Document:

exv10w1

 

Exhibit 10.1

Federal Signal Corporation

Executive Change-in-Control Severance Agreement

     THIS EXECUTIVE CHANGE-IN-CONTROL SEVERANCE AGREEMENT is made, entered
into, and is effective this    day of July 2004 (hereinafter referred
to as the “Effective Date”), by and between Federal Signal Corporation (the
“Company”), a Delaware corporation, and    (the
“Executive”).

     WHEREAS, the Executive is currently employed by the Company and possesses
considerable experience and knowledge of the business and affairs of the
Company concerning its policies, methods, personnel, and operations; and

     WHEREAS, the Company is desirous of assuring insofar as possible, that it
will continue to have the benefit of the Executive’s services; and the
Executive is desirous of having such assurances; and

     WHEREAS, the Company recognizes that circumstances may arise in which a
Change in Control of the Company occurs, through acquisition or otherwise,
thereby causing uncertainty of employment without regard to the Executive’s
competence or past contributions. Such uncertainty may result in the loss of
the valuable services of the Executive to the detriment of the Company and its
shareholders; and

     WHEREAS, both the Company and the Executive are desirous that any proposal
for a Change in Control or acquisition will be considered by the Executive
objectively and with reference only to the business interests of the Company
and its shareholders; and

     WHEREAS, the Executive will be in a better position to consider the
Company’s best interests if the Executive is afforded reasonable security, as
provided in this Agreement, against altered conditions of employment which
could result from any such Change in Control or acquisition.

     NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree
as follows:

     Article 1. Definitions

     Wherever used in this Agreement, the following terms shall have the
meanings set forth below and, when the meaning is intended, the initial letter
of the word is capitalized:

	 	(a)	 	“Agreement” means this Executive Change-in-Control Severance
Agreement.
	 
	 	(b)	 	“Base Salary” means, at any time, the then regular annual rate of
pay which the Executive is receiving as annual salary, excluding
amounts: (i) received under short-term or long-term incentive or other
bonus plans, regardless of whether or not the amounts are deferred, or
(ii) designated by the Company as payment toward reimbursement of
expenses.
	 
	 	(c)	 	“Beneficial Owner” shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
	 
	 	(d)	 	“Board” means the Board of Directors of the Company.
	 
	 	(e)	 	“Cause” shall be determined solely by the Committee in the exercise
of good faith and reasonable judgment, and shall mean the occurrence of
any one or more of the following:

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	 	(i)	 	The Executive’s willful and continued failure to
substantially perform his duties with the Company (other than
any such failure resulting from the Executive’s Disability),
after a written demand for substantial performance is delivered
to the Executive that specifically identifies the manner in
which the Committee believes that the Executive has not
substantially performed his duties, and the Executive has failed
to remedy the situation within fifteen (15) business days of
such written notice from the Company; or
	 
	 	(ii)	 	The Executive’s conviction of a felony; or
	 
	 	(iii)	 	The Executive’s willful engaging in conduct that is
demonstrably and materially injurious to the Company, monetarily
or otherwise. However, no act or failure to act on the
Executive’s part shall be deemed “willful” unless done, or
omitted to be done, by the Executive not in good faith and
without reasonable belief that the action or omission was in the
best interests of the Company.

	 	(f)	 	“Change in Control” of the Company shall mean the occurrence of any
one (1) or more of the following events:

	 	(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 of Directors of the Company, 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.

	 	(g)	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	 	(h)	 	“Committee” means the Compensation Committee of the Board of
Directors of the Company, or, if no Compensation Committee exists, then
the full Board of Directors of the Company, or a committee of Board
members, as appointed by the full Board to administer this Agreement.

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	 	(i)	 	“Company” means Federal Signal Corporation, a Delaware corporation
(including any and all subsidiaries), or any successor thereto as
provided in Article 9 herein.
	 
	 	(j)	 	“Disability” or “Disabled” shall have the meaning ascribed to such
term in the Executive’s governing long-term disability plan, or if no
such plan exists, at the discretion of the Board.
	 
	 	(k)	 	“Effective Date” means the date this Agreement is approved by the
Board, or such other date as the Board shall designate in its
resolution approving this Agreement, and as specified in the opening
sentence of this Agreement.
	 
	 	(l)	 	“Effective Date of Termination” means the date on which a
Qualifying Termination occurs, as provided in Section 2.2 herein, which
triggers the payment of Severance Benefits hereunder.
	 
	 	(m)	 	“Exchange Act” means the Securities Exchange Act of 1934, as
amended.
	 
	 	(n)	 	“Good Reason” means, without the Executive’s express written
consent, the occurrence after a Change in Control of the Company of any
one (1) or more of the following:

	 	(i)	 	The assignment of the Executive to duties materially
inconsistent with the Executive’s authorities, duties,
responsibilities, and status (including offices, titles, and
reporting requirements) as an executive and/or officer of the
Company, or a material reduction or alteration in the nature or
status of the Executive’s authorities, duties, or
responsibilities from those in effect as of ninety (90) calendar
days prior to the Change in Control, other than an insubstantial
and inadvertent act that is remedied by the Company promptly
after receipt of notice thereof given by the Executive;
	 
	 	(ii)	 	The Company’s requiring the Executive to be based at
a location in excess of fifty (50) miles from the location of
the Executive’s principal job location or office immediately
prior to the Change in Control; except for required travel on
the Company’s business to an extent substantially consistent
with the Executive’s then present business travel obligations;
	 
	 	(iii)	 	A reduction by the Company of the Executive’s Base
Salary in effect on the Effective Date hereof, or as the same
shall be increased from time to time;
	 
	 	(iv)	 	The failure of the Company to continue in effect any of
the Company’s short- 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;
	 
	 	(v)	 	The failure of the Company to obtain a satisfactory
agreement from any successor to the Company to assume and agree
to perform the Company’s obligations under this Agreement, as
contemplated in Article 9 herein; and
	 
	 	(vi)	 	A material breach of this Agreement by the Company
which is not remedied by the Company within ten (10) business
days of receipt of written notice of such breach delivered by the
Executive to the Company.

	 	 	 	Unless the Executive becomes Disabled, the Executive’s right to
terminate employment for Good Reason shall not be affected by the
Executive’s incapacity due to physical or mental illness. The

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	 	 	 	Executive’s continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstance constituting Good
Reason herein.
	 
	 	(o)	 	“Notice of Termination” shall mean a written notice which shall
indicate the specific termination provision in this Agreement relied
upon, and shall set 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.
	 
	 	(p)	 	“Person” shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a “group” as defined in Section 13(d).
	 
	 	(q)	 	“Qualifying Termination” means any of the events described in
Section 2.2 herein, the occurrence of which triggers the payment of
Severance Benefits hereunder.
	 
	 	(r)	 	“Severance Benefits” mean the payment of severance compensation as
provided in Section 2.3 herein.

     Article 2. Severance Benefits

     2.1 Right to Severance Benefits. The Executive shall be entitled to
receive from the Company Severance Benefits as described in Section 2.3 herein,
if there has been a Change in Control of the Company and, for certain benefits,
if within twenty-four (24) calendar months thereafter the Executive’s
employment with the Company shall end for any reason specified in Section 2.2
herein as being a Qualifying Termination.

     The Executive shall not be entitled to receive Severance Benefits if he is
terminated for Cause, or if his employment with the Company ends due to death,
Disability, or a voluntary termination of employment for reasons other than as
specified in Section 2.2(b) herein.

     No Executive shall be entitled to receive duplicative severance benefits
under any other Company-related plans or programs if benefits are triggered
hereunder.

     2.2 Qualifying Termination. The occurrence of any one of the following
events within twenty-four (24) calendar months after a Change in Control of the
Company shall trigger the payment of Severance Benefits to the Executive under
this Agreement:

	 	(a)	 	The Company’s involuntary termination of the
Executive’s employment without Cause; and
	 
	 	(b)	 	The Executive’s voluntary employment termination for
Good Reason.

     For purposes of this Agreement, a Qualifying Termination shall not include
a termination of employment by reason of death, Disability, or the Executive’s
voluntary termination for reasons other than as specified in Section 2.2(b)
herein, or the Company’s involuntary termination for Cause.

     2.3 Description of Severance Benefits. In the event the Executive becomes
entitled to receive Severance Benefits, as provided in Sections 2.1 and 2.2
herein, the Company shall pay to the Executive and provide him with the
following Severance Benefits:

	 	(a)	 	A lump-sum amount equal to the Executive’s unpaid Base
Salary, accrued vacation pay, unreimbursed business expenses, and
all other items earned by and owed to the Executive through and
including the Effective Date of Termination.
	 
	 	(b)	 	A lump-sum amount equal to the Executive’s then current
annual target bonus opportunity, established under the annual
bonus plan in which the Executive is then participating, for the
bonus plan year in which the Executive’s Effective Date of
Termination occurs, multiplied by a fraction the numerator of
which is the number of full completed months in the year from

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	 	 	 	January 1 through the Effective Date of Termination, and the
denominator of which is twelve (12). This payment will be in lieu
of any other payment to be made to the Executive under the annual
bonus plan in which the Executive is then participating for the
plan year.
	 
	 	(c)	 	A lump-sum amount equal to two (2) multiplied by the
sum of the following: (i) the higher of: (A) the Executive’s
annual rate of Base Salary in effect upon the Effective Date of
Termination, or (B) the Executive’s annual rate of Base Salary in
effect on the date of the Change in Control; and (ii) the
Executive’s annual target bonus opportunity established under the
annual bonus plan in which the Executive is then participating
for the bonus plan year in which the Executive’s Effective Date
of Termination occurs.
	 
	 	(d)	 	A lump-sum amount equal to one (1) multiplied by the
sum of the following: (i) the higher of: (A) the Executive’s
annual rate of Base Salary in effect upon the Effective Date of
Termination, or (B) the Executive’s annual rate of Base Salary in
effect on the date of the Change in Control; and (ii) the
Executive’s annual target bonus opportunity established under the
annual bonus plan in which the Executive is then participating
for the bonus plan year in which the Executive’s Effective Date
of Termination occurs. Such amount shall be in consideration for
the Executive entering into a noncompete agreement as described
in Article 4 herein.
	 
	 	(e)	 	Upon a Qualifying Termination, 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
preestablished performance period as of the Effective Date of
termination, and the denominator of which is the full number of
days in the entire performance period (i.e., typically thirty-six
(36) months). This payment will be in lieu of any other payment
to be made to the Executive under these long-term
performance-based award plans.
	 
	 	(f)	 	Upon the occurrence of a Change in Control, an
immediate full vesting and lapse of all restrictions on any and
all outstanding equity-based long-term incentives, including but
not limited to stock options and restricted stock awards held by
the Executive. This provision shall override any conflicting
language contained in the Executive’s respective award
agreements.
	 
	 	(g)	 	Upon the occurrence of a Change in Control, the Company
shall, as soon as possible, but in no event longer than thirty
(30) calendar 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 Federal Signal
Corporation Supplemental Savings and Investment Plan (the
“Deferred Compensation 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 each participating Executive the benefits
to which such Executive would be entitled pursuant to the terms
of the aforementioned Deferred Compensation Plan.
	 
	 	(h)	 	Continuation for thirty-six (36) months of the
Executive’s medical insurance coverage. The benefit shall be
provided by the Company to the Executive beginning immediately
upon the Effective Date of Termination. 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
Effective Date of Termination.
	 
	 	 	 	The Executive shall qualify for full COBRA health benefit
continuation coverage beginning concurrently with the
aforementioned thirty-six (36) month period.

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	 	 	 	Notwithstanding the above, this medical insurance benefit shall
be discontinued prior to the end of the stated continuation
period in the event the Executive receives a substantially
similar benefit from a subsequent employer, as determined solely
by the Committee in good faith. For purposes of enforcing this
offset provision, the Executive shall be deemed to have a duty to
keep the Company informed as to the terms and conditions of any
subsequent employment and any corresponding benefit earned from
such employment, and shall provide, or cause to provide, to the
Company in writing correct, complete, and timely information
concerning the same.

     2.4 Termination for Total and Permanent Disability. Following a Change in
Control, if the Executive’s employment is terminated with the Company due to
Disability, the Executive’s benefits shall be determined in accordance with the
Company’s retirement, insurance, and other applicable plans and programs then
in effect.

     2.5 Termination for Death. Following a Change in Control, if the
Executive’s employment with the Company is terminated by reason of his death,
the Executive’s benefits shall be determined in accordance with the Company’s
retirement, survivor’s benefits, insurance, and other applicable programs then
in effect.

     2.6 Termination for Cause or by the Executive Other Than for Good Reason.
Following a Change in Control, if the Executive’s employment is terminated
either: (i) by the Company for Cause; or (ii) voluntarily by the Executive for
reasons other than as specified in Section 2.2(b) herein, the Company shall pay
the Executive his full Base Salary at the rate then in effect, accrued
vacation, and other items earned by and owed to the Executive through the
Effective Date of Termination, plus all other amounts to which the Executive is
entitled under any compensation plans of the Company at the time such payments
are due, and the Company shall have no further obligations to the Executive
under this Agreement.

     2.7 Notice of Termination. Any termination of the Executive’s employment
by the Company for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party.

     Article 3. Form and Timing of Severance Benefits

     3.1 Form and Timing of Severance Benefits. The Severance Benefits
described in Sections 2.3(a), 2.3(b), 2.3(c), 2.3(d), and 2.3(e) herein shall
be paid in cash to the Executive in a single lump sum as soon as practicable
following the Effective Date of Termination, but in no event beyond ten (10)
calendar days from such date.

     3.2 Withholding of Taxes. The Company shall withhold from any amounts
payable under this Agreement all federal, state, city, or other taxes as
legally shall be required.

     Article 4. Noncompetition and Confidentiality

     In the event of a Change in Control, as provided in Article 1 paragraph
(f) herein, the following shall apply:

	 	(a)	 	Noncompetition. During the term of this Agreement and, if longer,
for a period of eighteen (18) months after the Effective Date of
Termination, the Executive shall not: (i) directly or indirectly act in
concert or conspire with any person employed by the Company in order to
engage in or prepare to engage in or to have a financial or other
interest in any business or any activity which he knows (or reasonably
should have known) to be directly competitive with the business of the
Company as then being carried on; or (ii) serve as an employee, agent,
partner, shareholder, director or consultant for, or in any other
capacity participate, engage, or have a financial or other interest in
any business or any activity which he knows (or reasonably should have
known) to be directly competitive with the business of the Company as
then being carried on (provided, however, that notwithstanding anything
to the contrary contained in this Agreement, the Executive may own up
to two percent (2%) of the outstanding shares of the capital stock of a
company whose securities are registered under Section 12 of the
Securities Exchange Act of 1934).

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	 	(b)	 	Confidentiality. The Company has advised the Executive and the
Executive acknowledges that it is the policy of the Company to maintain
as secret and confidential all Protected Information (as defined
below), and that Protected Information has been and will be developed
at substantial cost and effort to the Company. All Protected
Information shall remain confidential permanently and no Executive
shall at any time, directly or indirectly, divulge, furnish, or make
accessible to any person, firm, corporation, association, or other
entity (otherwise than as may be required in the regular course of the
Executive’s employment with the Company), nor use in any manner, either
during the term of employment or after termination, at any time, for
any reason, any Protected Information, or cause any such information of
the Company to enter the public domain.
	 
	 	 	 	For purposes of this Agreement, “Protected Information” means trade
secrets, confidential and proprietary business information of the
Company, and any other information of the Company, including, but not
limited to, customer lists (including potential customers), sources of
supply, processes, plans, materials, pricing information, internal
memoranda, marketing plans, internal policies, and products and
services which may be developed from time to time by the Company and
its agents or employees, including the Executive; provided, however,
that information that is in the public domain (other than as a result
of a breach of this Agreement), approved for release by the Company or
lawfully obtained from third parties who are not bound by a
confidentiality agreement with the Company, is not Protected
Information.
	 
	 	(c)	 	Nonsolicitation. During the term of this Agreement and, if longer,
for a period of eighteen (18) months after the Effective Date of
Termination, the Executive shall not employ or retain or solicit for
employment or arrange to have any other person, firm, or other entity
employ or retain or solicit for employment or otherwise participate in
the employment or retention of any person who is an employee or
consultant of the Company.
	 
	 	(d)	 	Cooperation. Executive agrees to cooperate with the Company and its
attorneys in connection with any and all lawsuits, claims,
investigations, or similar proceedings that have been or could be
asserted at any time arising out of or related in any way to
Executive’s employment by the Company or any of its subsidiaries.
	 
	 	(e)	 	Nondisparagement. At all times, the Executive agrees not to
disparage the Company or otherwise make comments harmful to the
Company’s reputation.
	 
	 	(f)	 	Judicial Interpretation. It is expressly understood and agreed
that although Executive and the Company consider the restrictions
contained in this Section to be reasonable, if a final judicial
determination is made by a court of competent jurisdiction that any
restriction contained in this Agreement is an unenforceable restriction
against Executive, the provisions of this Agreement shall not be
rendered void but shall be deemed amended to apply to the maximum
extent as such court may judicially determine or indicate to be
enforceable. Alternatively, if any court of competent jurisdiction
finds that any restriction contained in this Agreement is
unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of
the other restrictions contained herein.
	 
	 	(g)	 	Injunctive Relief and Additional Remedy. The Executive
acknowledges that the injury that would be suffered by the Company as a
result of a breach of the provisions of this Agreement would be
irreparable and that an award of monetary damages to the Company for
such a breach would be an inadequate remedy. Consequently, the Company
will have the right, in addition to any other rights it may have, to
obtain injunctive relief to restrain any breach or threatened breach or
otherwise to specifically enforce any provision of this Agreement, and
the Company will not be obligated to post bond or other security in
seeking such relief. Without limiting the Company’s rights under this
Article or any other remedies of the Company, if the Executive breaches
any of the provisions of this Article, the Company will have the right
to recover any amounts paid to the Executive under subsection 2.3(d) of
this Agreement.

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     Article 5. Excise Tax Equalization Payment

     5.1 Excise Tax Equalization Payment. If any portion of the Severance
Benefits or any other payment under this Agreement, or under any other
agreement with, or plan of the Company (in the aggregate, “Total Payments”)
would constitute an “excess parachute payment,” such that a golden parachute
excise tax is due, the Company shall provide to the Executive, in cash, an
additional payment in an amount sufficient to cover the full cost of any excise
tax and all of the Executive’s additional federal, state, and local income,
excise, and employment taxes that arise on this additional payment
(cumulatively, the “Full Gross-Up Payment”), such that the Executive is in the
same after-tax position as if he had not been subject to the excise tax. For
this purpose, the Executive shall be deemed to be in the highest marginal rate
of federal, state, and local income taxes in the state and locality of the
Executive’s residence on the Effective Date of Termination. This payment shall
be made as soon as possible following the date of the Executive’s Qualifying
Termination, but in no event later than ten (10) calendar days from such date.

     For purposes of this Agreement, the term “excess parachute payment” shall
have the meaning assigned to such term in Section 280G of the Internal Revenue
Code, as amended (the “Code”), and the term “excise tax” shall mean the tax
imposed on such excess parachute payment pursuant to Sections 280G and 4999 of
the Code.

     5.2 Subsequent Recalculation. In the event the Internal Revenue Service
subsequently adjusts the excise tax computation herein described, the Company
shall reimburse the Executive for the full amount necessary to make the
Executive whole on an after-tax basis (less any amounts received by the
Executive that the Executive would not have received had the computations
initially been computed as subsequently adjusted), including the value of any
underpaid excise tax, and any related interest and/or penalties due to the
Internal Revenue Service.

     Article 6. The Company’s Payment Obligation

     6.1 Payment Obligations Absolute. The Company’s obligation to make the
payments and the arrangements provided for herein shall be absolute and
unconditional, and shall not be affected by any circumstances including,
without limitation, any offset, counterclaim, recoupment, defense, or other
right which the Company may have against the Executive or anyone else. All
amounts payable by the Company hereunder shall be paid without notice or
demand. Each and every payment made hereunder by the Company shall be final,
and the Company shall not seek to recover all or any part of such payment from
the Executive or from whomsoever may be entitled thereto, for any reasons
whatsoever.

     The Executive shall not be obligated to seek other employment in
mitigation of the amounts payable or arrangements made under any provision of
this Agreement, and the obtaining of any such other employment shall in no
event effect any reduction of the Company’s obligations to make the payments
and arrangements required to be made under this Agreement, except to the extent
provided in Section 2.3(h) herein.

     6.2 Contractual Rights to Benefits. This Agreement establishes and vests
in the Executive a contractual right to the benefits to which he is entitled
hereunder. However, nothing herein contained shall require or be deemed to
require, or prohibit or be deemed to prohibit, the Company to segregate,
earmark, or otherwise set aside any funds or other assets, in trust or
otherwise, to provide for any payments to be made or required hereunder, except
to the extent provided in Section 2.3(g) herein.

     Article 7. Term of Agreement

     This Agreement will commence on the Effective Date and shall continue in
effect for three (3) full years. However, at the end of such three (3) year
period and, if extended, at the end of each additional year thereafter, the
term of this Agreement shall be extended automatically for one (1) additional
year, unless either party delivers written notice six (6) months prior to the
end of such term, or extended term, stating that the Agreement will not be
extended. In such case, the Agreement will terminate at the end of the term, or
extended term, then in progress.

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     However, in the event of a Change in Control of the Company, the term of
this Agreement shall automatically be extended for two (2) years from the date
of the Change in Control.

     Article 8. Dispute Resolution

     Any dispute or controversy between the parties arising under or in
connection with this Agreement shall be settled by arbitration.

     The arbitration proceeding shall be conducted before a panel of three (3)
arbitrators sitting in a location selected by the Executive within fifty (50)
miles from the location of the Executive’s principal place of employment, in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the award of the arbitrators in any court
having competent jurisdiction.

     All expenses of such litigation or arbitration, including the reasonable
fees and expenses of the legal representative for the Executive, and necessary
costs and disbursements incurred as a result of such dispute or legal
proceeding, and any prejudgment interest, shall be borne by the Company.

     Article 9. Successors

     9.1 Successors to the Company. The Company shall require any successor
(whether direct or indirect, by purchase, merger, reorganization,
consolidation, acquisition of property or stock, liquidation, or otherwise) of
all or a significant portion of the assets of the Company by agreement, in form
and substance satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place.
Regardless of whether such agreement is executed, this Agreement shall be
binding upon any successor in accordance with the operation of law and such
successor shall be deemed the “Company” for purposes of this Agreement.

     9.2 Assignment by the Executive. This Agreement shall inure to the benefit
of and be enforceable by the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees. If the Executive dies while any amount would still be payable to him
hereunder had he continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
Executive’s devisee, legatee, or other designee, or if there is no such
designee, to the Executive’s estate.

     Article 10. Miscellaneous

     10.1 Employment Status. This Agreement is not, and nothing herein shall be
deemed to create, an employment contract between the Executive and the Company
or any of its subsidiaries. The Executive acknowledges that the rights of the
Company remain wholly intact to change or reduce at any time and from time to
time his compensation, title, responsibilities, location, and all other aspects
of the employment relationship, or to discharge him prior to a Change in
Control (subject to such discharge possibly being considered a Qualifying
Termination pursuant to Section 2.2).

     10.2 Entire Agreement. This Agreement contains the entire understanding of
the Company and the Executive with respect to the subject matter hereof. In
addition, the payments provided for under this Agreement in the event of the
Executive’s termination of employment shall be in lieu of any severance
benefits payable under any severance plan, program, or policy of the Company to
which he might otherwise be entitled.

     10.3 Notices. All notices, requests, demands, and other communications
hereunder shall be sufficient if in writing and shall be deemed to have been
duly given if delivered by hand or if sent by registered or certified mail to
the Executive at the last address he has filed in writing with the Company or,
in the case of the Company, at its principal offices.

     10.4 Execution in Counterparts. This Agreement may be executed by the
parties hereto in counterparts, each of which shall be deemed to be original,
but all such counterparts shall constitute one and the same instrument, and all
signatures need not appear on any one counterpart.

35

 

     10.5 Conflicting Agreements. This Agreement completely supersedes any and
all prior change-in-control agreements or understandings, oral or written,
entered into by and between the Company and the Executive, with respect to the
subject matter hereof, and all amendments thereto, in their entirety. Further,
the Executive hereby represents and warrants to the Company that his entering
into this Agreement, and the obligations and duties undertaken by him
hereunder, will not conflict with, constitute a breach of, or otherwise violate
the terms of, any other employment or other agreement to which he is a party,
except to the extent any such conflict, breach, or violation under any such
agreement has been disclosed to the Board in writing in advance of the signing
of this Agreement.

     Notwithstanding any other provisions of this Agreement to the contrary, if
there is any inconsistency between the terms and provisions of this Agreement
and the terms and provisions of Company-sponsored compensation and welfare
plans and programs, the Agreement’s terms and provisions shall completely
supersede and replace the conflicting terms of the Company-sponsored
compensation and welfare plans and programs, where applicable.

     10.6 Severability. In the event any provision of this Agreement shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Agreement, and the Agreement shall be
construed and enforced as if the illegal or invalid provision had not been
included. Further, the captions of this Agreement are not part of the
provisions hereof and shall have no force and effect.

     Notwithstanding any other provisions of this Agreement to the contrary,
the Company shall have no obligation to make any payment to the Executive
hereunder to the extent, but only to the extent, that such payment is
prohibited by the terms of any final order of a federal or state court or
regulatory agency of competent jurisdiction; provided, however, that such an
order shall not affect, impair, or invalidate any provision of this Agreement
not expressly subject to such order.

     10.7 Modification. No provision of this Agreement may be modified, waived,
or discharged unless such modification, waiver, or discharge is agreed to in
writing and signed by the Executive and by a member of the Board, as
applicable, or by the respective parties’ legal representatives or successors.

     10.8 Applicable Law. To the extent not preempted by the laws of the United
States, the laws of Delaware shall be the controlling law in all matters
relating to this Agreement without giving effect to principles of conflicts of
laws.

     IN WITNESS WHEREOF, the parties have executed this Agreement on this
         day of          , 2004.

	 	 
	 	ATTEST
	 	 
	 	Federal Signal Corporation
	 	 
	 	                                                                            
	 	By:                                                                      ,
	 	Compensation Committee of the
	 	Board of Directors
	 	 
	 	                                                                            
	 	Executive

36exv10w2

 

Exhibit 10.2

Federal Signal Corporation

Executive Change-in-Control Severance Agreement

     THIS EXECUTIVE CHANGE-IN-CONTROL SEVERANCE AGREEMENT is made, entered
into, and is effective this
          day of July 2004 (hereinafter referred
to as the “Effective Date”), by and between Federal Signal Corporation (the
“Company”), a Delaware corporation, and
        (the
“Executive”).

     WHEREAS, the Executive is currently employed by the Company and possesses
considerable experience and knowledge of the business and affairs of the
Company concerning its policies, methods, personnel, and operations; and

     WHEREAS, the Company is desirous of assuring insofar as possible, that it
will continue to have the benefit of the Executive’s services; and the
Executive is desirous of having such assurances; and

     WHEREAS, the Company recognizes that circumstances may arise in which a
Change in Control of the Company occurs, through acquisition or otherwise,
thereby causing uncertainty of employment without regard to the Executive’s
competence or past contributions. Such uncertainty may result in the loss of
the valuable services of the Executive to the detriment of the Company and its
shareholders; and

     WHEREAS, both the Company and the Executive are desirous that any proposal
for a Change in Control or acquisition will be considered by the Executive
objectively and with reference only to the business interests of the Company
and its shareholders; and

     WHEREAS, the Executive will be in a better position to consider the
Company’s best interests if the Executive is afforded reasonable security, as
provided in this Agreement, against altered conditions of employment which
could result from any such Change in Control or acquisition.

     NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree
as follows:

     Article 1. Definitions

     Wherever used in this Agreement, the following terms shall have the
meanings set forth below and, when the meaning is intended, the initial letter
of the word is capitalized:

	 	(a)	 	“Agreement” means this Executive Change-in-Control Severance
Agreement.
	 
	 	(b)	 	“Base Salary” means, at any time, the then regular annual rate of
pay which the Executive is receiving as annual salary, excluding
amounts: (i) received under short-term or long-term incentive or other
bonus plans, regardless of whether or not the amounts are deferred, or
(ii) designated by the Company as payment toward reimbursement of
expenses.
	 
	 	(c)	 	“Beneficial Owner” shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
	 
	 	(d)	 	“Board” means the Board of Directors of the Company.
	 
	 	(e)	 	“Cause” shall be determined solely by the Committee in the exercise
of good faith and reasonable judgment, and shall mean the occurrence of
any one or more of the following:

37

 

	 	(i)	 	The Executive’s willful and continued failure to
substantially perform his duties with the Company (other than
any such failure resulting from the Executive’s Disability),
after a written demand for substantial performance is delivered
to the Executive that specifically identifies the manner in
which the Committee believes that the Executive has not
substantially performed his duties, and the Executive has failed
to remedy the situation within fifteen (15) business days of
such written notice from the Company; or
	 
	 	(ii)	 	The Executive’s conviction of a felony; or
	 
	 	(iii)	 	The Executive’s willful engaging in conduct that is
demonstrably and materially injurious to the Company, monetarily
or otherwise. However, no act or failure to act on the
Executive’s part shall be deemed “willful” unless done, or
omitted to be done, by the Executive not in good faith and
without reasonable belief that the action or omission was in the
best interests of the Company.

	 	(f)	 	“Change in Control” of the Company shall mean the occurrence of any
one (1) or more of the following events:

	 	(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 of Directors of the Company, 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.

	 	(g)	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	 	(h)	 	“Committee” means the Compensation Committee of the Board of
Directors of the Company, or, if no Compensation Committee exists, then
the full Board of Directors of the Company, or a committee of Board
members, as appointed by the full Board to administer this Agreement.

38

 

	 	(i)	 	“Company” means Federal Signal Corporation, a Delaware corporation
(including any and all subsidiaries), or any successor thereto as
provided in Article 9 herein.
	 
	 	(j)	 	“Disability” or “Disabled” shall have the meaning ascribed to such
term in the Executive’s governing long-term disability plan, or if no
such plan exists, at the discretion of the Board.
	 
	 	(k)	 	“Effective Date” means the date this Agreement is approved by the
Board, or such other date as the Board shall designate in its
resolution approving this Agreement, and as specified in the opening
sentence of this Agreement.
	 
	 	(l)	 	“Effective Date of Termination” means the date on which a
Qualifying Termination occurs, as provided in Section 2.2 herein, which
triggers the payment of Severance Benefits hereunder.
	 
	 	(m)	 	“Exchange Act” means the Securities Exchange Act of 1934, as
amended.
	 
	 	(n)	 	“Good Reason” means, without the Executive’s express written
consent, the occurrence after a Change in Control of the Company of any
one (1) or more of the following:

	 	(i)	 	The assignment of the Executive to duties materially
inconsistent with the Executive’s authorities, duties,
responsibilities, and status (including offices, titles, and
reporting requirements) as an executive and/or officer of the
Company, or a material reduction or alteration in the nature or
status of the Executive’s authorities, duties, or
responsibilities from those in effect as of ninety (90) calendar
days prior to the Change in Control, other than an insubstantial
and inadvertent act that is remedied by the Company promptly
after receipt of notice thereof given by the Executive;
	 
	 	(ii)	 	The Company’s requiring the Executive to be based at
a location in excess of fifty (50) miles from the location of
the Executive’s principal job location or office immediately
prior to the Change in Control; except for required travel on
the Company’s business to an extent substantially consistent
with the Executive’s then present business travel obligations;
	 
	 	(iii)	 	A reduction by the Company of the Executive’s Base
Salary in effect on the Effective Date hereof, or as the same
shall be increased from time to time;
	 
	 	(iv)	 	The failure of the Company to continue in effect any of
the Company’s short- 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;
	 
	 	(v)	 	The failure of the Company to obtain a satisfactory
agreement from any successor to the Company to assume and agree
to perform the Company’s obligations under this Agreement, as
contemplated in Article 9 herein; and
	 
	 	(vi)	 	A material breach of this Agreement by the Company
which is not remedied by the Company within ten (10) business
days of receipt of written notice of such breach delivered by the
Executive to the Company.

	 	 	 	Unless the Executive becomes Disabled, the Executive’s right to
terminate employment for Good Reason shall not be affected by the
Executive’s incapacity due to physical or mental illness. The

39

 

	 	 	 	Executive’s continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstance constituting Good
Reason herein.
	 
	 	(o)	 	“Notice of Termination” shall mean a written notice which shall
indicate the specific termination provision in this Agreement relied
upon, and shall set 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.
	 
	 	(p)	 	“Person” shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a “group” as defined in Section 13(d).
	 
	 	(q)	 	“Qualifying Termination” means any of the events described in
Section 2.2 herein, the occurrence of which triggers the payment of
Severance Benefits hereunder.
	 
	 	(r)	 	“Severance Benefits” mean the payment of severance compensation as
provided in Section 2.3 herein.

     Article 2. Severance Benefits

     2.1 Right to Severance Benefits. The Executive shall be entitled to
receive from the Company Severance Benefits as described in Section 2.3 herein,
if there has been a Change in Control of the Company and, for certain benefits,
if within twenty-four (24) calendar months thereafter the Executive’s
employment with the Company shall end for any reason specified in Section 2.2
herein as being a Qualifying Termination.

     The Executive shall not be entitled to receive Severance Benefits if he is
terminated for Cause, or if his employment with the Company ends due to death,
Disability, or a voluntary termination of employment for reasons other than as
specified in Section 2.2(b) herein.

     No Executive shall be entitled to receive duplicative severance benefits
under any other Company-related plans or programs if benefits are triggered
hereunder.

     2.2 Qualifying Termination. The occurrence of any one of the following
events within twenty-four (24) calendar months after a Change in Control of the
Company shall trigger the payment of Severance Benefits to the Executive under
this Agreement:

	 	(a)	 	The Company’s involuntary termination of the
Executive’s employment without Cause; and
	 
	 	(b)	 	The Executive’s voluntary employment termination for
Good Reason.

     For purposes of this Agreement, a Qualifying Termination shall not include
a termination of employment by reason of death, Disability, or the Executive’s
voluntary termination for reasons other than as specified in Section 2.2(b)
herein, or the Company’s involuntary termination for Cause.

     2.3 Description of Severance Benefits. In the event the Executive becomes
entitled to receive Severance Benefits, as provided in Sections 2.1 and 2.2
herein, the Company shall pay to the Executive and provide him with the
following Severance Benefits:

	 	(a)	 	A lump-sum amount equal to the Executive’s unpaid Base
Salary, accrued vacation pay, unreimbursed business expenses, and
all other items earned by and owed to the Executive through and
including the Effective Date of Termination.
	 
	 	(b)	 	A lump-sum amount equal to the Executive’s then current
annual target bonus opportunity, established under the annual
bonus plan in which the Executive is then participating, for the
bonus plan year in which the Executive’s Effective Date of
Termination occurs, multiplied by a fraction the numerator of
which is the number of full completed months in the year from

40

 

	 	 	 	January 1 through the Effective Date of Termination, and the
denominator of which is twelve (12). This payment will be in lieu
of any other payment to be made to the Executive under the annual
bonus plan in which the Executive is then participating for the
plan year.
	 
	 	(c)	 	A lump-sum amount equal to one and one-half (1.5)
multiplied by the sum of the following: (i) the higher of: (A)
the Executive’s annual rate of Base Salary in effect upon the
Effective Date of Termination, or (B) the Executive’s annual rate
of Base Salary in effect on the date of the Change in Control;
and (ii) the Executive’s annual target bonus opportunity
established under the annual bonus plan in which the Executive is
then participating for the bonus plan year in which the
Executive’s Effective Date of Termination occurs.
	 
	 	(d)	 	A lump-sum amount equal to one-half (0.5) multiplied by
the sum of the following: (i) the higher of: (A) the Executive’s
annual rate of Base Salary in effect upon the Effective Date of
Termination, or (B) the Executive’s annual rate of Base Salary in
effect on the date of the Change in Control; and (ii) the
Executive’s annual target bonus opportunity established under the
annual bonus plan in which the Executive is then participating
for the bonus plan year in which the Executive’s Effective Date
of Termination occurs. Such amount shall be in consideration for
the Executive entering into a noncompete agreement as described
in Article 4 herein.
	 
	 	(e)	 	Upon a Qualifying Termination, 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
preestablished performance period as of the Effective Date of
termination, and the denominator of which is the full number of
days in the entire performance period (i.e., typically thirty-six
(36) months). This payment will be in lieu of any other payment
to be made to the Executive under these long-term
performance-based award plans.
	 
	 	(f)	 	Upon the occurrence of a Change in Control, an
immediate full vesting and lapse of all restrictions on any and
all outstanding equity-based long-term incentives, including but
not limited to stock options and restricted stock awards held by
the Executive. This provision shall override any conflicting
language contained in the Executive’s respective award
agreements.
	 
	 	(g)	 	Upon the occurrence of a Change in Control, the Company
shall, as soon as possible, but in no event longer than thirty
(30) calendar 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 Federal Signal
Corporation Supplemental Savings and Investment Plan (the
“Deferred Compensation 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 each participating Executive the benefits
to which such Executive would be entitled pursuant to the terms
of the aforementioned Deferred Compensation Plan.
	 
	 	(h)	 	Continuation for twenty-four (24) months of the
Executive’s medical insurance coverage. The benefit shall be
provided by the Company to the Executive beginning immediately
upon the Effective Date of Termination. 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
Effective Date of Termination.
	 
	 	 	 	The Executive shall qualify for full COBRA health benefit
continuation coverage beginning concurrently with the
aforementioned twenty-four (24) month period.

41

 

	 	 	 	Notwithstanding the above, this medical insurance benefit shall
be discontinued prior to the end of the stated continuation
period in the event the Executive receives a substantially
similar benefit from a subsequent employer, as determined solely
by the Committee in good faith. For purposes of enforcing this
offset provision, the Executive shall be deemed to have a duty to
keep the Company informed as to the terms and conditions of any
subsequent employment and any corresponding benefit earned from
such employment, and shall provide, or cause to provide, to the
Company in writing correct, complete, and timely information
concerning the same.

     2.4 Termination for Total and Permanent Disability. Following a Change in
Control, if the Executive’s employment is terminated with the Company due to
Disability, the Executive’s benefits shall be determined in accordance with the
Company’s retirement, insurance, and other applicable plans and programs then
in effect.

     2.5 Termination for Death. Following a Change in Control, if the
Executive’s employment with the Company is terminated by reason of his death,
the Executive’s benefits shall be determined in accordance with the Company’s
retirement, survivor’s benefits, insurance, and other applicable programs then
in effect.

     2.6 Termination for Cause or by the Executive Other Than for Good Reason.
Following a Change in Control, if the Executive’s employment is terminated
either: (i) by the Company for Cause; or (ii) voluntarily by the Executive for
reasons other than as specified in Section 2.2(b) herein, the Company shall pay
the Executive his full Base Salary at the rate then in effect, accrued
vacation, and other items earned by and owed to the Executive through the
Effective Date of Termination, plus all other amounts to which the Executive is
entitled under any compensation plans of the Company at the time such payments
are due, and the Company shall have no further obligations to the Executive
under this Agreement.

     2.7 Notice of Termination. Any termination of the Executive’s employment
by the Company for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party.

     Article 3. Form and Timing of Severance Benefits

     3.1 Form and Timing of Severance Benefits. The Severance Benefits
described in Sections 2.3(a), 2.3(b), 2.3(c), 2.3(d), and 2.3(e) herein shall
be paid in cash to the Executive in a single lump sum as soon as practicable
following the Effective Date of Termination, but in no event beyond ten (10)
calendar days from such date.

     3.2 Withholding of Taxes. The Company shall withhold from any amounts
payable under this Agreement all federal, state, city, or other taxes as
legally shall be required.

     Article 4. Noncompetition and Confidentiality

     In the event of a Change in Control, as provided in Article 1 paragraph
(f) herein, the following shall apply:

	 	(a)	 	Noncompetition. During the term of this Agreement and, if longer,
for a period of eighteen (18) months after the Effective Date of
Termination, the Executive shall not: (i) directly or indirectly act in
concert or conspire with any person employed by the Company in order to
engage in or prepare to engage in or to have a financial or other
interest in any business or any activity which he knows (or reasonably
should have known) to be directly competitive with the business of the
Company as then being carried on; or (ii) serve as an employee, agent,
partner, shareholder, director or consultant for, or in any other
capacity participate, engage, or have a financial or other interest in
any business or any activity which he knows (or reasonably should have
known) to be directly competitive with the business of the Company as
then being carried on (provided, however, that notwithstanding anything
to the contrary contained in this Agreement, the Executive may own up
to two percent (2%) of the outstanding shares of the capital stock of a
company whose securities are registered under Section 12 of the
Securities Exchange Act of 1934).

42

 

	 	(b)	 	Confidentiality. The Company has advised the Executive and the
Executive acknowledges that it is the policy of the Company to maintain
as secret and confidential all Protected Information (as defined
below), and that Protected Information has been and will be developed
at substantial cost and effort to the Company. All Protected
Information shall remain confidential permanently and no Executive
shall at any time, directly or indirectly, divulge, furnish, or make
accessible to any person, firm, corporation, association, or other
entity (otherwise than as may be required in the regular course of the
Executive’s employment with the Company), nor use in any manner, either
during the term of employment or after termination, at any time, for
any reason, any Protected Information, or cause any such information of
the Company to enter the public domain.
	 
	 	 	 	For purposes of this Agreement, “Protected Information” means trade
secrets, confidential and proprietary business information of the
Company, and any other information of the Company, including, but not
limited to, customer lists (including potential customers), sources of
supply, processes, plans, materials, pricing information, internal
memoranda, marketing plans, internal policies, and products and
services which may be developed from time to time by the Company and
its agents or employees, including the Executive; provided, however,
that information that is in the public domain (other than as a result
of a breach of this Agreement), approved for release by the Company or
lawfully obtained from third parties who are not bound by a
confidentiality agreement with the Company, is not Protected
Information.
	 
	 	(c)	 	Nonsolicitation. During the term of this Agreement and, if longer,
for a period of eighteen (18) months after the Effective Date of
Termination, the Executive shall not employ or retain or solicit for
employment or arrange to have any other person, firm, or other entity
employ or retain or solicit for employment or otherwise participate in
the employment or retention of any person who is an employee or
consultant of the Company.
	 
	 	(d)	 	Cooperation. Executive agrees to cooperate with the Company and its
attorneys in connection with any and all lawsuits, claims,
investigations, or similar proceedings that have been or could be
asserted at any time arising out of or related in any way to
Executive’s employment by the Company or any of its subsidiaries.
	 
	 	(e)	 	Nondisparagement. At all times, the Executive agrees not to
disparage the Company or otherwise make comments harmful to the
Company’s reputation.
	 
	 	(f)	 	Judicial Interpretation. It is expressly understood and agreed
that although Executive and the Company consider the restrictions
contained in this Section to be reasonable, if a final judicial
determination is made by a court of competent jurisdiction that any
restriction contained in this Agreement is an unenforceable restriction
against Executive, the provisions of this Agreement shall not be
rendered void but shall be deemed amended to apply to the maximum
extent as such court may judicially determine or indicate to be
enforceable. Alternatively, if any court of competent jurisdiction
finds that any restriction contained in this Agreement is
unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of
the other restrictions contained herein.
	 
	 	(g)	 	Injunctive Relief and Additional Remedy. The Executive
acknowledges that the injury that would be suffered by the Company as a
result of a breach of the provisions of this Agreement would be
irreparable and that an award of monetary damages to the Company for
such a breach would be an inadequate remedy. Consequently, the Company
will have the right, in addition to any other rights it may have, to
obtain injunctive relief to restrain any breach or threatened breach or
otherwise to specifically enforce any provision of this Agreement, and
the Company will not be obligated to post bond or other security in
seeking such relief. Without limiting the Company’s rights under this
Article or any other remedies of the Company, if the Executive breaches
any of the provisions of this Article, the Company will have the right
to recover any amounts paid to the Executive under subsection 2.3(d) of
this Agreement.

43

 

     Article 5. Excise Tax Equalization Payment

     5.1 Excise Tax Equalization Payment. If any portion of the Severance
Benefits or any other payment under this Agreement, or under any other
agreement with, or plan of the Company (in the aggregate, “Total Payments”)
would constitute an “excess parachute payment,” such that a golden parachute
excise tax is due, the Company shall provide to the Executive, in cash, an
additional payment in an amount sufficient to cover the full cost of any excise
tax and all of the Executive’s additional federal, state, and local income,
excise, and employment taxes that arise on this additional payment
(cumulatively, the “Full Gross-Up Payment”), such that the Executive is in the
same after-tax position as if he had not been subject to the excise tax. For
this purpose, the Executive shall be deemed to be in the highest marginal rate
of federal, state, and local income taxes in the state and locality of the
Executive’s residence on the Effective Date of Termination. This payment shall
be made as soon as possible following the date of the Executive’s Qualifying
Termination, but in no event later than ten (10) calendar days from such date.

     For purposes of this Agreement, the term “excess parachute payment” shall
have the meaning assigned to such term in Section 280G of the Internal Revenue
Code, as amended (the “Code”), and the term “excise tax” shall mean the tax
imposed on such excess parachute payment pursuant to Sections 280G and 4999 of
the Code.

     5.2 Subsequent Recalculation. In the event the Internal Revenue Service
subsequently adjusts the excise tax computation herein described, the Company
shall reimburse the Executive for the full amount necessary to make the
Executive whole on an after-tax basis (less any amounts received by the
Executive that the Executive would not have received had the computations
initially been computed as subsequently adjusted), including the value of any
underpaid excise tax, and any related interest and/or penalties due to the
Internal Revenue Service.

     Article 6. The Company’s Payment Obligation

     6.1 Payment Obligations Absolute. The Company’s obligation to make the
payments and the arrangements provided for herein shall be absolute and
unconditional, and shall not be affected by any circumstances including,
without limitation, any offset, counterclaim, recoupment, defense, or other
right which the Company may have against the Executive or anyone else. All
amounts payable by the Company hereunder shall be paid without notice or
demand. Each and every payment made hereunder by the Company shall be final,
and the Company shall not seek to recover all or any part of such payment from
the Executive or from whomsoever may be entitled thereto, for any reasons
whatsoever.

     The Executive shall not be obligated to seek other employment in
mitigation of the amounts payable or arrangements made under any provision of
this Agreement, and the obtaining of any such other employment shall in no
event effect any reduction of the Company’s obligations to make the payments
and arrangements required to be made under this Agreement, except to the extent
provided in Section 2.3(h) herein.

     6.2 Contractual Rights to Benefits. This Agreement establishes and vests
in the Executive a contractual right to the benefits to which he is entitled
hereunder. However, nothing herein contained shall require or be deemed to
require, or prohibit or be deemed to prohibit, the Company to segregate,
earmark, or otherwise set aside any funds or other assets, in trust or
otherwise, to provide for any payments to be made or required hereunder, except
to the extent provided in Section 2.3(g) herein.

     Article 7. Term of Agreement

     This Agreement will commence on the Effective Date and shall continue in
effect for three (3) full years. However, at the end of such three (3) year
period and, if extended, at the end of each additional year thereafter, the
term of this Agreement shall be extended automatically for one (1) additional
year, unless either party delivers written notice six (6) months prior to the
end of such term, or extended term, stating that the Agreement will not be
extended. In such case, the Agreement will terminate at the end of the term, or
extended term, then in progress.

     However, in the event of a Change in Control of the Company, the term of
this Agreement shall automatically be extended for two (2) years from the date
of the Change in Control.

44

 

     Article 8. Dispute Resolution

     Any dispute or controversy between the parties arising under or in
connection with this Agreement shall be settled by arbitration.

     The arbitration proceeding shall be conducted before a panel of three (3)
arbitrators sitting in a location selected by the Executive within fifty (50)
miles from the location of the Executive’s principal place of employment, in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the award of the arbitrators in any court
having competent jurisdiction.

     All expenses of such litigation or arbitration, including the reasonable
fees and expenses of the legal representative for the Executive, and necessary
costs and disbursements incurred as a result of such dispute or legal
proceeding, and any prejudgment interest, shall be borne by the Company.

     Article 9. Successors

     9.1 Successors to the Company. The Company shall require any successor
(whether direct or indirect, by purchase, merger, reorganization,
consolidation, acquisition of property or stock, liquidation, or otherwise) of
all or a significant portion of the assets of the Company by agreement, in form
and substance satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place.
Regardless of whether such agreement is executed, this Agreement shall be
binding upon any successor in accordance with the operation of law and such
successor shall be deemed the “Company” for purposes of this Agreement.

     9.2 Assignment by the Executive. This Agreement shall inure to the benefit
of and be enforceable by the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees. If the Executive dies while any amount would still be payable to him
hereunder had he continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
Executive’s devisee, legatee, or other designee, or if there is no such
designee, to the Executive’s estate.

     Article 10. Miscellaneous

     10.1 Employment Status. This Agreement is not, and nothing herein shall be
deemed to create, an employment contract between the Executive and the Company
or any of its subsidiaries. The Executive acknowledges that the rights of the
Company remain wholly intact to change or reduce at any time and from time to
time his compensation, title, responsibilities, location, and all other aspects
of the employment relationship, or to discharge him prior to a Change in
Control (subject to such discharge possibly being considered a Qualifying
Termination pursuant to Section 2.2).

     10.2 Entire Agreement. This Agreement contains the entire understanding of
the Company and the Executive with respect to the subject matter hereof. In
addition, the payments provided for under this Agreement in the event of the
Executive’s termination of employment shall be in lieu of any severance
benefits payable under any severance plan, program, or policy of the Company to
which he might otherwise be entitled.

     10.3 Notices. All notices, requests, demands, and other communications
hereunder shall be sufficient if in writing and shall be deemed to have been
duly given if delivered by hand or if sent by registered or certified mail to
the Executive at the last address he has filed in writing with the Company or,
in the case of the Company, at its principal offices.

     10.4 Execution in Counterparts. This Agreement may be executed by the
parties hereto in counterparts, each of which shall be deemed to be original,
but all such counterparts shall constitute one and the same instrument, and all
signatures need not appear on any one counterpart.

     10.5 Conflicting Agreements. This Agreement completely supersedes any and
all prior change-in-control agreements or understandings, oral or written,
entered into by and between the Company and the Executive, with respect to the
subject matter hereof, and all amendments thereto, in their entirety. Further,
the Executive hereby

45

 

represents and warrants to the Company that his entering into this
Agreement, and the obligations and duties undertaken by him hereunder, will not
conflict with, constitute a breach of, or otherwise violate the terms of, any
other employment or other agreement to which he is a party, except to the
extent any such conflict, breach, or violation under any such agreement has
been disclosed to the Board in writing in advance of the signing of this
Agreement.

     Notwithstanding any other provisions of this Agreement to the contrary, if
there is any inconsistency between the terms and provisions of this Agreement
and the terms and provisions of Company-sponsored compensation and welfare
plans and programs, the Agreement’s terms and provisions shall completely
supersede and replace the conflicting terms of the Company-sponsored
compensation and welfare plans and programs, where applicable.

     10.6 Severability. In the event any provision of this Agreement shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Agreement, and the Agreement shall be
construed and enforced as if the illegal or invalid provision had not been
included. Further, the captions of this Agreement are not part of the
provisions hereof and shall have no force and effect.

     Notwithstanding any other provisions of this Agreement to the contrary,
the Company shall have no obligation to make any payment to the Executive
hereunder to the extent, but only to the extent, that such payment is
prohibited by the terms of any final order of a federal or state court or
regulatory agency of competent jurisdiction; provided, however, that such an
order shall not affect, impair, or invalidate any provision of this Agreement
not expressly subject to such order.

     10.7 Modification. No provision of this Agreement may be modified, waived,
or discharged unless such modification, waiver, or discharge is agreed to in
writing and signed by the Executive and by a member of the Board, as
applicable, or by the respective parties’ legal representatives or successors.

     10.8 Applicable Law. To the extent not preempted by the laws of the United
States, the laws of Delaware shall be the controlling law in all matters
relating to this Agreement without giving effect to principles of conflicts of
laws.

     IN WITNESS WHEREOF, the parties have executed this Agreement on this
       day
of         , 2004.

	 	 
	 	ATTEST
	 	 
	 	Federal Signal Corporation
	 	 
	 	                                                                            
	 	By:                                                                       ,
	 	Compensation Committee of the
	 	Board of Directors
	 	 
	 	                                                                            
	 	Executive

46

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