June 23, 1989
Mr. Joseph J. Ross
1195 LeProvence
Naperville, IL 60540
Dear Mr. Ross:
Pursuant to authorization of its Board of Directors (the
"Board"), this letter will set forth certain of the terms and
conditions of your continuing employment by Federal Signal
Corporation ("Federal") as an executive officer of Federal. By
your acceptance hereof you agree that your employment shall
continue upon the terms and conditions hereinafter set forth.
1. Term, Compensation and Services
1.1 The term of your employment pursuant to this
agreement shall continue from the date hereof until the December
31 following your 65th birthday, subject to earlier termination
of employment by Federal or you as hereinafter provided.
1.2 During the term of your employment, you will be
compensated at the annual rate as may from time to time be fixed
by resolution of the Board, provided, however, that your annual
rate of compensation shall in no event be less than $225,000 and
provided further that such minimum annual rate may be increased
by resolution of the Board which resolution shall be binding on
Federal for the remaining term of this agreement. Your annual
compensation shall be payable monthly and you shall be reimbursed
for business, travel and entertainment expenses in accordance
with Federal's prevailing policies. In its discretion, the Board
may pay you additional salary or bonuses.
1.3 You agree to devote your full business time and
efforts to the rendition of such services to Federal as may be
designated by the chief executive officer or the Board, subject,
however, to customary vacations and provided that you shall be
excused from performing services during any period of absence or
inability relating to illness or physical or mental disability.
You will at all times be subject to the direction and supervision
of the chief executive officer and the Board. You may devote a
reasonable amount of time to civic and community affairs but
shall not perform services during the term of your employment for
any other business organization in any capacity without the prior
consent of the Board.
2. Termination
2.1 Your employment shall be subject to termination by
Federal at any time for cause if you shall fail in any material
respect to perform your duties hereunder (other than by reason of
illness or physical or mental disability), shall breach any
provision hereof in any material respect, or shall engage in any
dishonest or fraudulent acts or conduct in the performance of
your duties to Federal. Termination by Federal pursuant to the
preceding sentence shall require that you receive thirty days
prior written notice of the basis for termination and that you
fail to cure or correct the basis for the termination during such
thirty day period. In addition, you may, at your option,
voluntarily terminate your employment hereunder by giving Federal
at least 90 days prior written notice thereof. Upon any
termination under this paragraph 2.1, all obligations of Federal
hereunder shall immediately terminate and, without limiting the
foregoing, Federal shall have no obligation under this agreement
to make payments to you in respect of any period subsequent to
such termination. However termination under this paragraph shall
not affect Federal's obligations, if any, to make payments as
required by other compensation or employee benefit plans
maintained by Federal.
2.2 Your employment shall be subject to termination by
Federal at any time without cause by notifying you in writing of
such termination not less than ten days prior to the effective
date thereof. Upon any termination of employment pursuant to
this paragraph 2.2, Federal shall be obligated to pay to you, or
to your designated beneficiary if you shall not be living, an
amount equal to one year's salary at the minimum annual rate then
in effect, or, if less, an amount equal to the amount of salary
at such minimum annual rate payable during the period from
termination until the December 31 following your 65th birthday.
The total amount owing to you or your designated beneficiary
under this paragraph 2.2 shall be paid in twelve equal monthly
installments. Installment payments shall commence as soon as
practicable following the effective date of termination and shall
not bear interest. For purposes of this paragraph 2.2 any
material breach by Federal of its obligations hereunder which are
not cured after thirty days written notice given to Federal by
you, may, at your option, be treated by you as a termination of
your employment without cause. Amounts payable to you under this
paragraph 2.2 shall be in addition to other payments, if any,
required by other compensation or employee benefit plans
maintained by Federal.
2.3 (a) In the event that a "change of control" (as
hereinafter defined) of Federal occurs during the term of this
agreement, 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, multiplied by three and then reduced by $1.00. In the
event of termination by you under this paragraph 2.3, you shall
also be entitled to receive all payments and compensation under
any other compensation or employee benefit plans of Federal.
Furthermore, to the extent you are not fully vested under any
such plan, amounts payable under any such other plan shall be
supplemented by Federal to the extent necessary so that the
amounts payable under such plan are at least equal to the amount
you would have received had you remained employed by Federal at
the minimum salary then in effect until your 65th birthday.
(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 the
Chicago Bar Association, which may be requested by you or Federal
at any time.
2.4 In the event of your death prior to the effective
date of any termination of your employment pursuant to paragraph
2.1, 2.2 or 2.3 hereof, Federal shall be obligated to pay to your
designated beneficiary, in not more than eighteen equal monthly
installments, an amount equal to one year's compensation at the
minimum annual rate in effect hereunder at the date of death.
Installment payments shall commence as soon as practicable
following the date of death and shall not bear interest.
2.5 In no event shall any termination of your employ-
ment under any provision of this agreement relieve you from
complying fully with your agreements set forth in paragraph 3.1
and 3.2 hereof.
3. Non-competition and Trade Secrets Agreements
3.1 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.
3.2 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.
3.3 Paragraph 3.1 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.
4. General Provisions
4.1 In the event you shall inquire, by writing 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.
4.2. 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.
4.3. 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.
4.4 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.
4.5 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 Secretary 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.
4.6 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 pending the outcome or settlement of such litigation
provided that, as a condition of such 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 4.6.
4.7 This agreement replaces the employment agreement
between you and Federal dated June 5, 1984.
Very truly yours,
FEDERAL SIGNAL CORPORATION
By Thomas N. McGowen, Jr.
Chairman of the
Executive Committee
Acceptance:
The foregoing terms and
conditions are accepted and
agreed to effective this 26th
day of June, 1989
Joseph J. Ross