Exhibit 10.1
Execution Copy
EMPLOYMENT AGREEMENT
     This agreement (“Agreement”) has been entered into as of the 15th day of
September, 2008 by and between Federal Signal Corporation, a Delaware
corporation (the “Company”), and William H. Osborne, an individual (the
“Executive”).
RECITALS
     The Board of Directors of the Company has determined that it is in the best
interests of the Company and its stockholders to hire the Executive as its
President and Chief Executive Officer. To reinforce and encourage the continued
attention and dedication of the Executive to the Company as the Company’s
President and Chief Executive Officer and to assure that the Company will have
the continued dedication of the Executive, notwithstanding the possibility or
occurrence of a Change in Control (as defined below), the Board desires to
provide for the continued employment of the Executive as its President and Chief
Executive Officer on terms competitive with those of other corporations.
     Additionally, the Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal uncertainties
and risks created by a potential or pending Change in Control and to encourage
the Executive’s full attention and dedication to the Company currently and in
the event of any potential or pending Change in Control, and to provide the
Executive with compensation and benefits arrangements upon any termination after
a Change in Control and certain terminations of employment prior to a Change in
Control which ensure that the compensation and benefits expectations of the
Executive will be satisfied.
     To accomplish these objectives, the Board has caused the Company to enter
into this Agreement. On behalf of the Company, the Board offers to employ the
Executive in the capacity of its President and Chief Executive Officer and the
Executive accepts this offer on the terms and conditions set forth in this
Agreement.
IT IS AGREED AS FOLLOWS:
Section 1: Definitions and Construction.
     1.1 Definitions. For purposes of this Agreement, the following words and
phrases, whether or not capitalized, shall have the meanings specified below,
unless the context plainly requires a different meaning.
          1.1(a) “Accrued Obligations” has the meaning set forth in
Section 4.1(a) of this Agreement.
          1.1(b) “Annual Base Salary” has the meaning set forth in
Section 2.4(a) of this Agreement.

 

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          1.1(c) Beneficial Owner” shall have the meaning ascribed to such term
in Rule 13d-3 of the General Rules and Regulations under the Securities and
Exchange Act of 1934, as amended.
          1.1(d) “Board” means the Board of Directors of the Company.
          1.1(e) “Cause” has the meaning set forth in Section 3.3 of this
Agreement.
          1.1(f) “Change in Control” means:
          (i) Any person (other than the Company, or any corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company, and any trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or such proportionately owned corporation), is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing forty percent
(40%) or more of the combined voting power of the Company’s then outstanding
securities;
          (ii) During any period of not more than twenty-four (24) consecutive
months, individuals who at the beginning of such period constitute the Board,
and any new director whose election by the Board or nomination for election by
the Company’s stockholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;
          (iii) The consummation of a merger or consolidation of the Company
with any other corporation, other than: (i) a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than sixty
percent (60%) of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation; or (ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
acquires more than forty percent (40%) of the combined voting power of the
Company’s then outstanding securities;
          (iv) The Company’s stockholders approve a plan or an agreement for the
sale or disposition by the Company of all or substantially all of the Company’s
assets (or any transaction or series of transactions having a similar effect);
or
          (v) Any other transaction that the Board designates as being a Change
in Control.
          1.1(g) “Change in Control Date” means the date that the Change in
Control first occurs.
          1.1(h) “Company” has the meaning set forth in the first paragraph of
this Agreement and, with regard to successors, in Section 6.2 of this Agreement.

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          1.1(i) “Code” shall mean the Internal Revenue Code of 1986, as
amended.
          1.1(j) “Date of Termination” has the meaning set forth in Section 3.7
of this Agreement. In all cases, a “Date of Termination” shall only occur upon
separation from service from the Company and all of its affiliates, as defined
in Treasury regulations under Section 409A of the Code (generally, separation
from the 50% controlled group that includes the Company).
          1.1(k) “Disability” shall be defined and determined consistent with
the meaning and the processes set forth in the Company’s then current applicable
disability policy.
          1.1(l) “Disability Effective Date” has the meaning set forth in
Section 3.2 of this Agreement.
          1.1(m) “Effective Date” means the first day of the Executive’s
employment with the Company.
          1.1(n) “Employment Period” means the period beginning on the Effective
Date and subject to either party giving the other party written notice at least
120 days before the expiration of the Term (as defined in Section 1.1(w) hereof)
of such party’s intent not to renew this Agreement, ending on the later of
(i) December 31, 2010, or (ii) December 31 of any successive three (3) year
period.
          1.1(o) “Excise Tax” has the meaning set forth in Section 4.2(i)(i) of
this Agreement.
          1.1(p) “Good Reason” has the meaning set forth in Section 3.4 of this
Agreement.
          1.1(q) “Gross-Up Payment” has the meaning set forth in
Section 4.2(i)(i) of this Agreement.
          1.1(r) “Initial Equity Grant” has the meaning set forth in
Section 2.4(c) of this Agreement.
          1.1(s) “Notice of Termination” has the meaning set forth in
Section 3.6 of this Agreement.
          1.1(t) “Payment” has the meaning set forth in Section 4.2(i)(i) of
this Agreement.
          1.1(u) “Prorated Target Bonus” has the meaning set forth in
Section 4.2(a) of this Agreement.
          1.1(v) “Target Bonus” has the meaning set forth in Section 2.4(b) of
this Agreement.

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          1.1(w) “Term” means the period that begins on the Effective Date and
ends on the earlier of (i) the Date of Termination (as defined in Section 3.7),
or (ii) subject to either party giving the other party written notice at least
120 days prior thereto, the close of business on the later of December 31, 2010
or December 31 of any renewal term.
     1.2 Gender and Number. When appropriate, pronouns in this Agreement used in
the masculine gender include the feminine gender, words in the singular include
the plural, and words in the plural include the singular.
     1.3 Headings. All headings in this Agreement are included solely for ease
of reference and do not bear on the interpretation of the text. Accordingly, as
used in this Agreement, the term “Section” mean the text that accompanies the
specified Section of the Agreement.
     1.4 Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Illinois, without reference to
its conflict of law principles.
Section 2: Terms and Conditions of Employment.
          2.1 Period of Employment. The Company shall employ and the Executive
shall remain in the employ of the Company throughout the Term of this Agreement
in accordance with the terms and provisions of this Agreement. This Agreement
will automatically renew for successive three-year periods unless either party
gives the other party written notice of such party’s intent not to renew this
Agreement at least 120 days before the expiration of the Term (as defined in
Section 1.1(w) of this Agreement).
          2.2 Positions and Duties.
          2.2(a) Throughout the Term of this Agreement, the Executive shall
serve as the President and Chief Executive Officer of the Company subject to the
reasonable directions of the Board. The Executive shall have such authority and
shall perform such duties as are specified by the By-laws of the Company and the
Board for the office of President and Chief Executive Officer, subject to the
control exercised by the Board from time to time.
          2.2(b) Throughout the Term of this Agreement (but excluding any
periods of vacation and sick leave to which the Executive is entitled), the
Executive shall devote reasonable attention and time during normal business
hours to the business and affairs of the Company and shall use his reasonable
best efforts to perform faithfully and efficiently such responsibilities as are
assigned to him consistent with his position, under or in accordance with this
Agreement; provided that, it shall not be a violation of this Section 2.2(b) for
the Executive to (i) serve on corporate, civic or charitable boards or
committees with or without compensation, (ii) deliver lectures or fulfill
speaking engagements, with or without compensation, or (iii) manage personal
investments, so long as such activities do not significantly interfere with the
performance of the Executive’s responsibilities as an employee of the Company in
accordance with this Agreement,

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violate the terms of this Agreement or any other agreement between the Executive
and the Company, or violate the Company’s conflict of interest policy or any
applicable law.
     2.3 Situs of Employment. Throughout the Term of this Agreement, the
Executive’s services shall be performed at and out of the Company’s executive
offices located in the greater Chicago, Illinois metropolitan area or such other
office as shall be agreed to between the Executive and the Board.
     2.4 Compensation.
          2.4(a) Annual Base Salary. Beginning on the Effective Date, the
Executive will be paid a base salary (“Annual Base Salary”) at an annual rate of
Six Hundred Fifty Thousand Dollars ($650,000), which shall be paid in equal or
substantially equal semi-monthly installments. During the Term of this
Agreement, the Annual Base Salary payable to the Executive shall be reviewed at
least annually after the end of the first calendar quarter (starting with
calendar year 2009), and increased but not decreased at the reasonable
discretion of the Board or the Compensation and Benefits Committee of the Board.
          2.4(b) Annual Incentive Bonus. Beginning on the Effective Date, in
addition to the Annual Base Salary, the Executive shall be awarded an
opportunity to earn an incentive bonus on an annual basis under any incentive
compensation plan which is generally available to other peer executives of the
Company. The Board or the Compensation Committee shall establish at the
beginning of each calendar year a target incentive award equal to a designated
percentage of the Executive’s Annual Base Salary paid during that plan year (the
“Target Bonus”). The Board and/or the Compensation Committee may also establish
minimum and maximum incentive bonus opportunities on an annual basis in addition
to the Target Bonus. The Board shall be exclusively responsible for decisions
relating to administration of the executive incentive plans. For the employment
period ending December 31, 2008, the Executive’s Target Bonus has been set at
90% of Annual Base Salary (i.e., $585,000). Any bonus payable to the Executive
with respect to the employment period ending December 31, 2008 shall be
pro-rated to reflect the Executive’s length of employment with the Company.
          2.4(c) Long-Term Incentive Plan Equity Grants. The Executive shall be
entitled to receive on the Effective Date a grant under the Company’s 2005
Executive Incentive Compensation Plan equal to $1,100,000 in total value on the
date of grant (as determined by the Company in accordance with the valuation
models used by it consistent with recent valuations by the Company) of
time-vested non-qualified stock options, time-vested restricted stock and
performance-vested restricted stock units (the “Initial Equity Grant”). The
terms of the Initial Equity Grant, including the exact number of shares subject
to each type of award and the conditions of each type of award, will be as
follows:
               (i) Time-Vested Non-Qualified Stock Option. The value of the
non-qualified stock option to be initially granted on the first day of the
Executive’s employment with the Company will be approximately Three Hundred
Sixty-Six Thousand Six Hundred Sixty-Seven Dollars ($366,667), or as near as
practicable, with the exact number of shares subject to such option determined
as of the Executive’s first day of employment with the Company in

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accordance with the valuation model consistent with recent valuations of similar
recent equity awards by the Company. The exercise price per share of the shares
subject to the option will be the closing price of the Company’s common stock as
reported by the New York Stock Exchange on the first day of the Executive’s
employment with the Company. The option will vest and become exercisable as to
one-third of the shares subject thereto on each of the first three anniversaries
of the date of grant. All other terms and conditions of the option will be
consistent with the most recent option grants to the other executive officers of
the Company.
               (ii) Time-Vested Restricted Stock. The value of the restricted
stock award to be initially granted on the first day of the Executive’s
employment with the Company will be approximately Three Hundred Sixty-Six
Thousand Six Hundred Sixty-Seven Dollars ($366,667), or as near as practicable,
with the exact number of shares subject to such restricted stock grant
determined using the closing price of the Company’s common stock as reported by
the New York Stock Exchange on the first day of the Executive’s employment with
the Company consistent with similar recent equity awards by the Company. The
restricted stock will fully vest on the third anniversary of the date of grant.
All other terms and conditions of the restricted stock award will be consistent
with the most recent restricted stock grants to other executive officers of the
Company.
               (iii) Performance-Based Restricted Stock Units. The value of the
restricted stock unit award to be initially granted on the first day of the
Executive’s employment with the Company will be approximately Three Hundred
Sixty-Six Thousand Six Hundred Sixty-Seven Dollars ($366,667), or as near as
practicable, with the exact number of restricted stock units granted to be
determined as of the Executive’s first day of employment with the Company in
accordance with the valuation model consistent with similar recent equity awards
by the Company. The restricted stock units will vest as to the number of shares
of common stock of the Company upon the attainment of the levels of performance
of the Company relative to the Company’s designated peer group during the
performance period beginning on January 1, 2008 and ending on December 31, 2010,
all as set forth in greater detail in Exhibit A to the minutes to the meeting of
the Compensation and Benefits Committee dated February 21, 2008. All other terms
and conditions of the restricted stock units award will be consistent with the
most recent restricted stock unit awards to other executive officers of the
Company.
          2.4(d) Credit of Amount to Savings Restoration Plan. On the Effective
Date, the Executive will be entitled to have an account established in his name
in the Company’s Savings Restoration Plan (or, in the event that the Savings
Restoration Plan is terminated, a similar plan or program established for the
benefit of the Executive) and the Company shall credit to such account the
amount of Two Hundred Thousand Dollars ($200,000). The Executive will be
entitled to designate the initial notional investment account or accounts for
the amount credited to his account as set forth in the Savings Restoration Plan.
The Company will also be obligated to credit in the Executive’s account in the
Savings Restoration Plan an additional amount equal to Two Hundred Thousand
Dollars ($200,000) per year on the anniversary date of the Executive’s first day
of employment with the Company for the next nine years beginning in 2009 and
ending in 2017, provided that the Executive continues in the employment of the
Company on such anniversary date. The initial and any subsequent amounts
credited to the Executive’s account will vest for the benefit of the Executive
over three years at the rate of one-

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third of the amount in each year as of the anniversary date of the Executive’s
first day of employment with the Company. All other terms and conditions of the
amounts credited to the Executive’s account in the Savings Restoration Plan will
be consistent with the terms of such plan.
          2.4(e) Participation in Savings and Retirement Plan. Beginning on the
Effective Date, the Executive will be eligible to participate in all savings and
retirement plans of the Company, including the Company’s tax-qualified
Retirement Savings Plan. Any excess amounts that the Executive is entitled to
contribute or the Company is required to match on behalf of the Executive that
cannot be contributed or matched in the tax-qualified plans due to limitations
or restrictions under the Code or the regulations thereunder, shall be credited
and/or matched into an account for the benefit of the Executive pursuant to the
Company’s Savings Restoration Plan.
          2.4(f) Future Participation in Incentive Plans. Throughout the Term of
the Agreement, the Executive shall be entitled to participate in all annual and
long-term equity and cash incentive plans generally available to other peer
executives of the Company. The terms and conditions, including the amount or
level and the nature of any actual or potential award and any performance or
other vesting criteria, shall be established by action of the Board or the
Compensation and Benefits Committee in its discretion. Nothing herein prevents
the Board or the Compensation and Benefits Committee, in its sole discretion
from terminating or changing any annual or long-term equity or cash incentive
plans, either currently existing or subsequently adopted during the Term of this
Agreement, subject to the then-existing rights of the Executive as a participant
under the terms of the plan as to any incentive award which has already been
earned or otherwise awarded.
          2.4(g) Reimbursement of Moving Costs and Temporary Living Expenses. In
connection with the Executive’s employment hereunder, upon presentation of an
itemized account of expenses, the Executive shall be entitled to receive
reimbursement for all reasonable expenses actually incurred by the Executive in
connection with his and his family’s relocation from Melbourne, Australia to the
greater Chicago, Illinois metropolitan area and all reasonable temporary living
expenses actually incurred by the Executive in connection with such relocation.
The Executive shall use his reasonable best efforts to obtain permanent housing
in the greater Chicago, Illinois metropolitan area as soon as practicable after
the date hereof.
          2.4(h) Signing Bonus/Housing Allowance. The Company recognizes that in
connection with the Executive’s relocation to the greater Chicago, Illinois
metropolitan area, he intends to purchase a primary residence. To encourage the
Executive to relocate to the United States, and particularly to the greater
Chicago, Illinois metropolitan area, and to arrange for a permanent residence,
ten (10) days prior to the scheduled closing date of the purchase of his primary
residence, the Company, in connection with the Executive’s employment hereunder,
will pay the Executive $500,000 as a combined signing bonus and housing
allowance. The signing bonus/housing allowance will be subject to repayment by
the Executive to the extent that the Executive does not continue in the
employment of the Company for at least 24 months after the commencement of his
employment. Accordingly, if the Executive’s employment does not continue for at
least 24 months from the Effective Date, the Executive agrees to repay the

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Company a portion of the signing bonus/housing allowance in an amount equal to:
(i) 1/24th of such amount (i.e., $20,833.33) times (ii) the number of months
during such 24 month period that the Executive was not employed by the Company
beginning with the month immediately following the month in which the
Executive’s last day of employment with the Company occurred. If the Executive
is discharged without Cause as defined in Section 3.3 or resigns for Good Reason
as defined in Section 3.4, the signing bonus/housing allowance will be deemed
paid in full and the Executive will be provided with a written acknowledgment by
the Company to that effect.
          2.4(i) Indemnification for Repayment of Retention Bonus. The Executive
has received a retention bonus in the amount of $263,000 from his former
employer. In accepting the position with the Company, his former employer may,
and is likely to, seek reimbursement of that bonus for the Executive’s failure
to remain in employment through the end of 2009. The Company agrees that should
the Executive’s former employer seek repayment of the retention bonus, it will
promptly indemnify and reimburse the Executive for the amount he is required to
return to his former employer in an aggregate amount not to exceed $263,000.
          2.4(j) Car Allowance. The Executive will be provided with a payment of
$13,800 per year, payable at the rate of $1,150 per month, as a car allowance
subject to increases as approved by the Board.
          2.4(k) Financial/Tax Preparation Services. The Executive will be
provided with the services of a financial and estate planning advisor of his
choice in the amount of $7,500. per year. This amount will be paid to the
Executive by January 31 of each year of employment. For the balance of calendar
year 2008, the reimbursement will be paid within thirty (30) days of the
Effective Date. In addition, the Company will provide the Executive at the
Company’s expense with tax preparation services for all U.S., Illinois and
Australian taxes that may be assessed against the Executive beginning with tax
preparation services for taxes related to the tax year ending December 31, 2008.
          2.4(l) Welfare Benefit Plans. Throughout the Term of this Agreement
(and thereafter, subject to Section 4.1(d) or 4.2(d) hereof), the Executive
and/or the Executive’s family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company (including, without
limitation, medical, prescription, dental, disability, salary continuance,
employee group life, accidental death and travel accident insurance plans and
programs) to the extent generally available to other peer executives of the
Company in accordance with the then current applicable plans, practices,
policies and programs. Subject to the foregoing and the terms of the Company’s
then current policy (including any cap in the amount of life insurance available
per person thereunder), the Company shall provide the Executive with employee
group life insurance on the Executive’s life providing for life insurance in the
amount of the Executive’s then current base salary, increasing as his base
salary increases, to a beneficiary designated by the Executive in accordance
with the then current applicable plan provisions.

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          2.4(m) Expenses. Throughout the Term of this Agreement, the Executive
shall be entitled to receive prompt reimbursement for all reasonable business
expenses incurred by the Executive in accordance with the policies, practices
and procedures of the Company.
          2.4(n) Fringe Benefits. Throughout the Term of this Agreement, the
Executive shall be entitled to such fringe benefits as generally are provided to
other peer executives of the Company.
          2.4(o) Office and Support Staff. Throughout the Term of this
Agreement, the Executive shall be entitled to an office or offices at the
Company’s executive offices in the greater Chicago, Illinois metropolitan area,
of a size and with furnishings and other appointments appropriate to the
President and Chief Executive Officer of the Company.
          2.4(p) Vacation. Throughout the Term of this Agreement, the Executive
shall be entitled to four weeks paid vacation per annum. For the employment
period ending December 31, 2008, the Executive shall receive 6 days of paid
vacation.
Section 3: Termination of Employment.
     3.1 Death. The Executive’s employment shall terminate automatically upon
the Executive’s death during the Employment Period.
     3.2 Disability. In the event of a determination of the Executive’s
Disability (as defined and determined in accordance with Section 1.1(k) hereof),
the Company may give the Executive written notice in accordance with Section 7.2
of its intention to terminate the Executive’s employment. In such event, the
Executive’s employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the “Disability Effective
Date”), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive’s duties. The
Executive will submit to such medical or psychiatric examinations and tests as
is necessary to make any such Disability determination.
     3.3 Termination for Cause or without Cause. The Company may terminate the
Executive’s employment during the Employment Period for “Cause,” which shall
mean termination based upon: (i) the Executive’s willful and continued failure
to substantially perform his duties with the Company (other than as a result of
a Disability), after a written demand for substantial performance is delivered
to the Executive by the Company, which specifically identifies the manner in
which the Executive has not substantially performed his duties, (ii) the
Executive’s being convicted of a felony, or (iii) the Executive’s material
breach of any provision of this Agreement. For purposes of this Section, no act
or failure to act on the Executive’s part shall be considered “willful” unless
done, or omitted to be done, without good faith and without reasonable belief
that the act or omission was in the best interest of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until (i) he receives a Notice of Termination
from the Company, (ii) he is given the opportunity, with counsel, to be heard
before the Board, and (iii) the Board finds, in its good faith opinion and
reasonable judgment, that the Executive was guilty of the conduct set forth in

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the Notice of Termination. The Company also may terminate the Executive’s
employment at any time during the Employment Period without Cause.
     3.4 Termination by the Executive for Good Reason. The Executive may
terminate his employment with the Company during the Employment Period for “Good
Reason,” which shall mean termination based upon the occurrence of one or more
of the following without the consent of the Executive: (i) a material reduction
in or the assignment of duties materially inconsistent with the Executive’s
authority, duties, responsibilities and status; (ii) a material reduction in the
Executive’s Annual Base Salary; (iii) the failure of the Company to continue in
effect any of the Company’s short-term and long-term incentive compensation
plans, or employee benefit or retirement plans, policies, practices or other
compensation arrangements in which the Executive participates unless such
failure to continue the plan, policy, practice or arrangement pertains to all
plan participants generally; or the failure by the Company to continue the
Executive’s participation therein on substantially the same basis, both in terms
of the amount of benefits provided and the level of the Executive’s
participation relative to other participants, as existed immediately prior to
the Change in Control of the Company; (iv) the failure of the Company to obtain
an agreement on terms reasonably satisfactory to both the Executive and the
Company from any successor to the Company to assume and agree to perform the
Company’s obligations under this Agreement, as contemplated in Section 6 hereof;
(v) a material reduction in the budget over which the Executive retains
authority; (vi) a material change in the primary geographic location at which
the Executive performs his duties under this Agreement; and (vii) any other
action or inaction that constitutes a material breach by the Company of any
provision of this Agreement. Any termination of the Executive’s employment based
upon a good faith determination of “Good Reason” made by the Executive shall be
subject to a delivery of a Notice of Termination by the Executive to the Company
in the manner prescribed in Section 3.6 within 15 days from the date the
Executive knew or should have known of the first occurrence of an event that
would constitute Good Reason and subject further to the ability of the Company
to remedy within 30 days of receipt of such notice any action that may otherwise
constitute Good Reason under this Section 3.4.
     Notwithstanding the foregoing, any changes in the employment relationship
between the Executive and the Company as a result of the short-term disability
of the Executive (e.g., a change in the Executive’s authority, duties,
responsibilities, or status, budgetary control, etc.) shall not constitute “Good
Reason” hereunder.
     3.5 Voluntary Termination by the Executive. The Executive may voluntarily
terminate his employment with the Company for any reason or for no reason at any
time during the Employment Period.
     3.6 Notice of Termination. Any termination by the Company for Cause,
without Cause, or Disability, or by the Executive for any reason or no reason
shall be communicated by Notice of Termination to the other party given in
accordance with Section 7.2. For purposes of this Agreement, a “Notice of
Termination” means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated, and (iii) if the Date of Termination

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(as defined in Section 3.7 hereof) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than
15 days after the giving of such notice).
     3.7 Date of Termination. “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, the Date of Termination shall
be the date of receipt by the Executive of the Notice of Termination or any
later date specified therein, as the case may be; (ii) if the Executive’s
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be; (iii) if the Executive’s employment is
voluntarily terminated by the Executive for any reason or no reason, the Date of
Termination shall be a date specified in the Notice of Termination, provided
that termination by the Executive for Good Reason shall not be effective until
30 days following the date of the Notice of Termination; or (iv) if the
Executive’s employment is terminated by the Company other than for Cause, death,
or Disability, the Date of Termination shall be the date of receipt by the
Executive of the Notice of Termination.
Section 4: Certain Benefits upon Termination.
     4.1 Termination without Cause or Termination for Good Reason prior to a
Change in Control. If, prior to a Change in Control during the Employment
Period, the Company terminates the Executive’s employment without Cause as
defined in Section 3.3 or the Executive terminates his employment with the
Company for Good Reason as defined in Section 3.4 within 45 days of the first
occurrence of an event that would constitute Good Reason that has not been
remedied by the Company as described in Section 3.4, the Executive shall be
entitled to the payment of the benefits provided below; provided, however, that
the Executive shall not be entitled to receive duplicative severance or other
benefits under any other Company related plans or programs if benefits are
triggered hereunder:
          4.1(a) Accrued Obligations. Within 30 days after the Date of
Termination, the Company shall pay to the Executive the sum of (i) (1) the
Executive’s accrued and unpaid salary through the Date of Termination plus
(2) any accrued and unpaid days off plus (3) any unreimbursed business expenses
and all other items earned by and owed to the Executive through and including
the Date of the Termination (collectively, the “Accrued Obligations”) and
(ii) the Prorated Target Bonus (as defined in Section 4.2(a) hereof) . In
addition, the Executive shall be entitled to the accrued benefits payable to the
Executive under any deferred compensation plan, program or arrangement in which
the Executive is a participant, which shall be payable in the time and manner
provided under the applicable plan, program or arrangement. Payment under any
annual or long-term cash incentive plan shall be determined and governed solely
by the terms of the applicable plan provided that such plan does not reduce the
Accrued Obligations described herein.
          4.1(b) Annual Base Salary and Target Bonus Continuation.
          (i) If the Date of Termination of the Executive under this Section 4.1
occurs on or prior to the second anniversary of the Effective Date, then, for a
period of two years, beginning in the month after the Date of Termination, the
Company shall pay to the Executive on a monthly basis one-twelfth of an amount
equal to the Executive’s then-current Annual Base Salary for the

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year in which the Date of Termination occurs. Additionally, in this case, for a
period of one year, beginning in the month after the Date of Termination, the
Company shall pay to the Executive on a monthly basis one-twelfth of an amount
equal to the Executive’s then-current Target Bonus for the year in which the
Date of Termination occurs. Payments under any long term cash incentive plan are
not part of or included in these calculations.
          (ii) If the Date of Termination of the Executive under this
Section 4.1 occurs after the second anniversary of the Effective Date, then, for
a period of one year, beginning in the month after the Date of Termination, the
Company shall pay to the Executive on a monthly basis one-twelfth of an amount
equal to the Executive’s then-current Annual Base Salary and Target Bonus for
the year in which the Date of Termination occurs. Payments under any long term
cash incentive plan are not part of or included in this calculation.
          4.1(c) Stock-Based Awards. All stock-based awards held by the
Executive will be exercisable or vested, expire or terminate in accordance with
the terms of their respective grant agreements.
          4.1(d) Health Benefit Continuation. For eighteen (18) months following
the Date of Termination, the Company shall pay the COBRA premiums for the
Executive and his spouse and other eligible dependents for the medical, dental
and prescription drug plan(s) maintained by the Company in which the Executive
and his spouse or other dependents were participating immediately prior to the
Date of Termination; provided, however, that if the Executive becomes reemployed
and is eligible to receive medical or health benefits under another
employer-provided plan, the Company’s COBRA premium payments described herein
shall be immediately terminated upon the commencement of coverage under the new
employer’s plan. Such benefit shall be provided to the Executive at the same
coverage level and cost to the Executive as in effective immediately prior to
the Executive’s Date of Termination. In addition, to the extent that the COBRA
premiums paid by the Company are taxable to the Executive, the Company shall pay
to the Executive a gross-up payment for applicable taxes. Such payment shall be
made monthly during the period the COBRA premiums are paid by the Company.
          4.1(e) Outplacement. Following the Date of Termination, the Company
shall provide to the Executive executive-level outplacement services by a
mutually agreeable outplacement firm in an aggregate amount not to exceed
$50,000.
     4.2 Benefits upon a Change in Control. If a Change in Control occurs during
the Employment Period and within two years after the Change in Control Date
(a) the Company terminates the Executive’s employment without Cause, or (b) the
Executive terminates employment with the Company for Good Reason, then the
Executive shall become entitled to the payment of the benefits as provided
below; provided, however, that the Executive shall not be entitled to receive
duplicative severance or other benefits under any other Company related plans or
programs if benefits are triggered hereunder:
          4.2(a) Accrued Obligations. Within thirty (30) days after the Date of
Termination, the Company shall pay to the Executive the Accrued Obligations and
the “Prorated Target Bonus.” For purposes of this Agreement, the term “Prorated
Target Bonus” means an

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amount determined by multiplying the actual percentage of the Executive’s annual
base salary that was to be paid to the Executive as his Target Bonus in the year
in which the Date of Termination occurs by the Executive’s then-current Annual
Base Salary as of the Date of Termination and prorating this amount by
multiplying it by a fraction, the numerator of which is the number of days
during the then-current calendar year that the Executive was employed by the
Company up to and including the Date of Termination and the denominator of which
is 365. Payment under any long term cash incentive plan shall be determined and
governed solely by the terms of such plan.
          4.2(b) Severance Amount. Within ten (10) days after the Date of
Termination, the Company shall pay to the Executive as severance pay in a lump
sum, in cash, an amount equal to 2 times the sum of the Executive’s then-current
Annual Base Salary plus the full annual Target Bonus for the bonus plan year in
which the Change in Control Date occurs. Payments under any long term cash
incentive plan are not part of or included in this calculation.
          4.2(c) Stock-Based Awards. All stock-based awards held by the
Executive will become immediately exercisable or vested and all restrictions on
such stock-based awards shall immediately lapse. This provision shall override
any conflicting language contained in the Executive’s respective award
agreements.
          4.2(d) Health Benefit Continuation. For thirty six (36) months
following the Date of Termination, the Company shall pay the COBRA premiums for
the Executive and his spouse and other eligible dependents for the medical,
dental, and prescription drug plan(s) maintained by the Company in which the
Executive and his spouse or other dependents were participating immediately
prior to the Date of Termination; provided, however, that if the Executive
becomes reemployed with another employer and is eligible to receive medical or
health benefits under another employer-provided plan, the Company’s COBRA
premium payments benefits described herein shall be immediately terminated upon
the commencement of coverage under the new employer’s plan. Such benefit shall
be provided to the Executive at the same coverage level and cost to the
Executive as in effect immediately prior to the Executive’s Date of Termination.
In addition, to the extent that the COBRA premiums paid by the Company are
taxable to the Executive, the Company shall pay to the Executive a gross-up
payment for applicable taxes. Such payment shall be made monthly during the
period the COBRA premiums are paid by the Company.
          4.2(e) Outplacement. Following the Date of Termination, the Company
shall provide to the Executive executive-level outplacement services by a
mutually agreeable outplacement firm in an amount not to exceed $50,000.
          4.2(f) Non-compete Covenant Consideration. A lump-sum amount equal to
the sum of the Executive’s then-current Annual Base Salary plus the full annual
Target Bonus for the bonus plan year in which the Change in Control Date occurs.
Payments under any long term cash incentive plan are not part of or included in
this calculation. Such amount shall be in consideration for the Executive
entering into a noncompete agreement as described in Section 5 hereof.

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          4.2(g) Deferred Compensation Plan Payment. The Company shall, as soon
as possible, but in no event longer than thirty (30) days following the
occurrence of a Change in Control, make an irrevocable contribution to the then
current trust in effect for purposes of holding assets to assist the Company in
satisfying its liabilities under the Savings Restoration Plan or successor
thereto in an amount that is sufficient (taking into account the trust assets,
if any, resulting from prior contributions) to fund the trust in an amount equal
to no less than one hundred percent (100%) of the amount necessary to pay the
Executive the benefits to which he would be entitled pursuant to the terms of
such plan.
          4.2(h) Payment under Cash-Based Long-term Performance-Based Award
Plans. The vesting and cash-out of any and all outstanding cash-based long-term
incentive awards held by the Executive, as granted to the Executive by the
Company as a component of the Executive’s compensation. The cash-out shall be in
a lump-sum amount equal to the target award level established for each award,
multiplied by a fraction the numerator of which is the full number of completed
days in the pre-established performance period as of the Date of Termination,
and the denominator of which is the full number of days in the entire
performance period (e.g., typically thirty-six (36) months). This payment will
be in lieu of any other payment to be made to the Executive under these
cash-based long-term performance-based award plans.
          4.2 (i) Gross-up Payments.
               (i) Anything in this Section 4.2 to the contrary notwithstanding,
in the event that it shall be determined that any payment by the Company to or
for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise but
determined without regard to any additional payments required under this
Section 4.2(i)) (a “Payment”) would be subject to the excise tax imposed by
Section 4999 of the Code (or any successor provision) or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then the Executive shall be
entitled to receive an additional payment (a “Gross-Up Payment”) in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest or penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment on an after-tax basis equal to the Excise Tax
imposed upon the Payment. Any Gross-Up Payment required under this
Section 4.2(i) shall be made on the last day of the month in which the Executive
remits such taxes to the required taxing authority. In no event will any such
Gross-Up Payment be paid to the Executive later than the end of the Executive’s
taxable year following the Executive’s taxable year in which the related taxes
are remitted to the required taxing authority. The intent of the parties is that
the Company shall be responsible in full for, and shall pay, any and all Excise
Tax on any Payments and Gross-up Payment(s) and any income and all excise and
employment taxes (including, without limitation, penalties and interest) imposed
on any Gross-up Payment(s) as well as any loss of deduction caused by or related
to the Gross-up Payment(s).
               (ii) Subject to the provisions of Section 4.2(i)(iii), all
determinations required to be made under this Section 4.2(i), including whether
and when a Gross-up Payment

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is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determinations, shall be made by the outside
accounting firm that then audits the Company’s financial statements (the
“Accounting Firm”), which Accounting Firm shall provide detailed supporting
calculations both to the Company and to the Executive within 15 business days of
receipt of notice from the Company or the Executive that there has been or will
be a Payment. In the event that the Accounting Firm is serving as the accountant
or auditor for the Person effecting the Change in Control, the Executive shall
appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
“Accounting Firm” hereunder). All fees and expenses of the Accounting Firm shall
be paid solely by the Company. If the Accounting Firm determines that no Excise
Tax is payable by the Executive, it shall furnish the Executive with a written
opinion that failure to report the Excise Tax on the Executive’s applicable
federal income tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive in the absence of a material mathematical or legal
error. As a result of the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination by the Accounting Firm hereunder,
it is possible that the Gross-Up Payments will not have been made by the Company
that should have been made or that the Gross-Up Payments will have been made
that should not have been made, in each case consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 4.2(i)(iii) below and a payment of any Excise Tax
or any interest, penalty or addition to tax related thereto is determined to be
due, the Accounting Firm shall determine the amount of the underpayment of
Excise Taxes that has occurred and such underpayment and interest, penalty or
addition to tax shall be promptly paid by the Company to the Internal Revenue
Service in satisfaction of the Company’s original withholding obligations. In
the event that the Accounting Firm determines that an overpayment of Gross-Up
Payment(s) has occurred, the Executive shall be responsible for the immediate
repayment to the Company of such overpayment with interest at the applicable
federal rate provided for in Section 7872(f)(2) of the Code; provided, however,
that the Executive shall have no duty or obligation whatsoever to repay such
overpayment if Executive’s receipt of the overpayment, or any portion thereof,
is included in the Executive’s income and the Executive’s repayment of the same
is not deductible by the Executive for federal or state income tax purposes.
               (iii) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment of the Excise Tax. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim by the Internal Revenue Service and the notification
shall apprise the Company of the nature of the claim and the date on which such
claim is required to be paid. The Executive shall not pay such claim prior to
the expiration of a 30-day period following the date on which the Executive has
given such notification to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is required). If the
Company notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:
                    (A) give the Company any information reasonably requested by
the Company relating to such claim;

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                    (B) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company;
                    (C) cooperate with the Company in good faith in order to
effectively contest such claim; and
                    (D) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest, and shall indemnify and hold the Executive harmless, on an after-tax
basis to the Executive, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such contest. Without
limitation on the foregoing provisions of this Section 4.2(i), the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax claimed and
sue for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction or in one or more
appellate courts, as the Company shall determine.
     4.3 Death. If the Executive’s employment is terminated by reason of the
Executive’s death during the Employment Period (either prior or subsequent to a
Change in Control), this Agreement shall terminate without further obligations
to the Executive’s legal representatives under this Agreement, other than for
payment of Accrued Obligations (as defined in Section 4.1(a)) (which shall be
paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in
cash within 30 days of the Date of Termination) and any other benefits to which
the Executive’s beneficiaries are entitled under the terms of any of the
Company’s benefit plans or programs, including death benefits pursuant to the
terms of any plan, policy, or arrangement of the Company. Payment under any long
term cash incentive plan or other incentive compensation plan shall be
determined and governed solely by the terms of the applicable plan.
     4.4 Disability. If the Executive’s employment is terminated by reason of
the Executive’s Disability during the Employment Period (either prior or
subsequent to a Change in Control), this Agreement shall terminate without
further obligations to the Executive, other than for (i) payment of Accrued
Obligations (as defined in Section 4.1(a)) (which shall be paid to the Executive
in a lump sum in cash within 30 days of the Date of Termination) and (ii) the
timely payment or provision of any other benefits to which the Executive is
entitled under the terms of any of the Company’s benefit plans or programs,
including disability benefits pursuant to the terms of any plan, policy or
arrangement of the Company. Payment under any long term cash incentive plan or
other incentive compensation plan shall be determined and governed solely by the
terms of the applicable plan.

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     4.5 Termination by the Company for Cause or Voluntary Termination by the
Executive. During the Employment Period, if the Executive’s employment shall be
terminated: (i) by the Company for Cause, either prior or subsequent to a Change
in Control, or (ii) voluntarily by the Executive for any reason other than Good
Reason, either prior to or subsequent to a Change in Control, then this
Agreement shall terminate without further obligations to the Executive, other
than for (i) payment of the Executive’s Accrued Obligations (as defined in
Section 4.1(a)) (which shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination), and (ii) the timely payment or
provision of any other benefits to which the Executive is entitled under the
terms of any of the Company’s benefit plans or programs. Payment under any long
term cash incentive plan or other incentive compensation plan shall be
determined and governed solely by the terms of the applicable plan.
     4.6 Non-Exclusivity of Rights. Except as provided in Sections 4.1(d) and
4.1(e) or 4.2(d) and 4.2(e), nothing in this Agreement shall prevent or limit
the Executive’s continuing or future participation in any plan, program, policy
or practice provided by the Company and for which the Executive may qualify.
Amounts which are vested benefits of which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of, or any other contract
or agreement with, the Company at or subsequent to the Date of Termination,
shall be payable in accordance with such plan, policy, practice or program or
contract or agreement.
     4.7 Full Settlement. The Company’s obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and, except as provided
in Sections 4.1(d) and 4.2(d), such amounts shall not be reduced whether or not
the Executive obtains other employment. The Company agrees to pay promptly as
incurred, to the full extent permitted by law, all legal fees and expenses which
the Executive may reasonably incur as a result of any contest (regardless of the
outcome thereof) by the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive regarding the amount of any payment pursuant to this Agreement), plus
in each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Code. Any such payment shall be
made not later than the end of the calendar year following the calendar year in
which the Executive incurred such expense.
     4.8 Conditions to Payments. After the Date of Termination, to be eligible
to receive (and continue to receive) and retain the payments and benefits
described in Sections 4.1(b) — (e) or Sections 4.2(b) — (h), the Executive must
comply with the terms of Section 5, and must execute and deliver to the Company
a mutually acceptable agreement, in form and substance reasonably satisfactory
to both the Executive and the Company, effectively releasing and giving up all
claims the Executive may have against the Company and its subsidiaries,
shareholders, successors and affiliates (and each of their respective employees,
officers, plans and agents) arising out of or based upon any facts or conduct
occurring prior to that date with the exception of (i) all

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payments, vested stock, deferred compensation and other benefits provided under
the terms of this Agreement, (ii) the Executive’s right to continued
indemnification to the fullest extent provided under the Company By-laws by
reason of any act or omission performed or omitted by the Executive during his
employment, and (iii) the Executive’s rights to enforce the terms of this
Agreement and sue for its breach. Such agreement will also require the Executive
to reaffirm and agree to comply with the terms of this Agreement and any other
agreement signed by the Executive in favor of the Company or any of its
subsidiaries or affiliates that is still in effect. Such agreement will also
provide that the Company on its own behalf and on behalf of its subsidiaries,
and successors is effectively releasing and giving up all claims that they may
have against the Executive arising out of or based upon any facts or conduct
occurring prior to the date of his termination with the exception of fraudulent
or willful misconduct by the Executive. Such agreement will be prepared by the
Company and provided to the Executive and his attorney at the time the
Executive’s employment is terminated or as soon as administratively practicable
thereafter and the Executive will be given ample time to review and modify such
agreement to the extent necessary to make it acceptable to both parties. Each of
the Executive and the Company agree to negotiate the terms of such agreement in
good faith. Such agreement also will require the Executive, among other things,
subject to other demands on his time, to consult with Company representatives at
its reasonable request and at a mutually agreeable time and place, and unless
against the advice of his attorney, to voluntarily appear as a witness for trial
or deposition (and to prepare for any such testimony) in connection with, any
claim which may be asserted by or against the Company, or any business matter
concerning the Company or any of its transactions or operations. After the Date
of Termination, the Company will have no obligations to make the payments and/or
provide the benefits specified in Sections 4.1(b) — (e) or Sections 4.2(b) — (h)
specified above, when applicable, unless and until the Executive signs and
delivers such agreement, as mutually agreed to between the parties, and as
described in this Section 4.8 within 60 days of the Date of Termination and all
conditions to the effectiveness of the release and waiver (including but not
limited to the expiration of any applicable time to revoke acceptance without
any action being taken to revoke acceptance or otherwise invalidate the
agreement) have been satisfied.
Section 5: Restrictive Covenants.
     The provisions of this Section 5 and any related provisions shall survive
termination of this Agreement and/or the Executive’s employment with the Company
and do not supersede, but are in addition to and not in lieu of, any other
agreements signed by the Executive concerning non competition, confidentiality,
solicitation of employees, or trade secrets (whether included in a stock option
agreement or otherwise), and are included in consideration for the Company
entering into this Agreement. The Executive’s right to receive and retain the
benefits specified in Sections 4.1(b) — (e) or Sections 4.2(b) — (h) are
conditioned upon the Executive’s compliance with the terms of this Section 5:
     5.1 Non-Compete Agreement.
          5.1(a) During the Executive’s employment with the Company and during
the period beginning on the Date of Termination and ending eighteen (18) months
thereafter, the Executive shall not, without prior written approval of the
Board, become an officer, employee, agent, partner, or director of, or provide
any services or advice to or for, any business enterprise in

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substantial direct competition (as defined in Section 5.1(b)) with the Company.
The above constraint shall not prevent the Executive from making passive
investments, not to exceed 5%, in any enterprise where the Executive’s services
or advice is not required or provided.
          5.1(b) For purposes of Section 5.1, a business enterprise with which
the Executive becomes associated as an officer, employee, agent, partner, or
director shall be considered in substantial direct competition, if such entity
competes with the Company in any business in which the Company or any of its
subsidiaries is engaged or provides services or products of a type which is
marketed, sold or provided by the Company or any of its subsidiaries or
affiliates (including but not limited to any product or service which the
Company or any such other entity is developing) within any State or country
where the Company or any such affiliate or subsidiary then provides or markets
(or at the time of the Executive’s termination, has taken substantial steps
towards providing or marketing) any service or product as of the date the
Executive’s Company employment terminates.
          5.1(c) During the Executive’s employment with the Company and during
the period beginning on the Date of Termination and ending eighteen (18) months
thereafter, the Executive shall not, without prior written approval of the
Company’s Board, directly or indirectly solicit the employment of, recruit,
employ, hire, cause to be employed or hired, entice away, or establish a
business with, any then current officer, office manager, staffing coordinator or
other employee or agent of the Company or any of its subsidiaries or affiliates
(other than non-supervisory or non-managerial personnel who are employed in a
clerical or maintenance position) or any other such person who was employed by
the Company or any of its subsidiaries or affiliates within the 12 months
immediately prior to the date the Executive’s employment with the Company
terminated; or suggest to or discuss with any such employee the discontinuation
of that person’s status or employment with the Company or any of its
subsidiaries and affiliates, or such person’s employment or participation in any
activity in competition with the Company or any of its subsidiaries or
affiliates.
     5.2 Confidential Information. The Executive will receive under a
relationship of trust and confidence, and shall hold in a fiduciary capacity for
the benefit of the Company, all “Confidential Information.” “Confidential
Information” means confidential and/or confidential proprietary information and
trade secrets of or relating to the Company or any of its subsidiaries and
affiliates (and includes information the disclosure of which might be injurious
to those companies), including but not limited to confidential information
concerning personnel of the Company or any of its subsidiaries and affiliates,
confidential financial information, customer or customer prospect information,
confidential information concerning temporary staffing candidates, temporary
employees, and personnel, temporary employee and customer lists and data,
methods and formulas for estimating costs and setting prices, research results
(such as marketing surveys, or trials), confidential software, programming, and
programming architecture, enhancements and developments, cost data (such as
billing, equipment and programming cost projection models), compensation
information and models, business or marketing plans or strategies, new products
or marketing strategies, deal or business terms, budgets, vendor names,
programming operations, information on proposed acquisitions or dispositions,
actual performance compared to budgeted performance, long-range plans, results
of internal analyses, computer programs and programming information, techniques
and designs,

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business and marketing plans, acquisition plans and strategies, divestiture
plans and strategies, internal valuations of Company assets, and trade secrets,
but does not include information generally known in the marketplace or in the
industry or which becomes known in the marketplace or in the industry other than
by the Executive’s disclosure. In addition, Confidential Information includes
information of another company given to the Company with the understanding that
it will be kept confidential and secret or confidential information, knowledge
or data relating to the Company or any of its affiliated companies or direct or
indirect subsidiaries, and their respective businesses, which shall have been
obtained by the Executive during the Executive’s employment by the Company and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
During the Executive’s employment with the Company and after termination of the
Executive’s employment with the Company, the Executive shall never, without the
prior written consent of the Company, or as may otherwise be required by law or
legal process, use (other than during the Executive’s employment with the
Company for the benefit of the Company), or communicate, reveal, or divulge any
such information, knowledge or data, to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 5.2 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement. No Confidential
Information (as defined herein) is the property of the Executive.
     5.3 Non Disparagement. The Executive will never criticize, denigrate,
disparage, or make any derogatory statements about the Company or its respective
business plans, policies and practices, or about any of the Company’s officers,
employees or former officers or employees, to customers, competitors, suppliers,
employees, former employees, members of the public, members of the media, or any
other person; nor shall the Executive harm or in any way adversely affect the
reputation and goodwill of the Company. Similarly, the Company, by and through
its officers, former officers and agents will never criticize, denigrate,
disparage, or make any derogatory statement about the Executive to customers,
competitors, suppliers, employees, former employees, potential employers or
executive recruiters, members of the public, members of the media, or any other
person nor shall the Company harm or in any way adversely affect the personal
and professional reputation of the Executive. Nothing in this paragraph shall
preclude or prevent the Executive or the Company from giving truthful testimony
or information to law enforcement entities, administrative agencies or courts or
in any other legal proceedings as required by law.
     5.4 Provisions Relating To Non Competition, Non Solicitation and
Confidentiality. The provisions of this Section 5 survive the termination of the
Executive’s employment and this Agreement and shall not be affected by any
subsequent changes in employment terms, positions, duties, responsibilities,
authority, or employment termination, permitted or contemplated by this
Agreement. To the extent that any covenant set forth in this Section 5 of this
Agreement shall be determined to be invalid or unenforceable in any respect or
to any extent, the covenant shall not be void or rendered invalid, but instead
shall be automatically amended for such lesser term, to such lesser extent, or
in such other lesser degree, as will grant the Company the maximum protection
and restrictions on the Executive’s activities permitted by applicable law in
such circumstances. In cases where there is a dispute as to the right to
terminate the Executive’s employment or the basis for such termination, the term
of any

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covenant set forth in Section 5 shall commence as of the date specified in the
Notice of Termination and shall not be deemed to be tolled or delayed by reason
of the provisions of this Agreement. The Company shall have the right to request
injunctive relief to restrain any breach or threatened breach of any provisions
in this Section 5 in addition to and not in lieu of any rights to recover
damages. The Company shall have the right, with prior notice to the Executive to
advise any prospective or then current employer of the Executive of the
provisions of this Agreement without liability so long as the communication is
truthful, correct, reasonably necessary and in compliance with the terms of this
Agreement including the Section prohibiting non-disparagement. The Company’s
right to enforce the provisions of this Agreement shall not be affected by the
existence, or non-existence, of any other similar agreement for any other
executive, or by the Company’s failure to exercise any of its rights under this
Agreement or any other similar agreement or to have in effect a similar
agreement for any other employee.
     5.5 Provision relating to Arbitration. Subject to the Parties’ rights to
seek injunctive relief, the Executive and the Company agree that any controversy
or claim arising out of or relating to this Agreement, the employment
relationship between the Executive and the Company, or the termination thereof,
including the arbitrability of any controversy or claim, which cannot be settled
by mutual agreement will finally be settled by arbitration which shall be in
accordance with the Employment Dispute Arbitration Rules of the American
Arbitration Association as such rules shall be in effect on the date of delivery
of demand for arbitration. The arbitration of such issues, including the
determination of the amount of any damages suffered by either party hereto by
reason of the acts or omissions of the other, shall be to the exclusion of any
court of law. The decision of the arbitrators or a majority of them shall be
final and binding on both parties and their respective heirs, executors,
administrators, successors and assigns. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction. There shall be
three arbitrators, one to be chosen directly by each party at will and the third
arbitrator to be selected by the two arbitrators so chosen. Each party shall pay
the fees of the arbitrator selected by him and of his own attorneys and the
expenses connected with the presentation of his/its case. All other costs of the
arbitration, including the cost of the third arbitrator, the record or
transcripts thereof, if any, administrative fees, and all other fees and costs
and costs shall be born equally by the parties. Nonetheless, the arbitrators
shall have the authority to award all or any expenses, costs and attorneys’ fees
to the party that substantially prevails.
Section 6: Successors.
     6.1 Successors of the Executive. This Agreement is personal to the
Executive and, without the prior written consent of the Company, the rights (but
not the obligations) shall not be assignable by the Executive otherwise than by
will or the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive’s legal representatives.
     6.2 Successors of Company. This Agreement is freely assignable by the
Company and its successors/assignees subject to its duty to require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company or the division in which the Executive is employed, as the case may be,
to assume expressly and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession had

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taken place subject to the Executive’s rights in the case of a Change in Control
as provided in Section 4.2. Failure of the Company to obtain such agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to terminate the Agreement at his
option on or after the Change in Control Date for Good Reason in accordance with
Section 3.4 hereof.
Section 7: Miscellaneous.
     7.1 Other Agreements. This Agreement supersedes all prior dated agreements,
letters and understandings concerning the Executive’s employment or severance
benefits payable to the Executive, either before or after a Change in Control.
The Board may, from time to time in the future, provide other incentive programs
and bonus arrangements to the Executive with respect to the occurrence of a
Change in Control that will be in addition to the benefits required to be paid
in the designated circumstances in connection with the occurrence of a Change in
Control. Such additional incentive programs and/or bonus arrangements will
affect or abrogate the benefits to be paid under this Agreement only in the
manner and to the extent explicitly agreed to by the Executive in any such
subsequent program or arrangement. This Agreement does not supersede or affect
in any way the validity of any agreement signed by the Executive concerning
confidentiality, stock options, post-employment competition, non solicitation of
business, accounts or employees, or agreements of a similar type or nature; and
any provisions of this Agreement shall be in addition to and not in lieu of (or
replace) any such other agreements.
     7.2 Notice. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses as set forth below; provided that all notices to the
Company shall be directed to the attention of the Board of Directors with a copy
to the General Counsel of the Company , or to such other address as one party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.
     Notice to the Executive:
William H. Osborne
c/o Penny Nathan Kahan
Penny Nathan Kahan & Associates
150 North Wacker Drive, Suite 2236
Chicago, Illinois 60606
with a copy to:
Penny Nathan Kahan & Associates
150 North Wacker Drive, Suite 2236
Chicago, Illinois 60606
Attention: Penny Nathan Kahan

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     Notice to the Company:
Federal Signal Corporation
1415 West 22nd Street
Oak Brook, IL 60502
Attention: Board of Directors
with a copy to:
Federal Signal Corporation
1415 West 22nd Street
Oak Brook, IL 60502
Attention: Jennifer L. Sherman, General Counsel
and an additional copy to:
Thompson Coburn
One US Bank Plaza
St. Louis, MO 63101
Attention: Robert M. LaRose, Esq.
     7.3 Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
     7.4 Withholding. The Company may withhold from any amounts payable under
this Agreement such federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
     7.5 Waiver. The Executive’s or the Company’s failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
     7.6 Execution in Counterparts. This Agreement may be executed by the
parties hereto in counterparts, each of which shall be deemed to be an original,
but all such counterparts shall constitute one and the same instrument, and all
signatures need not appear on any one counterpart.
[signature page follows]

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     IN WITNESS WHEREOF, the Executive and the Company, pursuant to the
authorization from its Board, have caused this Agreement to be executed in its
name on its behalf, all as of the day and year first above written.

                    William H. Osborne
 
                    Federal Signal Corporation
 
       
 
  By    
 
       
 
       
 
  Name:    
 
       
 
       
 
  Title:    
 
       

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