competent jurisdiction.  Except as and
if otherwise required by law, any proceeds of the Collateral sold or disposed
of pursuant hereto shall be applied toward the Liabilities in such order as
Secured Party shall determine in its sole discretion.  Any balance remaining shall be returned to
Pledgor.

 

(c)                                  Secured Party may, by written notice to Pledgor,
at any time and from time to time, waive any Event of Default or Unmatured
Event of Default, which shall be for such period and subject to such conditions
as shall be specified in any such notice. 
In the case of any such waiver, Secured Party and Pledgor shall be
restored to their former position and rights hereunder, and any Event of
Default or Unmatured Event of Default so waived shall be deemed to be cured and
not continuing; but no such waiver shall extend to or impair any subsequent or
other Event of Default or Unmatured Event of Default.  No failure to exercise, and no delay in
exercising, on the part of Secured Party of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. 
The rights and remedies of Secured Party herein provided are cumulative
and not exclusive of any rights or remedies provided by law.

 

(d)                                 As to any Liabilities owed to any Lender, Secured
Party shall act as collateral agent for such Lender and shall take or refrain
from taking action, and shall distribute proceeds of Collateral and other
amounts recovered hereunder or under any Related Document, between such Lender
and Secured Party as they shall from time to time agree.  Except as and if required by law Pledgor
shall have no obligation or right whatsoever to inquire into any agreements or
arrangements between Secured Party and any Lender as to Secured Party’s acting
as collateral agent for any Lender.

 

10.                                 RIGHTS OF SECURED PARTY.  Without limiting any other rights Secured
Party has under the law, Secured Party may, from time to time, at its option
(but shall have no duty to):

 

(a)                                  perform any agreement of Pledgor hereunder that
Pledgor shall have failed to perform;

 

(b)                                 take any other action which Secured Party deems
necessary or desirable for the preservation of the Collateral or Secured
Party’s interest therein and the carrying out of this Agreement, including: (i)
any action to collect or realize upon the

 

12

 

Collateral;
(ii) the discharge of taxes, liens, security interests or other encumbrances at
any time levied or placed on the Collateral; (iii) the discharge or keeping
current of any obligation of Pledgor having effect on the Collateral; (iv)
receiving, endorsing and collecting all checks and other orders for the payment
of money made payable to Pledgor representing any dividend, interest payment or
other distribution payable or distributable in respect of the Collateral or any
part thereof, and giving full discharge for the same; and (v) causing any
person or entity having possession of any Collateral to acknowledge that such
person or entity holds such Collateral for the benefit of Secured Party; and

 

(c)                                  sign, file, authenticate, and authorize the
signing, filing and authentication of, such financing statements and other
documents respecting any right of Secured Party in the Collateral, in any and
all jurisdictions as Secured Party shall determine in its discretion.

 

Pledgor
hereby appoints Secured Party as Pledgor’s attorney in fact, which appointment
is and shall be deemed to be irrevocable and coupled with an interest, for
purposes of performing acts and signing and delivering any agreement, document,
or instrument, on behalf of Pledgor in accordance with this Section.  Pledgor will reimburse Secured Party for all
reasonable expenses so incurred by Secured Party within 10 business days of
receipt of a written request for reimbursement. 
Amounts unpaid by Pledgor after such 10 business day period shall bear
interest thereon at a rate per year equal to two percent (2%) in addition to
the Prime Rate until paid.

 

11.                                 WAIVER OF DEFENSES.  Pledgor irrevocably waives presentment,
protest, notice of intent to accelerate, demand, notice of dishonor or default,
notice of acceptance of this Agreement, notice of any loans made, extensions
granted or other action taken in reliance hereon, and all other demands and
notices of any kind in connection with this Agreement or the Liabilities.

 

12.                                 SECURED PARTY MAY ALSO BE INTERMEDIARY OR
TRUSTEE.  Pledgor hereby irrevocably
waives, releases and forever relinquishes any claim or right of any nature
whatsoever based upon the fact that Intermediary or a trustee of any Pledgor or
Guarantor which is a trust is or may be Secured Party itself or a Secured Party
Affiliate, and hereby irrevocably consents to any such circumstance.  The rights and powers of Secured Party shall
not in any way be restricted by reason of any such present or future
circumstance.

 

13.                                 FURTHER ASSURANCES.  Pledgor agrees to do (or cause to be done)
such further acts and things, and to execute and deliver (or cause to be
executed and delivered) such additional conveyances, assignments, agreements, and
instruments, as Secured Party may at any time request in connection with the
administration or enforcement of this Agreement or related to the Collateral or
any part thereof or in order better to assure and confirm unto Secured Party
its rights, powers and remedies hereunder.

 

14.                                 INVESTMENT DECISIONS.  Pledgor agrees that, except for a duty of
good faith, Secured Party shall have no duty to Pledgor with regard to
decisions which Secured Party may make with regard to purchasing, holding or
selling Collateral while the same shall be under Secured Party’s control.

 

13

 

15.                                 NOTICES. 
All notices, requests and demands to or upon the respective parties
hereto shall be deemed to have been given or made five business days after a
record has been deposited in the mail, postage prepaid, or one business day
after a record has been deposited with a recognized overnight courier, charges
prepaid or to be billed to the sender, or on the day of delivery if delivered
manually with receipt acknowledged, in each case addressed or delivered if to
Secured Party to its banking office indicated above (Attention: Banking) and if
to Pledgor to its address set forth above, or to such other address as may be
hereafter designated in writing by the respective parties hereto by a notice in
accord with this Section.

 

16.                                 MISCELLANEOUS. 
This Agreement, the Related Documents, and any document or instrument
executed in connection herewith or therewith, unless in each case otherwise
specifically provided therein: (i) shall be governed by and construed in
accordance with the internal law of the State of Illinois, except to the extent
if any that the Uniform Commercial Code of the State of Illinois provides for
the application of the law of a different State; and (ii) shall be deemed to
have been executed in the State of Illinois. 
This Agreement shall bind Pledgor, its(his)(her) heirs, trustees
(including successor and replacement trustees), executors, personal
representatives, successors and assigns, as well as all persons and entities
who become bound as a Pledgor to this Agreement, and shall inure to the benefit
of Secured Party, its successors and assigns, except that neither Pledgor nor
any person or entity who or which becomes bound as a Pledgor hereto may
transfer or assign any rights or obligations hereunder without the prior
written consent of Secured Party. 
Pledgor agrees to pay upon written demand all reasonable expenses
(including attorneys’ fees, legal costs and expenses, and time charges of
attorneys who may be employees of Secured Party, in each case whether in or out
of court, in original or appellate proceedings or in bankruptcy) incurred or
paid by Secured Party or any holder hereof in connection with the enforcement
or preservation of its rights hereunder, under any Related Document, or under
any document or instrument executed in connection herewith or therewith.  If there shall be more
than one person or entity constituting Pledgor, each of them shall be
primarily, jointly and severally liable for all obligations hereunder.  This Agreement may be executed in two or more
counterparts, and (if there is more than one party) by each party on separate
counterparts, each of which shall be deemed an original but which together
shall constitute one and the same instrument.

 

17.                                 WAIVER OF JURY TRIAL, ETC. PLEDGOR AND (BY ITS
ACCEPTANCE HEREOF AS PROVIDED BELOW) SECURED PARTY HEREBY IRREVOCABLY AGREE
THAT ALL SUITS, ACTIONS OR OTHER PROCEEDINGS WITH RESPECT TO, ARISING OUT OF OR
IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED DOCUMENT SHALL BE SUBJECT TO
LITIGATION IN COURTS HAVING SITES WITHIN OR JURISDICTION OVER THE STATE OF
ILLINOIS AND THE COUNTY IN SUCH STATE WHERE THE ABOVE-INDICATED OFFICE OF
SECURED PARTY IS LOCATED.  PLEDGOR AND
(BY ITS ACCEPTANCE HEREOF AS PROVIDED BELOW) SECURED PARTY HEREBY CONSENT AND
SUBMIT TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED IN OR
HAVING JURISDICTION OVER SUCH COUNTY AND STATE, AND HEREBY IRREVOCABLY WAIVE
ANY RIGHT THEY OR ANY OF THEM MAY HAVE TO REQUEST OR DEMAND TRIAL BY JURY,
TO TRANSFER OR CHANGE THE VENUE OF ANY SUIT, ACTION OR

 

14

 

OTHER
PROCEEDING BROUGHT IN ACCORDANCE WITH THIS SECTION, OR TO CLAIM THAT ANY SUCH
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  NO PARTY HERETO MAY SEEK OR RECOVER PUNITIVE
OR CONSEQUENTIAL DAMAGES IN ANY PROCEEDING BROUGHT UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY RELATED DOCUMENT.

 

15

 

IN
WITNESS HEREOF, the parties hereto have executed this Pledge Agreement as of
the date first above written.

 

	
  TRANSAFE
  CORPORATION

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Daniel P. Gorey

  	
   

  
	
  Name:

  	
  Daniel
  P. Gorey

  
	
  Title:

  	
  Vice President and
  Treasurer

  
	
   

  
	
   

  
	
  ACCEPTED:

  
	
   

  
	
  THE
  NORTHERN TRUST COMPANY,

  
	
  for
  itself and as Agent on behalf of Lenders

  
	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jon W. Kreidler

  	
   

  
	
  Name:

  	
  Jon
  W. Kreidler

  
	
  Title:

  	
  Officer

  

 

16

 

EXHIBIT A TO

SUBSIDIARY STOCK
PLEDGE AGREEMENT EXECUTED

BY TRANSAFE
CORPORATION (“ Pledgor”)

IN FAVOR OF THE
NORTHERN TRUST COMPANY,

AS AGENT FOR THE
LENDERS (“Secured Party”)

 

THIS EXHIBIT A CONSISTS
OF 1 PAGE

 

LISTING OF PLEDGED
SECURITIES

 

	
  OWNER

  	
   

  	
  ISSUER

  	
   

  	
  STOCK CERTIFICATE

  NO./SHARES OF

  COMMON STOCK

  	
   

  	
  AUTHORIZED

  SHARES/OUTSTANDING

  	
   

  
	
  1.   Transafe Corporation

  	
   

  	
  Nu-Metrics, Inc.

  	
   

  	
  #1/366,233

  	
   

  	
  2,000,000
  Common, $1.00 PV /

  366,232 Common Outstanding

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.   Transafe Corporation

  	
   

  	
  Highway Information
  Systems, Inc.

  	
   

  	
  #1/1000

  	
   

  	
  1000 Common,
  $1.00 PV /

  1000 Common

  	
   

  

 

17

SUBSIDIARY STOCK PLEDGE AGREEMENT

(ENERGY ABSORPTION SYSTEMS, INC.)

 

Dated as of September 10, 2004

 

This
Pledge Agreement (as modified from time to time, the “Agreement”) has been
executed by ENERGY
ABSORPTION SYSTEMS, INC., organized
under the laws of the State of Delaware, on its own behalf as Pledgor
(“Pledgor”), with an office at 35 East Wacker Drive, Chicago, Illinois 60601,
in favor of THE NORTHERN TRUST COMPANY, an Illinois banking association, as
secured party and as Agent for itself and the other Lenders (“Lenders”) party
to that Credit Agreement, as defined herein (together with any successor,
assign or subsequent holder, “Secured Party”), with a banking office at 50
South LaSalle Street, Chicago, Illinois 60675. 
Various capitalized terms used in this Agreement have the meanings set
forth in the Section of this Agreement entitled “DEFINITIONS.”

 

WHEREAS,
Quixote Corporation (the “Borrower”) and the Lenders entered into that certain
Credit Agreement, dated as of May 16, 2003, as amended by a First Amendment,
dated as of December 9, 2003, by a Second Amendment as of June 30,
2004 and by a Third Amendment as of the date hereof (the “Credit Agreement”),
pursuant to which Credit Agreement the Lenders have made, (i) Revolving Loans
to the Borrower evidenced by certain Revolving Notes, dated as of
September 10, 2004, in the maximum aggregate principal amount of Thirty
Eight Million Dollars and 00/100 ($38,000,000), executed by the Borrower and
made payable pro rata to the order of the Lenders (the “Revolving Notes”) and
(ii) Term Loans to the Borrower evidenced by certain Term Notes, dated as of
May 16, 2003, in the aggregate principal amount of Twenty Million Dollars and
00/100 ($20,000,000), executed by the Borrower and made payable pro rata to the
order of the Lenders (the “Term Notes”);

 

WHEREAS,
Pledgor is the owner of all of the Membership interests, as described in Exhibit
A attached hereto (the “Securities”), of Energy Absorption Systems, LLC, of
which is a Subsidiary Guarantor under the Credit Agreement;

 

WHEREAS,
Pledgor has issued and is obligated under that Subsidiary Guaranty, dated
December 9, 2003, in favor of Secured Party, under which Subsidiary
Guaranty, Pledgor guaranties the Liabilities, as defined herein, including,
without limitation, the payment and performance of the obligations of Borrower
under the Credit Agreement.

 

WHEREAS,
the Secured Party has requested and the Pledgor has agreed to pledge the
Securities as collateral for the Liabilities, as defined herein.

 

In consideration of Secured Party’s extension of the
financial accommodations and continuation of existing financial accommodations
to Borrower, pursuant to the terms of the Credit Agreement and other valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Pledgor agrees as follows:

 

 

1.                                       DEFINITIONS.

 

(a)                                  As used in this Agreement the following terms
shall have the indicated meanings:

 

“Collateral”—see Section entitled “PLEDGE.”

 

“Constituent Documents”—means the articles or certificate of incorporation,
by-laws, partnership agreement, certificates of limited partnership, limited
liability company operating agreement, limited liability company articles of
organization, trust agreement, and all other documents and instruments
pertaining to the formation and ongoing existence of any person or entity which
is not an individual.

 

“Credit Agreement” means the Credit Agreement, dated as of May 16, 2003,
among the Borrower, the Secured Party and the Lenders party thereto, as amended
by a First Amendment, dated as of December 9, 2003, a Second Amendment,
dated as of June 30, 2004 and a Third Amendment, dated as of
September 10, 2004 and as hereafter amended from time to time.

 

“Event of Default”—see Section entitled “EVENTS OF DEFAULT.”

 

“Guarantor” means any Subsidiary Guarantor, as defined in the Credit
Agreement, any person, or any persons severally, who now or hereafter
guarantees payment or collection of all or any part of the Liabilities or
provides any collateral for the Liabilities.

 

“Intermediary”—see Section entitled “PLEDGE.”

 

“Lender” shall mean the Secured Party for itself and any Lender, a party
to and as defined in the Credit Agreement.

 

“Liabilities”—see Section entitled “LIABILITIES.”

 

“Listed,” as to a security, means traded domestically on any national
securities exchange or in the NASDAQ market.

 

The term “person” includes both individuals and organizations.

 

“Prime Rate” means
that floating rate of interest per year announced from time to time by Secured
Party called its prime rate, which at any time may not be the lowest rate
charged by Secured Party, computed for the actual number of days elapsed on the
basis of a calendar year of 365 or 366 days. 
Changes in the rate of interest resulting from a change in the Prime
Rate shall take effect on the date set forth in each announcement of a change
in the Prime Rate.

 

“Related Document(s)” means any note, agreement, guaranty, security
agreement or other document or instrument previously, now or hereafter
delivered to Secured Party

 

2

 

or
any Lender in connection with the Liabilities, the Credit Agreement, any
Subsidiary Guaranty or this Agreement. The term “related document,” if not
initial-capitalized, means a document related to another referenced document.

 

“Related Party(ies)” means any Guarantor.

 

The term “Secured Party” means the above-indicated Secured Party acting
both for itself and as collateral agent for any Lender (see in particular the
section hereof entitled “Liabilities”).

 

“Unmatured Event of Default” means any event or condition that would
become an Event of Default with notice or the passage of time or both.

 

(b)                                 As used in this Agreement, unless otherwise
specified: the term “including” means “including without limitation”; the term
“days” means “calendar days”; and terms such as “herein,” “hereof” and words of
similar import refer to this Agreement as a whole.  References herein to partners of a
partnership, joint venturers of a joint venture, or members of a limited
liability company, mean, respectively, persons or entities owning or holding
partnership interests, joint venture interests, or membership interests in such
partnership, joint venture or limited liability company.  Terms not defined herein, shall have the
meaning assigned to that term in the Credit Agreement.  Unless otherwise defined herein, all terms
(including those not capitalized) that are defined in the Uniform Commercial
Code of Illinois shall have the same meanings herein as in such Code, as such
Code may be amended from time to time. 
Unless the context requires otherwise, wherever used herein the singular
shall include the plural and vice versa, and the use of one gender shall also
denote the others.  Captions herein are
for convenience of reference only and shall not define or limit any of the
terms or provisions hereof; references herein to sections or provisions without
reference to the document in which they are contained are references to this
Agreement.

 

2.                                       PLEDGE. 
Pledgor hereby assigns, pledges, hypothecates, delivers, sets over and
transfers to Secured Party and grants to Secured Party a continuing security
interest in, for the benefit of Secured Party (as provided in the
Section entitled “Liabilities”), the following, in each case whether
certificated or uncertificated, whether now owned or hereafter acquired,
wherever located (any or all of such, the “Collateral”):

 

(a)                                  Certificated Securities in possession of Secured
Party and not in a Securities Account, which Securities are described in Exhibit
A attached hereto and incorporated herein by reference.

 

(b)                                 With respect to any Collateral referred to
herein:

 

(i)                                     all stock and bond powers, certificates and
instruments; and

 

(ii)                                  all additions, replacements, substitutions,
interest, cash and stock dividends, warrants, options, and other rights and
amounts paid, accrued, received, receivable, or distributed with respect
thereto from time to time, 

 

3

 

(c)                                  With respect to the foregoing, all products and
proceeds thereof, including insurance proceeds and payments under the
Securities Investor Protection Act of 1970, as amended.

 

3.                                       LIABILITIES.

 

The
Collateral shall secure the payment and performance of all obligations and
liabilities of Pledgor:

 

(a)                                  to Secured Party, and to any Lender and its
affiliates, with respect to Hedging Obligations as defined in the Credit
Agreement, howsoever created, evidenced or arising, whether direct or indirect,
absolute or contingent, now due or to become due, or now existing or hereafter
arising, joint, several or joint and several, including obligations under or
with respect to future advances and letters of credit issued by Secured Party
or any Lender for the account of or at the request of Pledgor and all
reimbursement obligations arising therefrom, including, without limitation,
under the Credit Agreement and the Related Documents;

 

(b)                                 to Secured Party under or in connection
with:  (i) the Subsidiary Guaranty by
Pledgor guaranteeing any and all obligations of Borrower to Secured Party; and
(ii) any reasonable expenses (including attorneys’ fees, legal costs and
expenses, and time charges of attorneys who may be employees of Secured Party,
whether in or out of court, in original or appellate proceedings or in
bankruptcy) incurred or paid by Secured Party in connection with the
enforcement or preservation of its rights hereunder or under any Related
Document.

 

(any
or all obligations and liabilities described in the foregoing portion of this
Section, the “Liabilities”).  This
Agreement shall continue and remain in effect notwithstanding that at any
particular time there may be no Liabilities outstanding.

 

4.                                       REPRESENTATIONS AND WARRANTIES.

 

Pledgor
hereby represents and warrants to Secured Party that:

 

(a)                                  Pledgor’s exact legal name is as set forth in the
heading to this Agreement.  If Pledgor is
an organization: Pledgor’s type of organization and jurisdiction of
organization or formation, are as set forth in the preamble to this Agreement;
and Pledgor’s place of business or, if Pledgor has more than one place of
business, Pledgor’s chief executive office is located at the address set forth
above; and Pledgor has never been organized or formed in any jurisdiction other
than the jurisdiction set forth in the preamble to this Agreement.  All Collateral currently is located in one of
the fifty states of the United States of America.  Further, except as and if specifically
disclosed by Pledgor to Secured Party IN WRITING prior to the execution of this
Agreement, during the five (5) years and six months prior to the date of this
Agreement:

 

4

 

(A)                              Pledgor has not been known by any legal name different from the one set
forth in the heading of this Agreement nor has Pledgor been the subject of any
merger, consolidation, or other corporate or organizational reorganization.

 

(B)                                Pledgor’s place of business or, if Pledgor has more than one place of
business, Pledgor’s chief executive office has been at Pledgor’s address set
forth above, except that prior to February 9, 2004, 2004 Pledgor’s chief
executive office was located at One East Wacker Drive, Chicago, Illinois 60601.

 

(b)                                 Pledgor and Borrower are validly existing and in
good standing under the laws of their state of organization or formation, and
are duly qualified, in good standing and authorized to do business in each
jurisdiction where failure to do so might have a material adverse impact on the
assets, condition or prospects of Pledgor. 
The execution, delivery and performance of this Agreement and all
Related Documents are within Pledgor’s powers and have been authorized by all
necessary action required by law and Pledgor’s Constituent Documents.

 

(c)                                  The execution, delivery and performance of this
Agreement and all Related Documents have received any and all necessary
governmental approval, and do not and will not contravene or conflict with any
provision of law, any Constituent Document or any agreement affecting Pledgor
or its property.

 

(d)                                 There has been no material adverse change in the
business, condition, properties, assets, operations or prospects of Pledgor or
any Related Party since the date of the latest financial statements provided by
or on behalf of Pledgor or any Related Party to Secured Party.

 

(e)                                  No financing statement, mortgage, notice of
judgment, or any similar instrument (unless filed on behalf of Secured Party)
covering any of the Collateral is on file in any public office.

 

(f)                                    Pledgor is the lawful owner of and has rights in
or power to transfer all Collateral, free and clear of all liens, pledges,
charges, mortgages, and claims other than any in favor of Secured Party, except
liens for current taxes not delinquent.

 

(g)                                 Pledgor has filed or caused to be filed all
federal, state, and local tax returns that are required to be filed, and has
paid or has caused to be paid all of its taxes, including any taxes shown on
such returns or on any assessment received by it, to the extent that such taxes
have become due.

 

(h)                                 Except for federal and
state securities laws generally applicable to the sale, transfer or redemption
of securities, sale, transfer and redemption of the Collateral by Secured
Party: (A) are not prohibited or regulated by any federal or state law or
regulation or any agreement binding upon Pledgor, including any Constituent
Document; and (B) require no registration or filing with, or consent or
approval of, any governmental body, regulatory authority or securities
exchange.

 

5

 

(i)                                     Pledgor is not an executive officer, director or other “affiliate” (as
contemplated by Rules 144 and 145 of the Federal Securities and Exchange
Commission) of any issuer of any Collateral.

 

(j)                                     The Collateral is duly
and validly authorized and issued, non-assessable, fully paid and paid for, and outstanding.

 

(k)                                  (A)
The execution, delivery and performance of this Agreement and all Related
Documents are in Pledgor’s best interest in its current and future business
operations and will materially benefit Pledgor; and (B) Pledgor has received
adequate, fair and valuable consideration, and at least reasonably equivalent
value, to enter into and perform this Agreement and all Related Documents.

 

(l)                                     The request or application for any Liabilities by
Pledgor shall be a representation and warranty by Pledgor as of the date of
such request or application that: (i) no Event of Default or Unmatured Event of
Default has occurred and is continuing as of such date; and (ii) Pledgor’s
representations and warranties herein and in any Related Document are true and
correct as of such date as though made on such date.

 

5.                                       DEPOSITORIES; SUB-AGENTS AND NOMINEES.

 

(a)           Without limiting any other provision
hereof, Secured Party may at its option from time to time transfer, or cause
any Intermediary to transfer, the Collateral into a “pledge position” at any
depository now or hereafter holding the Collateral, and do or cause to be done,
execute (or cause to be executed) such other documents, and take (or cause to
be taken) such other actions as Secured Party may deem necessary or appropriate
in connection therewith.

 

(b)                                 Secured Party shall have the right to appoint one
or more sub-agents for the purpose of retaining physical possession of any
certificates or instruments representing or evidencing the Collateral, which
may be held (in the discretion of Secured Party) in the name of Secured Party
or any nominee or nominees of Secured Party or a sub-agent appointed by Secured
Party.  In addition, Secured Party shall
at all times have the right to exchange certificates or instruments
representing or evidencing Collateral for certificates or instruments of
smaller or larger denominations for any purpose consistent with its performance
of this Agreement.

 

(c)                                  For the better perfection of Secured Party’s
rights in and to the Collateral and to facilitate implementation of such
rights, following an Event of Default, Pledgor shall, upon written request of
Secured Party, cause all the certificates, notes, documents and other
instruments evidencing, representing or otherwise comprising the Collateral to
be registered or otherwise put into the name of Secured Party or a nominee or
nominees of Secured Party.

 

(d)                                 Pledgor hereby consents and agrees that the
issuers of, or any depository, registrar, transfer agent or similar party for
any of, the Collateral shall be entitled to accept the provisions hereof as
conclusive evidence of the right of Secured Party to effect any transfer
pursuant hereto, notwithstanding any notice or direction to the contrary
heretofore or hereafter

 

6

 

given
by Pledgor or any other person to any such issuer or any such depository,
registrar, transfer agent or similar party.

 

6.                                       VOTING & MISCELLANEOUS RIGHTS.  Unless an Event of Default has occurred and
is continuing, Pledgor may exercise any and all rights (including voting
rights) with respect to the Collateral, subject to the terms of this
Agreement.  If an Event of Default has
occurred and is continuing, Secured Party (and only Secured Party) may exercise
any and all such rights.

 

7.                                       GENERAL COVENANTS.  Pledgor agrees that so long as this Agreement
remains in effect, it will:

 

(a)                                  NOTIFY SECURED PARTY IN WRITING AT LEAST SIXTY
(60) DAYS IN ADVANCE OF:

 

(i)                                     ANY CHANGE WHATSOEVER IN THE NAME OF PLEDGOR;

 

(ii)                                  THE STATE OR JURISDICTION IN WHICH PLEDGOR IS
ORGANIZED OR FORMED OR, IF PLEDGOR IS AN INDIVIDUAL, IN WHICH PLEDGOR’S
PRINCIPAL RESIDENCE IS LOCATED;

 

(iii)                               ANY NEW NAMES UNDER WHICH PLEDGOR INTENDS TO DO BUSINESS; OR

 

(iv)                              ANY NEW ADDRESSES AT OR FROM WHICH PLEDGOR INTENDS TO DO BUSINESS OR TO
KEEP COLLATERAL OF ANY KIND.

 

Pledgor
shall in any event keep all Collateral within one or more states of the United
States of America.

 

(b)                                 Promptly deliver any cash, securities or other
property received with respect to the Collateral, whether as proceeds of the
disposition thereof, dividends with respect thereto, or otherwise, to be held
by Secured Party as Collateral. 
NOTWITHSTANDING THE FOREGOING, UNLESS AN EVENT OF DEFAULT HAS OCCURRED
AND IS CONTINUING, PLEDGOR MAY CONTINUE TO RECEIVE AND RETAIN INTEREST AND
REGULAR CASH DIVIDENDS ON THE COLLATERAL.

 

(c)                                  Defend the Collateral against the claims and
demands of all persons other than Secured Party and promptly pay all taxes,
assessments, and charges upon the Collateral. 
Pledgor agrees not to sign, file, or authenticate, or authorize or
permit the signing, filing or authentication of, any financing statements or
other documents creating or perfecting a lien upon or security interest in any
of the Collateral except in favor of Secured Party, or otherwise create,
suffer, or permit to exist any liens or security interests upon any Collateral
other than in favor of Secured Party, except tax liens, provided that such
liens are removed before related taxes become delinquent.

 

7

 

(d)                                 Sign, file, authenticate, and authorize the
signing, filing and authenticating of, such financing statements and other
documents (and pay the cost of filing and recording the same in all public offices
deemed necessary by Secured Party), and do such other acts, as Secured Party
may request to establish and maintain a valid and perfected security interest
in the Collateral free and clear of all other liens and claims, except tax
liens, provided that such liens are removed before related taxes become
delinquent.

 

(e)                                  Keep at its address for notices set forth above
its records concerning the Collateral, which records shall be of such character
as will enable Secured Party to determine at any time the status of the
Collateral; and permit Secured Party from time to time to inspect, audit, and
make copies of, and extracts from, all records and all other papers in the
possession or control of Pledgor pertaining to the Collateral.

 

(f)                                    Subject to the terms of the Credit Agreement,
provide to Secured Party from time to time such financial statements of and
other information concerning the Collateral, Pledgor, and any Related Party as
Secured Party shall reasonably request.

 

(g)                                 Except if and to the extent specifically
permitted by this Agreement, not sell, transfer, lease, grant a license or
option or similar right with respect to, or otherwise dispose of, or agree to
dispose of, any Collateral.

 

8.                                       EVENTS OF DEFAULT.  The occurrence or continuance of any of the
following shall constitute an “Event of Default”:

 

(a)                                  (i) failure to pay, when and as due, any
principal payable hereunder or in connection with any of the Liabilities in
each case after giving effect to any applicable notice, grace or cure period;
(ii) failure to pay, when and as due, any interest or other amounts payable
hereunder or in connection with any of the Liabilities in each case after
giving effect to any applicable notice; or (iii) failure to comply with or
perform any agreement or covenant of Pledgor contained herein; or

 

(b)                                 any default, event of default, or similar event
shall occur or continue under the Credit Agreement or any Related Document, and
shall continue beyond any applicable notice, grace or cure period set forth in
such Related Document; or

 

(c)                                  the Pledgor or any
Related Party shall fail to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) with respect
to any Indebtedness (as defined in the Credit Agreement) beyond any period of
grace provided with respect thereto, which individually or together with other
such Indebtedness as to which any such failure exists has an aggregate
outstanding principal amount in excess of $2,000,000; or any breach, default or
event of default shall occur, or any other condition shall exist under any
instrument, agreement or indenture pertaining to any such Indebtedness having
such aggregate outstanding principal amount, beyond any period of grace, if
any, provided with respect thereto, if the effect thereof is

 

8

 

to cause an acceleration,
mandatory redemption, a requirement that the Pledgor offer to purchase such
Indebtedness or other required repurchase of such Indebtedness; or

 

(d)                                 any representation, warranty, schedule,
certificate, financial statement, report, notice, or other writing furnished by
or on behalf of Pledgor or any Related Party to Secured Party is false or
misleading in any material respect on the date as of which the facts therein
set forth are stated or certified, in each case as amended by the information
provided in any request or notice delivered by Pledgor to Secured Party
pursuant to Section 7.1 of the Credit Agreement; or

 

(e)                                  this Agreement or any Related Document, including
any guaranty of or pledge of collateral security for the Liabilities, shall be
repudiated or shall become unenforceable or incapable of performance in accord
with its terms; or

 

(f)                                    Pledgor or any Related Party shall fail to
maintain their existence in good standing in their state of organization or
formation or shall fail to be duly qualified, in good standing and authorized
to do business in each jurisdiction where failure to do so might have a
material adverse impact on the assets, condition or prospects of Pledgor or any
Related Party; or

 

(g)                                 Pledgor or any Related Party shall dissolve,
liquidate, merge, consolidate, or cease to be in existence for any reason, or
there shall be any change in any Constituent Document of Pledgor from that in
force on the date hereof which may have a material adverse impact on the
ability of Pledgor to repay the Liabilities; or

 

(h)                                 any person or entity presently not in control of
a Pledgor or Related Party which is not a natural person shall obtain control
directly or indirectly of such a Pledgor or Related Party, whether by purchase
or gift of stock or assets, by contract, or otherwise; or

 

(i)                                     Pledgor shall grant or any person (other than
Secured Party) shall obtain a security interest in any of the Collateral, or
shall file any financing statement purportedly covering any Collateral; Pledgor
or any other person shall perfect (or attempt to perfect) such a security
interest; a court shall determine that Secured Party does not have a
first-priority security interest in any of the Collateral or in any other
assets constituting security for the Liabilities, enforceable in accord with
this Agreement (as to the Collateral) or the related collateral documents (as
to such other assets); or any notice of a federal tax lien against Pledgor or
any Related Party shall be filed with any public recorder; or

 

(j)                                     (without limiting any other provision of this
Agreement or any Related Document) there shall be any material loss or
depreciation in the value of any of the Collateral for any reason, or Secured
Party shall otherwise reasonably deem itself insecure with respect to the
Collateral; or, unless expressly permitted by this Agreement or the Related
Documents, all or any part of any of the Collateral or any direct, indirect,

 

9

 

legal,
equitable or beneficial interest therein is assigned, transferred or sold
without Secured Party’s prior written consent;

 

(k)                                  An
involuntary case shall be commenced against the Pledgor or any Related Party
and the petition shall not be dismissed, stayed, bonded or discharged within
sixty (60) days after commencement of the case; or a court having jurisdiction
in the premises shall enter a decree or order for relief in respect of the
Pledgor or any Related Party, under any applicable bankruptcy, insolvency or
other similar law now or hereinafter in effect; or any other similar relief
shall be granted under any applicable federal, state, local or foreign law; or

 

(l)                                     A
decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over the Pledgor or any Related Party or
over all or a substantial part of the property of the Pledgor or any Related
Party shall be entered; or an interim receiver, trustee or other custodian of
the Pledgor or any Related Party or of all or a substantial part of the
property of the Pledgor or any Related Party shall be appointed or a warrant of
attachment, execution or similar process against any substantial part of the
property of the Pledgor or any Related Party, shall be issued and any such
event shall not be stayed, dismissed, bonded or discharged within sixty (60)
days after entry, appointment or issuance; or

 

(m)                               Pledgor
or any Related Party shall (i) commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, (ii)
consent to the entry of an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such law,
(iii) consent to the appointment of or taking possession by a receiver, trustee
or other custodian for all or a substantial part of its property, (iv) make any
assignment for the benefit of creditors or (v) take any corporate action to
authorize any of the foregoing.

 

9.                                       DEFAULT REMEDIES.

 

(a)                                  Notwithstanding any provision of any document or
instrument evidencing or relating to any Liability: (i) upon the occurrence and
during the continuance of any Event of Default specified in subsections (a)-(j)
of the Section entitled “EVENTS OF DEFAULT,” Secured Party at its option
may declare the Liabilities immediately due and payable without notice or
demand of any kind; and (ii) upon the occurrence of any Event of Default
specified in subsections (k)-(m) of the Section entitled “EVENTS OF
DEFAULT,” the Liabilities shall be immediately and automatically due and
payable without action of any kind on the part of Secured Party.  Upon the occurrence and during the
continuance of any Event of Default, Secured Party may exercise any rights and
remedies under this Agreement, any Related Document or other document or
instrument (including any Related Document evidencing Liabilities or pertaining
to Collateral), and at law or in equity.

 

(b)                                 If any Event of Default shall have occurred and
be continuing, then, in addition to having the right to exercise any rights and
remedies of a secured party upon default

 

10

 

under
the Uniform Commercial Code in effect in Illinois and any State in which any
Collateral is located, Secured Party may, in its sole discretion:

 

(i)                                     without being required to give any prior notice
to Pledgor apply the cash (if any) then held by it hereunder toward the
Liabilities in such order as Secured Party shall determine in its sole
discretion; and

 

(ii)                                  if there shall be no such cash or the cash so
applied shall be insufficient to pay all obligations in full, sell the
Collateral, or any part thereof, at any public or private sale, for cash, upon
credit or for future delivery, as Secured Party shall deem appropriate,
provided, however, that Pledgor shall be credited with proceeds thereof only
when the proceeds are actually received in cash by Secured Party, and such sale
shall be deemed commercially reasonable. 
Secured Party shall be authorized at any such sale (to the extent it
deems it advisable to do so, in its sole discretion) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral then being sold for their own account for
investment and not with a view to the distribution or resale thereof, and upon
consummation of any such sale Secured Party shall have the right to assign,
transfer and deliver to the purchasers thereof the Collateral so sold.  Each such purchaser at any such sale shall
hold the property sold absolutely free from any claim or right on the part of
Pledgor.  Pledgor hereby waives (to the
extent permitted by law) all rights of redemption, stay and/or appraisal which
it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. 
Secured Party has no obligation to marshal Collateral or to clean up or
otherwise prepare Collateral for sale, and may specifically disclaim any
warranties as to the Collateral, including those of title, merchantability, and
fitness for a particular purpose. 
Secured Party may comply with any applicable local, state or federal law
requirements in connection with a disposition of Collateral, and compliance
will not be considered adversely to affect the commercial reasonableness of any
sale of Collateral.  Pledgor grants to
Secured Party the right to enter into or on any premises where Collateral may
be located for the purposes of exercising any remedies upon the occurrence of
an Event of Default.  Secured Party shall
be deemed to have exercised reasonable care in the custody and preservation of
Collateral if it takes such action for that purpose as Pledgor requests in
writing, but failure to do so shall not be deemed a failure to exercise
ordinary care; no failure of Secured Party to preserve or protect any right
with respect to Collateral against prior parties, or to do any act with respect
to preservation of Collateral not so requested by Pledgor, shall be deemed of
itself a failure to exercise reasonable care in the custody or preservation of
Collateral.  To the extent that notice of
sale shall be required to be given by law, Secured Party shall give Pledgor at
least ten days’ written notice of any such public sale or the date after which
any such private sale or sales will be held. 
Secured Party shall not be obligated to make any sale of Collateral if
it shall determine not to do so, regardless of the fact that notice of sale of
Collateral may have been given.  Secured
Party may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned

 

11

 

from
time to time by announcement at the time and place fixed for sale, and such
sale may, without further notice, be made at the time and place to which the
same was so adjourned.  In case sale of
all or any part of the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by Secured Party until the sale price is
paid by the purchaser thereof, but Secured Party shall not incur any liability
in case any such purchaser shall fail to take up and pay for the Collateral so
sold; in the case of any such failure, such Collateral may be sold again upon
like notice.  As an alternative to
exercising the power of sale herein conferred upon it, Secured Party may
proceed by a suit at law or in equity to foreclose this Agreement and to sell
the Collateral, or any portion thereof, pursuant to a judgment or decree of a
court of competent jurisdiction.  Except
as and if otherwise required by law, any proceeds of the Collateral sold or
disposed of pursuant hereto shall be applied toward the Liabilities in such
order as Secured Party shall determine in its sole discretion.  Any balance remaining shall be returned to
Pledgor.

 

(c)                                  Secured Party may, by written notice to Pledgor,
at any time and from time to time, waive any Event of Default or Unmatured
Event of Default, which shall be for such period and subject to such conditions
as shall be specified in any such notice. 
In the case of any such waiver, Secured Party and Pledgor shall be
restored to their former position and rights hereunder, and any Event of
Default or Unmatured Event of Default so waived shall be deemed to be cured and
not continuing; but no such waiver shall extend to or impair any subsequent or
other Event of Default or Unmatured Event of Default.  No failure to exercise, and no delay in
exercising, on the part of Secured Party of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. 
The rights and remedies of Secured Party herein provided are cumulative
and not exclusive of any rights or remedies provided by law.

 

(d)                                 As to any Liabilities owed to any Lender, Secured
Party shall act as collateral agent for such Lender and shall take or refrain
from taking action, and shall distribute proceeds of Collateral and other
amounts recovered hereunder or under any Related Document, between such Lender
and Secured Party as they shall from time to time agree.  Except as and if required by law Pledgor shall
have no obligation or right whatsoever to inquire into any agreements or
arrangements between Secured Party and any Lender as to Secured Party’s acting
as collateral agent for any Lender.

 

10.                                 RIGHTS OF SECURED PARTY.  Without limiting any other rights Secured
Party has under the law, Secured Party may, from time to time, at its option
(but shall have no duty to):

 

(a)                                  perform any agreement of Pledgor hereunder that
Pledgor shall have failed to perform;

 

(b)                                 take any other action which Secured Party deems
necessary or desirable for the preservation of the Collateral or Secured
Party’s interest therein and the carrying out of this Agreement, including: (i)
any action to collect or realize upon the

 

12

 

Collateral;
(ii) the discharge of taxes, liens, security interests or other encumbrances at
any time levied or placed on the Collateral; (iii) the discharge or keeping
current of any obligation of Pledgor having effect on the Collateral; (iv)
receiving, endorsing and collecting all checks and other orders for the payment
of money made payable to Pledgor representing any dividend, interest payment or
other distribution payable or distributable in respect of the Collateral or any
part thereof, and giving full discharge for the same; and (v) causing any person
or entity having possession of any Collateral to acknowledge that such person
or entity holds such Collateral for the benefit of Secured Party; and

 

(c)                                  sign, file, authenticate, and authorize the
signing, filing and authentication of, such financing statements and other
documents respecting any right of Secured Party in the Collateral, in any and
all jurisdictions as Secured Party shall determine in its discretion.

 

Pledgor
hereby appoints Secured Party as Pledgor’s attorney in fact, which appointment
is and shall be deemed to be irrevocable and coupled with an interest, for
purposes of performing acts and signing and delivering any agreement, document,
or instrument, on behalf of Pledgor in accordance with this Section.  Pledgor will reimburse Secured Party for all
reasonable expenses so incurred by Secured Party within 10 business days of
receipt of a written request for reimbursement. 
Amounts unpaid by Pledgor after such 10 business day period shall bear
interest thereon at a rate per year equal to two percent (2%) in addition to
the Prime Rate until paid.

 

11.                                 WAIVER OF DEFENSES.  Pledgor irrevocably waives presentment,
protest, notice of intent to accelerate, demand, notice of dishonor or default,
notice of acceptance of this Agreement, notice of any loans made, extensions
granted or other action taken in reliance hereon, and all other demands and
notices of any kind in connection with this Agreement or the Liabilities.

 

12.                                 SECURED PARTY MAY ALSO BE INTERMEDIARY OR
TRUSTEE.  Pledgor hereby irrevocably
waives, releases and forever relinquishes any claim or right of any nature
whatsoever based upon the fact that Intermediary or a trustee of any Pledgor or
Guarantor which is a trust is or may be Secured Party itself or a Secured Party
Affiliate, and hereby irrevocably consents to any such circumstance.  The rights and powers of Secured Party shall
not in any way be restricted by reason of any such present or future
circumstance.

 

13.                                 FURTHER ASSURANCES.  Pledgor agrees to do (or cause to be done)
such further acts and things, and to execute and deliver (or cause to be
executed and delivered) such additional conveyances, assignments, agreements,
and instruments, as Secured Party may at any time request in connection with
the administration or enforcement of this Agreement or related to the
Collateral or any part thereof or in order better to assure and confirm unto
Secured Party its rights, powers and remedies hereunder.

 

14.                                 INVESTMENT DECISIONS.  Pledgor agrees that, except for a duty of
good faith, Secured Party shall have no duty to Pledgor with regard to
decisions which Secured Party may make with regard to purchasing, holding or
selling Collateral while the same shall be under Secured Party’s control.

 

13

 

15.                                 NOTICES. 
All notices, requests and demands to or upon the respective parties
hereto shall be deemed to have been given or made five business days after a
record has been deposited in the mail, postage prepaid, or one business day
after a record has been deposited with a recognized overnight courier, charges
prepaid or to be billed to the sender, or on the day of delivery if delivered
manually with receipt acknowledged, in each case addressed or delivered if to
Secured Party to its banking office indicated above (Attention: Banking) and if
to Pledgor to its address set forth above, or to such other address as may be
hereafter designated in writing by the respective parties hereto by a notice in
accord with this Section.

 

16.                                 MISCELLANEOUS. 
This Agreement, the Related Documents, and any document or instrument
executed in connection herewith or therewith, unless in each case otherwise
specifically provided therein: (i) shall be governed by and construed in
accordance with the internal law of the State of Illinois, except to the extent
if any that the Uniform Commercial Code of the State of Illinois provides for
the application of the law of a different State; and (ii) shall be deemed to
have been executed in the State of Illinois. 
This Agreement shall bind Pledgor, its(his)(her) heirs, trustees
(including successor and replacement trustees), executors, personal
representatives, successors and assigns, as well as all persons and entities
who become bound as a Pledgor to this Agreement, and shall inure to the benefit
of Secured Party, its successors and assigns, except that neither Pledgor nor
any person or entity who or which becomes bound as a Pledgor hereto may
transfer or assign any rights or obligations hereunder without the prior
written consent of Secured Party. 
Pledgor agrees to pay upon written demand all reasonable expenses
(including attorneys’ fees, legal costs and expenses, and time charges of
attorneys who may be employees of Secured Party, in each case whether in or out
of court, in original or appellate proceedings or in bankruptcy) incurred or
paid by Secured Party or any holder hereof in connection with the enforcement
or preservation of its rights hereunder, under any Related Document, or under
any document or instrument executed in connection herewith or therewith.  If there shall be more
than one person or entity constituting Pledgor, each of them shall be
primarily, jointly and severally liable for all obligations hereunder.  This Agreement may be executed in two or more
counterparts, and (if there is more than one party) by each party on separate
counterparts, each of which shall be deemed an original but which together
shall constitute one and the same instrument.

 

17.                                 WAIVER OF JURY TRIAL, ETC. PLEDGOR AND (BY ITS
ACCEPTANCE HEREOF AS PROVIDED BELOW) SECURED PARTY HEREBY IRREVOCABLY AGREE
THAT ALL SUITS, ACTIONS OR OTHER PROCEEDINGS WITH RESPECT TO, ARISING OUT OF OR
IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED DOCUMENT SHALL BE SUBJECT TO
LITIGATION IN COURTS HAVING SITES WITHIN OR JURISDICTION OVER THE STATE OF
ILLINOIS AND THE COUNTY IN SUCH STATE WHERE THE ABOVE-INDICATED OFFICE OF
SECURED PARTY IS LOCATED.  PLEDGOR AND
(BY ITS ACCEPTANCE HEREOF AS PROVIDED BELOW) SECURED PARTY HEREBY CONSENT AND
SUBMIT TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED IN OR
HAVING JURISDICTION OVER SUCH COUNTY AND STATE, AND HEREBY IRREVOCABLY WAIVE
ANY RIGHT THEY OR ANY OF THEM MAY HAVE TO REQUEST OR DEMAND TRIAL BY JURY,
TO TRANSFER OR CHANGE THE VENUE OF ANY SUIT, ACTION OR

 

14

 

OTHER
PROCEEDING BROUGHT IN ACCORDANCE WITH THIS SECTION, OR TO CLAIM THAT ANY SUCH
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  NO PARTY HERETO MAY SEEK OR RECOVER PUNITIVE
OR CONSEQUENTIAL DAMAGES IN ANY PROCEEDING BROUGHT UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY RELATED DOCUMENT.

 

15

 

IN
WITNESS HEREOF, the parties hereto have executed this Pledge Agreement as of
the date first above written.

 

 

	
  ENERGY
  ABSORPTION SYSTEMS, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Daniel P. Gorey

  	
   

  	
   

  
	
  Name:

  	
  Daniel P. Gorey

  	
   

  
	
  Title:

  	
  Vice President and
  Treasurer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ACCEPTED:

  	
   

  
	
   

  	
   

  
	
  THE
  NORTHERN TRUST COMPANY,

  	
   

  
	
  for
  itself and as Agent on behalf of Lenders

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jon W. Kreidler

  	
   

  	
   

  
	
  Name:

  	
  Jon
  W. Kreidler

  	
   

  
	
  Title:

  	
  Officer

  	
   

  
					

 

16

 

EXHIBIT A TO

SUBSIDIARY STOCK
PLEDGE AGREEMENT EXECUTED

BY ENERGY
ABSORPTION SYSTEMS, INC. (“ Pledgor”)

IN FAVOR OF THE
NORTHERN TRUST COMPANY,

AS AGENT FOR THE
LENDERS (“Secured Party”)

 

THIS EXHIBIT A CONSISTS OF 1 PAGE

 

LISTING OF PLEDGED
SECURITIES

 

	
  OWNER

  	
   

  	
  ISSUER

  	
   

  	
  STOCK CERTIFICATE

  NO./SHARES OF COMMON

  STOCK

  	
   

  	
  AUTHORIZED

  SHARES/OUTSTANDING

  	
   

  
	
  1.                    Energy
  Absorption Systems, Inc. (sole managing member)

  	
   

  	
  Energy
  Absorption Systems LLC

  	
   

  	
  #1/100%
  Membership Interest

  	
   

  	
  N/A

  	
   

  

 

17

 

CALIFORNIA
MORTGAGE

 

(Space above this
line for Recorder’s use)

 

DEED OF TRUST,
ASSIGNMENT OF RENTS, 

SECURITY AGREEMENT AND FIXTURE FILING

 

Tax Lot No.:

 

 

Parcel Identification
No.                     Verified
by                      County
on this 10th day of September, 2004

 

By:

 

 

Mail/Box
to:   Fischel & Kahn, Ltd., 190 S. LaSalle Street, Suite
2850, Chicago, IL 60603; Attn:  Edward F.
Dobbins

 

This
instrument was prepared by:  Fischel
& Kahn, Ltd., 190 S. LaSalle Street, Suite 2850, Chicago, IL 60603;
Attn:  Edward F. Dobbins

 

Brief
description for the Index:  APN
17-200-14-01; 17-200-13-01 ptn.; 17-200-17-01 ptn., 17-200-18-01 ptn.

 

 

THIS DEED OF TRUST,
ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this “Deed of
Trust”) is made effective as of the 10th day of
September 2004, by ENERGY ABSORPTION SYSTEMS, INC., a Delaware corporation
(“Grantor”), whose address is 35 East Wacker Drive, Chicago, Illinois
60601, to CHICAGO TITLE INSURANCE COMPANY (herein “Trustee”) in favor
and for the benefit of THE NORTHERN TRUST COMPANY, an Illinois banking
corporation, as Administrative Agent for itself and the Lender party to that
Credit Agreement, as defined herein, whose address is 50 South LaSalle Street,
Chicago, Illinois 60675 (herein “Beneficiary”).

 

RECITALS

 

I.                                         The
Bank and the Lenders, as herein defined, have made or may make loans to
Mortgagor and may extend other financial accommodations to Quixote Corporation
(the “Borrower”) in an aggregate principal amount of $58,000,000.00
(collectively, the “Loans”).  The Loans
consist of (i) revolving loans (the “Revolving Loans”), the outstanding
principal balance of which may increase or decrease from time to time, but at
no time shall the outstanding principal balance of such Revolving Loan exceed
$38,000,000.00 and (ii) term loans (the “Term Loans”) in the original
principal sum of $20,000,000.00.  Certain
repayment obligations of Mortgagor with respect to the Revolving Loans are
evidenced by Borrower’s Revolving Notes,

 

 

dated September 10,
2004, payable pro rata to the Lenders in the aggregate principal amount of
$38,000,000.00 (said notes, with all allonges, amendments, supplements,
modifications and replacements thereof, being sometimes referred to in this
Mortgage as the “Revolving Notes”). 
Certain repayment obligations of Mortgagor with respect to the Term
Loans are evidenced by the Borrower’s Term Notes dated May 16, 2003, payable
pro rata to the Lenders in the aggregate principal amount of $20,000,000.00
(said notes, with all allonges, amendments, supplements, modifications and
replacements thereof, being sometimes referred to in this Mortgage as the “Term
Notes”.  The Revolving Notes and the Term
Notes are sometimes referred to herein collectively as the “Notes.”  The terms of the Loans are governed by a
certain Credit Agreement, dated as of May 16, 2003, as amended by a First
Amendment, dated as of December 9, 2003 (the “First Amendment”) and by a
Second Amendment, dated as of June 30, 2004 (the “Second Amendment”) and a
Third Amendment, dated as of the date hereof (said Credit Agreement, together
with all amendments, supplements, modifications and replacements thereof, being
referred to in this Mortgage as the “Credit Agreement”), by and among the
Borrower, the Lenders party thereto (“Lenders”) and The Northern Trust Company
as Administrative Agent for itself and the Lenders.  In connection with the Credit Agreement, the
Mortgagor executed and delivered to the Administrative Agent, as a condition to
the Credit Agreement, that certain Subsidiary Guaranty, dated as of May 16,
2003, as reaffirmed by the First Amendment, Second Amendment and Third
Amendment, in favor of the Administrative Agent for the ratable benefit of the
Lenders (the “Subsidiary Guaranty”).  The
terms and provisions of the Notes and the Credit Agreement are hereby
incorporated by reference in this Mortgage. 
Capitalized terms not otherwise defined in this Mortgage shall have the
meaning ascribed to them in the Credit Agreement.

 

II.                                     This
Mortgage is given to secure the Subsidiary Guaranty, one or more Term Loans,
Revolving Loans and Reimbursement Obligations and secures not only present
indebtedness but also future advances, whether such future advances are
obligatory or are to be made at the option of Lenders, or otherwise as are to
be made within twenty (20) years of the date hereof.  The amount of indebtedness secured hereby may
increase or decrease from time to time; provided, however the principal amount
of such indebtedness shall not at one time exceed the amount of $58,000,000
plus interest thereon, and other costs, amounts and disbursements as provided
herein and in the other Loan Documents (hereinafter defined).

 

Grantor is executing and
delivering this Deed of Trust in order to secure Borrowers obligations under
the Notes and Grantor’s obligations under the Subsidiary Guaranty and this Deed
of Trust in favor of Beneficiary.

 

NOW THEREFORE, in
consideration of the foregoing, Grantor hereby irrevocably grants, conveys,
transfers and assigns to Trustee, its successors and assigns, in trust for the
use and benefit of Beneficiary, with power of sale and right of entry and
possession, all of Grantor’s present and future estate, right, title and
interest in, to and under the following described property (herein all of the
property described in clauses (A) through (G) below is referred to as the “Mortgaged
Property”):

 

A.                                   The
Land;

 

2

 

B.                                     TOGETHER
with all present and future structures, buildings and improvements now existing
or hereafter erected on the aforesaid property, all easements, rights and
appurtenances thereto or used in connection therewith, all wastewater capacity
reservations, if any, other rights relating to sewage treatment capacity, water
capacity and utilities serving the aforesaid property or improvements thereon,
all rents, royalties, issues, profits, revenues, income and other benefits
thereof or arising from the use or enjoyment of all or any portion thereof
(subject, however, to the rights and authorities given herein to Grantor to
collect and apply such rents, royalties, issues, profits, revenues, income and
other benefits), all interests in and rights, royalties and profits in
connection with all minerals, oil and gas and other hydrocarbon substances
thereon or therein, development rights or credits, air rights, water, water
rights (whether riparian, appropriative, or otherwise, and whether or not
appurtenant) and water stock, all intangible property and rights relating to
the aforesaid property or the operation thereof and all “general intangibles”
and all “payment intangibles” as such terms may be defined in Article 9 of
the Illinois Uniform Commercial Code as in effect from time to time (the “UCC”),
or used in connection therewith, including without limitation, all fixtures,
machinery, equipment, building materials, appliances and goods of every nature
whatsoever (herein collectively called “equipment and other personal property”)
now or hereafter located in, or on, or attached or affixed to, or used or
intended to be used in connection with, the aforesaid property, including
replacements thereof and additions thereto, which shall, to the fullest extent
permitted by law and for the purposes of this Deed of Trust, be deemed to be
part and parcel of, and appropriated to the use of, the Land and, whether
affixed or annexed thereto or not, be deemed conclusively to be real property
and conveyed by this Deed of Trust, and Grantor agrees to execute and deliver,
from time to time, such further instruments and documents as may be required by
Beneficiary to confirm the lien of this Deed of Trust on any of the foregoing;

 

C.                                     TOGETHER
with all rights to applications, architectural and engineering plans,
specifications and drawings (including, without limitation, as-built drawings),
which arise from or relate to the Land or to any business now or later to be
conducted on it by the Grantor, or to the Land and Improvements thereon;

 

D.                                    TOGETHER
WITH and any and all licenses, permits, authorizations, entitlements, consents
and approvals theretofore or hereafter issued by any and all governmental
authorities in connection with the operation, development, use or occupancy of
the Land (collectively, “Entitlements”);

 

E.                                      TOGETHER
with all awards of damages and all other compensation payable directly or
indirectly because of a condemnation, proposed condemnation or taking for
public or private use which affects all or part of the Mortgaged Property, or
for damage or injury to or decrease in value of all or part of the Mortgaged
Property or any interest in it; and all proceeds of any insurance policies
payable because of loss sustained to all or part of the Mortgaged Property; and
all interest which may accrue on any of the foregoing;

 

F.                                      TOGETHER
with any and all claims and causes of action for loss, damage or environmental
contamination to all or any portion of the Mortgaged Property

 

3

 

or against any and all
tenants for breach of their respective leases or for any loss, damage or
environmental contamination resulting from any such tenant’s activities;

 

G.                                     TOGETHER
with all proceeds, including all claims to and demands for them, of the
voluntary or involuntary conversion of any of the Land, Improvements or the
other Mortgaged Property into cash or liquidated claims, including proceeds of
or from all present and future fire, hazard or casualty insurance policies and
all condemnation awards or payments now or later to be made by any public body
or decree by any court of competent jurisdiction for any taking or in
connection with any condemnation or eminent domain proceeding, and all causes
of action and their proceeds for any damage or injury to the Land, Improvements
or the other property described above or any part of them, or breach of
warranty in connection with the construction of the Improvements, including
causes of action arising in tort, contract, fraud or concealment of a material
fact.

 

TO HAVE AND TO HOLD the
Mortgaged Property, unto Trustee, forever, to secure the payment of the
Indebtedness and performance of the obligations described below, and Grantor
does hereby bind Grantor and Grantor’s heirs, personal representatives,
successors and assigns, to warrant and forever defend the Mortgaged Property
unto Trustee, forever, against the claim or claims of all persons whomsoever
claiming or to claim the same, or any part thereof and Grantor hereby covenants
with Trustee and Beneficiary that it is seized of the Premises in fee simple,
has the right to convey the same in fee simple, that title is marketable and
free and clear of all encumbrances, except for exceptions approved by
Beneficiary in writing;

 

FOR THE PURPOSE OF
SECURING the following obligations (sometimes hereinafter referred to as the “Secured
Obligations”):

 

(a)                                  The
repayment and performance of Grantor’s Indebtedness and obligations under the
Subsidiary Guaranty, and all extensions, renewals, modifications, amendments
and replacements thereof;

 

(b)                                 The
payment and performance of Grantor’s indebtedness and obligations under this
Deed of Trust;

 

(c)                                  The
payment and performance of Borrower’s obligations under the Credit Agreement,
the Notes which by their express terms survive the Closing of the transaction
contemplated thereby;

 

(d)                                 The
payment of all other sums which may be advanced by or otherwise be due to
Trustee or Beneficiary under any provision of this Deed of Trust or to protect
the security of this Deed of Trust or under any other instrument or document
referred to in clause (e) below, with interest thereon at the rate
provided herein or therein;

 

(e)                                  The
performance of each and every one of the covenants and agreements of Grantor
contained (i) herein, and (ii) in the Notes; and

 

4

 

(f)                                    The
repayment of any other loans or advances, including, without limitation,
advance by Beneficiary to protect its interests hereunder, with interest
thereon, hereafter made by Beneficiary (herein “Future Advance”).

 

ARTICLE I

COVENANTS OF GRANTOR

 

To protect the security
of this Deed of Trust, Grantor covenants and agrees as follows:

 

1.1                                 Performance
of Obligations Secured. Grantor shall promptly pay when due the principal
of and any interest on the Indebtedness evidenced by the Subsidiary Guaranty,
Notes, the principal of and interest on any Future Advances, and any late
charges provided for in the Notes or herein, and shall further perform fully
and in a timely manner all other obligations of Grantor contained herein, and
of Borrower on the Notes and under the Credit Agreement.  All sums payable by Grantor hereunder shall
be paid without demand, counterclaim, offset, deduction or defense.  Grantor waives all rights now or hereafter
conferred by statute or otherwise to any such demand, counterclaim, setoff,
deduction or defense.

 

1.2                                 Insurance.  Grantor shall keep all improvements located
on the Land, now or hereafter erected, constantly insured for the benefit of
the Beneficiary against loss by fire, windstorm and any other casualties and
contingencies, in such manner and with such companies and in such amounts, not
less than that amount necessary to pay the sum secured by this Deed of Trust,
and as may be satisfactory to the Beneficiary. 
Additionally, Grantor shall maintain liability insurance on the
Mortgaged Property in an amount not less than $2,750,000.  All insurance policies required hereunder shall
name Beneficiary as an additional insured, and as a loss payee.  All such insurance policies may be canceled
or modified only upon not less than thirty (30) days’ prior written notice to
Beneficiary.  Grantor shall purchase such
insurance, pay all premiums therefor, and shall deliver to Beneficiary such
policies along with evidence or premium payments as long as the Notes secured
hereby remain unpaid.  If Grantor fails
to purchase such insurance, pay premiums therefor of deliver said policies
along the evidence of payment of premiums thereon, then Beneficiary, at its
option, may purchase such insurance. 
Such amounts paid by Beneficiary shall be added to the principal of the
Notes secured by this Deed of Trust, and shall be due and payable upon demand
of Beneficiary.  All proceeds from any
insurance so maintained shall at the option of Beneficiary be applied to the
debt secured hereby or to the repair or restoration of any improvements located
on the Land.

 

1.3                                 Condemnation
and Insurance Proceeds.

 

(a)                                  The
proceeds of any award or claim for damages, direct or consequential, in connection
with any condemnation or other taking of or damage or injury to the Mortgaged
Property, or any part thereof, or for conveyance in lieu of condemnation, are
hereby assigned to and shall be paid to Beneficiary.  In addition, all causes of action, whether
accrued before or after the date of this Deed of Trust, of all types for
damages or injury to the Mortgaged Property or any part thereof, or in
connection with any transaction financed by funds loaned to Grantor by
Beneficiary and secured hereby, or in connection with or affecting the
Mortgaged Property or

 

5

 

any part thereof,
including without limitation causes of action arising in tort or contract and
causes of action for fraud or concealment of a material fact, are hereby
assigned to Beneficiary as additional security, and the proceeds thereof shall
be paid to Beneficiary.  Notwithstanding
such assignment, Grantor shall have the right, prior to an Event of Default, to
prosecute such causes of action. 
Following an Event of Default, Beneficiary may at its option appear in
and prosecute in its own name any action or proceeding to enforce any such
cause of action and may make any compromise or settlement thereof.  Grantor, immediately upon obtaining knowledge
of the institution of any proceedings relating to condemnation or other taking
of or damage or injury to the Mortgaged Property or any portion thereof, or
knowledge of any casualty damage to the Mortgaged Property or damage in any
other manner, will immediately notify Beneficiary in writing.  Beneficiary may participate in any such
proceedings and may join Grantor in adjusting any loss covered by
insurance.  Any compromise or settlement
of any cause of action which may give rise to proceeds in which Beneficiary has
an interest shall be subject to Beneficiary’s reasonable approval thereof.

 

(b)                                 In
the event of any taking of or damage or injury to the Mortgaged Property, all
proceeds under Section 1.3 shall be paid to Beneficiary (subject
only to the rights of any third parties having a prior and superior lien
thereon) and applied to the Indebtedness under the Notes and to reimbursement
Beneficiary for any costs and expenses incurred in connection with such event,
including attorneys’ fees.

 

(c)                                  In
the event of any casualty affecting or injury to the Mortgaged Property, all
proceeds under Section 1.3 shall be payable to Beneficiary, and
Grantor hereby authorizes and directs any affected insurance company to make
payment of such proceeds directly to Beneficiary.

 

1.4                                 Taxes,
Liens and Other Items.  Grantor shall
pay all taxes, bonds, assessments, fees, liens, charges, fines, impositions and
any and all other items which are attributable to or affect the Mortgaged
Property and which may attain a priority over this Deed of Trust (collectively,
the “Impositions”) by making payment prior to delinquency directly to
the payee thereof.  Grantor shall
promptly discharge any lien which has or may attain priority over this Deed of
Trust.

 

1.5                                 Rents
and Profits.

 

(a)                                  All
of the rents, royalties, issues, profits, revenue, income and other benefits of
the Mortgaged Property arising from the use or enjoyment of all or any portion
thereof or from any lease or agreement pertaining thereto (the “Rents and
Profits”), whether now due, past due, or to become due, and including all
prepaid rents and security deposits, are hereby absolutely, presently and
unconditionally assigned, transferred, conveyed and set over to Beneficiary to
be applied by Beneficiary in payment of the principal and interest and all
other sums payable on the Subsidiary Guaranty or the Notes, and of all other
sums payable under the Subsidiary Guaranty or the Notes and this Deed of
Trust.  Prior to the happening of any
Event of Default as set forth in Article II hereof, Grantor shall have a
license to collect and receive all Rents and Profits, which license shall be
terminable at the sole option of Beneficiary, without regard to the adequacy of
its security hereunder and without notice to or demand upon Grantor, upon the
occurrence of any Event of Default.

 

6

 

It is understood and
agreed that neither the foregoing assignment of Rents and Profits to
Beneficiary nor the exercise by Beneficiary of any of its rights or remedies
under Article III hereof shall be deemed to make Beneficiary a
“mortgagee-in-possession” or otherwise responsible or liable in any manner with
respect to the Mortgaged Property or the use, occupancy, enjoyment or operation
of all or any portion thereof, unless and until Beneficiary, in person or by
agent, assumes actual possession thereof. 
Nor shall appointment of a receiver for the Mortgaged Property by any
court at the request of Beneficiary or by agreement with Grantor, or the
entering into possession of the Mortgaged Property or any part thereof by such
receiver, be deemed to make Beneficiary a mortgagee-in-possession or otherwise
responsible or liable in any manner with respect to the Mortgaged Property or
the use, occupancy, enjoyment or operation of all or any portion thereof.

 

1.6                                 Security
Agreement.  This Deed of Trust is
intended to be a security agreement pursuant to Article 9 of the UCC for
(i) any and all items of personal property specified above as part of the
Mortgaged Property which, under applicable law, may be subject to a security
interest pursuant to Article 9 of the UCC and which are not herein
effectively made part of the real property, and (ii) any and all items of
property specified above as part of the Mortgaged Property which, under
applicable law, constitute fixtures and may be subject to a security interest
under Article 9 of the UCC; and Grantor hereby grants Beneficiary a
security interest in said property, and in all additions thereto, substitutions
therefor and proceeds thereof, for the purpose of securing all indebtedness and
other obligations of Grantor now or hereafter secured by this Deed of
Trust.  Grantor hereby authorizes
Beneficiary to file and/or record applicable financing statements covering the
Mortgaged Property (and to file any continuation statements as necessary).  Grantor shall pay all costs of filing such
statements, renewals, and releases thereof. 
Upon the occurrence of any default of Grantor hereunder, Beneficiary
shall have the rights and remedies of a secured party under the UCC, as well as
all other rights and remedies available at law or in equity, and, at
Beneficiary’s option, Beneficiary may also invoke the remedies provided in Article III
of this Deed of Trust as to such property.

 

1.7                                 Further
Encumbrances or Sales.  If the
Grantor shall take any of the following actions without Beneficiary’s prior
written consent, such action shall constitute an Event of Default
hereunder:  (i) if Grantor shall execute
or deliver any pledge, security agreement, mortgage, deed of trust or other
instrument of hypothecation, covering all or any portion of the Mortgaged
Property or any interest therein, or (ii) if Grantor shall sell, contract to
sell, lease with option to purchase, convey, alienate, transfer or otherwise
dispose of all or any portion of the Mortgaged Property or any interest
therein, whether voluntarily or involuntarily, by operation of law or otherwise
(including, without limitation, any foreclosure sale or deed in lieu of
foreclosure under any mortgage or deed of trust the lien of which is junior to
this Deed of Trust, whether or not Beneficiary has approved such mortgage or
deed of trust).

 

1.8                                 Preservation
and Maintenance of the Mortgaged Property. Grantor shall keep the Mortgaged
Property and every part thereof in good condition and repair, and shall not
permit or commit any waste, impairment, or deterioration of the Mortgaged
Property, normal wear and tear excepted, or commit, suffer or permit any act
upon or use of the Mortgaged Property in violation of law or applicable order
of any governmental authority, whether now existing or hereafter enacted and
whether foreseen or unforeseen, or in violation of any covenants, conditions or
restrictions affecting the Mortgaged Property, or bring or keep any

 

7

 

article upon any of
the Mortgaged Property or cause or permit any condition to exist thereon which
would be prohibited by or could invalidate any insurance coverage maintained,
or required hereunder to be maintained, by Grantor on or with respect to any
part of the Mortgaged Property, and Grantor further shall do all other acts
which from the character or use of the Mortgaged Property may be reasonably
necessary to protect the security hereof, the specific enumerations herein not
excluding the general.

 

1.9                                 Offset
Certificates.  Grantor, within five
(5) days upon request in person or within ten (10) days upon request by mail,
shall furnish a written statement duly acknowledged of all amounts due on any
indebtedness secured hereby, whether for principal or interest on the Notes or
otherwise, and stating whether any offsets or defenses exist against the
Indebtedness secured hereby and covering such other matters with respect to any
such Indebtedness as Beneficiary may reasonably require.

 

1.10                           Trustee’s
Costs and Expenses; Governmental Charges. 
Grantor shall pay all costs, fees and expenses of Trustee, its agents
and counsel in connection with the performance of its duties hereunder,
including without limitation the cost of any trustee’s sale or other title
insurance coverage ordered in connection with any foreclosure proceedings
hereunder, and shall pay all taxes (except federal and state income taxes) or
other governmental charges or impositions imposed by any governmental authority
on Trustee or Beneficiary by reason of its interest in the Notes, or any Notes
evidencing a Future Advance, or this Deed of Trust.  Without limiting anything contained herein or
any rights which may be available to Trustee under applicable laws, in the
event Trustee is named as a party to any civil action as Trustee in this Deed
of Trust, the Trustee shall be entitled to employ an attorney at law
(including, if Trustee is an individual, himself if he is a licensed Attorney)
to represent it in said action and the reasonable attorney’s fees of the
Trustee in such action shall be paid by the Grantor.

 

1.11                           Protection
of Security; Costs and Expenses.

 

(a)                                  Grantor
agrees that, at any time and from time to time, it will execute and deliver all
such further documents and do all such other acts and things as Beneficiary may
reasonably request in writing in order to protect the security and priority of
the lien created hereby.  Grantor shall
appear in and defend any action or proceeding purporting to affect the security
hereof or the rights or powers of the Beneficiary or Trustee, and shall pay all
costs and expenses, including without limitation cost of evidence of title and
reasonable attorneys’ fees, in any such action or proceeding in which
Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to
foreclose this Deed of Trust or to enforce or establish any other rights or
remedies of Beneficiary hereunder.  If
Grantor fails to perform any of the covenants or agreements contained in this
Deed of Trust, or if any action or proceeding is commenced which affects
Beneficiary’s interest in the Mortgaged Property or any part thereof,
including, but not limited to, eminent domain, code enforcement, or proceedings
of any nature whatsoever under any federal or state law, whether now existing
or hereafter enacted or amended, relating to bankruptcy, insolvency,
arrangement, reorganization or other form of debtor relief, or to a decedent,
and if Grantor fails to cure any breach within the time period set forth in Article II
below, then Beneficiary or Trustee may, but without obligation to do so and
without notice to or demand upon Grantor and without releasing Grantor from any
obligation hereunder, make such appearances, disburse such sums and take such
action as Beneficiary or Trustee deems necessary

 

8

 

or appropriate to protect
Beneficiary’s interest, including, but not limited to, disbursement of
reasonable attorneys’ fees, entry upon the Mortgaged Property to make repairs
or take other action to protect the security hereof, and payment, purchase,
contest or compromise of any encumbrance, charge or lien which in the judgment
of either Beneficiary or Trustee appears to be prior or superior hereto.

 

(b)                                 Following
an Event of Default, Grantor further agrees to pay all reasonable expenses of
Beneficiary (including fees and disbursements of counsel) incident to the
protection of the rights of Beneficiary hereunder, or to enforcement or collection
of payment of the Notes or any Future Advances, whether by judicial or
nonjudicial proceedings, or in connection with any bankruptcy, insolvency,
arrangement, reorganization or other debtor relief proceeding of Grantor, or
otherwise.  Any amounts disbursed by
Beneficiary or Trustee pursuant to this Section shall be additional
indebtedness of Grantor secured by this Deed of Trust as of the date of
disbursement and shall bear interest as set forth in the Notes as of the date
Beneficiary or Trustee makes a demand on Grantor for reimbursement.  All such amounts shall be payable by Grantor
immediately without demand.  Nothing
contained in this Section shall be construed to require Beneficiary or
Trustee to incur any expense, make any appearance, or take any other action.

 

1.12                           Compliance
with Laws.  Grantor will promptly and
faithfully comply with, conform to and obey all present and future laws,
ordinances, rules, regulations and requirements (collectively, “Laws”)
of every governmental authority and of every Board of Fire Underwriters having
jurisdiction, or similar body exercising similar functions, which may be
applicable to it or to the Mortgaged Property, or any part thereof, or to the
use or manner of use, occupancy, possession, operation, maintenance, alteration,
repair or reconstruction of the Mortgaged Property, or any part thereof
(including, without limitation, the Americans with Disabilities Act, to the
extent such compliance is required thereby), whether or not such Law shall
necessitate structural changes or improvements or interfere with the use or
enjoyment of the Mortgaged Property.

 

1.13                           Hazardous
Materials.  Without limiting the
generality of Section 1.12 hereof:

 

(a)                                  Grantor
shall keep and maintain the Mortgaged Property in compliance with, and shall
not cause or permit the Mortgaged Property to be in violation of, any federal,
state or local laws, statutes, common law duties, rules, regulations,
ordinances and codes, together with all administrative orders, directed duties,
licenses, authorizations and permits of, and agreements with, any governmental
authorities, in each case relating to the preservation, conservation,
regulation, health or safety of the environment (including soil, water,
groundwater, and indoor and ambient air conditions), and in each case as may be
now or hereafter enacted, amended or modified, including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. Section 9601, et seq.), the Hazardous Materials Transportation
Act (49 U.S.C. Section 1801, et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. Section 6901, et seq.), the Federal Water
Pollution Control Act of 1972, the Solid Waste Disposal Act, the Emergency
Planning and Community Right-to-Know Act, the Toxic Substance Control Act of
1976 (15 U.S.C. Section 2601 et seq.), the Clean Water Act
(33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C.
Section 7901 et seq.), any so-

 

9

 

called “Superfund” or “Superlien”
law, or any other federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to or imposing liability or
standards of conduct concerning any hazardous, toxic or dangerous waste,
substance or material (“Environmental Laws”); and

 

(b)                                 Grantor
shall not manufacture, generate or store (and shall not permit the same) any
Hazardous Materials at, in, on, under, over, from or affecting the Mortgaged
Property.  Grantor shall not permit the
presence, placement, discharge, deposit, emission, disposal, burial, dumping,
injection, spillage, leakage, seepage, release, threatened release, or
contamination of any Hazardous Material, whether intentional or unintentional,
negligent or non-negligent, sudden or non-sudden, accidental or non-accidental
presence (each, a “Release”) of any asbestos, asbestos-containing
materials, polychlorinated biphenyl or polychlorinated biphenyl containing
materials, and all those substances which are regulated by, or which may form the
basis of liability under, any Environmental Law, including all substances
identified under any Environmental Law as a pollutant, contaminant, hazardous
waste, hazardous constituent, radioactive waste, special waste, hazardous
substance, hazardous material, toxic substance, or petroleum or petroleum
derived substance or waste (“Hazardous Materials”) at, in, on, under,
over, from or affecting the Mortgaged Property or the transport of Hazardous
Materials to or from the Mortgaged Property.

 

1.14                           Fixture
Filing.  This Deed of Trust
constitutes a financing statement filed as a fixture filing pursuant to
Article 9 of the UCC in the Official Records of the County Recorder of the
county in which the Mortgaged Property is located with respect to any and all
fixtures included within the term “Mortgaged Property” as used herein and with
respect to any goods or other personal property that may now be or hereafter
become such fixtures.  The following
information is included for purposes of meeting the requirements of a financing
statement:

 

(a)                                  The
name of the debtor ENERGY ABSORPTION SYSTEMS, INC.

 

(b)                                 The
mailing address of the debtor is 35 East Wacker Drive, Chicago, Illinois 60601.

 

(c)                                  The
organizational number of the debtor
is                          .

 

(d)                                 The
name of the secured party is THE NORTHERN TRUST COMPANY, as Agent

 

(e)                                  The
address of the secured party is 50 South LaSalle Street, Chicago, Illinois
60675, Attn:  Ms. Erin Sullivan.

 

(f)                                    This
financing statement covers all of the debtor’s Personalty and Fixtures (whether
now owned or hereafter acquired).  The
Personalty and Fixtures includes (i) goods which are or are to become
Fixtures on the Land described in Exhibit A, (ii) minerals or the
like (including, without limitation, oil and gas) located on the Land described
in Exhibit A, (iii) the Personalty, and (iv) all proceeds and
products of the Personalty and Fixtures.

 

10

 

1.15                           Single
Purpose Entity.  Grantor is and shall
remain a single purpose entity which (i) is formed or organized solely for the
purpose of acquiring and directly holding an ownership interest in the Property
and activities incidental thereto, (ii) does not and will not engage in any
business unrelated to the Property, (iii) does not and will not have any assets
other than those related to its interest in such Property or any indebtedness
other than as permitted herein, (iv) has its own separate books and records and
keeps its own accounts, in each case which are separate and apart from the
books and records and accounts of any other entity, (v) is subject to all of
the limitations on powers set forth in its organizational documentation, (vi)
holds and will hold itself out as being an entity separate and apart from any
other entity, (vii) has not at any time since its formation assumed or
guaranteed and will not assume or guaranty the liabilities of any other entity,
(viii) has not at any time since its formation acquired and will not acquire
obligations or securities of any other entity, (ix) has not at any time since
its formation made and will not make loans to any other entity, and (x) does
not and will not have any subsidiaries.

 

ARTICLE II

EVENTS OF DEFAULT

 

The following shall
constitute an Event of Default hereunder (each, an “Event of Default”):

 

2.1                                 Payment
of Indebtedness.  If Grantor shall
fail to pay the Indebtedness under the Subsidiary Guaranty and all sums due
under the Credit Agreement and Notes as and when the same shall be due and
payable pursuant to the Notes, whether at the due date thereof or by
acceleration or otherwise.

 

2.2                                 Default
Under Credit Agreement.  An event of
default exists and is continuing under the Credit Agreement.

 

2.3                                 Other
Obligations.  Grantor shall fail to
perform or observe any other term or covenant contained in this Deed of Trust,
or any term or covenant contained in the Subsidiary Guaranty which by its
express terms survives the Closing of the transaction contemplated thereby, and
such default shall continue for a period of thirty (30) calendar days after the
date upon which written notice thereof is given to Grantor by Beneficiary; provided,
however, if such default arises solely as a result of a default by
Grantor in the performance of a non-monetary obligation hereunder and a cure of
such default cannot reasonably be effected within such 30-day period despite
Grantor’s diligence in prosecuting such cure, then, provided Grantor commences
cure within said 30-day period and diligently prosecutes said cure to
completion, the cure period provided hereunder shall be extended to such time
as may be reasonably necessary to cure the default, which, in any event, shall
not exceed sixty (60) days from the date upon which written notice thereof was
given to Grantor.

 

11

 

ARTICLE III

REMEDIES

 

Upon the occurrence of
any Event of Default, Trustee and Beneficiary shall have the following rights
and remedies:

 

3.1                                 Acceleration.  Notwithstanding the stated maturity in the
Notes, Beneficiary may declare the entire principal amount of the Notes and/or
any Future Advances then outstanding (if not then due and payable), and accrued
and unpaid interest thereon, and all other sums or payments required
thereunder, to be due and payable immediately, without notice of intention to
accelerate, notice of acceleration or notice of any kind or nature whatsoever,
demand or presentment, all of which are hereby expressly waived by Grantor.

 

3.2                                 Receiver.  Beneficiary may apply to any court of
competent jurisdiction for, and obtain appointment of, a receiver for the
Property.

 

3.3                                 Entry.  Irrespective of whether Beneficiary exercises
the option provided in Section 3.1 above, Beneficiary in person or
by agent or by court-appointed receiver may enter upon, take possession of,
manage and operate the Mortgaged Property or any part thereof and do all things
necessary or appropriate in Beneficiary’s good faith discretion in connection
therewith, including without limitation inspecting for violations of any
covenants of Grantor, contracting for and making repairs and alterations, and
doing any and all other acts which Beneficiary deems proper to protect the
security hereof; and either with or without so taking possession, in its own
name or in the name of Grantor, sue for or otherwise collect and receive the
Rents and Profits, including those past due and unpaid, and apply the same less
costs and expenses of operation and collection, including reasonable attorneys’
fees, upon any indebtedness secured hereby, and in such order as Beneficiary
may determine.  The entering upon and
taking possession of the Mortgaged Property, or any part thereof, and the
collection of any Rents and Profits and the application thereof as aforesaid
shall not cure or waive any default theretofore or thereafter occurring or
affect any notice or default hereunder or invalidate any act done pursuant to
any such default or notice, and, notwithstanding continuance in possession of
the Mortgaged Property or any part thereof by Beneficiary, Grantor or a
receiver, and the collection, receipt and application of the Rents and Profits,
Beneficiary shall be entitled to exercise every right provided for in this Deed
of Trust or by law or in equity upon or after the occurrence of a default,
including without limitation the right to exercise the power of sale.  Any of the actions referred to in this Section 3.3
may be taken by Beneficiary irrespective of whether any notice of default or
notice of sale has been given hereunder and without regard to the adequacy of
the security for the indebtedness hereby secured.

 

3.4                                 Judicial
Action.  Beneficiary may bring an
action in any court of competent jurisdiction to foreclose this instrument or
to enforce any of the covenants and agreements hereof.

 

3.5                                 Power
of Sale.  The Trustee, at the request
of Beneficiary, shall sell at public venue the Mortgaged Property or any part
thereof or any interest therein, to the highest bidder, for cash, all in
accordance with and as permitted by applicable law.  Any notices, postings and filings required by
applicable law may be performed or given by Trustee or

 

12

 

Beneficiary or by any
agent acting in their or its behalf, unless applicable law requires
otherwise.  Grantor designates as
Grantor’s address for the purposes of such notice, the address set out on page
1 of this Deed of Trust, and each other debtor, if any, obligated to pay the
debts secured hereby agrees that such address shall likewise constitute such
other debtor’s address for such notice, unless a different address is
designated by such other debtor; no change of such address or designation of a
different address shall be binding on Beneficiary until fifteen (15) days after
Beneficiary has received notice of such change sent to Beneficiary in accordance
with Section 4.2 below, addressed to Beneficiary at the address for
Beneficiary set out herein (or to such other address as Beneficiary may have
designated by notice given in accordance with Section 4.2 below to
Grantor).  Any change of address of
Beneficiary shall be effective fifteen (15) business days after written notice
thereof addressed to Grantor and sent in accordance with Section 4.2
below.  In connection with any sale or
sales hereunder, Beneficiary may elect to treat any of the Mortgaged Property
which consists of a right in action or which is property that can be severed
from the real property covered hereby or any improvements thereon without
causing structural damage thereto as if the same were personal property, and
dispose of the same in accordance with applicable law, separate and apart from
the sale of real property.  Where the
Mortgaged Property consists of real and personal property or fixtures, whether
or not such personal property is located on or within the real property,
Beneficiary may elect in its discretion to exercise its rights and remedies
against any or all of the real property, personal property, and fixtures in
such order and manner as is now or hereafter permitted by applicable law.  Any sale of personal property hereunder shall
be conducted in any manner permitted by Article 9 of the UCC, or any other
applicable provision of the UCC.  Should
Beneficiary elect to sell any portion of the Mortgaged Property which is real
property or which is personal property or fixtures that Beneficiary has elected
to sell together with real property in accordance with the laws governing a
sale of real property, Beneficiary or Trustee shall give such notice of default
and election to sell as may then be required by law.  Thereafter, upon the expiration of such time
and the giving of such notice of sale as may then be required by law, and
without the necessity of any demand on Grantor, Trustee, at the time and place
specified in the notice of sale, shall sell said real property or part thereof
at public auction to the highest bidder for cash in lawful money of the United
States or in such other manner as Beneficiary shall direct which is not
prohibited by applicable law.  Trustee
may, and upon request of Beneficiary shall, from time to time, postpone any
sale hereunder by public announcement thereof at the time and place noticed
therefor.  Trustee shall be entitled to a
reasonable commission in connection with any such sale.

 

3.6                                 Proceed
under the UCC.  Without limiting the
generality of the foregoing, Beneficiary may, in its sole and absolute
discretion and without regard to the adequacy of its security, elect to proceed
against any or all of the real property, personal property and fixtures in any
manner permitted under Article 9 of the UCC; and if the Beneficiary elects
to proceed in the manner permitted under Article 9 of the UCC, the power
of sale herein granted shall be exercisable with respect to all or any of the
real property, personal property and fixtures covered hereby, as designated by
Beneficiary, and the Trustee is hereby authorized and empowered to conduct any
such sale of any real property, personal property and fixtures in accordance
with the procedures applicable to real property.

 

13

 

3.7                                 Additional
Provisions.

 

(a)                                  Where
the Mortgaged Property consists of real property and personal property, any
reinstatement of the obligation secured hereby, following default and an
election by the Beneficiary to accelerate the maturity of said obligation,
which is made by Grantor or any other person or entity permitted to exercise
the right of reinstatement under applicable law, shall not prohibit the
Beneficiary from conducting a sale or other disposition of any personal
property or fixtures or from otherwise proceeding against or continuing to
proceed against any personal property or fixtures in any manner permitted by
applicable law; nor shall any such reinstatement invalidate, rescind or
otherwise affect any sale, disposition or other proceeding held, conducted or
instituted with respect to any personal property or fixtures prior to such
reinstatement or pending at the time of such reinstatement.  Any sums paid to Beneficiary in effecting any
reinstatement pursuant to applicable law shall be applied to the secured
obligation and to the Beneficiary’s and Trustee’s reasonable costs and expenses
in the manner required by applicable law or as Beneficiary otherwise reasonably
directs.

 

(b)                                 If
the Mortgaged Property consists of several lots, parcels or items of property,
Beneficiary may: (i) designate the order in which such lots, parcels or
items shall be offered for sale or sold, or (ii) elect to sell such lots,
parcels or items through a single sale, or through two or more successive
sales, or in any other manner Beneficiary deems in its best interest.  Any person, including Grantor, Trustee or
Beneficiary, may purchase at any sale hereunder, and Beneficiary shall have the
right to purchase at any sale hereunder by crediting upon the bid price the
amount of all or any part of the Secured Obligations.  Should Beneficiary desire that more than one
sale or other disposition of the Mortgaged Property be conducted, Beneficiary
may, at its option, cause the same to be conducted simultaneously, or
successively, on the same day, or at such different days or times and in such
order as Beneficiary may deem to be in the Beneficiary’s best interests, and no
such sale shall terminate or otherwise affect the lien of this Deed of Trust on
any part of the Mortgaged Property not sold until all Secured Obligations have
been fully paid.  In the event
Beneficiary elects to dispose of the Mortgaged Property through more than one
sale, Grantor agrees to pay the costs and expenses of each such sale and of any
judicial proceedings wherein the same may be made, including reasonable
compensation to Trustee and Beneficiary, their agents and counsel, and to pay
all expenses, liabilities and advances made or incurred by Trustee in
connection with such sale or sales, together with interest on all such advances
made by Trustee at the lower of the interest rate provided for in the Notes or
the maximum rate permitted by law to be charged by Trustee.  Beneficiary may sell the Mortgaged Property
for any amount it deems reasonably acceptable, whether or not such amount is
equal to the Secured Obligations, or otherwise. 
Grantor authorizes and empowers Trustee, upon any sale hereunder, to
execute and deliver to the purchaser or purchasers a good and sufficient deed
or deeds conveying the property so sold, with covenant of general warranty
binding on Grantor and Grantor’s legal representatives, successors and assigns,
whereupon such purchaser or purchasers shall be let into immediate possession.

 

(c)                                  The
recitals contained in any deed(s) or other instrument(s) given in connection
with any such foreclosure sale and/or any affidavit(s) of a person(s)
knowledgeable of the facts as to compliance with the requirements of such sale,
shall be prima facie evidence of such facts and it shall not be necessary to
prove in any court the existence of such facts. 
All prerequisites and requirements of any sale or sales shall be
conclusively presumed to have been performed and all persons subsequently
dealing with the property so conveyed, including

 

14

 

without limitation, the
purchaser(s) thereof, shall be fully protected in relying upon the truthfulness
of such recitals or affidavits.

 

(d)                                 Upon
any foreclosure sale hereunder, Grantor shall immediately surrender and deliver
possession to the purchaser.  If Grantor
fails to do so, Grantor shall be a tenant at will of the purchaser and such
purchaser shall have the right to bring an action of forcible entry and
detainer.

 

3.8                                 Proceeds
of Sale.  The proceeds of any sale
made under or by virtue of this Article III, together with all
other sums which then may be held by Trustee or Beneficiary under this Deed of
Trust, whether under the provisions of this Article III or
otherwise, shall be applied as follows:

 

FIRST:  To the payment of the costs and expenses of
sale and of any judicial proceedings wherein the same may be made, including
reasonable compensation to Trustee and Beneficiary, their agents and counsel,
and to the payment of all expenses, liabilities and advances made or incurred
by Trustee under this Deed of Trust, together with interest on all advances
made by Trustee at the lower of the interest rate provided for in the Notes or
the maximum rate permitted by law to be charged.

 

SECOND:  To the payment of any and all sums expended
by Beneficiary under the terms hereof, not then repaid with accrued interest at
the rate provided for in the Notes or the maximum rate permitted by law.

 

THIRD:  To the payment of all other Secured
Obligations.

 

FOURTH:  The remainder, if any, to the person or
persons legally entitled thereto.

 

3.9                                 Waiver
of Marshaling.  To the extent
permitted by law, Grantor, for itself and for all persons hereafter claiming
through or under it or who may at any time hereafter become holders of liens
junior to the lien of this Deed of Trust, hereby expressly waives and releases
all rights to direct the order in which any of the Mortgaged Property shall be
sold in the event of any sale or sales pursuant hereto and to have any of the
Mortgaged Property and/or any other property now or hereafter constituting
security for any of the indebtedness secured hereby marshaled upon any
foreclosure of this Deed of Trust or of any other security for any of said
indebtedness.

 

3.10                           Remedies
Cumulative.  No remedy herein
conferred upon or reserved to Trustee or Beneficiary is intended to be
exclusive of any other remedy herein or by law provided, but each shall be
cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute.  No delay or omission of Trustee or
Beneficiary to exercise any right or power accruing upon any Event of Default
shall impair any right or power or shall be construed to be a waiver of any
Event of Default or any acquiescence therein; and every power and remedy given
by this Deed of Trust to Trustee or Beneficiary may be exercised from time to
time as often as may be deemed expedient by Trustee or Beneficiary. If there
exists additional security for the performance of the obligations secured
hereby, the holder of the Notes, at its sole option, and without limiting or
affecting any of its rights or remedies hereunder, may exercise any of the
rights and remedies to which it may be

 

15

 

entitled hereunder either
concurrently with whatever rights and remedies it may have in connection with
such other security or in such order as it may determine.  Any application of any amounts or any portion
thereof held by Beneficiary at any time as additional security hereunder,
whether pursuant to Article I or Article III hereof or
otherwise, to any indebtedness secured hereby shall not extend or postpone the
due dates of any payments due from Grantor to Beneficiary hereunder or under
the Notes, any Future Advances, or change the amounts of any such payments or
otherwise be construed to cure or waive any default or notice of default
hereunder or invalidate any act done pursuant to any such default or notice.

 

ARTICLE IV

MISCELLANEOUS

 

4.1.                              Severability.  In the event any one or more of the
provisions contained in this Deed of Trust shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision of this Deed of Trust,
but this Deed of Trust shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.

 

4.2.                              Notices.  Any notice required or permitted to be given
hereunder shall be deemed to be given when (i) hand delivered or (ii) one (1)
business day after pickup by Emery Air Freight, Airborne, Federal Express, or
similar overnight express service, or (iii) on the day of confirmation of
receipt by telefacsimile (provided that a duplicate copy of the information
sent by telefacsimile has also been mailed on the same day), in all cases
addressed to the parties at their respective addresses referenced below:

 

	
  If to

  Beneficiary:

  	
   

  	
  The Northern Trust
  Company

  50 South LaSalle Street

  Chicago, Illinois 60675

  Attention:  Ms. Erin G. Sullivan

  hone:  (312) 557-7340

  Fax:  (312) 444-7028

  
	
   

  	
   

  	
   

  
	
  With copy to:

  	
   

  	
  Fischel & Kahn,
  Ltd.

  190 South LaSalle Street

  Suite 2850

  Chicago, Illinois 60675

  Attention:  Edward F. Dobbins, Esq.

  Phone:  (312) 726-1440 (x230)

  Fax:  (312) 726-1448

  

 

16

 

	
  If to Grantor:

  	
   

  	
  Energy Absorption
  Systems, Inc.

  35 East Wacker Drive

  Suite 1100

  Chicago, Illinois 60601

  Attention:  Daniel P. Gorey

  Phone:  (312) 467-6755

  Fax:  (312) 467-1356

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Holland & Knight,
  LLP

  131 South Dearborn Street

  30th Floor

  Chicago, Illinois 60603

  Attention:  Anne Hamblin

  Phone:  (312) 263-3600

  Fax:  (312) 578-6666

  

 

4.3.                              Grantor
Not Released.  Extension of the time
for payment or modification of the terms of payment of any sums secured by this
Deed of Trust granted by Beneficiary to any successor in interest of Grantor
shall not operate to release, in any manner, the liability of the original
Grantor.  Beneficiary shall not be required
to (i) commence proceedings against such successor or (i) refuse to extend time
for payment or otherwise modify the terms of payment of the sums secured by
this Deed of Trust by reason of any demand made by the original Grantor.  Without affecting the liability of any
person, including Grantor, for the payment of any indebtedness secured hereby,
or the lien of this Deed of Trust on the remainder of the Mortgaged Property
for the full amount of any such indebtedness and liability unpaid, Beneficiary
and Trustee are respectively empowered as follows:  Beneficiary may from time to time and without
notice (a) release any person liable for the payment of any of the
indebtedness, (b) extend the time or otherwise alter the terms of payment
of any of the indebtedness, (c) accept additional real or personal
property of any kind as security therefor, whether evidenced by deeds of trust,
mortgages, security agreements or any other instruments of security, or
(d) alter, substitute or release any property securing the indebtedness;
Trustee may, at any time, and from time to time, upon the written request of
Beneficiary (a) consent to the making of any map or plat of the Mortgaged
Property or any part thereof, (b) join in granting any easement or
creating any restriction thereon, (c) join in any subordination or other
agreement affecting this Deed of Trust or the lien or charge hereof, or
(d) reconvey, without any warranty, all or part of the Mortgaged Property.

 

4.4.                              Inspection.  Beneficiary or its representatives are hereby
authorized to enter upon and inspect the Mortgaged Property at all reasonable
times but with reasonable notice to Grantor (and in accordance with any
applicable leases affecting the portion of the Mortgaged Property sought to be
inspected, if applicable), except in the case of an emergency or if a default
has occurred and is continuing in which case Beneficiary or its representatives
are hereby authorized to enter upon and inspect the Mortgaged Property as
Beneficiary deems necessary.

 

17

 

4.5.                              Indemnity.  Grantor hereby agrees to indemnify, defend,
and hold harmless Beneficiary and its respective officers, directors,
shareholders, partners, agents, successors and assigns (collectively, the “Indemnified
Parties”), from and against any and all claims, demands, liabilities,
losses, lawsuits, judgments and costs and expenses (“Liabilities”)
(including, without limitation, attorneys’ fees and costs) which Beneficiary or
any of the other Indemnified Parties may incur as a result of (i) being named
as the Beneficiary hereunder, or (ii) in the exercising of Beneficiary’s rights
hereunder, including, without limitation liabilities resulting from the
negligence of Beneficiary, but excluding but excluding any Liabilities
resulting from the gross negligence or misconduct of any of the Indemnified
Parties.

 

4.6.                              Statute
of Limitations.  The pleading of any
statute of limitations as a defense to any and all obligations secured by this
Deed of Trust is hereby waived to the fullest extent permitted by law.

 

4.7.                              Interpretation.  Wherever used in this Deed of Trust, unless
the context otherwise indicates a contrary intent, or unless otherwise
specifically provided herein, the word “Grantor” shall mean and include both
Grantor and any subsequent owner or owners of the Mortgaged Property, and the
word “Beneficiary” shall mean and include not only the original Beneficiary
hereunder but also any future owner and holder, including pledgees, of the
Notes secured hereby.  In this Deed of
Trust whenever the context so requires, the masculine gender includes the
feminine and/or neuter, and the neuter includes the feminine and/or masculine,
and the singular number includes the plural and conversely.  The captions and headings of the Articles and
Sections of this Deed of Trust are for convenience only and are not to be used
to interpret, define or limit the provisions hereof.

 

4.8.                              Consent;
Delegation to Sub-agents.  The
granting or withholding of consent by Beneficiary to any transaction as
required by the terms hereof shall not be deemed a waiver of the right to
require consent to future or successive transactions.  Wherever a power of attorney is conferred
upon Beneficiary hereunder, it is understood and agreed that such power is conferred
with full power of substitution, and Beneficiary may elect in its sole
discretion to exercise such power itself or to delegate such power, or any part
thereof, to one or more sub-agents.

 

4.9.                              Successors
and Assigns.  All of the grants,
obligations, covenants, agreements, terms, provisions and conditions herein
shall run with the land and shall apply to, bind and inure to the benefit of,
the heirs, administrators, executors, legal representatives, successors and
assigns of Grantor and the successors in trust of Trustee and the endorsees, transferees,
successors and assigns of Beneficiary. 
In the event Grantor is composed of more than one party, the
obligations, covenants, agreements, and warranties contained herein as well as
the obligations arising therefrom are and shall be joint and several as to each
such party.  Beneficiary shall have the
right to assign its interest in the Notes and in this Deed of Trust without the
consent of Grantor; provided, however, Beneficiary may not assign
its rights or obligations under the Notes or this Deed of Trust.

 

18

 

4.10.                        Governing
Law.  This Deed of Trust shall be
governed by and construed under the laws of the State of Illinois without
regard to conflicts or choice of law rules.

 

4.11.                        Substitution
of Trustee.  Beneficiary may remove
Trustee at any time or from time to time, with or without cause, and appoint a
successor trustee, and upon such appointment, all powers, rights, duties and
authority of Trustee, as aforesaid, shall thereupon become vested in such
successor.  Beneficiary shall have full
power to appoint, at any time and without any formality other than by written
instrument executed by Beneficiary, a substitute trustee, and, if desired by
Beneficiary, several substitute trustees in succession, each of whom shall
succeed to all the estate, rights, powers and duties of Trustee named herein,
and no notice of such appointment need be given to Grantor or to any other
person or filed for record in any public office.  Such appointment may be executed by
Beneficiary or any agent of Beneficiary and such appointment shall be
conclusively presumed to be executed with authority and shall be valid and
sufficient without proof of any action by the board of directors or any
executive officer of Beneficiary.  Neither
Trustee nor any substitute trustee shall be liable to Grantor for any reason or
under any theory, except for gross negligence, fraud or intentional misconduct
done in bad faith, actually proved by Grantor. 
Grantor agrees to indemnify, defend and hold harmless Trustee and any
substitute trustee for any costs and expenses incurred by Trustee in the
performance of its duties hereunder.

 

4.12.                        THE
WRITTEN INSTRUMENTS AND OTHER DOCUMENTS EVIDENCING, RELATING TO AND SECURING
THE SECURED OBLIGATIONS CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.

 

4.13.                        GRANTOR
AND BENEFICIARY (BY ACCEPTANCE OF THIS DEED OF TRUST) MUTUALLY, EXPRESSLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY FOR ANY PROCEEDINGS ARISING
OUT OF OR IN CONNECTION WITH THIS DEED OF TRUST, IN THE INTEREST OF AVOIDING
DELAYS AND EXPENSES ASSOCIATED WITH JURY TRIALS.

 

4.14.                        Time is of
the essence in this Deed of Trust.

 

[The remainder of
this page is intentionally left blank.]

 

19

 

IN WITNESS WHEREOF,
Grantor has caused this Deed of Trust to be executed and delivered by its duly
authorized officer, as of the date first above written.

 

	
   

  	
  GRANTOR:

  
	
   

  	
   

  
	
   

  	
  ENERGY ABSORPTION
  SYSTEMS, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel P. Gorey

  	
   

  
	
   

  	
  Name:

  	
  Daniel P. Gorey

  
	
   

  	
  Title:

  	
  Vice President and
  Treasurer

  

 

 

	
  STATE OF ILLINOIS

  	
  )

  
	
   

  	
  )  SS

  
	
  COUNTY OF COOK

  	
  )

  

 

 

The undersigned, a notary
public in and for said County and State, DOES HEREBY CERTIFY, that Daniel P.
Gorey, the Vice President and Treasurer of ENERGY ABSORPTION SYSTEMS, INC., a Delaware
corporation, personally known to me to be the same person whose name is
subscribed to the foregoing instrument, appeared before me this day in person
and acknowledged that he/she signed, sealed and delivered the said instrument
on behalf of said company, as his/her free and voluntary act and the voluntary
act of said company, for the uses and purposes therein set forth.

 

GIVEN under my hand and
seal this 10th day of September, 2004.

 

	
   

  	
  /s/ Eileen M. O’Connell

  	
   

  
	
   

  	
  Notary Public

  
	
   

  
	
  My commission expires:

  	
  July 13, 2007

  	
   

  
					

 

20

 

Exhibit A

To Deed of Trust

 

Description of
Land

 

PARCEL 1:

 

That portion of
Section 9, Township 11 North, Range 6 East, M.D.B&M., included within
the land shown and designated as Parcel D on Parcel Map No. 72210, filed for
record in the office of the Recorder of Placer County, California, on
August 26, 1977, in Book 10 of Parcel Maps, at Page 153, Placer County
Records.

 

TOGETHER WITH a
non-exclusive easement for roadway and public utility purposes, over, under and
across a portion of Section 9, Township 11 North, Range 6 East,
M.D.B&M., included within the land shown and designated as Area “K” of
Parcel Map No. P-72210, filed in the office of the Placer County Recorder on August 26,
1977, in Book 10 of Parcel Maps, at Page 153.

 

ALSO TOGETHER WITH a
non-exclusive easement for ingress and egress and construction of a road and
public utilities over, under and across the following described property:

 

Beginning at the
northwest corner of Parcel C on Parcel Map No. P-72210 filed for record in the
office of the Recorder of Placer County, being in Section 9, Township 11
North, Range 6 East, M.D.B.&M., California, said Parcel Map No. P-72210
filed on August 26, 1977, in Book 10 of. Parcel Maps, at Page 153, Placer
County Records; thence South 89°59’58” East along the North boundary of said
Parcel C, 98.11 feet; thence in a southwesterly direction along the arc of a
155.00 foot radius curve to the right concave to the North, having a radius of 155.0
feet and a central angle of 39°16’05” (the long chord to which bears South
70°21’56” West 104.16 feet) an arc length of 106.23 feet to the West boundary
of said Parcel C; North 00°00’02” East along the West boundary 35.00 feet to
the point of beginning.

 

ALSO TOGETHER WITH a
10.00 foot wide non-exclusive storm drainage easement lying 5.00 feet on each
side, of the following described centerline:

 

Commencing at the
northeast corner Parcel C, located in Section 9, Township 11 North, Range
6 East, M.D.B.&M., as designated on Parcel Map P-72210, filed for record in
the office of the Recorder of Placer County, California on August 26,
1977, in Book 10 of Parcel Maps, at Page 153, Placer County Records; thence
North 89°59’58” West 140.00 feet to the point of beginning of the center line
to be described; thence South 00°00’02” West 885.00 feet to the point of
terminus of said centerline.

 

21

 

ALSO TOGETHER WITH a
non-exclusive easement for storm water drainage and detention, the perimeter of
which is more particular described as follows:

 

Beginning at the point of
terminius of the above described centerline; thence South 89°59’58” East 5.00
feet; thence South 00°00’02, West 104.00 feet, thence North 89°59’58” West
5.00 feet; thence South 00°00’02” West 87.25 feet to a point on the South
boundary of Parcel A as designated on aforementioned Parcel Map P-72210, Placer
County Records, said point bears North 89°59’58” West 140.00 feet from the
southeast corner of said Parcel A; thence North 89°59’58” West along said South
boundary 33.00 feet; thence leaving said South boundary North 00°00’02” East
191.25 feet; thence South 89°59’58” East 33.00 feet to the point of beginning.

 

PARCEL 1-A:

 

The Easterly 140 feet of
Parcel C as said Parcel is shown and designated on Parcel Map No. 72210, filed
for record in the office of the Recorder of Placer County, California on
August 26, 1977, in Book 10 of Parcel Maps, at Page 153, Placer County
Records.

 

PARCEL 1-B:

 

The Easterly 140 feet of
Parcels C and D as said Parcels are shown and designated on Parcel Map No.
73488, filed for record in the office of the Recorder of Placer County,
California on May 14, 1980 in Book 16 of Parcel Maps, at Page 88, Placer County
Records.

 

EXCEPTING THEREFROM
Parcels 1, 1-A and 1-B hereinabove described, all oil, gas, minerals,
hydrocarbon and kindred substances lying below a depth of 500 feet, as conveyed
to National Resources Equities Corporation by deed recorded November 10,
1969 in Book 1269, Page 62, Placer County Records.

 

	
  APN:

  	
  17-200-14-01,
  17-200-13-01 ptn., 17-200-17-01 ptn., 17-200-18-01 ptn.

  
	
   

  	
   

  
	
  Address:

  	
  3617 Cincinnati Avenue

  
	
   

  	
  Rocklin, California
  95767

  
	
   

  	
   

  
	
   

  	
   

  
	
  NOTE:

  	
  Parcels 1, 1-A and 1-B
  together comprise but one parcel.

  

 

22

 

PENNSYLVANIA
MORTGAGE

 

THIS INSTRUMENT PREPARED
BY

AND AFTER RECORDING RETURN

TO:

Edward F. Dobbins

Fischel & Kahn, Ltd.

190 S. LaSalle Street

Suite 2850

Chicago, Illinois 60603

 

OPEN-END MORTGAGE

 

This Open-End Mortgage (“Mortgage”),
made as of September 10, 2004, is made and executed by NU-METRICS, INC., a
Pennsylvania corporation, having its principal offices at 35 East Wacker Drive,
Chicago, Illinois 60601 (“Mortgagor”), in favor of THE NORTHERN TRUST COMPANY,
an Illinois banking association, as Administrative Agent for itself and the
other Lenders party to the Credit Agreement, as defined herein, having an
office at 50 South LaSalle Street, Chicago, Illinois 60675 (“Bank”).

 

RECITALS

 

I.                                         The
Bank and the Lenders, as herein defined, have made or may make loans to
Mortgagor and may extend other financial accommodations to Quixote Corporation
(the “Borrower”) in an aggregate principal amount of $58,000,000.00
(collectively, the “Loans”).  The Loans
consist of (i) revolving loans (the “Revolving Loans”), the outstanding
principal balance of which may increase or decrease from time to time, but at
no time shall the outstanding principal balance of such Revolving Loan exceed
$38,000,000.00 and (ii) term loans (the “Term Loans”) in the original
principal sum of $20,000,000.00.  Certain
repayment obligations of Mortgagor with respect to the Revolving Loans are
evidenced by Borrower’s Revolving Notes, dated as of September 10, 2004,
payable pro rata to the Lenders in the aggregate principal amount of
$38,000,000.00 (said notes, with all allonges, amendments, supplements,
modifications and replacements thereof, being sometimes referred to in this
Mortgage as the “Revolving Notes”). 
Certain repayment obligations of Mortgagor with respect to the Term
Loans are evidenced by the Borrower’s Term Notes dated May 16, 2003, payable
pro rata to the Lenders in the aggregate principal amount of $20,000,000.00
(said notes, with all allonges, amendments, supplements, modifications and
replacements thereof, being sometimes referred to in this Mortgage as the “Term
Notes”.  The Revolving Notes and the Term
Notes are sometimes referred to herein collectively as the “Notes.”  The terms of the Loans are governed by a
certain Credit Agreement, dated as of
May 16, 2003, as amended by a First Amendment, dated as of
December 9, 2003 (the “First Amendment”) and by a Second Amendment, dated
as of June 30, 2004 (the “Second Amendment”) and a Third Amendment, dated
as of the date hereof (said Credit Agreement, together with all
amendments, supplements, modifications and replacements thereof, being referred
to in this Mortgage as the “Credit Agreement”), by and among the

 

 

Borrower, the Lenders
party thereto (“Lenders”) and The Northern Trust Company as Administrative
Agent for itself and the Lenders.  In connection with the Credit Agreement, the
Mortgagor executed and delivered to the Administrative Agent, as a condition to
the Credit Agreement, that certain Subsidiary Guaranty, dated as of May 16,
2003, as reaffirmed by the First Amendment, Second Amendment and Third
Amendment, in favor of the Administrative Agent for the ratable benefit of the
Lenders (the “Subsidiary Guaranty”).  The
terms and provisions of the Notes and the Credit Agreement are hereby incorporated
by reference in this Mortgage. 
Capitalized terms not otherwise defined in this Mortgage shall have the
meaning ascribed to them in the Credit Agreement.

 

II.                                     This
Mortgage is given to secure one or more Term Loans, Revolving Loans and
Reimbursement Obligations and secures not only present indebtedness but also
future advances, whether such future advances are obligatory or are to be made
at the option of Lenders, or otherwise as are to be made within twenty (20)
years of the date hereof.  The amount of
indebtedness secured hereby may increase or decrease from time to time;
provided, however the principal amount of such indebtedness shall not at one
time exceed the amount of $58,000,000 plus interest thereon, and other costs,
amounts and disbursements as provided herein and in the other Loan Documents
(hereinafter defined).

 

GRANTING CLAUSES

 

To secure (i) the
payment of the indebtedness evidenced by the Notes, (ii) the payment and
satisfaction of the Obligations (defined in the Credit Agreement) and
(iii) the payment of all amounts due under and the performance and
observance of all covenants and conditions contained in this Mortgage, the
Notes, the Credit Agreement, the Subsidiary Guaranty, any and all other
mortgages, security agreements, pledge agreements, assignments of leases and
rents, guaranties, letters of credit and any other documents and instruments
now or hereafter executed by Mortgagor or any party related thereto or
affiliated therewith to evidence, secure or guarantee the payment of all or any
portion of the indebtedness under the Notes and any and all renewals,
extensions, amendments and replacements of this Mortgage, the Notes, the Credit
Agreement, the Subsidiary Guaranty and any such other documents and instruments
(the Notes, the Credit Agreement, this Mortgage, the Subsidiary Guaranty, such
other mortgages, security agreements, pledge agreements, assignments of leases
and rents, guaranties, letters of credit, and any other documents and
instruments now or hereafter executed and delivered in connection with the
Loan, and any and all amendments, renewals, extensions and replacements hereof
and thereof, being sometimes referred to collectively as the “Loan Documents”
and individually as a “Loan Document”) and to secure the payment of any and all
other indebtedness and obligations of Mortgagor or any party related thereto or
affiliated therewith to Bank, whether now existing or hereafter created,
absolute or contingent, direct or indirect, liquidated or unliquidated, or
otherwise (all indebtedness and liabilities secured hereby, subject to the
limitation hereinafter set forth, being hereinafter sometimes referred to as
“Borrower’s Liabilities,” provided that Borrower’s Liabilities shall, in no
event, exceed $58,000,000), Mortgagor has granted, conveyed, aliened,
enfeoffed, released, confirmed and mortgaged, and by these presents does hereby
grant, convey, alien, enfeoff, release, confirm and mortgage unto Bank the
following described property subject to the terms and conditions herein:

 

2

 

(A)                              The
land located in Fayette County, Pennsylvania, legally described in attached
Exhibit A (“Land”);

 

(B)                                All
the buildings, structures, improvements and fixtures of every kind or nature
now or hereafter situated on the Land and all machinery, appliances, equipment,
furniture and all other personal property of every kind or nature which
constitute fixtures with respect to the Land, together will all extensions,
additions, improvements, substitutions and replacements of the foregoing
(“Improvements”);

 

(C)                                All
easements, tenements, rights-of-way, vaults, gores of land, streets, ways,
alleys, passages, sewer rights, water courses, water rights and powers and
appurtenances in any way belonging, relating or appertaining to any of the Land
or Improvements, or which hereafter shall in any way belong, relate or be
appurtenant thereto, whether now owned or hereafter acquired (“Appurtenances”);

 

(D)                               (i)                                     All
judgments, insurance proceeds, awards of damages and settlements which may
result from any damage to all or any portion of the Land, Improvements or
Appurtenances or any part thereof or to any rights appurtenant thereto;

 

(ii)                                  All
compensation, awards, damages, claims, rights of action and proceeds of or on
account of (a) any damage or taking, pursuant to the power of eminent domain,
of the Land, Improvements or Appurtenances or any part thereof, (b) damage to
all or any portion of the Land, Improvements or Appurtenances by reason of the
taking, pursuant to the power of eminent domain, of all or any portion of the
Land, Improvements, Appurtenances or of other property, or (c) the alteration
of the grade of any street or highway on or about the Land, Improvements,
Appurtenances or any part thereof; and, except as otherwise provided herein,
Bank is hereby authorized to collect and receive said awards and proceeds and
to give proper receipts and acquittances therefor and, except as otherwise
provided herein, to apply the same toward the payment of the indebtedness and
other sums secured hereby; and

 

(iii)                               All
proceeds, products, replacements, additions, substitutions, renewals and
accessions of and to the Land, Improvements or Appurtenances;

 

(E)                                 All
rents, issues, profits, income and other benefits now or hereafter arising from
or in respect of the Land, Improvements or Appurtenances (the “Rents”); it
being intended that this Granting Clause shall constitute an absolute and
present assignment of the Rents, subject, however, to the conditional
permission given to Mortgagor to collect and use the Rents as provided in this
Mortgage;

 

(F)                                 Any
and all leases, licenses and other occupancy agreements now or hereafter
affecting the Land, Improvements or Appurtenances, together with all security
therefor and guaranties thereof and all monies payable thereunder, and all
books and records owned by Mortgagor which contain evidence of payments made
under the leases and all security given therefor (collectively, the “Leases”),
subject, however, to the conditional permission given in this

 

3

 

Mortgage to Mortgagor to
collect the Rents arising under the Leases as provided in this Mortgage;

 

(G)                                Any
and all after-acquired right, title or interest of Mortgagor in and to any of
the property described in the preceding Granting Clauses; and

 

(H)                               The
proceeds from the sale, transfer, pledge or other disposition of any or all of
the property described in the preceding Granting Clauses;

 

All of the mortgaged
property described in the Granting Clauses, together with all real and
personal, tangible and intangible property pledged in, or to which a security
interest attaches pursuant to, any of the Loan Documents is sometimes referred
to collectively as the “Mortgaged Property.” 
The Rents and Leases are pledged on a parity with the Land and
Improvements and not secondarily.

 

ARTICLE I

COVENANTS OF MORTGAGOR

 

Mortgagor covenants and
agrees with Bank as follows:

 

1.1.                              Performance
under Notes, Mortgage and Other Loan Documents.  Mortgagor shall perform, observe and comply
with or cause to be performed, observed and complied with in a complete and
timely manner all provisions hereof, of the Credit Agreement and of the Notes,
every other Loan Instrument and every instrument evidencing or securing
Borrower’s Liabilities.

 

1.2.                              General
Covenants and Representations. 
Mortgagor covenants, represents and warrants that as of the date hereof
and at all times thereafter during the term hereof: (a) Mortgagor is seized of
an indefeasible estate in fee simple in that portion of the Mortgaged Property
which is real property, and has good and absolute title to it and the balance
of the Mortgaged Property free and clear of all liens, security interests,
charges and encumbrances whatsoever except for Permitted Liens (defined in the
Credit Agreement); (b) Mortgagor has good right, full power and lawful
authority to mortgage and pledge the Mortgaged Property as provided herein; (c)
upon the occurrence of an Event of Default (hereinafter defined), Bank may at
all times peaceably and quietly enter upon, hold, occupy and enjoy the
Mortgaged Property in accordance with the terms hereof; and (d) Mortgagor will
maintain and preserve the lien of this Mortgage as a first and paramount lien
on the Mortgaged Property subject only to the Permitted Liens until Borrower’s
Liabilities have been paid in full.

 

1.3.                              Compliance
with Laws and Other Restrictions. Mortgagor covenants and represents that
the Land and the Improvements and the use thereof presently comply in all
material respects with, and will during the full term of this Mortgage continue
to comply in all material respects with, all applicable restrictive covenants,
zoning and subdivision ordinances and building codes, licenses, health and
environmental laws and regulations and all other applicable laws, ordinances,
rules and regulations.

 

4

 

1.4.                              Taxes
and Other Charges.

 

1.4.1.                     Taxes and
Assessments.  Mortgagor shall pay
promptly when due all taxes, assessments, rates, dues, charges, fees, levies,
fines, impositions, liabilities, obligations, liens and encumbrances of every
kind and nature whatsoever now or hereafter imposed, levied or assessed upon or
against the Mortgaged Property or any part thereof, or upon or against this
Mortgage or Borrower’s Liabilities or upon or against the interest of Bank in
the Mortgaged Property, as well as all taxes, assessments and other
governmental charges levied and imposed by the United States of America or any
state, county, municipality or other taxing authority upon or in respect of the
Mortgaged Property or any part thereof; provided, however, that Mortgagor may
in good faith contest the validity, applicability or amount of any asserted
tax, assessment or other charge in accordance with the provisions set forth in
the Credit Agreement regarding the contest of taxes.  Upon Bank’s request, Mortgagor will promptly
file, if it has not theretofore filed, such petition, application or other
instrument as is necessary to cause the Land and Improvements to be taxed as a
separate parcel or parcels which include no property not a part of the
Mortgaged Property.

 

1.4.2.                     Taxes
Affecting Bank’s Interest.  If any
state, federal, municipal or other governmental law, order, rule or regulation,
which becomes effective subsequent to the date hereof, in any manner changes or
modifies existing laws governing the taxation of mortgages or debts secured by
mortgages, or the manner of collecting taxes, so as to impose on Bank a tax by
reason of its ownership of any or all of the Loan Documents or measured by the
principal amount of the Notes, requires or has the practical effect of
requiring Bank to pay any portion of the real estate taxes levied in respect of
the Mortgaged Property to pay any tax levied in whole or in part in
substitution for real estate taxes or otherwise affects materially and
adversely the rights of Bank in respect of the Notes, this Mortgage or the
other Loan Documents, Borrower’s Liabilities and all interest accrued thereon
shall, upon thirty (30) days’ notice, become due and payable forthwith at the
option of Bank, whether or not there shall have occurred an Event of Default,
provided, however, that, if Mortgagor may, without violating or causing a
violation of such law, order, rule or regulation, pay such taxes or other sums
as are necessary to eliminate such adverse effect upon the rights of Bank and
does pay such taxes or other sums when due, Bank may not elect to declare due
Borrower’s Liabilities by reason of the provisions of this Section 1.4.2.

 

1.4.3                        Tax
Escrow.  If directed by Bank in
writing, Mortgagor shall, in order to secure the performance and discharge of
Mortgagor’s obligations under this Section 1.4, but not in lieu of such
obligations, deposit with Bank on the first day of each calendar month
throughout the term of the Loan, deposits, in amounts set by Bank from time to
time by written notice to Mortgagor, in order to accumulate funds sufficient to
permit Bank to pay all annual ad valorem taxes, assessments and charges of the
nature described in Section 1.4.1 at least thirty (30) days prior to the
date or dates on which they shall become delinquent.  The taxes, assessments and charges for
purposes of this Section 1.4.3 shall, if Bank so elects, include, without
limitation, water and sewer rents. Mortgagor shall procure and deliver to Bank
when issued all statements or bills for such obligations.  Upon demand by Bank, Mortgagor shall deliver
to Bank such additional monies as are required to satisfy any deficiencies in
the amounts necessary to enable Bank to pay such taxes, assessments and similar
charges thirty (30) days prior to the date they

 

5

 

become delinquent.  Bank shall pay such taxes, assessments and
other charges as they become due to the extent of the funds on deposit with
Bank from time to time and provided Mortgagor has delivered to Bank the
statements or bills therefor. In making any such payments, Bank shall be
entitled to rely on any bill issued in respect of any such taxes, assessments
or charges without inquiry into the validity, propriety or amount thereof and
whether delivered to Bank by Mortgagor or otherwise obtained by Bank. Any
deposits received pursuant to this Section 1.4.3 shall not be, nor be
deemed to be, trust funds, but may be commingled with the general funds of Bank
and Bank shall have no obligation to pay interest on amounts deposited with
Bank pursuant to this Section 1.4.3. 
If any Event of Default occurs, any part or all of the amounts then on
deposit or thereafter deposited with Bank under this Section 1.4.3 may at
Bank’s option be applied to payment of Borrower’s Liabilities in such order as
Bank may determine.

 

1.4.4.                     No Credit
Against the Indebtedness Secured Hereby. Mortgagor shall not claim, demand
or be entitled to receive any credit against the principal or interest payable
under the terms of the Notes or the Credit Agreement or on any of Borrower’s
Liabilities for any of the taxes, assessments or similar impositions assessed
against the Mortgaged Property or any part thereof or that are applicable to
Borrower’s Liabilities or to Bank’s interest in the Mortgaged Property.

 

1.5.                              Mechanic’s
and Other Liens.  Mortgagor shall not
permit or suffer any mechanic’s, laborer’s, materialman’s, statutory or other
lien or encumbrance, other than Permitted Liens, to be created upon or against
the Mortgaged Property, provided, however, that Mortgagor may in good faith, by
appropriate proceeding, contest the validity, applicability or amount of any
asserted lien in accordance with the applicable provisions of the Credit
Agreement, if any.  Mortgagor shall pay
the disputed amount and all interest and penalties due in respect thereof on or
before the date any adjudication of the validity or amount thereof becomes
final and, in any event, no less than thirty (30) days prior to any foreclosure
sale of the Mortgaged Property or the exercise of any other remedy by such
claimant against the Mortgaged Property.

 

1.6.                              Insurance
and Condemnation.

 

1.6.1.                     Hazard
Insurance.  Mortgagor shall, at its
sole expense, obtain for, deliver to, assign to and maintain for the benefit of
Bank, until Borrower’s Liabilities are paid in full, policies of hazard
insurance in an amount which shall be not less than 100% of the full insurable
replacement cost of the Mortgaged Property (other than the Land) insuring, on a
replacement cost basis, the Mortgaged Property against loss or damage on a
“special cause of loss” form, such insurable hazards, casualties and
contingencies as are included therein and otherwise as Bank may require,
including without limitation fire, windstorm, rainstorm, vandalism, earthquake
and, if all or any part of the Mortgaged Property shall at any time be located
within an area identified by the government of the United States or any agency
thereof as having special flood hazards and for which flood insurance is
available, flood. Mortgagor shall pay promptly when due any premiums on such
insurance policies and on any renewals thereof. 
The form of such policies and the companies issuing them shall be
acceptable to Bank. If any such policy shall contain a co-insurance clause it
shall also contain an agreed amount or stipulated value endorsement.  All such policies and renewals thereof shall
be held by Bank and shall contain a “Bank’s loss payable” clause making losses
payable to Bank. Losses shall not be payable to any other party

 

6

 

without Bank’s prior
written consent.  In the event of loss,
Mortgagor will give immediate written notice to Bank and Bank may make proof of
loss if not made promptly by Mortgagor (for which purpose Mortgagor hereby
irrevocably appoints Bank as its attorney-in-fact). In the event of the
foreclosure of this Mortgage or any other transfer of title to the Mortgaged
Property in full or partial satisfaction of Borrower’s Liabilities, all right,
title and interest of Mortgagor in and to all insurance policies and renewals
thereof then in force shall pass to the purchaser or grantee. All such policies
shall provide that they shall not be modified, cancelled or terminated without
at least thirty (30) days’ prior written notice to Bank from the insurer.

 

1.6.2.                     Other
Insurance.  Mortgagor shall, at its
sole expense, obtain for, deliver to, assign to and maintain for the benefit
of, Bank, until Borrower’s Liabilities are paid in full, such other policies of
insurance as may be required by the terms of the Credit Agreement.

 

1.6.3.                     Adjustment
of Loss.  Except as permitted by the
Credit Agreement, Bank is hereby authorized and empowered, at its option, to
adjust or compromise any loss under any insurance policies covering the
Mortgaged Property and to collect and receive the proceeds from any such policy
or policies (which proceeds shall be disposed of in the manner provided in
Section 1.6.5). Mortgagor hereby irrevocably appoints Bank as its
attorney-in-fact for the purposes set forth in the preceding sentence.  Each insurance company is hereby authorized
and directed to make payment of 100% of all such losses directly to Bank
alone.  After deducting from such
insurance proceeds any expenses incurred by Bank in the collection and
settlement thereof, including without limitation attorneys’ and adjusters’ fees
and charges, Bank shall apply the net proceeds as provided in Section 1.6.5.

 

1.6.4.                     Condemnation
Awards.  Bank shall be entitled to
all compensation, awards, damages, claims, rights of action and proceeds of, or
on account of, (i) any damage or taking, pursuant to the power of eminent
domain, of the Mortgaged Property or any part thereof, (ii) damage to the
Mortgaged Property by reason of the taking, pursuant to the power of eminent
domain, of other property, or (iii) the alteration of the grade of any street
or highway on or about the Mortgaged Property. 
Bank is hereby authorized, at its option, to commence, appear in and
prosecute in its own or Mortgagor’s name any action or proceeding relating to
any such compensation, awards, damages, claims, rights of action and proceeds
and to settle or compromise any claim in connection therewith.  Mortgagor hereby irrevocably appoints Bank as
its attorney-in-fact for the purposes set forth in the preceding sentence.  Bank after deducting from such compensation,
awards, damages, claims, rights of action and proceeds all its expenses,
including attorneys’ fees, may apply such net proceeds (except as otherwise
provided in Section 1.6.5 of this Mortgage) to payment of Borrower’s
Liabilities in such order and manner as Bank may elect.  Mortgagor agrees to execute such further
assignments of any compensation awards, damages, claims, rights of action and
proceeds as Bank may require.

 

1.6.5.                     Repair;
Proceeds of Casualty Insurance and Eminent Domain.  If all or any part of the Mortgaged Property
shall be damaged or destroyed by fire or other casualty or shall be damaged or
taken through the exercise of the power of eminent domain or other cause
described in Section 1.6.4, Mortgagor shall promptly and with all due
diligence restore and repair the Mortgaged Property whether or not the proceeds,
award or other compensation are sufficient to pay the cost of such restoration
or repair.  Unless the Credit Agreement
expressly

 

7

 

provides that such
proceeds, award or other compensation shall be used for another purpose, the
entire amount of such proceeds, award or compensation shall be applied to
Borrower’s Liabilities in such order and manner as Bank may elect.  To the extent expressly provided by the
Credit Agreement, such proceeds, award or other compensation shall be made
available to Mortgagor, on such terms and conditions as Bank may impose, for
the purpose of financing the cost of restoration or repair with any excess to
be applied to Borrower’s Liabilities. 
Notwithstanding any other provision of this Section 1.6.5, if an
Event of Default shall be existing at the time of such casualty, taking or
other event or if an Event of Default occurs thereafter, Bank shall have the
right to immediately apply all insurance proceeds, awards or compensation to
the payment of Borrower’s Liabilities in such order and manner as Bank may
determine.

 

1.6.6.                     Renewal of
Policies.  At least twenty (20) days
prior to the expiration date of any policy evidencing insurance required under
this Section 1.6, a renewal thereof satisfactory to Bank shall be
delivered to Bank or substitution therefor, together with receipts or other
evidence of the payment of any premiums then due on such renewal policy or
substitute policy.

 

1.6.7.                     Insurance
Escrow.  If directed by Bank in writing,
Mortgagor shall, in order to secure the performance and discharge of
Mortgagor’s obligations under this Section 1.6, but not in lieu of such
obligations, deposit with Bank on the first day of each calendar month
throughout the term of the Loan, a sum in an amount determined by Bank from
time to time by written notice to Mortgagor, in order to accumulate funds
sufficient to permit Bank to pay all premiums payable in connection with the
insurance required hereunder at least thirty (30) days prior to the date or
dates on which they shall become due. 
Upon demand by Bank, Mortgagor shall deliver to Bank such additional
monies as are required to satisfy any deficiencies in the amounts necessary to
enable Bank to pay such premiums thirty (30) days prior to the date they shall
become due.

 

1.7.                              Non-Impairment
of Bank’s Rights.  Nothing contained
in this Mortgage shall be deemed to limit or otherwise affect any right or
remedy of Bank under any provision of this Mortgage or of any statute or rule
of law to pay and, upon Mortgagor’s failure to pay the same, Bank may pay any
amount required to be paid by Mortgagor under Sections 1.4, 1.5 and 1.6.  Mortgagor shall pay to Bank on demand the
amount so paid by Bank together with interest at the rate payable under the Credit
Agreement after an “Event of Default” as such term is defined in the Credit
Agreement (the “Default Rate”) and the amount so paid by Bank together with
interest, shall be added to Borrower’s Liabilities.

 

1.8.                              Care
of the Mortgaged Property.

 

(a)                                  Mortgagor
shall preserve and maintain the Mortgaged Property in good and first class
condition and repair. Mortgagor shall not, without the prior written consent of
Bank, permit, commit or suffer any waste, impairment or deterioration of the
Mortgaged Property or of any part thereof.

 

(b)                                 Except
as otherwise provided in the Credit Agreement or this Mortgage, no new
improvements shall be constructed on the Mortgaged Property and no part of the

 

8

 

Mortgaged Property shall
be removed, demolished or altered in any material manner without the prior
written consent of Bank.

 

1.9.                              Transfer
or Encumbrance of the Mortgaged Property. Except as permitted by the Credit
Agreement, Mortgagor shall not permit or suffer to occur any sale, assignment,
conveyance, transfer, mortgage, lease (other than leases made in accordance
with the provisions of this Mortgage) or encumbrance of, or any contract for
any of the foregoing on an installment basis or otherwise pertaining to, the Mortgaged
Property, any part thereof, any interest therein, the beneficial interest in
Mortgagor, any interest in the beneficial interest in Mortgagor or in any trust
holding title to the Mortgaged Property, or any interest in a corporation,
partnership or other entity which owns all or part of the Mortgaged Property or
such beneficial interest, whether by operation of law or otherwise, without the
prior written consent of Bank having been obtained.

 

1.10.                        Further
Assurances.  At any time and from
time to time, upon Bank’s request, Mortgagor shall make, execute and deliver,
or cause to be made, executed and delivered, to Bank, and where appropriate
shall cause to be recorded, registered or filed, and from time to time
thereafter to be re-recorded, re-registered and refiled at such time and in
such offices and places as shall be deemed desirable by Bank, any and all such
further mortgages, security agreements, financing statements, instruments of
further assurance, certificates and other documents as Bank may consider
necessary or desirable in order to effectuate or perfect, or to continue and
preserve the obligations under, this Mortgage.

 

1.11.                        Assignment
of Rents.

 

The assignment of rents,
income and other benefits contained in Section (E) of the Granting Clauses
of this Mortgage shall be fully operative without any further action on the
part of either party, and, specifically, Bank shall be entitled, at its option,
upon the occurrence of an Event of Default hereunder, to all rents, income and
other benefits from the Mortgaged Property, whether or not Bank takes
possession of such property.  Such
assignment and grant shall continue in effect until Borrower’s Liabilities are
paid in full, the execution of this Mortgage constituting and evidencing the
irrevocable consent of Mortgagor to the entry upon and taking possession of the
Mortgaged Property by Bank pursuant to such grant, whether or not foreclosure
proceedings have been instituted. 
Notwithstanding the foregoing, so long as no Event of Default has
occurred or is continuing, Mortgagor shall have the right and authority to
continue to collect the rents, income and other benefits from the Mortgaged
Property as they become due and payable but not more than thirty (30) days
prior to the due date thereof.

 

1.12.                        After-Acquired
Property.  To the extent permitted
by, and subject to, applicable law, the lien of this Mortgage shall
automatically attach, without further act, to all property hereafter acquired
by Mortgagor located in or on, or attached to, or used or intended to be used
in connection with, or with the operation of, the Mortgaged Property or any
part thereof.

 

9

 

1.13.                        Leases
Affecting Mortgaged Property.

 

Mortgagor shall comply
with and perform in a complete and timely manner all of its obligations as
landlord under all leases affecting the Mortgaged Property or any part
thereof.  The assignment contained in
Section (E) of the Granting Clauses shall not be deemed to impose upon
Bank any of the obligations or duties of the landlord or Mortgagor provided in
any lease.

 

1.14.                        Management
of Mortgaged Property.  Mortgagor
shall cause the Mortgaged Property to be managed at all times in accordance
with sound business practice.

 

1.15.                        Execution
of Leases.  Mortgagor shall not
permit any leases to be made of the Mortgaged Property, or to be modified,
terminated, extended or renewed, without the prior written consent of Bank.

 

1.16.                        Expenses.  Without limitation of any obligation of
Mortgagor set forth in the Credit Agreement, Mortgagor shall pay when due and
payable, and otherwise on demand made by Bank, all appraisal fees, recording
fees, taxes, brokerage fees and commissions, abstract fees, title insurance
fees, escrow fees, attorneys’ fees, court costs, documentary and expert
evidence, fees of inspecting architects and engineers, and all other costs and
expenses of every character which have been incurred or which may hereafter be
incurred by Bank in connection with this Mortgage or the administration and
enforcement of any term or provision of this Mortgage.  If Mortgagor fails to pay said costs and
expenses as above provided, Bank may elect, but shall not be obligated, to pay
the costs and expenses described in this Section 1.16, and if Bank does so
elect, then Mortgagor will, upon demand by Bank, reimburse Bank for all such
expenses which have been or shall be paid or incurred by it.  The amounts paid by Bank shall bear interest
at the Default Rate and such amounts, together with interest, shall be added to
Borrower’s Liabilities, shall be immediately due and payable and shall be
secured by the lien of this Mortgage and the other Loan Documents.  In the event of foreclosure hereof, Bank
shall be entitled to add to the indebtedness found to be due by the court a
reasonable estimate of such expenses to be incurred after entry of the decree
of foreclosure.

 

To the extent permitted
by law, Mortgagor agrees to hold harmless Bank against and from, and reimburse
it for, all claims, demands, liabilities, losses, damages, judgments,
penalties, costs and expenses, including without limitation attorneys’ fees,
which may be imposed upon, asserted against, or incurred or paid by it by
reason of or in connection with any bodily injury or death or property damage
occurring in or upon or in the vicinity of the Mortgaged Property through any
cause whatsoever, or asserted against it on account of any act performed or
omitted to be performed hereunder, or on account of any transaction arising out
of or in any way connected with the Mortgaged Property, this Mortgage, the
other Loan Documents, any of the indebtedness evidenced by the Notes or any of
Borrower’s Liabilities.

 

1.17.                        Bank’s
Performance of Mortgagor’s Obligations. 
If Mortgagor fails to pay any tax, assessment, encumbrance or other
imposition, or to furnish insurance hereunder, or to perform any other
covenant, condition or term in this Mortgage, the Notes, the Credit Agreement
or any other Loan Instrument, Bank may, but shall not be obligated to, pay,
obtain or perform the same. All payments made, whether such payments are
regular or accelerated payments, and costs

 

10

 

and expenses incurred or
paid by Bank in connection therewith shall be due and payable immediately.  The amounts so incurred or paid by Bank shall
bear interest at the Default Rate and such amounts, together with interest,
shall be added to Borrower’s Liabilities and secured by the lien of this
Mortgage and the other Loan Documents. Bank is hereby empowered to enter and to
authorize others to enter upon the Mortgaged Property or any part thereof for
the purpose of performing or observing any covenant, condition or term that
Mortgagor has failed to perform or observe, without thereby becoming liable to
Mortgagor or any person in possession holding under Mortgagor. Performance or
payment by Bank of any obligation of Mortgagor shall not relieve Mortgagor of
such obligation or of the consequences of having failed to perform or pay the
same and shall not effect the cure of any Event of Default.

 

1.18.                        Payment
of Superior Liens.  To the extent
that Bank, after the date hereof, pays any sum due under any provision of law
or instrument or document creating any lien superior or equal in priority in
whole or in part to the lien of this Mortgage, Bank shall have and be entitled
to a lien on the premises equal in parity with that discharged, and Bank shall
be subrogated to and receive and enjoy all rights and liens possessed, held or
enjoyed by, the holder of such lien, which shall remain in existence and
benefit Bank to secure the Notes, the Credit Agreement and all obligations and
liabilities secured hereby.  Bank shall
be subrogated, notwithstanding their release of record, to mortgages, trust
deeds, superior titles, vendors’ liens, mechanics’ and materialmen’s liens,
charges, encumbrances, rights and equities on the Mortgaged Property to the
extent that any obligation under any thereof is paid or discharged with
proceeds of disbursements or advances under the Notes or other indebtedness
secured hereby.

 

1.19.                        Use of
the Mortgaged Property.  Mortgagor
shall not suffer or permit the Mortgaged Property, or any portion thereof, to
be used for any purpose other than for the purposes for which it is currently
being used and, without limitation of the foregoing, Mortgagor shall not use or
permit the use of the Mortgaged Property or any portion thereof for any
unlawful purpose.

 

ARTICLE II

DEFAULTS

 

2.1                                 Event
of Default.  The term “Event of
Default,” wherever used in this Mortgage, shall mean any one or more of the
following events:

 

(a)                                  The
failure by Mortgagor:  (i) to pay or
deposit when due any deposit for taxes and assessments due hereunder or any
other sums to be paid by Mortgagor hereunder; or (ii) to keep, perform, or
observe any covenant, condition or agreement contained in Sections 1.4.1,
1.6.1, 1.6.2, 1.9 or 1.19 hereof; or (iii) to keep, perform or observe any
other covenant, condition or agreement on the part of Mortgagor in this
Mortgage.

 

(b)                                 The
occurrence of an “Event of Default” under and as defined in the Credit
Agreement, the Subsidiary Guaranty or any of the other Loan Documents.

 

(c)                                  The
untruth of any warranty or representation made herein.

 

11

 

(d)                                 An
uninsured loss, damage, destruction or taking by eminent domain or other
condemnation proceedings of any part of the Mortgaged Property.

 

(e)                                  The
receipt by Bank of written notice from any mortgagor, any guarantor or surety
of Mortgagor’s obligations or any other party, purportedly sent to terminate,
limit or restrict future advances, whether or not such notice is sent pursuant
to the provisions of 42 PA.C.S.A. Sections 8143(B) or 8143(C) and whether or
not such notice is effective thereunder.

 

ARTICLE III

REMEDIES

 

3.1                                 Acceleration
of Maturity.  If an Event of Default
shall have occurred, Bank may declare Borrower’s Liabilities to be immediately
due and payable, and upon such declaration Borrower’s Liabilities shall
immediately become and be due and payable without further demand or
notice.  The foregoing shall not be in
limitation of any provision contained in any other Loan Instrument, including
without limitation any such provision pursuant to which Borrower’s Liabilities
become immediately due and payable without action or election by Bank.

 

3.2                                 Bank’s
Power of Enforcement.  If an Event of
Default shall have occurred, Bank may, either with or without entry or taking
possession as provided in this Mortgage or otherwise, and without regard to
whether or not Borrower’s Liabilities shall have been accelerated, and without
prejudice to the right of Bank thereafter to bring an action of foreclosure or
any other action for any default existing at the time such earlier action was
commenced or arising thereafter, proceed by any appropriate action or
proceeding:  (a) to enforce payment of
the Notes and/or any other of Borrower’s Liabilities or the performance of any
term hereof or any of the other Loan Documents; (b) to foreclose this Mortgage
and to have sold, as an entirety or in separate lots or parcels, the Mortgaged
Property; and (c) to pursue any other remedy available to it. Bank may take
action either by such proceedings or by the exercise of its powers with respect
to entry or taking possession, or both, as Bank may determine.  Without limitation of the foregoing, if an
Event of Default shall have occurred, as an alternative to the right of
foreclosure for the full indebtedness evidenced by the Notes and the interest
accrued thereon and any other Borrower’s Liabilities, after acceleration
thereof, Bank shall have the right to institute partial foreclosure proceedings
with respect to the portion of Borrower’s Liabilities so in default, as if
under a full foreclosure, and without declaring all of Borrower’s Liabilities
to be immediately due and payable (such proceedings being referred to herein as
“partial foreclosure”), and provided that, if Bank has not elected to
accelerate all of Borrower’s Liabilities and a foreclosure sale is made because
of default in payment of only a part of Borrower’s Liabilities, such sale may
be made subject to the continuing lien of this Mortgage for the unmatured part
of Borrower’s Liabilities.  Any sale
pursuant to a partial foreclosure, if so made, shall not in any manner affect
the unmatured portion of Borrower’s Liabilities, but as to such unmatured
portion, this Mortgage and the lien thereof shall remain in full force and
effect just as though no foreclosure sale had been made.  Notwithstanding the filing of any partial
foreclosure or entry of a decree of sale therein, Bank may elect, at any time
prior to a foreclosure sale pursuant to such decree, to discontinue such
partial foreclosure and to accelerate Borrower’s Liabilities by reason of any
Event of Default upon which such partial foreclosure was predicated or by
reason of any other defaults, and proceed with full foreclosure proceedings.
Bank may proceed with one or more

 

12

 

partial foreclosures
without exhausting its right to proceed with a full or partial foreclosure sale
for any unmatured portion of Borrower’s Liabilities, it being the purpose to
permit, from time to time a partial foreclosure sale for any matured portion of
Borrower’s Liabilities without exhausting the power to foreclose and to sell
the Mortgaged Property pursuant to any partial foreclosure in respect of any
other portion of Borrower’s Liabilities, whether matured at the time or
subsequently maturing, and without exhausting at any time the right of
acceleration and the right to proceed with a full foreclosure.

 

3.3                                 Bank’s
Right to Enter and Take Possession, Operate and Apply Income.

 

(a)                                  If
an Event of Default shall have occurred, (i) Mortgagor, upon demand of Bank,
shall forthwith surrender to Bank the actual possession of the Mortgaged
Property, and to the extent permitted by law, Bank itself, or by such officers
or agents as it may appoint, is hereby expressly authorized to enter and take
possession of all or any portion of the Mortgaged Property and may exclude
Mortgagor and its agents and employees wholly therefrom.

 

(b)                                 If
Mortgagor shall for any reason fail to surrender or deliver the Mortgaged
Property or any part thereof after Bank’s demand, Bank may obtain a judgment or
decree conferring on Bank the right to immediate possession or requiring
Mortgagor to deliver immediate possession of all or part of the Mortgaged
Property to Bank, to the entry of which judgment or decree Mortgagor hereby
specifically consents.  Mortgagor shall
pay to Bank, upon demand, all costs and expenses of obtaining such judgment or
decree and reasonable compensation to Bank, its attorneys and agents, and all
such costs, expenses and compensation shall, until paid, be secured by the lien
of this Mortgage.

 

(c)                                  Upon
every such entering upon or taking of possession, Bank, to the extent permitted
by law, may hold, store, use, operate, manage and control the Mortgaged
Property and conduct the business thereof.

 

(d)                                 For
the purpose of obtaining possession of the Mortgaged Property in the Event of
Default hereunder or under the Credit Agreement and the Notes, Mortgagor hereby
authorizes and empowers any attorney of any court of record in the Commonwealth
of Pennsylvania or elsewhere, as attorney for Mortgagor and all persons
claiming under or through Mortgagor, to sign an agreement for entering in any
competent court an action in ejectment for possession of the Mortgaged Property
and to appear for and confess judgment against Mortgagor, and against all
persons claiming under or through Mortgagor, in favor of Bank, for recovery by
Bank of possession thereof, for which this Mortgage, or a copy thereof verified
by affidavit, shall be a sufficient warrant; and thereupon a writ of possession
may immediately issue for possession of the Mortgaged Property, without any prior
writ or proceeding whatsoever and without any stay of execution.  If for any reason after such action has been
commenced it shall be discontinued, or possession of the Mortgaged Property
shall remain in or be restored to Mortgagor, Bank shall have the right for the
same default or any subsequent default to bring one or more further actions as
above provided to recover possession of the Mortgaged Property.  Bank may bring an action in ejectment and
confess judgment therein before or after the institution of proceedings to
foreclose this Mortgage or to enforce the Credit Agreement and the Notes, or
after entry of judgment therein or on the Credit Agreement and the Notes, or
after a

 

13

 

Sheriff’s sale of the
Mortgaged Property in which Bank is the successful bidder, it being the
understanding of the parties that the authorization to pursue such proceedings
for obtaining possession and confession of judgment therein is an essential
part of the remedies for enforcement of the Mortgage, the Credit Agreement and
the Notes, and shall survive any execution sale to Bank.

 

3.4.                              Leases.  Bank is authorized to foreclose this Mortgage
subject to the rights, if any, of any or all tenants of the Mortgaged Property,
even if the rights of any such tenants are or would be subordinate to the lien
of this Mortgage. Bank may elect to foreclose the rights of some subordinate
tenants while foreclosing subject to the rights of other subordinate tenants.

 

3.5.                              Purchase
by Bank.  Upon any foreclosure sale,
Bank may bid for and purchase all or any portion of the Mortgaged Property and,
upon compliance with the terms of the sale, may hold, retain and possess and
dispose of such property in its own absolute right without further accountability.

 

3.6.                              Application
of Foreclosure Sale Proceeds.  The
proceeds of any foreclosure sale of the Mortgaged Property or any part thereof
received by Bank shall be applied by Bank to the indebtedness secured hereby in
such order and manner as Bank may elect.

 

3.7                                 Application
of Indebtedness Toward Purchase Price. Upon any foreclosure sale, Bank may
apply any or all of the indebtedness and other sums due to Bank under the
Notes, this Mortgage or any other Loan Instrument to the price paid by Bank at
the foreclosure sale.

 

3.8.                              Waiver
of Appraisement, Valuation, Stay, Extension and Redemption Laws.  Mortgagor hereby waives any and all rights of
redemption.  Mortgagor further agrees, to
the full extent permitted by law, that in case of an Event of Default, neither
Mortgagor nor anyone claiming through or under it will set up, claim or seek to
take advantage of any reinstatement, appraisement, valuation, stay or extension
laws now or hereafter in force, or take any other action which would prevent or
hinder the enforcement or foreclosure of this Mortgage or the absolute sale of
the Mortgaged Property or the final and absolute putting into possession
thereof, immediately after such sale, of the purchaser thereat.  Mortgagor, for itself and all who may at any
time claim through or under it, hereby waives, to the full extent that it may
lawfully so do, the benefit of all such laws, and any and all right to have the
assets comprising the Mortgaged Property marshalled upon any foreclosure of the
lien hereof and agrees that Bank or any court having jurisdiction to foreclose
such lien may sell the Mortgaged Property in part or as an entirety.

 

3.9.                              Receiver
- Bank in Possession.  If an Event of
Default shall have occurred, Bank, to the extent permitted by law and without
regard to the value of the Mortgaged Property or the adequacy of the security
for the indebtedness and other sums secured hereby, shall be entitled as a
matter of right and without any additional showing or proof, at Bank’s
election, to either the appointment by the court of a receiver (without the
necessity of Bank posting a bond) to enter upon and take possession of the
Mortgaged Property and to collect all rents, income and other benefits thereof
and apply the same as the court may direct or to be placed by the court into

 

14

 

possession of the
Mortgaged Property as mortgagee in possession with the same power herein
granted to a receiver and with all other rights and privileges of a mortgagee
in possession under law.  The right to
enter and take possession of and to manage and operate the Mortgaged Property,
and to collect all rents, income and other benefits thereof, whether by a
receiver or otherwise, shall be cumulative to any other right or remedy hereunder
or afforded by law and may be exercised concurrently therewith or independently
thereof.  Bank shall be liable to account
only for such rents, income and other benefits actually received by Bank,
whether received pursuant to this Section 3.9 or Section 3.3.
Notwithstanding the appointment of any receiver or other custodian, Bank shall
be entitled as pledgee to the possession and control of any cash, deposits or
instruments at the time held by, or payable or deliverable under the terms of
this Mortgage to Bank.

 

3.10.                        Mortgagor
to Pay Borrower’s Liabilities in Event of Default; Application of Monies by
Bank.

 

(a)                                  Upon
occurrence of an Event of Default, Bank shall be entitled to sue for and to
recover judgment against Mortgagor for Borrower’s Liabilities due and unpaid
together with costs and expenses, including, without limitation, the reasonable
compensation, expenses and disbursements of Bank’s agents, attorneys and other
representatives, to the fullest extent as permitted under applicable law,
either before, after or during the pendency of any proceedings for the
enforcement of this Mortgage; and the right of Bank to recover such judgment
shall not be affected by any taking of possession or foreclosure sale
hereunder, or by the exercise of any other right, power or remedy for the
enforcement of the terms of this Mortgage, or the foreclosure of the lien
hereof.

 

(b)                                 In
case of a foreclosure sale of all or any part of the Mortgaged Property and of
the application of the proceeds of sale to the payment of Borrower’s
Liabilities, Bank shall be entitled to enforce all other rights and remedies
under the Loan Documents.

 

(c)                                  Mortgagor
hereby agrees, to the extent permitted by law, that no recovery of any judgment
by Bank under any of the Loan Documents, and no attachment or levy of execution
upon any of the Mortgaged Property or any other property of Mortgagor, shall
(except as otherwise provided by law) in any way affect the lien of this
Mortgage upon the Mortgaged Property or any part thereof or any lien, rights,
powers or remedies of Bank hereunder, but such lien, rights, powers and
remedies shall continue unimpaired as before until Borrower’s Liabilities are
paid in full.

 

(d)                                 Any
monies collected or received by Bank under this Section 3.10 shall be
applied to the payment of compensation, expenses and disbursements of the
agents, attorneys and other representatives of Bank, and the balance remaining
shall be applied to the payment of Borrower’s Liabilities, in such order and
manner as Bank may elect, and any surplus, after payment of all Borrower’s
Liabilities, shall be paid to Mortgagor.

 

3.11.                        Remedies
Cumulative.  No right, power or
remedy conferred upon or reserved to Bank by the Notes, the Credit Agreement,
this Mortgage or any other Loan Instrument or any instrument evidencing or
securing Borrower’s Liabilities is exclusive of any other right,

 

15

 

power or remedy, but each
and every such right, power and remedy shall be cumulative and concurrent and
shall be in addition to any other right, power and remedy given hereunder or
under the Notes or any other Loan Instrument or any instrument evidencing or
securing Borrower’s Liabilities, or now or hereafter existing at law, in equity
or by statute.

 

ARTICLE IV

MISCELLANEOUS PROVISIONS

 

4.1.                              Heirs,
Successors and Assigns Included in Parties. Whenever Mortgagor or Bank is
named or referred to herein, heirs and successors and assigns of such person or
entity shall be included, and all covenants and agreements contained in this
Mortgage shall bind the successors and assigns of Mortgagor, including any
subsequent owner of all or any part of the Mortgaged Property and inure to the
benefit of the successors and assigns of Bank. 
This Section 4.1 shall not be construed to permit an assignment,
transfer, conveyance, encumbrance or other disposition otherwise prohibited by
this Mortgage.

 

4.2.                              Notices.

 

(a)                                  All
notices, requests, reports demands or other instruments required or
contemplated to be given or furnished under this Mortgage to Mortgagor or Bank
shall be directed to Mortgagor or Bank, as the case may be, in the manner set
forth in the Credit Agreement at the following addresses:

 

	
  If to Bank:

  	
   

  	
  The Northern Trust
  Company

  
	
   

  	
   

  	
  50 South LaSalle Street

  
	
   

  	
   

  	
  Chicago, Illinois 60675

  
	
   

  	
   

  	
  Attention:  Erin G. Sullivan

  
	
   

  	
   

  	
   

  
	
  If to Mortgagor:

  	
   

  	
  c/o Quixote Corporation

  
	
   

  	
   

  	
  35 East Wacker Drive

  
	
   

  	
   

  	
  Chicago, Illinois 60601

  
	
   

  	
   

  	
  Attention:  Daniel P. Gorey

  

 

4.3.                              Headings.  The headings of the articles, sections,
paragraphs and subdivisions of this Mortgage are for convenience only, are not
to be considered a part hereof, and shall not limit, expand or otherwise affect
any of the terms hereof.

 

4.4                                 Invalid
Provisions.  In the event that any of
the covenants, agreements, terms or provisions contained in this Mortgage shall
be invalid, illegal or unenforceable in any respect, the validity of the
remaining covenants, agreements, terms or provisions contained herein (or the
application of the covenant, agreement, term held to be invalid, illegal or unenforceable,
to persons or circumstances other than those in respect of which it is invalid,
illegal or unenforceable) shall be in no way affected, prejudiced or disturbed
thereby.

 

4.5                                 Changes.  Neither this Mortgage nor any term hereof may
be released, changed, waived, discharged or terminated orally, or by any action
or inaction, but only by an

 

16

 

instrument in writing
signed by the party against which enforcement of the release, change, waiver,
discharge or termination is sought. To the extent permitted by law, any
agreement hereafter made by Mortgagor and Bank relating to this Mortgage shall
be superior to the rights of the holder of any intervening lien or encumbrance.  Any holder of a lien or encumbrance junior to
the lien of this Mortgage shall take its lien subject to the right of Bank to
amend, modify or supplement this Mortgage, the Notes, the Credit Agreement or
any of the other Loan Documents, to extend the maturity of Borrower’s
Liabilities or any portion thereof, to vary the rate of interest chargeable
under the Notes and/or the Credit Agreement and to increase the amount of the
indebtedness secured hereby, in each and every case without obtaining the
consent of the holder of such junior lien and without the lien of this Mortgage
losing its priority over the rights of any such junior lien.

 

4.6                                 Governing
Law.  This Mortgage shall be
construed, interpreted, enforced and governed by and in accordance with the
laws of the Commonwealth of Pennsylvania.

 

4.7.                              Required
Notices.  Mortgagor shall notify Bank
promptly of the occurrence of any of the following: (i) receipt of notice from
any governmental authority relating to the violation of any rule, regulation,
law or ordinance, the enforcement of which would materially and adversely
affect the Mortgaged Property; (ii) material default by any tenant in the
performance of its obligations under any lease of all or any portion of the
Mortgaged Property or receipt of any notice from any such tenant claiming that
a default by landlord in the performance of its obligations under any such
lease has occurred; or (iii) commencement of any judicial or administrative
proceedings by or against or otherwise adversely affecting Mortgagor or the
Mortgaged Property.  Mortgagor agrees
that any notice given by Mortgagor purportedly pursuant to 42PA. C.S.A. §8143
shall be given by registered or certified mail, return receipt requested, to
the address of Bank specified on page 1 of this Mortgage and only to that
address, and such notice shall be deemed to have been received no earlier than
the date actually and physically received at the address on page 1.

 

4.8                                 Future
Advances.  This Mortgage is given to
secure not only existing indebtedness, but also future advances (whether such
advances are obligatory or are to be made at the option of Bank, or otherwise)
made by Bank under the Notes or the Credit Agreement, to the same extent as if
such future advances were made on the date of the execution of this Mortgage.
The total amount of indebtedness that may be so secured may decrease or
increase from time to time, but all indebtedness secured hereby shall, in no
event, exceed $58,000,000.

 

4.9                                 Release.  Upon full payment and satisfaction of
Borrower’s Liabilities, Bank shall issue to Mortgagor an appropriate release
deed in recordable form.

 

4.10                           Attorneys’
Fees.  Whenever reference is made
herein to the payment or reimbursement of attorneys’ fees, such fees shall be
deemed to include compensation to staff counsel, if any, of Bank in addition to
the fees of any other attorneys engaged by Bank.

 

4.11                           Compliance
with Mortgage Foreclosure Law. In the event that any provision in this
Mortgage shall be inconsistent with any provision of applicable statutory
provisions governing the creation, perfection or enforcement of mortgages, such
provisions shall

 

17

 

take precedence over the
provisions of this Mortgage, but shall not invalidate or render unenforceable
any other provision of this Mortgage that can be construed in a manner
consistent with applicable law.  If any
provision of this Mortgage shall grant to Bank any rights or remedies upon
default of Mortgagor which are more limited than the rights that would
otherwise be vested in Bank under applicable law, Bank shall be vested with
such rights to the full extent permitted by law.

 

4.12                           Credit
Agreement.  The Loan is governed by
terms and provisions set forth in the Credit Agreement and in the event of any
conflict between the terms of this Mortgage and the terms of the Credit
Agreement, the terms of the Credit Agreement shall control.

 

18

 

IN WITNESS WHEREOF,
Mortgagor has caused this instrument to be executed by its duly authorized
officers as of the day and year first above written.

 

	
   

  	
  NU-METRICS, INC.,

  a Pennsylvania corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Daniel P. Gorey

  	
   

  
	
   

  	
  Name:

  	
  Daniel P. Gorey

  
	
   

  	
  Title:

  	
  Vice President and
  Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Joan R. Riley

  	
   

  
	
   

  	
  Name:

  	
  Joan R. Riley

  
	
   

  	
  Title:

  	
  Secretary

  
					

 

19

 

ACKNOWLEDGMENT

 

	
  STATE OF ILLINOIS

  	
  )

  
	
   

  	
  ) SS

  
	
  COUNTY OF COOK

  	
  )

  

 

I, Eileen M. O’Connell, a
Notary Public in and for and residing in said County and State, DO HEREBY
CERTIFY THAT Daniel P. Gorey and Joan R. Riley of Nu-Metrics, Inc., personally
known to me to be the same persons whose names are subscribed to the foregoing
instrument as such Vice President/Treasurer and Secretary appeared before me
this day in person and acknowledged that they signed and delivered said
instrument as their own free and voluntary acts and as the free and voluntary
act of said corporation; and the said Joan R. Riley acknowledged that she, as
custodian of the corporate seal of said corporation, did affix said corporate
seal to said instrument as her own free and voluntary act and as the free and
voluntary act of said corporation for said uses and purposes.

 

GIVEN under my hand and
notarial seal this 10th day of September, 2004.

 

	
   

  	
    /s/ Eileen
  M. O’Connell

  	
   

  
	
   

  	
     Notary
  Public

  
	
   

  
	
  My Commission Expires:

  
	
   

  
	
  July 13, 2007

  	
   

  
				

 

20

 

EXHIBIT A

 

Legal Description

 

ALL those two certain
pieces, parcels, or tracts of land situate in North Union Township, Fayette
County, Pennsylvania, known as Lot Nos. 4 and 4A in Plat No. 3 of the Greater
Uniontown Industrial Fund Subdivision of Industrial Park No. 2, the plan
whereof is recorded in the office of the Recorder of Deeds for Fayette County,
Pennsylvania, in Plan Book No. 46, page 20, and more particularly together
bounded and described as follows:

 

[BEGINNING at an iron pin
on the Southern line of a 50 foot public road known as Commerce Drive at the
Northwestern corner of Lot No. 3 in Plat No. 2 of the Greater Uniontown
Industrial Fund Subdivision of Industrial Park No. 2, the plan whereof is
recorded in the office of the Recorder of Deeds for Fayette County,
Pennsylvania, in Plan Book No. 44, page 21; thence along the Western line of
said Lot No. 3, South 21° 28’ 00” West, a distance of 260.00 feet to an iron
pin on line of land now or formerly of Brier Hill Steel Co., Inc.; thence by
line of land now or formerly of said Brier Hill Steel Co., Inc., North 68° 32’
00” West, a distance of 381.55 feet to an iron pin on the eastern line of S.R.
0119, known as University Drive; thence along the Eastern line of S.R. 0119,
known as University Drive,
North                                        122.33
feet), an arc distance of 122.43 feet to an iron pin; thence by same, North 04°
19’ 06” East, a distance of 10.00 feet to an iron pin; thence by same by a
curve to the right having a radius of 905.00 feet (the chord bearing and
distance being South 78° 10’ 56” East 236.27 feet), an arc distance of 236.95
feet to an iron pin; then by same, North 19° 19’ 06” East, a distance of 10.00
feet to an iron pin; thence by same by a curve to the right having a radius of
915.00 feet (the chord bearing and distance being South 68° 58’ 18” East, 54.62
feet), an arc distance of 54.63 feet to an iron pin; thence by same, South 67° 15’
40” East, a distance of 55.76 feet to an iron pin in line of Lot No. 5 in the
aforesaid Plat No. 3 of the Greater Uniontown Industrial Fund Subdivision of
Industrial Park No. 2; thence along the dividing line between Lot No. 4A and
Lot No. 5 in said Plat No. 3 of the Greater Uniontown Industrial Fund
Subdivision of Industrial Park No. 2, South 21° 28’ 00” West, a distance of
280.08 feet to an iron pin on the Northern line of said 50 foot public road
known as Commerce Drive; thence along the Northern line of Commerce Drive,
North 68° 32’ 00” West, a distance of 255.69 feet to an iron pin on the
cul-de-sac of said Commerce Drive; thence along said cul-de-sac by a curve to
the left having a radius of 50.00 feet (the chord bearing and distance being
North 87° 16’ 29” West, 32.02 feet), an arc distance of 32.61 feet to an iron
pin; thence by same by a curve to the left having a radius of 50 feet (the
chord bearing and distance being South 42° 13’ 38” East, 89.61 feet), an arc
distance of 203.01 feet to an iron pin, the place of beginning, containing
5.731 acres.]

 

	
  ADDRESS:

  	
  2152 University Drive

  
	
   

  	
  Uniontown, Pennsylvania
  15401

  

 

21

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