Federal Signal
Corporation
Tier 1 Executive Change-in-Control Severance Agreement
THIS EXECUTIVE
CHANGE-IN-CONTROL SEVERANCE AGREEMENT is made, entered into, and is
effective this
day of
, 20 ___ (hereinafter referred to as the “Effective
Date”), by and between Federal Signal Corporation (the
“Company”), a Delaware corporation, and
(the “Executive”). This Agreement is an amendment and
restatement of, and supersedes, any applicable previously existing
agreement between the Company and 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:
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:
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(a)
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“ Agreement ”
means this Executive Change-in-Control Severance
Agreement.
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(b)
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“ 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.
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(c)
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“ Beneficial Owner
” shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the
Exchange Act.
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(d)
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“ Board ” means
the Board of Directors of the Company.
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(e)
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“ 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)
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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
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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
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(ii)
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The
Executive’s conviction of a felony; or
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(iii)
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The
Executive’s willful engagement 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.
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(f)
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“ Change-in-Control
” of the Company shall mean the occurrence of any one
(1) or more of the following events:
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(i)
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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;
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(ii)
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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;
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(iii)
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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;
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(iv)
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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
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(v)
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Any
other transaction that the Board designates as being a
Change-in-Control.
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(g)
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“ Code ” means
the Internal Revenue Code of 1986, as amended.
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(h)
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“ Committee ”
means the Compensation and Benefits Committee of the Board of
Directors of the Company, or, if no Compensation and Benefits
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)
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“ Company ” means
Federal Signal Corporation, a Delaware corporation (including any
and all subsidiaries), or any successor thereto as provided in
Article 9 herein.
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(j)
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“ 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.
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(k)
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“ 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.
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(l)
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“ 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.
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(m)
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“ Exchange Act ”
means the Securities Exchange Act of 1934, as amended.
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(n)
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“ 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:
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(i)
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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;
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(ii)
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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;
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(iii)
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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;
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(iv)
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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;
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(v)
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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; or
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(vi)
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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.
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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 Executive must notify the Company within ninety (90) days
of the existence of
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the
Good Reason condition, and the Company shall have thirty
(30) days to remedy the condition.
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(o)
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“ 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.
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(p)
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“ 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).
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(q)
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“ 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.
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(r)
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“ Severance Benefits
” mean the payment of severance compensation as provided in
Section 2.3 herein.
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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, certain other Severance 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 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:
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(a)
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The
Company’s involuntary termination of the Executive’s
employment without Cause; and
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(b)
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The
Executive’s voluntary employment termination for Good
Reason.
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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:
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(a)
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Upon a Qualifying Termination, 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.
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(b)
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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.
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(c)
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Upon a Qualifying Termination, 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.
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(d)
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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
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