March 4, 2002
Xx. Xxxxxxxxx Xxxxxxx
Dear Xxxxxxxxx:
Pursuant to authorization of its Board of Directors (the "Board"), this
letter will set forth certain of the terms and conditions of
termination of your employment with Federal after a "change of
control," as defined below.
1. Change of Control and Termination
1.1 (a) In the event that a "change of control" (as
hereinafter defined) of Federal occurs while you are employed by
Federal, you may at your option terminate this agreement at any
time during the one year following such change of control by
giving thirty days prior written notice of termination to
Federal. Upon such termination, Federal shall be obligated to
pay to you or your designated beneficiary (if you are deceased)
immediately in one lump sum an amount equal to your average
annualized W-2 compensation for the five most recent taxable
years ending before the date on which the change of control
occurs (or such portion of such period which you worked for
Federal), multiplied by three and then reduced by $1.00. In the
event of termination by you under this paragraph 1.1, you shall
also be entitled to receive all payments and compensation under
any other compensation or employee benefit plans of Federal.
(b) A "change of control" shall mean (i) the filing
with the Securities and Exchange Commission by any person or
"group" of a report disclosing beneficial ownership by such
person or group of shares of stock entitled to cast more than
40% of the votes in the election of directors, or (ii) the
election of any person or persons as a director or directors at
a meeting of Federal's stockholders at which proxies solicited
on behalf of Federal's Board or management were not voted in
favor of the election of such person or persons, or (iii) the
occurrence of any other event which would require an affirmative
response to Item 6(e) of Schedule 14A (the Proxy Statement
Disclosure Rules) as now in effect, regarding a change of
control. The date of a change of control specified in clause
(iii) shall be the date Federal is first advised by its counsel
or counsel specified in the next sentence that an event of the
type specified in clause (iii) has occurred. Any dispute as to
whether an event specified in clause (iii) of the preceding
sentence has occurred shall be conclusively resolved by an
opinion of independent counsel selected by the Chairman of the
Securities Law Committee of Chicago Bar Association, which may
be requested by you or Federal at any time.
1.2 In no event shall any termination of your employment
under any provision of this agreement relieve you from complying
fully with your agreements set forth in paragraph 2.1 and 2.2
hereof.
March 4, 2002
Page Two
2. Non-competition and Trade Secrets Agreements
2.1 During the term of your employment and for a period of
thirty-six months following termination of employment for any
reason, or following expiration of the term hereof, you agree
that you will not directly or indirectly act as an officer,
director, consultant, employee or principal for any entity which
is competitive with Federal. An entity is deemed competitive
with Federal if it is engaged in a line of business in which
Federal has derived at least 10% of its revenues during the two
years prior to termination of employment in the same geographic
area in which Federal conducts such business.
2.2 You further covenant that at no time following such
termination of employment will you, without prior written
consent of Federal, divulge to anyone any trade secret or
confidential corporate information concerning Federal or
otherwise use any such information to the detriment of Federal.
2.3 Paragraph 2.1 shall not prohibit you from investing in
any securities of any corporation which is competitive with
Federal whose securities, or any of them, are listed on a
national securities exchange or traded in the over-the-counter
market if you shall own less than 3% of the outstanding voting
stock of such corporation.
3. General Provisions
3.1 In the event you shall inquire, by written notice to Federal,
whether any proposed action on your part would be considered by
Federal to be prohibited by or in breach of the terms hereof,
Federal shall have forty-five days after the giving of such
notice, to express in writing to you its position with respect
thereto, and in the event such writing shall not be given to
you, such proposed action (as set forth in your notice to
Federal) shall not be a violation of or in breach of the terms
hereof.
3.2 The term "designated beneficiary" as used in this agreement
shall mean such person or persons as you designate to receive
payments hereunder in the latest written notice received by the
Company from you which specifies a person or persons as a
designated beneficiary hereunder and in the absence of such
written notice shall mean your estate. Federal may conclusively
rely on any written notice specifying or changing a designated
beneficiary which it believes to be authentic.
3.3 Except as context otherwise requires, reference herein to
Federal shall include its subsidiaries and references to the
Board shall include committees thereof to the extent that any
applicable powers of the Board are or shall be delegated to any
such committees.
March 4, 2002
Page Three
3.4 The terms and conditions hereof shall constitute the entire
agreement between the parties and shall supersede all prior
written or oral understandings between you and Federal
concerning the subject matter hereof. The agreement may not be
amended or altered except in writing signed by the parties and
approved by a resolution of the Board. Neither party may assign
its rights hereunder without the written consent of the other.
3.5 All notices required or permitted to be given pursuant to this
agreement shall be given in writing, if to you, then at the
address set forth at the beginning hereof or at such other
address as you may specify in writing to Federal; and, if to
Federal, then to the Chief Executive Officer of Federal at
Federal's corporate office. All notices shall be deemed to have
been given when delivered in person or, if mailed, 48 hours
after depositing same in the United States mail, properly
addressed, and postage prepaid.
3.6 In the event that you or your designated beneficiary shall be
required to commence litigation to enforce your rights under
this agreement or otherwise your rights under this agreement
shall ever be involved in any litigation, the Company shall
indemnify you or your designated beneficiary against all costs
and expenses (including attorneys fees) reasonably incurred by
you in connection with such litigation except to the extent that
it is determined by the court in such litigation that you are
not entitled to such indemnification because you breached your
obligations hereunder. The Company shall, prior to the outcome
or settlement of such litigation, advance funds to you or your
designated beneficiary as you or your designated beneficiary
request for the purpose of paying your reasonable legal fees and
expenses advances, you or your designated beneficiary execute a
written undertaking agreeing to return to the Company all
amounts so advanced together with 12% per annum interest thereon
if it is determined by the court that you are not entitled to
indemnification under this paragraph 3.6.
Very truly yours,
FEDERAL SIGNAL CORPORATION
By
Acceptance:
The foregoing terms and conditions are accepted and
agreed to effective this ____ day of ____________, 2002.
