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 ______ (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 employed by the Company and will develop 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:

	 	(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.

 

 

	 	(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, means
entitled to receive Social Security disability benefits.
	 
	 	(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, which results in a material negative change in the Executive’s employment
relationship with the Company:

	 	(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 thirty (30) 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. Executive must notify the Company within ninety (90) days of the
existence of the Good Reason condition, and the Company shall have thirty (30) days to
remedy the conditions.
	 
	 	(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 the Executive’s separation from service (as defined
in Section 409A of the Code and the applicable regulations) due to 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, 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 Executive’s separation from service (as defined in Section
409A of the Code and applicable regulations) within twenty-four (24) calendar months after a Change
in Control of the Company shall constitute a Qualifying Termination and shall trigger the payment
of Severance Benefits to the Executive under this Agreement under the following circumstances:

	 	(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, subject to the limitations set
forth in Section 5.1 herein:

	 	(a)	 	Upon a Qualifying Termination, a lump-sum amount equal to the
Executive’s accrued but 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)	 	Upon a Qualifying Termination, 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 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)	 	Upon a Qualifying Termination, a lump-sum amount equal to 1.99
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)	 	Upon a Qualifying Termination, 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
but no less than one hundred percent (100%) of the

 

 

	 	 	 	amount necessary to pay the Executive the benefits to which such Executive
would be entitled pursuant to the terms of the aforementioned Deferred
Compensation Plan.
	 
	 	(h)	 	Upon a Qualifying Termination, 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. Any COBRA health benefit continuation
coverage provided to Executive shall run concurrently with the aforementioned
thirty-six (36) month period.
	 
	 	 	 	The value of such medical insurance coverage shall be treated as taxable
income to Executive to the extent necessary to comply with Sections 105(h) and
409A of the Code. For purposes of 409A of the Code, any payments of continued
health benefits that are made during the applicable COBRA continuation period
(even if the Executive does not actually receive COBRA coverage for the entire
applicable period), are exempt from the requirements of Code Section 409A
pursuant to Treasury Regulation Section 1.409A-1(b)(9)(v)(B). The right to
continue coverage beyond the applicable COBRA continuation period is not subject
to liquidation or exchange for another benefit. 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 has a separation from service (as defined in Section 409A of the Code
and the applicable regulations) either due to: (i) termination by the Company for Cause; or (ii)
voluntary termination by the Executive for reasons other than as specified in Section 2.2(b)
herein, the Company shall pay the Executive his accrued but unpaid Base Salary at the rate
then in effect, accrued vacation, and other items earned by and owed to the Executive through the
Executive’s separation from service, 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. Internal Revenue Code Section 409A. The Plan is intended to comply with the American Jobs
Creation Act of 2004, Code Section 409A, and related guidance.

     (a) Notwithstanding anything to the contrary set forth in this Agreement, any
Severance Benefits paid (i) within 2-1/2 months of the end of the Company’s taxable year containing
the Executive’s severance from employment, or (ii) within 2-1/2 months of the Executive’s taxable
year containing the severance from employment shall be exempt from the requirements of Section 409A
of the Code, and shall be paid in accordance with this Article 3. Severance Benefits subject to
this Section 3.2(a) shall be treated and shall be deemed to be an entitlement to a separate payment
within the meaning of Section 409A of the Code and the regulations thereunder.

     (b) To the extent Severance Benefits are not exempt from Section 409A under Section 3.2(a)
above, any Benefits paid in the first 6 months following the Executive’s severance from employment
that are equal to or less than the lesser of the amounts described in Treasury Regulation Section
1.409A-1(b)(9)(iii)(A)(1) and (2) shall be exempt from Section 409A and shall be paid in accordance
with this Article 3. Severance Benefits subject to this Section 3.2(b) shall be treated and shall
be deemed to be an entitlement to a separate payment within the meaning of Section 409A of the Code
and the regulations thereunder.

     (c) To the extent Severance Benefits are not exempt from Section 409A under Sections 3.2(a) or
(b) above, any Benefits paid equal to or less than the applicable dollar amount under Section
402(g)(1)(B) of the Code for the year of severance from employment shall be exempt from Section
409A in accordance with Treasury Regulation Section 1.409A-1(b)(9)(v)(D) and shall be paid in
accordance with this Article 3. Severance Benefits subject to this Section 3.2(c) shall be treated
and shall be deemed to be an entitlement to a separate payment within the meaning of Section 409A
of the Code and the regulations thereunder.

     (d) To the extent Severance Benefits are not exempt from Section 409A pursuant to Sections
3.2(a), (b) or (c) above, and to the extent the Executive is a “specified employee” (as defined
below), payments due to the Executive under Section 6 shall begin no sooner than six months after
the Executive’s severance from employment (other than for Death) ; provided, however, that any
payments not made during the six (6) month period described in this Section 3.2(d) due to the
6-month delay period required under Treasury Regulation Section 1.409A-3(i)(2) shall be made in a
single lump sum as soon as administratively practicable after the expiration of such six (6) month
period, with interest thereon , and the balance of all other payments required under this Agreement
shall be made as otherwise scheduled in this Agreement.  Notwithstanding anything herein to
the contrary, and subject to Code Section 409A, to the extent the following rules should apply to
the Executive in connection with payments made hereunder, payment shall not be made or commence as
a result of the Executive’s Effective Date of Termination to any Executive who is a key employee
(defined below) before the date that is not less than six months after the Executive’s Effective
Date of Termination. For this purpose, a key employee includes a “specified employee” (as defined
in Code Section 409A(a)(2)(B)) during the entire 12-month period determined by the Company ending
with the annual date upon which key employees are identified by the Company, and also including any
Executive identified by the Company in good faith with respect to any distribution as belonging to
the group of identified key employees, to a maximum of 200 such key employees, regardless of
whether such Executive is subsequently determined by the Company, any governmental agency, or a
court not to be a key employee. The identification date for determining key employees shall be
each December 31 (and the new key employee list shall be updated and effective each subsequent
April 1).

     (e) For purposes of this Section 3.2, any reference to severance of employment or termination
of employment shall mean a “separation from service” as defined in Treasury Reg. Section
1.409A-1(h). For purposes of this Agreement, the term “specified employee” shall have the meaning
set forth in Treasury Reg. Section 1.409A-1(i). The determination of whether the Executive is a
“specified employee” shall be made by the Company in good faith applying the applicable Treasury
regulations.

 

 

     3.3 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).
	 
	 	(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.

     Article 5. Reduction of Severance Benefits in the Event of an Excise Tax Due

     5.1 Events Triggering Reduction of Severance Benefits. 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 will make no additional payments to the
Executive to cover the cost of such excise tax (a “Gross-Up Payment”) and the aggregate amount of
Severance Payments payable to the Executive under this Agreement, or any other agreement with or
plan of the Company, shall be reduced to the largest amount which would both (i) not cause any
excise tax to be payable by the Executive, and (ii) not cause any of the Severance Payments to
become nondeductible by the Company by reason of Section 280G of the Code (or any successor
provision thereto).

     For purposes of this Agreement, the term “excess parachute payment” shall have the meaning
assigned to such term in Section 280G of 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 Procedures in the Event of a Reduction in Severance Benefits. If there is a determination
that the Severance Benefits payable to the Executive must be reduced pursuant to Section 5.1, the
Company shall promptly give the Executive notice to that effect and a copy of the detailed
calculation thereof and of the amount that must be reduced. The Executive may then elect, at the
Executive’s sole discretion, which and how much of the various Severance Benefits shall be
eliminated or reduced as long as after the Execuitive’s election the aggregate present value of the
Severance Benefits equals the largest amount that would both (i) not cause any excise tax to be
payable by the Executive, and (ii) not cause any Severance Payment to become nondeductible by the
Company by reason of Section 280G of the Code (or any successor provision thereto). The Executive
will advise the Company in writing of the Executive’s election under this Section 5.2 within ten
(10) days of the Executive’s receipt of the notice under this Section 5.2 from the Company. If no
election is made by the Executive within the ten-day period, the Company may election which and how
much of the Severance Benefits shall be eliminated or reduced as long as after the Company’s
election the aggregate present value of the Severance Payments equals the largest amount that would
both (i) not cause any excise tax to be paid by the Executive, and (ii) not cause and Severance
Payments to become nondeductible by the Company by reason of Section 289G of the Code (or any
successor provision thereof). For purposes of this Section 5.2, present value shall be determined
in accordance with Section 280G(d)(4) of the Code.

 

 

     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.

     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 beneficiary designated under the Company’s life insurance plan, or, if there is no such
beneficiary, 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 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
____________, _______________.

	 	 	 	 	 
	ATTEST

Federal Signal Corporation

 	 	 
	 	 	 
	By:  	 	, 	 
	 	Compensation Committee of the 	 	 
	 	Board of Directors 	 	 
	 
	 
	Executiveexv10w1

Exhibit 10.1

QUALITY SYSTEMS, INC.

first amended and restated

indemnification Agreement

     This First Amended and Restated Indemnification Agreement (this “Agreement”) is made
as of                     , by and between QUALITY SYSTEMS, INC., a California corporation (the
“Company”), and                      (“Indemnitee”).

R E C I T A L
S

     WHEREAS, the Company and Indemnitee recognize the increasing difficulty in obtaining quality
directors’ and officers’ liability insurance, the significant increases in the cost of such
insurance and the general reductions in the coverage of such insurance;

     WHEREAS, the Company and Indemnitee further recognize the substantial increase in corporate
litigation in general, subjecting officers and directors to expensive litigation risks at the same
time as the availability and coverage of cost effective liability insurance has been severely
limited; and

     WHEREAS, the Company desires to attract and retain the services of highly qualified
individuals, such as Indemnitee, to serve as officers and directors of the Company and to indemnify
its officers and directors so as to provide them with the maximum protection permitted by law.

     NOW, THEREFORE, in consideration for Indemnitee’s services as an officer or director of the
Company (as the case may be), the Company and Indemnitee hereby agree as follows:

     1. Indemnification.

          (a) Third Party Proceedings. The Company shall indemnify Indemnitee if Indemnitee is
or was a party or is threatened to be made a party to any threatened, pending or completed action,
suit, proceeding or any alternative dispute resolution mechanism, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the Company) by reason
of the fact that Indemnitee is or was a director, officer, employee or agent of the Company, or any
subsidiary of the Company, or by reason of the fact that Indemnitee is or was serving at the
request of the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses (including reasonable
attorneys’ fees and costs), judgments, fines and amounts paid in settlement (if such settlement is
approved in advance by the Company, which approval shall not be unreasonably withheld) actually and
reasonably incurred by Indemnitee in connection with such action, suit or proceeding if Indemnitee
acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of
the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to
believe Indemnitee’s conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that Indemnitee did not act

 

 

in good faith and in a manner which Indemnitee reasonably believed to be in the best interests
of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to
believe that Indemnitee’s conduct was unlawful.

          (b) Proceedings By or in the Right of the Company. The Company shall indemnify
Indemnitee if Indemnitee is or was a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Company or any subsidiary of the
Company to procure a judgment in its favor by reason of the fact that Indemnitee is or was a
director, officer, employee or agent of the Company, or any subsidiary of the Company, or by reason
of the fact that Indemnitee is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including reasonable attorneys’ fees and costs) and, to the fullest extent
permitted by law, amounts paid in settlement actually and reasonably incurred by Indemnitee in
connection with the defense or settlement of such action or suit if Indemnitee acted in good faith
and in a manner Indemnitee reasonably believed to be in the best interests of the Company, except
that no indemnification shall be made in respect of any claim, issue or matter as to which
Indemnitee shall have been adjudged to be liable to the Company unless and only to the extent that
the Superior Court of the State of California or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses which the Superior Court of the State of California or such other court shall deem proper.

          (c) Mandatory Payment of Expenses. To the extent that Indemnitee has been successful
on the merits or otherwise in defense of any action, suit or proceeding referred to in
subsections (a) and (b) of this Section 1, or in defense of any claim, issue or matter
therein, Indemnitee shall be indemnified against expenses (including reasonable attorneys’ fees and
costs) actually and reasonably incurred by Indemnitee in connection therewith. For purposes of
this Agreement, and without limitation, the termination of any claim, issue or matter in any
action, suit or proceeding by dismissal with prejudice shall be deemed to be a successful result
as to such claim, issue or matter.

     2. Agreement to Serve. In consideration of the protection afforded by this Agreement,
if Indemnitee is a director of the Company he agrees to serve at least for the 90 days after the
effective date of this Agreement as a director and not to resign voluntarily during such period
without the written consent of a majority of the Board of Directors. If Indemnitee is an officer
of the Company not serving under an employment contract, he agrees to serve in such capacity at
least for the 90 days after the effective date of this Agreement and not to resign voluntarily
during such period without the written consent of a majority of the Board of Directors. Following
the applicable period set forth above, Indemnitee agrees to continue to serve in such capacity at
the will of the Company (or under separate agreement, if such agreement exists) so long as he is
duly appointed or elected and qualified in accordance with the applicable provisions of the Bylaws
of the Company or any subsidiary of the Company or until such time as he tenders his resignation in
writing. Nothing contained in this Agreement is intended to create in Indemnitee any right to
continued employment.

- 2 - 

 

     3. Expenses; Indemnification Procedure.

          (a) Advancement of Expenses. The Company shall advance all expenses incurred by
Indemnitee in connection with the investigation, defense, settlement or appeal of any civil or
criminal action, suit or proceeding referenced in Section 1(a) or (b) hereof (but not
amounts actually paid in settlement of any such action, suit or proceeding). Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the extent that, it shall ultimately be
determined that Indemnitee is not entitled to be indemnified by the Company as authorized hereby.
The advances to be made hereunder shall be paid by the Company to Indemnitee within thirty (30)
days following delivery of a written request therefor by Indemnitee to the Company.

          (b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition precedent to
his or her right to be indemnified under this Agreement, give the Company written notice as soon as
practicable of any claim for which Indemnitee will or could seek indemnification under this
Agreement. In addition, Indemnitee shall give the Company such information and cooperation as it
may reasonably require and as shall be within Indemnitee’s power.

          (c) Procedure. Any indemnification and advances provided for in Section 1 and
this Section 3 shall be made no later than thirty (30) days after receipt of the written
request of Indemnitee. If a claim under this Agreement, under any statute, or under any provision
of the Company’s Articles of Incorporation or Bylaws providing for indemnification, is not paid in
full by the Company within thirty (30) days after a written request for payment thereof has first
been received by the Company, Indemnitee may, but need not, at any time thereafter bring an action
against the Company to recover the unpaid amount of the claim and, subject to Section 8 and
10(g) of this Agreement, Indemnitee shall also be entitled to be paid for the expenses
(including reasonable attorneys’ fees and costs) of bringing such action. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses incurred in
connection with any action, suit or proceeding in advance of its final disposition) that Indemnitee
has not met the standards of conduct which make it permissible under applicable law for the Company
to indemnify Indemnitee for the amount claimed. However, Indemnitee shall be entitled to receive
interim payments of expenses pursuant to Section 3(a) unless and until such defense may be
finally adjudicated by court order or judgment from which no further right of appeal exists. It is
the parties’ intention that if the Company contests Indemnitee’s right to indemnification, the
question of Indemnitee’s right to indemnification shall be for a court of competent jurisdiction to
decide, and neither the failure of the Company (including its Board of Directors, any committee or
subgroup of the Board of Directors, independent legal counsel, or its stockholders) to have made a
determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee
has met the applicable standard of conduct required by applicable law, nor an actual determination
by the Company (including it Board of Directors, any committee or subgroup of the Board of
Directors, independent legal counsel, or its stockholders) that Indemnitee has not met such
applicable standard of conduct, shall create a presumption that Indemnitee has or has not met the
applicable standard of conduct.

          (d) Notice to Insurers. If, at the time of the receipt of a notice of a claim
pursuant to Section 3(b) hereof, the Company has director and officer liability insurance
in effect, the Company shall give prompt notice of the commencement of such proceeding to the

- 3 - 

 

insurers in accordance with the procedures set forth in the respective policies. The Company
shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of
the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of
such policies.

          (e) Selection of Counsel. In the event the Company shall be obligated under
Section 3(a) hereof to pay the expenses of any proceeding against Indemnitee, the Company,
if appropriate, shall be entitled to assume the defense of such proceeding, with counsel approved
by Indemnitee (which approval shall not be unreasonably withheld), upon the delivery to Indemnitee
of written notice of its election to do so. After delivery of such notice, approval of such
counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be
liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same proceeding, provided that (i) Indemnitee shall have the right
to employ his counsel in any such proceeding at Indemnitee’s expense; and (ii) if (A) the
employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee
shall have reasonably concluded that there may be a conflict of interest between the Company and
Indemnitee in the conduct of any such defense, or (C) the Company shall not, in fact, have employed
counsel to assume the defense of such proceeding, then the fees and expenses of Indemnitee’s
counsel shall be at the expense of the Company.

     4. Additional Indemnification Rights; Nonexclusivity.

          (a) Scope. Notwithstanding any other provision of this Agreement, the Company hereby
agrees to indemnify the Indemnitee to the fullest extent permitted by the California General
Corporation Law (the “CGCL”), notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Company’s Articles of Incorporation, the
Company’s Bylaws or by statute. In the event of any change, after the date of this Agreement, in
any applicable law, statute, or rule which expands the right of a California corporation to
indemnify a member of its board of directors or an officer, such changes shall be, ipso facto,
within the purview of Indemnitee’s rights and Company’s obligations, under this Agreement. In the
event of any change in any applicable law, statute or rule which narrows the right of a California
corporation to indemnify a member of its board of directors or an officer, such changes, to the
extent not otherwise required by such law, statute or rule to be applied to this Agreement shall
have no effect on this Agreement or the parties’ rights and obligations hereunder.

          (b) Nonexclusivity. The indemnification provided by this Agreement shall not be
deemed exclusive of any rights to which Indemnitee may be entitled under the Company’s Articles of
Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterested Directors, the
CGCL, or otherwise, both as to action in Indemnitee’s official capacity and as to action in another
capacity while holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee for any action taken or not taken while serving in an indemnified
capacity even though he may have ceased to serve in such capacity at the time of any action, suit
or other covered proceeding.

     5. Partial Indemnification. If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of the expenses, judgments,

- 4 - 

 

fines or penalties actually and reasonably incurred by him in the investigation, defense,
appeal or settlement of any civil or criminal action, suit or proceeding, but not, however, for the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such
expenses, judgments, fines or penalties to which Indemnitee is entitled.

     6. Mutual Acknowledgement. Both the Company and Indemnitee acknowledge that in
certain instances, Federal law or applicable public policy may prohibit the Company from
indemnifying its directors and officers under this Agreement or otherwise. Indemnitee understands
and acknowledges that the Company has undertaken or may be required in the future to undertake with
the Securities and Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company’s right under public policy to indemnify
Indemnitee.

     7. Officer and Director Liability Insurance. The Company shall, from time to time,
make the good faith determination whether or not it is practicable for the Company to obtain and
maintain a policy or policies of insurance with reputable insurance companies providing the
officers and directors of the Company with coverage for losses from wrongful acts, or to ensure the
Company’s performance of its indemnification obligations under this Agreement. Among other
considerations, the Company will weigh the costs of obtaining such insurance coverage against the
protection afforded by such coverage. In all policies of director and officer liability insurance,
Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights
and benefits as are accorded to the most favorably insured of the Company’s directors, if
Indemnitee is a director; or of the Company’s officers, if Indemnitee is not a director of the
Company but is an officer. Notwithstanding the foregoing, the Company shall have no obligation to
obtain or maintain such insurance if the Company determines in good faith that such insurance is
not reasonably available, if the premium costs for such insurance are disproportionate to the
amount of coverage provided, if the coverage provided by such insurance is limited by exclusions so
as to provide an insufficient benefit, or if Indemnitee is covered by similar insurance maintained
by a subsidiary or parent of the Company.

     8. Exceptions. Any other provision herein to the contrary notwithstanding, the
Company shall not be obligated pursuant to the terms of this Agreement:

          (a) Claims Initiated by Indemnitee. To indemnify or advance expenses to Indemnitee
with respect to proceedings or claims initiated or brought voluntarily by Indemnitee and not by way
of defense, except with respect to proceedings brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law or otherwise as required under
Section 317 of the CGCL, but such indemnification or advancement of expenses may be provided by the
Company in specific cases if the Board of Directors has approved the initiation or bringing of such
suit; or

          (b) Lack of Good Faith. To indemnify Indemnitee for any expenses incurred by the
Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or interpret this
Agreement, if a court of competent jurisdiction determines that each of the material assertions
made by the Indemnitee in such proceeding was not made in good faith or was frivolous; or

- 5 - 

 

          (c) Insured Claims. To indemnify Indemnitee for expenses or liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and
amounts paid in settlement) which have been paid directly to Indemnitee by an insurance carrier
under a policy of officers’ and directors’ liability insurance maintained by the Company; or

          (d) Claims Under Section 16(b). To indemnify Indemnitee for expenses and the payment
of profits arising from the purchase and sale by Indemnitee of securities in violation of
Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute.

     9. Construction of Certain Phrases.

          (a) For purposes of this Agreement, references to the “Company” shall include, in addition to
the resulting corporation, any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had continued, would have
had power and authority to indemnify its directors, officers, and employees or agents, so that if
Indemnitee is or was a director, officer, employee or agent of such constituent corporation, or is
or was serving at the request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other enterprise, Indemnitee
shall stand in the same position under the provisions of this Agreement with respect to the
resulting or surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.

          (b) For purposes of this Agreement, references to “other enterprises” shall include employee
benefit plans; references to “fines” shall include any excise taxes assessed on Indemnitee with
respect to an employee benefit plan; and references to “serving at the request of the Company”
shall include any service as a director, officer, employee or agent of the Company which imposes
duties on, or involves services by, such director, officer, employee or agent with respect to an
employee benefit plan, its participants, or beneficiaries.

     10. Miscellaneous.

          (a) Choice of Law. This Agreement shall be governed by and its provisions construed
in accordance with the laws of the State of California , as applied to contracts between California
residents entered into and to be performed entirely within California without regard to the
conflict of law principles thereof.

          (b) Consent to Jurisdiction. The Company and Indemnitee each hereby irrevocably
consent to the jurisdiction of the courts of the State of California for all purposes in connection
with any action or proceeding which arises out of or relates to this Agreement and agree that any
action instituted under this Agreement shall be brought only in the state courts of the State of
California .

          (c) Amendment and Termination. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless it is in writing signed by both the
parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall

- 6 - 

 

constitute a waiver of any other provisions hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.

          (d) Entire Agreement. This Agreement sets forth the entire understanding between the
parties hereto and supersedes and merges all previous written and oral negotiations, commitments,
understandings and agreements relating to the subject matter hereof between the parties hereto.

          (e) Successors and Assigns. This Agreement shall be binding upon the Company and its
successors and assigns, and shall inure to the benefit of Indemnitee and Indemnitee’s estate, heirs
and legal representatives.

          (f) Severability. Nothing in this Agreement is intended to require or shall be
construed as requiring the Company to do or fail to do any act in violation of applicable law. The
Company’s inability, pursuant to court order, to perform its obligations under this Agreement shall
not constitute a breach of this Agreement. If this Agreement or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this
Agreement that shall not have been invalidated, and the balance of this Agreement not so
invalidated shall be enforceable in accordance with its terms.

          (g) Attorneys’ Fees. In the event that any action is instituted by Indemnitee under
this Agreement to enforce or interpret any of the terms hereof, Indemnitee shall be entitled to be
paid all court costs and expenses, including reasonable attorneys’ fees, incurred by Indemnitee
with respect to such action, unless as a part of such action, the court of competent jurisdiction
determines that each of the material assertions made by Indemnitee as a basis for such action were
not made in good faith or were frivolous. In the event of an action instituted by or in the name
of the Company under this Agreement or to enforce or interpret any of the terms of this Agreement,
Indemnitee shall be entitled to be paid all court costs and expenses, including reasonable
attorneys’ fees, incurred by Indemnitee in defense of such action (including with respect to
Indemnitee’s counterclaims and cross-claims made in such action), unless as a part of such action
the court determines that each of Indemnitee’s material defenses to such action were made in bad
faith or were frivolous.

          (h) Notice. All notices, requests, demands and other communications required or
permitted under this Agreement shall be in writing and shall be delivered personally by hand or by
courier, mailed by United States first-class mail, postage prepaid, sent by facsimile or sent by
electronic mail directed to the party to be notified at the address, facsimile number or electronic
mail address indicated for such person on the signature page hereof, or at such other address,
facsimile number or electronic mail address as such party may designate by ten (10) days’ advance
written notice to the other parties hereto. All such notices and other communications shall be
deemed given upon personal delivery, on the date of mailing, upon confirmation of facsimile
transfer or when directed to the electronic mail address set forth on signature page hereof.

          (i) Period of Limitations. No legal action shall be brought and no cause of action
shall be asserted by or in the right of the Company against Indemnitee, Indemnitee’s

- 7 - 

 

estate, spouse, heirs, executors or personal or legal representatives after the expiration of
two years from the date of accrual of such cause of action, and any claim or cause of action of the
Company shall be extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, such shorter period shall govern.

          (j) Subrogation. In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall
execute all documents required and shall do all acts that may be necessary to secure such rights
and to enable the Company effectively to bring suit to enforce such rights.

          (k) Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall constitute an original.

[signature page follows]

- 8 - 

 

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

	 	 	 	 	 	 	 
	 

	 	QUALITY SYSTEMS, INC.	 
	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	Address:

18111 Von Karman Avenue, Suite 600

Irvine, CA 92612

Facsimile #: 949-255-2610

Email: pholt@qsii.com (Corporate Secretary)	 	 

AGREED TO AND ACCEPTED:

“Indemnitee”

	 	 	 	 	 
	 	 	 
	Signature	 	 
	 
	 	 	 	 
	 	 	 
	Print Name	 	 
	 
	 	 	 	 
	Address:	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	Facsimile #:
	 	 	 	 
	 

	 	 

	 	 
	Email:
	 	 	 	 
	 

	 	 

	 	 

- 9 -

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